<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
AMERICAN INDEMNITY FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
AMERICAN INDEMNITY FINANCIAL CORPORATION
P. O. BOX 8985
WILMINGTON, DELAWARE 19899-8985
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 28, 1997
Notice is hereby given that the Annual Meeting of Stockholders of American
Indemnity Financial Corporation (the "Company") will be held in the Board of
Directors Room of the United States National Bank of Galveston, 2201 Market
Street, Galveston, Texas, at 10:00 a.m. on Monday, April 28, 1997, for the
following purposes:
1. To elect three Class III directors of the Company to hold office
for the ensuing three years.
2. To approve and adopt the Company's 1997 Non-Employee Director Stock
Option Plan.
3. To transact such other business as may properly be brought before
the meeting or any adjournment thereof.
Only holders of Common Stock of the Company of record at the close of
business on March 14, 1997 will be entitled to notice of and to vote at the
meeting.
Stockholders who do not expect to attend the annual meeting are requested
to sign and return the enclosed proxy, for which a return envelope is enclosed.
By Order of the Board of Directors,
/s/ HELEN K. LOHEC
Helen K. Lohec
Secretary
March 27, 1997
<PAGE> 3
AMERICAN INDEMNITY FINANCIAL CORPORATION
P. O. BOX 8985
WILMINGTON, DELAWARE 19899-8985
---------------------
PROXY STATEMENT
---------------------
This Proxy Statement and the enclosed form of proxy are being mailed on or
about March 27, 1997, to the record holders of the Common Stock, $3.33 1/3 par
value ("Common Stock"), of American Indemnity Financial Corporation (the
"Company") on March 14, 1997. The enclosed form of proxy is solicited by the
Board of Directors of the Company to be used at the Annual Meeting of
Stockholders to be held on April 28, 1997. Any stockholder giving such a proxy
may revoke it any time before it is voted by delivering written revocation
delivered to either person named as proxy, by voting in person at the annual
meeting or by giving a later proxy. Otherwise, if received in time, it will be
voted at the meeting.
Holders of record of Common Stock at the close of business on March 14,
1997, will be entitled to notice of and to vote at the annual meeting. Each
outstanding share of Common Stock will be entitled to one vote. On the record
date there were outstanding 1,962,410 shares of Common Stock. There are no other
voting securities of the Company outstanding.
The Annual Report to Stockholders for the fiscal year ended December 31,
1996, including financial statements, accompanies this Proxy Statement. The
annual report does not constitute a part of the proxy soliciting material.
The Annual Meeting of Stockholders will be held at 10:00 a.m. on Monday,
April 28, 1997, in the Board of Directors Room of the United States National
Bank of Galveston, 2201 Market Street, Galveston, Texas.
<PAGE> 4
PRINCIPAL STOCKHOLDERS
The following table sets forth as of March 14, 1997, (i) the ownership of
Common Stock by each person known by management of the Company to be the
beneficial owner of more than 5% of the outstanding shares of Common Stock, and
(ii) the number of shares of Common Stock owned by all executive officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS
------------------- ------------------ ----------
<S> <C> <C>
J. F. Seinsheimer, Jr.(1)................................. 576,880 29.4%
4809 Woodrow
Galveston, Texas 77551
Irma K. Seinsheimer Trust(2)
2201 Market Street
Galveston, Texas 77550
American Finance Company of Galveston(2).................. 471,770 24.0%
United States Securities Corporation
One American Indemnity Plaza
Galveston, Texas 77550
J. Fellman Seinsheimer, III(3)............................ 578,205 29.5%
One American Indemnity Plaza
Galveston, Texas 77550
Dimensional Fund Advisors Inc.(4)......................... 118,700 6.1%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
FMR Corp.(5).............................................. 194,000 9.9%
82 Devonshire Street
Boston, Massachusetts 02109
Franklin Resources, Inc.(6)............................... 100,000 5.1%
777 Mariners Island Blvd.
San Mateo, California 94404
Tweedy, Browne Company L.P.(7)............................ 207,360 10.6%
52 Vanderbilt Avenue
New York, New York 10017
Executive officers and directors as a group (10
persons)(8)............................................. 670,041 34.1%
</TABLE>
- ---------------
(1) J. F. Seinsheimer, Jr. resigned as a member of the Board of Directors on
April 24, 1995 and was named Chairman Emeritus. As of March 14, 1997, Mr.
Seinsheimer, Jr. shared voting and dispositive power over 38,095 shares
(1.9%) of the Company's Common Stock with his son, J. Fellman Seinsheimer,
III, and United States National Bank of Galveston as co-trustees of the
Jessie Lee Seinsheimer Trust (the "Seinsheimer Trust"). Mr. Seinsheimer, Jr.
is the sole beneficiary under the Seinsheimer Trust until his death, at
which time the remainder will be divided among his children. Additionally,
pursuant to powers of attorney granted by Mr. Seinsheimer, Jr. to his son,
J. Fellman Seinsheimer, III, Messrs. Seinsheimer will share voting and
dispositive power over the 67,015 shares (3.4%) of the Company's Common
Stock owned of record by Mr. Seinsheimer, Jr. Mr. Seinsheimer, Jr., as
co-trustee of the Irma K. Seinsheimer Trust, as described further in Note 2
below, may be deemed to be the beneficial owner of an additional 471,770
shares of Common Stock beneficially owned by such trust.
(2) The Irma K. Seinsheimer Trust (the "Family Trust") is the beneficial owner
of 471,770 shares of Common Stock. Of the 471,770 shares of Common Stock
beneficially owned, 7,675 shares are owned of record and 464,095 shares are
owned by two corporations controlled by the Family Trust, namely American
Finance Company of Galveston and United States Securities Corporation, that
owned of record 289,764 shares (14.8%) and 174,331 shares (8.9%) of the
Company's Common Stock, respectively. Mr. Seinsheimer, Jr. and William C.
Levin, M.D. (a director of the Company) are co-trustees of the Family Trust
and as such have shared voting and dispositive power with respect to the
shares
2
<PAGE> 5
controlled by the Family Trust. However, Mr. Seinsheimer, Jr. exercises sole
voting and dispositive control over such shares. Dr. Levin exercises no
voting or dispositive power over, has no pecuniary interest in and disclaims
any beneficial ownership or interest in the shares of Common Stock
beneficially owned by the Family Trust.
(3) As of March 14, 1997, J. Fellman Seinsheimer, III owned of record 9,000
shares of the Company's Common Stock, which does not include 270 shares
owned of record by his sons, as to which he disclaims any beneficial
ownership or interest. Pursuant to the Powers of Attorney granted by J. F.
Seinsheimer, Jr. to his son, J. Fellman Seinsheimer, III, the Messrs.
Seinsheimer share voting and dispositive power over 67,015 shares (3.4%) of
the Company's Common Stock owned of record by J. F. Seinsheimer, Jr.
Additionally, J. Fellman Seinsheimer, III, J. F. Seinsheimer, Jr. and United
States National Bank of Galveston, as co-trustee of the Seinsheimer Trust,
share voting and dispositive power over 38,095 shares (1.9%) of the
Company's Common Stock owned by such trust. Additionally, as President of
American Finance Company of Galveston and United States Securities
Corporation, which corporations owned of record 289,764 shares and 174,331
shares of Common Stock, respectively, J. Fellman Seinsheimer, III has shared
voting and dispositive power over an aggregate of 464,095 shares owned by
such corporations.
(4) Based upon information contained in a Schedule 13G filed with the Securities
and Exchange Commission and other information provided by Dimensional Fund
Advisors Inc., a registered investment advisor ("Dimensional"). According to
such information, as of December 31, 1996, all of such shares are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company (the "Fund"), or in series of The DFA Investment Trust
Company, a Delaware business trust (the "Trust"), or the DFA Group Trust and
the DFA Participation Group Trust, investment vehicles for qualified
employee benefit plans, for all of which Dimensional serves as investment
manager. Dimensional exercises sole dispositive power with respect to all
such shares and sole voting power with respect to 87,000 of such shares.
Persons who are officers of Dimensional also serve as officers of the Fund
and the Trust, and in the capacity as officers of the Fund and the Trust
exercise sole voting power with respect to 16,700 of such shares owned by
the Fund and 15,000 of such shares owned by the Trust. The Company has been
advised by Dimensional that Dimensional disclaims beneficial ownership of
all such shares.
(5) Based upon information contained in a Schedule 13G filed with the Securities
and Exchange Commission by FMR Corp. ("FMR"), the parent holding company of
Fidelity Management & Research Company, a registered investment advisor
("Fidelity"). According to such Schedule 13G, FMR, Edward C. Johnson 3d, the
Chairman and principal stockholder of FMR, Abigail P. Johnson, a director
and principal stockholder of FMR, Fidelity and Fidelity Low-Priced Stock
Fund, an investment company to which Fidelity acts as investment advisor
(the "Fund"), may be deemed to own beneficially, as of December 31, 1996,
194,000 shares of Common Stock. FMR, through its control of Fidelity, Edward
C. Johnson 3d and the Fund each have the power to dispose of such shares.
Neither FMR nor Edward C. Johnson 3d has the sole power to vote or to direct
the voting of such shares, which power resides with the Board of Trustees of
the Fund. Fidelity carries out the voting of such shares under written
guidelines established by the Board of Trustees of the Fund.
(6) Based upon information contained in a Schedule 13G filed with the Securities
and Exchange Commission by Franklin Resources, Inc. ("FRI"), the parent
holding company of certain direct and indirect investment advisory
subsidiaries (the "Advisory Subsidiaries"). The Advisory Subsidiaries advise
one or more open or closed-end investment companies or other managed
accounts which beneficially owned 100,000 shares of Common Stock as of
December 31, 1996. The Advisory Subsidiaries are granted sole voting and
investment power over such shares by the advisory clients, and, as a result,
the Advisory Subsidiaries may be deemed to be the beneficial owner of the
100,000 shares of Common Stock. FRI and Charles B. Johnson and Rupert H.
Johnson, Jr., the principal stockholders of FRI, also may be deemed to be
the beneficial owner of the 100,000 shares of Common Stock. Each of FRI,
Charles B. Johnson, Rupert H. Johnson, Jr. and the Advisory Subsidiaries
disclaim beneficial ownership of all such shares.
(7) Based upon information contained in a Schedule 13D filed with the Securities
and Exchange Commission and other information provided by Tweedy, Browne
Company L.P. ("TBC"). TBC is a registered investment advisor beneficially
owning 207,360 shares of Common Stock, of which TBC exercises shared
dispositive power and sole voting power with respect to 192,661 such shares.
Additionally, certain of the general partners of TBC may be deemed to have
sole power to vote certain shares and shared power to direct the disposition
of all the shares of Common Stock held in the TBC Accounts.
(8) Based upon information furnished by directors and executive officers.
Includes 21,000 shares issuable on exercise of options.
3
<PAGE> 6
ELECTION OF DIRECTORS
At the meeting, three Class III directors (constituting all of the Class
III directors) are to be elected to hold office for terms of three years or
until their respective successors shall have been elected and shall qualify. It
is the intention of the persons named in the enclosed form of proxy to vote such
proxy for the election of the three nominees named below for Class III
directorships unless authorization is withheld on the proxy. The Board of
Directors of the Company do not contemplate that any of the nominees will be
unable or unwilling to serve as a director or become unavailable for any reason,
but if that should occur before the meeting, each of the proxies received by the
Board of Directors which do not withhold authority to vote for directors will be
voted for another nominee or nominees to be selected by the Board of Directors.
The enclosed form of proxy provides a means for stockholders to vote for
each of the nominees listed therein or to withhold authority to vote for certain
or all of the nominees. Each properly executed proxy received in time for the
meeting will be voted as specified therein. If a stockholder does not specify
otherwise, the shares represented by his or her proxy will be voted for the
nominees listed therein or, as noted above, for other nominees selected by the
Board of Directors. Since the Company's bylaws provide that the directors are
elected by a plurality of votes cast, broker non-votes or withholding authority
to vote for any of the nominees will have no effect upon the election of
directors, unless a vote is cast in person or by means of another proxy.
However, all shares represented by proxies that are signed by the holder of
record will be counted for purposes of determining the presence of a quorum. The
presence at the meeting, in person or by proxy, of the holders of a majority of
the shares of Common Stock is necessary to constitute a quorum for the
transaction of business at the meeting.
The following table sets forth information with respect to each person
nominated for election as a Class III director and each person whose term of
office as a director will continue after the annual meeting. Except for J.
Fellman Seinsheimer, III, William C. Levin, M.D. and Harris L. Kempner, Jr., who
owned beneficially 29.5%, 2.2% and 1.1%, respectively, of the outstanding shares
of Common Stock at March 14, 1997, each nominee and director owned less than 1%
of the outstanding shares of Common Stock at such date. The table has been
prepared from information obtained from the respective nominees and directors.
<TABLE>
<CAPTION>
Shares of
Common
Stock
Beneficially
Served as Owned on
Principal Director March 14,
Name Age Occupation Since 1997(1)
---- --- ------------------------------------------ --------- ------------
<S> <C> <C> <C> <C>
CLASS III -- NOMINEES FOR TERMS EXPIRING IN 2000
Fred C. Burns.............. 59 Managing Partner -- John L. Wortham & Son, 1997 1,000(2)
L.L.P.
Harris L. Kempner, 1991 21,611(4)(5)
Jr.(3)................... 57 President -- Kempner Capital Management,
Inc.
William C. Levin, M.D...... 80 Consultant in Hematology 1973 43,051(6)
CLASS I -- DIRECTORS WHOSE TERMS EXPIRE IN 1998
Henry W. Hope(3)(7)........ 56 Partner -- Fulbright & Jaworski L.L.P. 1977 3,479(4)
James W. McFarland, 1994 2,500(9)
Ph.D(8).................. 51 Dean -- A.B. Freeman School of Business,
Tulane University
Marvin L. West(3)(8)....... 68 Management Consultant 1980 2,053(9)
CLASS II -- DIRECTORS WHOSE TERMS EXPIRE IN 1999
Jack T. Currie(7)(10)...... 68 Investments 1977 6,751(4)
Synott L. McNeel(8)(10).... 73 Investments 1973 7,891(2)
J. Fellman Seinsheimer,
III(7)(10)............... 56 President and Chief Executive Officer of 1973 578,205(11)
the Company
</TABLE>
(Footnotes on following page)
4
<PAGE> 7
- ---------------
(1) Unless otherwise indicated below, each director or nominee has sole voting
and investment power with respect to the shares attributed to him.
(2) Includes 1,000 shares issuable on the exercise of options.
(3) Member of the Compensation Committee of the Board of Directors.
(4) Includes 3,000 shares issuable on the exercise of options.
(5) Includes 18,611 shares held by the H. Kempner Trust, of which Mr. Kempner
is a beneficiary, is one of five trustees and shares voting and investment
power.
(6) Includes 3,000 shares issuable upon the exercise of options, but does not
include 471,770 shares beneficially owned by the Family Trust, of which Dr.
Levin is a co-trustee. See Note (2) under "Principal Stockholders".
(7) Member of the Nominating and Management Development Committee of the Board
of Directors.
(8) Member of the Audit Committee of the Board of Directors.
(9) Includes 2,000 shares issuable on the exercise of options.
(10) Member of the Executive Committee of the Board of Directors.
(11) Does not include 270 shares owned of record by his sons, as to which Mr.
Seinsheimer disclaims any beneficial ownership or interest. See Notes (1)
and (3) under "Principal Stockholders".
Fred C. Burns joined John L. Wortham & Son in 1963 and was elected Partner
in 1970. He became Managing Partner in 1985. Mr. Burns serves as a director of
Texas Commerce Bank, The Council of Insurance Agents and Brokers, Assurex
Development Corporation and is a registered principal of the National
Association of Securities Dealers.
Jack T. Currie has been engaged in managing personal investments since
January 1986. Prior to 1986, he was engaged in the merchant banking and
investment banking businesses. Mr. Currie is also a member of the Boards of
Directors of American National Growth Fund, American National Income Fund,
Triflex Fund, Inc. and Stewart & Stevenson Services, Inc.
Henry W. Hope has been a partner in the law firm of Fulbright & Jaworski
L.L.P. since 1975.
Harris L. Kempner, Jr. has served as a Trustee of H. Kempner Trust
Association of Galveston since 1964 and as President of Kempner Capital
Management, Inc. since 1981. He serves on the Boards of Directors of Imperial
Holly Corp., TNP Enterprises and Cullen Frost Bankers, Inc.
William C. Levin, M.D. served as President of the University of Texas
Medical Branch at Galveston from 1974 until his retirement in September 1987. He
served as the Ashbel Smith Professor at the University until his retirement from
that position in September 1992 and now serves as a consultant in hematology.
James W. McFarland is dean and professor at Tulane University's A.B.
Freeman School of Business, positions he has held since 1988. Prior to that
time, he was dean of the College of Business Administration at the University of
Houston. He is a member of the Boards of Directors of Sizeler Property
Investors, Inc. and Stewart Enterprises, Inc. and serves on the Audit and
Compensation Committees of both companies. Mr. McFarland also serves on the
Executive Committee of Sizeler Property Investors, Inc. In addition, Mr.
McFarland is a member of the Board of Directors of Petroleum Helicopters Inc.
and serves on the Audit Committee of that company.
Synott L. McNeel served as Senior Vice President, Secretary and Treasurer
of the Company from January 1983 until his retirement on December 31, 1993.
Prior to that time he served as Senior Vice President and Treasurer of the
Company since 1973.
J. Fellman Seinsheimer, III has served as President and Chief Executive
Officer since July 1992. He served as President and Chief Operating Officer from
January 1983 to July 1992, and prior to that time was Executive Vice President
and Secretary of both the Company and American Indemnity Company, the Company's
principal insurance subsidiary ("American Indemnity").
5
<PAGE> 8
Marvin L. West has served as a management consultant since July 1991. From
November 1988 until July 1991, Mr. West handled personal investments. Mr. West
served as Chairman of the Board and President of Westheimer National Bank from
July 1984 until November 1988. In November 1992, Mr. West filed a voluntary
petition under Chapter 7 of the Bankruptcy Code in Houston, Texas, and has since
been discharged from such proceeding.
J. Fellman Seinsheimer, III is the son and William C. Levin, M.D. is the
brother-in-law of Mr. Seinsheimer, Jr., the principal stockholder of the
Company.
The Company's Board of Directors has an established Executive Committee,
Audit Committee, Nominating and Management Development Committee and
Compensation Committee. The Executive Committee performs various tasks in the
management of the business and affairs of the Company and may exercise all of
the powers of the Board of Directors when it is not in session except those
reserved by law to the Board. The Audit Committee recommends the selection of
and confers with the Company's independent accountants regarding the scope and
adequacy of annual audits and other review procedures, reviews reports from the
independent accountants relating to the annual audits and quarterly reviews, and
meets with such independent accountants and the Company's internal auditors and
financial personnel to review such reports and the adequacy of the Company's
financial controls, accounting principles and policies. The Audit Committee also
reviews compliance with the Company's reporting obligations and certain Company
policies. The Compensation Committee is responsible for reviewing and
recommending to the Board of Directors the compensation for the executive
officers and directors of the Company and through 1996 for administering the
Company's employee stock option plans. A subcommittee of the Compensation
Committee will hereafter administer employee stock option plans. The primary
function of the Nominating and Management Development Committee is to review
management's recommendations for persons to serve as the Company's executive
officers and as members of the Board of Directors and committees of the Board of
Directors (other than the Nominating and Management Development Committee),
together with such other nominees as it may choose to consider, and to recommend
to the Board of Directors the persons nominated by the Committee for such
positions. The Nominating and Management Development Committee will consider for
the annual meeting of stockholders to be held in 1998 nominees for director
recommended by stockholders that are submitted in writing, together with
adequate information regarding such person's biographical data and
qualifications, addressed to the Nominating and Management Development Committee
at the address of the Company's principal executive office and received no later
than November 28, 1997. The Nominating and Management Development Committee
periodically considers executive management development and succession matters.
During 1996, the Board of Directors held four meetings, the Executive
Committee held no meetings, the Audit Committee held four meetings, the
Nominating and Management Development Committee held two meetings and the
Compensation Committee held one meeting. During 1996, each incumbent director
attended 75% or more of the total number of meetings of the Board and the
committees on which he served, except Jack T. Currie, who attended 50% of the
meetings of the Board and the committees on which he served.
PROPOSAL TO APPROVE 1997 NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN
Effective January 22, 1997, the Board of Directors of the Company adopted,
subject to approval by the stockholders of the Company at their 1997 Annual
Meeting, the American Indemnity Financial Corporation 1997 Non-Employee Director
Stock Option Plan (the "1997 Director Plan"). The 1997 Director Plan is for the
benefit of directors who, at the time of their service are not employees of the
Company or any of its subsidiaries, but are persons who have made or are
expected to make a significant contribution to the Company or its subsidiaries.
Participation by such persons in the 1997 Director Plan will provide additional
incentive through an increase in their proprietary interest in the success of
the Company, thereby encouraging them in their service to the Company and to
continue in their current capacity.
6
<PAGE> 9
The following is a summary of the material provisions of the 1997 Director
Plan and is qualified in its entirety by reference to the 1997 Director Plan, a
copy of which is attached as Appendix A hereto.
ELIGIBILITY AND PARTICIPATION
The individuals eligible to participate in the 1997 Director Plan are those
individuals who are members of the board of directors of the Company or of a
subsidiary and who, at the time of service, are not employees of such companies.
Currently, there are nine persons eligible to participate in the 1997 Director
Plan.
SHARES SUBJECT TO OPTIONS
The 1997 Director Plan provides for the granting of stock options not
exceeding an aggregate of 25,000 shares of Common Stock. If any outstanding
options expire or terminate, the shares of Common Stock allocable to the
unexercised portions of those options may again be subject to option under the
1997 Director Plan. The number of shares authorized for issuance under the 1997
Director Plan and the number of shares and exercise prices of outstanding
options are subject to adjustment in the event of stock splits, stock dividends
and similar changes in the Company's capitalization and in the event of a
merger, consolidation, acquisition, liquidation, the sale of substantially all
assets or similar corporate transactions.
GRANT AND EXERCISE OF OPTIONS
The selection of non-employee directors to whom options are to be granted,
the number of shares subject to an option, the exercise price of an option and
the term of an option are specified in the 1997 Director Plan, and the Director
Plan Committee (defined below) authorized to administer the Plan has no
discretion as to such matters. The price at which shares may be purchased
pursuant to an option granted under the 1997 Director Plan is the fair market
value of such shares on the date the option is granted as determined by market
quotes. If no quotes are available on that date, the fair market value is
determined as of the immediately preceding date on which quotes are available.
The 1997 Director Plan provides for grants of options for specified events
to each non-employee director of 1,000 shares of Common Stock, subject to
adjustment, (i) on the date such person is newly elected as a non-employee
director, and (ii) on January 2, 1998 and every other January 2 thereafter if
the individual has previously received an option under the 1997 Director Plan or
the 1992 Director Plan. If there are shares available but in insufficient
numbers to permit all grants required on a particular date of grant to a class
of non-employee directors, then options will be granted in an equal whole number
to each non-employee director of the class which will use the maximum shares
available without issuing an option in an unequal amount or for a fractional
share.
Each option granted is embodied in a written option agreement which is
subject to the terms and conditions of the 1997 Director Plan and any other
provisions that the Director Plan Committee deems advisable. Upon the expiration
of six months from the date of grant, each option will be exercisable for a term
of ten years from the date of grant, subject to an earlier termination as set
forth in the plan.
Options are exercised by the delivery to the Company of a written notice.
This notice must be accompanied by the payment of the option price of the shares
exercised and the amount necessary to satisfy any resulting withholding tax
liability. Subject to certain limitations set forth in the 1997 Director Plan,
and in the sole discretion of the Director Plan Committee, payment may be made
in shares of Common Stock owned by the optionee.
ADMINISTRATION OF THE 1997 DIRECTOR PLAN
The 1997 Director Plan is administered by a committee consisting of one or
more employees of the Company appointed by the Board of Directors of the Company
and is herein referred to as the "Director Plan Committee". The Director Plan
Committee is currently comprised of J. Fellman Seinsheimer, III, President,
Phillip E. Apgar, Vice President and Chief Financial Officer, and William H.
Felts, Jr., Vice President, of the Company.
7
<PAGE> 10
AMENDMENT OF THE 1997 DIRECTOR PLAN
The Board of Directors may modify, revise or terminate the 1997 Director
Plan at any time. However, without required stockholder approval and except
under certain circumstances specified in the 1997 Director Plan, the Board of
Directors may not (i) change the aggregate number of shares that may be issued
under options; (ii) reduce the option price permitted for the options; (iii)
change the class of persons eligible to receive options; (iv) extend the term
during which an option may be exercised or the termination date of the 1997
Director Plan; or (v) materially increase any other benefits accruing to the
non-employee directors under the 1997 Director Plan. Additionally, the terms of
the 1997 Director Plan relating to the number of shares that may be subject to
an option, the times at which options are to be granted, and the means by which
the option price for the options granted is to be determined may not be amended
more than once every six months, other than to comply with certain legal
requirements.
DURATION OF THE 1997 DIRECTOR PLAN; REGISTRATION OF SHARES
The 1997 Director Plan, subject to stockholder approval, will become
effective and will be deemed to have been adopted on January 22, 1997. No
options will be granted under this plan after January 22, 2007. It is the
Company's intention to register the securities covered by the 1997 Director Plan
under the Securities Act of 1933, as amended, as soon as practicable after
approval by the stockholders.
TRANSFERABILITY; TERMINATION
Options will not be transferable by the optionee except by will or under
the laws of descent and distribution, and will be exercisable only by the
optionee during his lifetime. Except as otherwise provided in the 1997 Director
Plan, options will normally terminate upon the earlier of the date of the
expiration of the option or the severance of the relationship between the
Company and the optionee which made the individual eligible to receive an option
under the plan, without regard for the reason for severance. However, if the
optionee retires in good standing from the Board of Directors of the Company or
its subsidiaries, his outstanding options will terminate on the earlier of the
date of expiration of the option or one day less than three months after the
date of retirement. If the optionee dies while serving on the Board of Directors
of the Company or its subsidiaries or during the three month period after
retirement in good standing, his outstanding options will terminate on the
earlier of the date of expiration of the option or one year following the date
of death. After the death of the optionee, his executors, administrators or any
person to whom his option may be transferred by will or by the laws of descent
and distribution will have the right to exercise the option.
FORFEITURE OF OPTIONS
The Director Plan Committee may forfeit an optionee's option for dishonest
conduct detrimental to the Company.
FEDERAL INCOME TAX CONSEQUENCES
The optionee is not taxed upon receipt of the option. When the option is
exercised, the optionee is taxed at ordinary income rates on the difference
between the option price and the fair market value on the date of exercise. The
Company receives a deduction for compensation expense for this amount, and there
is a withholding requirement on the date of exercise.
1992 DIRECTOR PLAN
As discussed elsewhere in this Proxy Statement, the Company and its
stockholders have previously approved the 1992 Director Plan. Under that plan,
options to purchase an aggregate of 22,000 shares were granted to non-employee
directors. There are 3,000 additional shares reserved for the 1992 Director Plan
which are not subject to options. Upon approval of the 1997 Director Plan by the
Company's stockholders, the 1992 Director Plan will terminate and the remaining
3,000 shares will be reclassified as authorized but
8
<PAGE> 11
unissued shares of the Company's Common Stock. All options previously granted
under the 1992 Director Plan will continue for the remainder of their respective
terms.
VOTE REQUIRED AND RECOMMENDATION FOR APPROVAL
The Board of Directors of the Company has unanimously adopted the 1997
Director Plan. However, the 1997 Director Plan will not be implemented unless
holders of at least a majority of the shares of Common Stock represented in
person or by proxy and entitled to vote at the annual meeting vote "FOR" the
approval of the 1997 Director Plan. Each properly executed proxy received in
time for the meeting will be voted as specified therein. If a stockholder
executes and returns a proxy but does not specify otherwise, the shares
represented by such stockholder's proxy will be voted for the approval of the
1997 Director Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
1997 DIRECTOR PLAN.
EXECUTIVE OFFICERS
The following table lists the persons currently serving as the executive
officers of the Company and who have been nominated for re-election to such
positions at the directors' meeting to be held following the Annual Meeting of
Stockholders. If elected, the persons named below are expected to serve in the
position stated until the next annual meeting of the directors and until their
successors are elected and qualified. Both officers have been continually
employed by the Company in an executive capacity for the last five years, except
Mr. Apgar who was elected to his position with the Company in January 1994. Mr.
Apgar is 43 years of age and has been employed with American Indemnity Company
in various capacities since April 1974, most recently as Vice President and
Controller. Mr. Apgar beneficially owns 3,500 shares of Common Stock, including
3,000 shares issuable upon the exercise of options, which represents less than
1% of the shares of Common Stock outstanding as of March 14, 1997.
<TABLE>
<CAPTION>
SERVED AS
OFFICER
NAME SINCE POSITION
---- --------- --------
<S> <C> <C>
J. Fellman Seinsheimer, III.................. 1973 President and Chief Executive
Officer
Phillip E. Apgar, C.P.A. .................... 1994 Vice President, Treasurer and Chief
Financial Officer
</TABLE>
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee (the "Committee") of the Board of Directors of
the Company, which is composed of three non-employee directors, is responsible
for recommending to the full Board of Directors compensation for the executive
officers of the Company. Additionally, the Committee has in the past been
responsible for administering and making recommendations regarding the Company's
stock option plans other than the non-employee director stock option plan.
COMPENSATION POLICIES
In determining compensation for the Company's executive officers, the
Committee seeks to ensure that the executive officers are effectively
compensated in terms that are both internally equitable and externally
competitive. Compensation decisions should include consideration of all factors
relevant to these decisions, including the performance of the specific officer
under consideration, the financial condition and results of operations of the
Company, conditions prevailing generally in the Company's industry during the
applicable periods and the Company's performance in light of such conditions.
Management's recommendations are requested and considered by the Committee.
9
<PAGE> 12
COMPENSATION PROGRAM CONSIDERATIONS
In 1996, compensation for the Company's executive officers consisted
primarily of base salary and certain other benefits, including contributions to
the Company's defined benefit pension plan and to the Company's 401(k) plan. The
Committee considered certain of these components as follows.
Base Salary -- Base salary levels are determined principally on the factors
mentioned above, as well as the Company's past compensation practices,
compensation practices in the applicable geographic region and by comparison
with companies that are similar to the Company. The most important factor in the
Committee's determination is the Committee's understanding and perception of how
the particular officer performed during the preceding periods under the
circumstances as they existed at such times.
In 1995, the Company commissioned an outside compensation consulting firm
to update its previous report on compensation arrangements for the executive
officers (the "compensation survey"). This compensation survey illustrated that
the executive officers' base salaries were at or below the mid-points of the
ranges shown in that survey for their respective positions. The companies used
in the compensation survey are not the companies comprising the broader indices
utilized in the performance graph.
In general, base salary levels and increases in these levels reflect the
Committee's view of the contribution made by the particular executive officer
based on, among other things, the factors listed above. These factors are
typically subjective. No quantifiable goals or standards are established,
although the compensation survey provides certain benchmarks considered by the
Committee for compensation levels. While the profitability of the Company is
considered, it is not determinative in setting executive officer compensation.
With this background, the Committee recommended increases in base salaries for
the executive officers in 1996 that were in keeping with the general increases
given to other employees.
Stock Options -- The Committee believes that stock options provide a
valuable incentive to the key employees of the Company, particularly those
having substantial responsibility for the future and success of the Company. By
providing an opportunity to increase their ownership of Company stock, the
interests of the stockholders and those key personnel will become more closely
aligned. Stock options provide the option holder with additional incentive to
remain in the Company's employ and to bring about greater growth and success of
the Company. Options also provide a means to tie compensation more closely to
the Company's financial performance to the extent reflected in the price of the
Company's Common Stock.
Following review and consideration of the options previously granted to the
executive officers and that are currently outstanding, the Committee determined
that no additional options would be granted to executive officers as part of the
1996 compensation review.
Other Matters -- The Company has various other employee benefit plans and
executive officers participate in these on the same terms as eligible,
non-executive employees, subject to any legal limits on such participation.
These include the Profit Sharing and 401(k) Plan adopted by the Company's
subsidiary effective January 1994 and an automobile bonus plan whereby employees
are compensated for taxes incurred for personal use of company automobiles.
1996 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
The leading role taken by J. Fellman Seinsheimer, III in bringing about the
improved results experienced by the Company in recent years and in handling the
many adverse circumstances that arose during 1995 was considered by the
Committee in its review. While the Committee does not believe that an executive
should realize a windfall for a single good year, the Committee likewise does
not believe that a year with unsatisfactory results standing alone should result
in a negative action with respect to an executive's compensation. The Committee
recognized that during 1995 there were many difficulties encountered such as the
extensive weather related losses. The Committee's perception of the performance
of the Chief Executive Officer was that such individual performed well under
these circumstances. For these reasons, the Committee determined that the Chief
Executive Officer should receive the recommended increase in compensation. This
increase would continue his compensation at approximately the mid-point of his
compensation range based upon the compensation survey update commissioned by the
Company.
10
<PAGE> 13
SUMMARY
The Committee believes that the annual compensation for the Company's
executive officers appropriately reflects the contribution of such officers to
the Company and is linked to and reflective of the individual performance and
the financial performance of the Company.
COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS
Henry W. Hope
Harris L. Kempner, Jr.
Marvin L. West
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Harris L. Kempner, Jr., a director of the Company, is Chairman Emeritus of
the Board of United States National Bank, which serves as the principal banking
institution for the Company. Henry W. Hope, a director of the Company, is a
partner in the law firm of Fulbright & Jaworski L.L.P., which serves as
corporate and securities counsel to the Company.
SUMMARY OF COMPENSATION
The following table summarizes compensation information concerning each of
the Company's executive officers for each of the three years ended December 31,
1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION (AWARDS)
------------------------------ ------------
OTHER SHARES
ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTIONS COMPENSATION
YEAR ($) ($) ($)(1) (#) ($)(2)
NAME AND PRINCIPAL POSITION -------- -------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
J. Fellman Seinsheimer, III...... 1996 206,400 -- 14,254 -- 6,192
President and Chief 1995 199,500 -- 6,541 -- 8,393
Executive Officer 1994 190,000 -- 5,308 -- 6,321
Phillip E. Apgar, C.P.A.......... 1996 113,850 -- 12,148 -- 3,416
Vice President, Treasurer 1995 110,000 -- 4,355 -- 3,300
and Chief Financial Officer 1994 100,000 -- 3,527 3,000 2,500
</TABLE>
- ---------------
(1) Amounts represent tax gross-ups for the lease value and expenses relating to
the use of Company automobiles. The dollar value of all other perquisites
and personal benefits were less than the lesser of either $50,000 or 10% of
the total annual salary and bonus for each named executive officer and
therefore have been excluded.
(2) Amounts for 1996 represent matching contributions made by the Company under
the Company's 401(k) Plan.
Each executive officer of the Company holds office until the regular
meeting of directors following the annual meeting of stockholders or until his
successor is elected and qualifies.
COMPENSATION OF DIRECTORS
Directors of the Company who are not employed by the Company or its
subsidiaries receive $1,200 for each meeting of the Board of Directors attended
by such director and $50 to $200 for each meeting of the Company's subsidiaries'
Boards of Directors on which such persons may serve. Committee members serving
11
<PAGE> 14
on established committees of the Board of Directors receive $300 for each
meeting attended. Since May 1990, the Company has not paid director or committee
fees to persons who also serve as officers of the Company.
Non-employee directors also receive options every other year to purchase
1,000 shares of the Company's Common Stock pursuant to the 1992 Non-Employee
Director Stock Option Plan (the "1992 Director Plan"). See "Option Grants and
Exercises". Each option is exercisable for a term of ten years from the date of
grant, subject to earlier termination as set forth in the plan. A proposal to
continue these option grants to the non-employee directors is presented in this
proxy statement for vote by the stockholders at the upcoming annual meeting. See
"Proposal to Approve 1997 Non-Employee Director Stock Option Plan".
OPTION GRANTS AND EXERCISES
The Company currently maintains two plans pursuant to which options to
purchase shares of the Company's Common Stock are outstanding or available for
future grants.
In April 1992, the Company's stockholders approved the 1992 Employee Stock
Option Plan (the "1992 Option Plan") and the 1992 Director Plan. Options to
purchase up to an aggregate of 100,000 shares may be granted under the 1992
Option Plan at no less than the fair market value of the shares of Common Stock
on the date of grant for incentive stock options, and no less than 85% of the
fair market value of the shares of Common Stock on the date of grant for
non-incentive stock options. Under the 1992 Director Plan, 25,000 shares were
reserved for the grant of options. The selection of non-employee directors to
whom options are to be granted, the number of shares subject to an option, the
date of grant, the exercise price and the term of an option are specified in the
1992 Director Plan. In 1994, options to purchase 4,000 shares were granted under
the 1992 Option Plan and options to purchase 6,000 shares were granted under the
1992 Director Plan. There were no options granted under either plan in 1995.
Options to purchase 8,000 shares were granted under the 1992 Director Plan in
1996 and options to purchase 1,000 shares were granted under the 1992 Director
Plan in January 1997. As of March 14, 1997, there were 96,000 shares available
for the grant of options under the 1992 Option Plan and 3,000 shares under the
1992 Director Plan.
AGGREGATED OPTION EXERCISES IN 1996 AND OPTION VALUES AT DECEMBER 31, 1996
The following table sets forth information concerning each exercise of
stock options during the year ended December 31, 1996 by each of its executive
officers and the value of unexercised in-the-money options at December 31, 1996.
OPTION EXERCISES AND OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS AT
SHARES AT DECEMBER 31, 1996 DECEMBER 31, 1996
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
(#) ($) (#) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
J. Fellman Seinsheimer,
III....................... -- -- 7,000 -- 41,930 --
Phillip E. Apgar, C.P.A. ... -- -- 3,000 -- -0- --
</TABLE>
12
<PAGE> 15
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the Company's
cumulative total stockholder return on Common Stock with the cumulative total
return of the NASDAQ U.S. Market Index and the Dow Jones Property and Casualty
Insurance Industry Index for the five years ended December 31, 1996. The graph
assumes that the value of the investment in the Company's Common Stock and each
index was $100 at December 31, 1991 and that all dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, THE NASDAQ U.S. MARKET INDEX AND
THE DOW JONES PROPERTY AND CASUALTY INSURANCE INDUSTRY INDEX
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) AIFC NASDAQ U.S. DOW JONES P&C
<S> <C> <C> <C>
1991 100 100 100
1992 128 116 122
1993 279 134 123
1994 220 131 129
1995 222 184 182
1996 233 227 219
</TABLE>
PENSION PLAN
Effective January 1, 1988, American Indemnity established a
noncontributory, retirement plan (the "Plan") carried and funded through a group
annuity covering substantially all full-time employees over 21 years of age who
have more than one year of service. The Plan was amended January 1, 1992 to
comply with the Tax Reform Act that was effective January 1, 1989. Effective
January 1, 1996, the Plan was converted to a Cash Balance Plan and the Company
contributes for each participant 5% of such person's salary. In addition, the
Cash Balance Plan provides for 6% interest per annum on such cash balance.
Similar to the pre-1996 Plan, an annuity at retirement, which is based upon
stated plan factors, is available as an alternative to the lump sum payment of
the cash balance. The following table sets forth estimated cash balances and
estimated annuities at an assumed retirement age of 65 and assumed annual salary
growth of 4%.
13
<PAGE> 16
Projected Cash Balances
<TABLE>
<CAPTION>
SALARY AT JANUARY 1, 1996, OR HIRE DATE IF LATER
--------------------------------------------------------
$20,000 $40,000 $60,000 $80,000 $100,000
-------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Age at January 1, 1996, or
hire date if later
25.......................... $274,251 $548,502 $822,753 $1,097,004 $1,371,255
35.......................... 125,013 250,026 375,039 500,052 625,065
45.......................... 50,806 101,612 152,418 203,224 254,030
55.......................... 15,532 31,064 46,596 62,128 77,660
</TABLE>
Projected Annual Annuity
<TABLE>
<CAPTION>
SALARY AT JANUARY 1, 1996, OR HIRE DATE IF LATER
-------------------------------------------------------
$20,000 $40,000 $60,000 $80,000 $100,000
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Age at January 1, 1996, or
hire date if later
25.......................... $25,760 $51,520 $77,280 $103,040 $128,800
35.......................... 11,742 23,484 35,226 46,968 58,710
45.......................... 4,772 9,544 14,316 19,088 23,860
55.......................... 1,459 2,918 4,377 5,836 7,295
</TABLE>
The benefits under the Cash Balance Plan would be supplemented by the
benefits, if any, from the Plan as in effect prior to January 1, 1996 and any
benefit which was earned under previous plans prior to January 1, 1988. The
compensation covered by the Plan includes all salary costs, excluding bonuses,
for all employees who have reached the age of 21. Such compensation includes the
salaries set forth in the salary column of the Summary Compensation Table. Upon
retirement at an assumed retirement age of 65, the estimated annual and lump sum
benefit payable under the Cash Balance Plan would be approximately $14,000 and
$149,200, respectively, for J. Fellman Seinsheimer, III and approximately
$36,000 and $383,000, respectively, for Phillip E. Apgar. Mr. Seinsheimer, III
and Mr. Apgar are the only employees of the Company whose annual salaries exceed
the range of salaries reflected in the tables above.
KEY EXECUTIVE SEVERANCE AGREEMENTS
J. Fellman Seinsheimer, III, the President and Chief Executive Officer of
the Company and American Indemnity Company ("American Indemnity"), a subsidiary
of the Company, and one other key employee of American Indemnity have each
entered into a Key Executive Severance Agreement ("Executive Agreement") with
the Company and American Indemnity. Each officer's Executive Agreement is
effective as of February 7, 1983 and provides that if in the event that a third
person or group commences a tender or exchange offer, circulates a proxy to
stockholders, or takes other steps to effect a change in control of the Company,
such officer will not voluntarily leave the employ of the Company or American
Indemnity, as the case may be, and will continue to perform the duties of his
office until such time as such third person has abandoned or terminated his
efforts to effect a change of control or until a change of control has occurred.
In the event that such officer's employment with the Company or any of its
subsidiaries terminates for any reason (either voluntary or involuntary, other
than as a consequence of his death, disability or willful misconduct) within two
years after a change of control of the Company, the Company or American
Indemnity, or both, will (i) pay to such officer as compensation for services
rendered to the Company and its subsidiaries a lump sum in cash equal to five
times the highest aggregate compensation paid or payable to such officer with
respect to any 12 consecutive month period during the three years ending with
the date of such officer's termination, and (ii) continue to provide such
officer, for a period of 15 years from the date of his termination, with such
life, accident, medical and long-term disability insurance plans of the Company
and its subsidiaries as provided to him prior to the change of control, unless
and until he obtains other employment that provides comparable coverage. For
purposes of each officer's Executive Agreement, a change of control of the
Company will result from the occurrence of either of the following events: (i) a
third person, including a "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, becomes the beneficial owner of
14
<PAGE> 17
shares of the Company having 25% or more of the total number of votes that may
be cast for the election of directors of the Company; or (ii) as the result of,
or in connection with, any cash tender or exchange offer, merger or other
business combination, sale of assets or contested election, or any combination
of the foregoing transactions, the persons who were directors of the Company
before any of such transactions shall cease to constitute a majority of the
Board of Directors of the Company or any successor to the Company. The Executive
Agreements also provide that, for a period of one year following any voluntary
termination (except one following a change in control of the Company) by an
officer who is a party to the agreement, that such officer will not participate
in any business which is in competition with the business of the Company and its
subsidiaries within a defined geographic area. Except during the pendency of or
following a change in control, the Board of Directors may determine that an
officer who is a party to an Executive Agreement is no longer a "key executive"
of the Company or American Indemnity and thereupon terminate such officer's
Executive Agreement. If the terms of the Executive Agreements had been activated
during the Company's 1996 fiscal year, the sum which would have been payable to
the executive officer named above is $1,032,000. Such payment, if required to be
made during 1996, would have had an adverse impact on the 1996 reported results
of operations; however, it would not have had an adverse effect on the overall
financial condition of the Company.
OTHER TRANSACTIONS
Harris L. Kempner, Jr., a director of the Company, is Chairman Emeritus of
the Board of United States National Bank, which serves as the principal banking
institution for the Company.
Henry W. Hope, a director of the Company, is a partner in the law firm of
Fulbright & Jaworski L.L.P., which serves as corporate and securities counsel to
the Company.
Eugene Hornstein, in his capacity as First Vice President of American
Indemnity, received compensation from such company in the amount of $88,100 as a
base salary, $2,635 in matching contributions made by the Company under the
Company's 401(k) Plan and $9,812 included as earnings in connection with the use
of Company automobiles for the fiscal year ending December 31, 1996. Mr.
Hornstein is the son-in-law of William C. Levin, M.D., a director of the
Company.
See Notes (1) and (3) under "Principal Stockholders" for information
concerning J. Fellman Seinsheimer, III's shared power to vote and dispose of
shares of Common Stock owned of record by his father, Mr. Seinsheimer, Jr., and
shares of Common Stock held by the Seinsheimer Trust.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Deloitte & Touche LLP, or a predecessor of such firm, has been auditing the
accounts of the Company since its inception and has been selected as the
Company's independent accountants for the current year. A representative of
Deloitte & Touche LLP is expected to be available at the Annual Meeting of
Stockholders to respond to appropriate questions and will be permitted to make a
statement if such representative desires to do so.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than 10% of a registered class
of the Company's equity securities to file Form 3, Form 4 and Form 5 reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than 10% stockholders are required by the
regulation to furnish the Company with copies of all Section 16(a) reports they
file.
To the Company's knowledge and except as set forth below, based solely on a
review of Forms 3 and 4, and amendments thereto furnished to the Company during
its most recent fiscal year and Forms 5 and amendments thereto furnished to the
Company with respect to its most recent fiscal year, and written
15
<PAGE> 18
representations from reporting persons that no Form 5 was required, all Section
16(a) filing requirements were complied with. Form 4s with respect to two
transactions for William C. Levin, M.D. and one transaction for J. Fellman
Seinsheimer, Jr. were not timely filed. Such transactions relate to dispositions
of shares deemed beneficially owned by such persons. Form 4s for each person
were sent by certified mail prior to the filing deadline for such forms, but
were not received by the Securities and Exchange Commission until after such
date.
PROPOSALS FOR NEXT ANNUAL MEETING
Any proposals of holders of Common Stock intended to be presented at the
annual meeting of stockholders of the Company to be held in 1998 must be
received by the Company at P.O. Box 8985, Wilmington, Delaware 19899-8985, no
later than November 28, 1997, in order to be included in the proxy statement and
form of proxy relating to that meeting.
GENERAL
Management of the Company does not intend to present any other items of
business and knows of no other items of business that are likely to be brought
before the meeting, except those set forth in the attached Notice of Annual
Meeting of Stockholders. However, if any other matter should properly come
before the meeting, the persons named in the enclosed proxy will have the
discretionary authority to vote such proxy in accordance with their best
judgment on such matters.
This solicitation is made on behalf of the Board of Directors of the
Company. The cost of solicitation of proxies in the accompanying form will be
paid by the Company. In addition to solicitation by use of mails, certain
directors, officers and employees may solicit the return of proxies by
telephone, telegram or personal interviews. The Company will also request banks,
brokers and other custodians, nominees and fiduciaries to send proxy materials
to the beneficial owners of shares of the Common Stock, and upon request, they
will be reimbursed by the Company for postage and clerical expenses.
HELEN K. LOHEC
Secretary
March 27, 1997
16
<PAGE> 19
APPENDIX A
AMERICAN INDEMNITY FINANCIAL CORPORATION
1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. PURPOSE. The 1997 Non-Employee Director Stock Option Plan (the "Plan")
of American Indemnity Financial Corporation, a Delaware corporation (the
"Company"), is for the benefit of members of the boards of directors of the
Company and its subsidiaries who, at the time of their service, are not
employees of the Company or its subsidiaries ("Non-Employee Directors"), but are
persons who have made or are expected to make a significant contribution to the
continued growth of the Company or its subsidiaries by providing them with an
additional incentive through an increase in their proprietary interest in the
success of the Company -- thereby encouraging them to continue in their present
capacity.
2. ADMINISTRATION. The Plan shall be administered by a committee (the
"Committee") to be appointed by the board of directors of the Company (the
"Board of Directors"). The Committee shall consist of one or more members who
are employees of the Company and who have not been eligible to participate under
the Plan for a period of at least one year prior to being appointed to the
Committee. The Board of Directors of the Company shall have the power from time
to time to add or remove members of the Committee, and to fill vacancies arising
for any reason. The Committee shall designate a chairman from among its members,
who shall preside at all of its meetings, and shall designate a secretary,
without regard to whether that person is a member of the Committee, who shall
keep the minutes of the proceedings and all records, documents, and data
pertaining to its administration of the Plan. Meetings shall be held at any time
and place as it shall choose. A majority of the members of the Committee shall
constitute a quorum for the transaction of business. The vote of a majority of
those members present at any meeting shall decide any question brought before
that meeting. In addition, the Committee may take any action otherwise proper
under the Plan by the affirmative vote, taken without a meeting, of a majority
of its members. No member of the Committee shall be liable for any act or
omission of any other member of the Committee or for any act or omission on his
own part, including but not limited to the exercise of any power or discretion
given to him under the Plan, except those resulting from his own gross
negligence or willful misconduct. The Committee shall have no discretion in the
selection of Non-Employee Directors to whom Options are to be granted, the
number of shares subject to an Option, the exercise price of the Option and the
term of the Option. All other questions of interpretation and application of the
Plan, or as to options granted under it (the "Options"), shall be subject to the
determination of a majority of the Committee. The Committee in exercising any
power or authority granted under this Plan or in making any determination under
this Plan shall perform or refrain from performing those acts using its sole
discretion and judgment. Any decision made by the Committee or any refraining to
act or any act taken by the Committee in good faith shall be final and binding
on all parties. The Committee's decision shall never be subject to de novo
review.
3. OPTION SHARES. The stock subject to the Options and other provisions of
the Plan shall be shares of the Company's Common Stock, $3.33 1/3 par value (the
"Common Stock"). The total amount of the Common Stock with respect to which
Options may be granted shall not exceed in the aggregate 25,000 shares. The
class and aggregate number of shares which may be subject to the Options granted
under this Plan shall be subject to adjustment under Section 16. The shares may
be treasury shares or authorized but unissued shares.
In the event that an outstanding Option shall expire or terminate for any
reason, the shares of Common Stock allocable to the unexercised portion of that
Option may again be subject to an Option under the Plan.
4. GRANT OF OPTIONS. During the term of this Plan if there is a sufficient
number of shares of Common Stock available, there shall be granted an Option for
1,000 shares of Common Stock: (a) to each individual who is newly elected as a
Non-Employee Director on the day of his initial election and (b) to each Non-
Employee Director who has previously received an Option under this Plan or the
American Indemnity Financial Corporation 1992 Non-Employee Director Stock Option
Plan on January 2, 1998, and every other January 2 thereafter if it is a
business day, or if it is not, then on the next business day if the individual
is a Non-Employee Director on that date. If the aggregate shares authorized for
this Plan become subject to an adjustment under Section 16, then the number of
shares which is the subject of each grant after that date will
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<PAGE> 20
be subject to the same adjustment. If there are shares available but in
insufficient numbers to permit all grants required on a particular date of grant
to a class of Non-Employee Directors, then options shall be granted in an equal
whole number to each Non-Employee Director of the class which will use the
maximum shares available without issuing an Option in an unequal amount or for a
fractional share.
5. ELIGIBILITY. The individuals who shall be eligible to participate in the
Plan shall be those individuals who are a member of the board of directors of
the Company or of a subsidiary who, at the time of service, are not employees of
any of them. No individual shall be eligible to receive an Option under the Plan
while that individual is a member of the Committee.
6. OPTION PRICE. The price at which shares may be purchased pursuant to an
Option granted under this Plan (the "Option Price") shall be its fair market
value on the date the Option is granted. The fair market value of a share of
Common Stock shall be the closing sale price of a share of Common Stock on that
date as reported by the principal national securities exchange on which the
Common Stock is listed if the Common Stock is listed on a national securities
exchange, or the average of the bid and asked price of a share of Common Stock
on that date as reported in the NASDAQ listing if the Common Stock is not listed
on a national securities exchange. If no closing price or quotes are reported on
that date, the fair market value of a share of Common Stock shall be the closing
sale price of a share of Common Stock on the next preceding date that a share of
Common Stock is reported by the principal national securities exchange on which
the Common Stock is listed if the Common Stock is listed on a national
securities exchange, or the average of the bid and asked price of a share of
Common Stock on that date as reported in the NASDAQ listing if the Common Stock
is not listed on a national securities exchange.
7. DURATION OF OPTIONS. Each Option granted shall be exercisable for a
period of 10 years commencing from the date the Option is granted.
8. AMOUNT EXERCISABLE. Each Option granted may be exercised, so long as it
is valid and outstanding, from time to time in part or as a whole, after the
expiration of six months following the date of grant.
9. EXERCISE OF OPTIONS. An optionee may exercise an Option by delivering to
the Company a written notice stating (a) that he wishes to exercise the Option
on the date the notice is delivered, (b) the number of shares of stock with
respect to which the Option is to be exercised, (c) the address to which the
certificate representing the shares are to be mailed, and (d) his social
security number. In order to be effective, written notice shall be accompanied
by payment of the Option Price of the shares and payment of any amount necessary
to satisfy any withholding tax liability that may result from the exercise of
the Option.
Normally, each payment shall be made by cashier's check drawn on a national
banking association and payable to the order of the Company in United States
currency.
However, if, at the time of receipt by the Company of the notice, (a) the
Company has unrestricted surplus in an amount not less than the Option Price of
the shares, (b) all accrued cumulative preferential dividends and other current
preferential dividends on all outstanding shares of preferred stock of the
Company, if any, have been fully paid, (c) the acquisition by the Company of its
own shares of stock for the purpose of enabling the optionee to exercise the
Option is permitted by applicable law and without any vote or consent of any
stockholder of the Company, and (d) there has been adopted a resolution of the
Board of Directors, which remains effective, authorizing the acquisition by the
Company of its own shares for that purpose, then the optionee may deliver to the
Company, in payment of the Option Price of the shares with respect to which the
Option is exercised, certificates registered in the name the optionee that
represent a number of shares of stock legally and beneficially owned by him
(free of all liens, claims and encumbrances of every kind) and having a fair
market value on the date of receipt by the Company of the notice that is not
greater than the Option Price of the shares with respect to which the Option is
to be exercised. The certificates must be accompanied by stock powers duly
endorsed in blank by the record holder of the shares represented by the
certificates, with the signature guaranteed by a national banking association
(or, in lieu of certificates, other arrangements for the transfer of those
shares to the Company which are satisfactory to the Company). If the Option
Price of the shares with respect to which the Option is to be exercised exceeds
the fair market value, the optionee must also deliver a cashier's check drawn on
a national banking association and payable to the order of the
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<PAGE> 21
Company in an amount, in United States currency, equal to the amount of the
excess plus the amount of money necessary to satisfy any withholding tax
liability that may result from the exercise of the Option.
In any event, the Committee, in its sole discretion, may refuse to accept
shares in payment of the Option Price of the shares with respect to which the
Option is to be exercised. In that event, any certificates representing shares
that were received by the Company with the notice shall be returned to the
optionee, together with a notice by the Company to the optionee of the refusal
of the Committee to accept the shares. If, at the expiration of seven business
days after the delivery to the optionee of the notice, the optionee has not
delivered to the Company a cashier's check drawn on a national banking
association, payable to the order of the Company, in an amount in United States
currency, equal to the amount for which the shares were to have been payment,
the notice from the optionee to the Company shall be ineffective to exercise the
Option.
The Company, with the approval of the Board of Directors may, at the
request of the optionee, retain shares of Common Stock which would otherwise be
issued upon exercise of an Option to satisfy any withholding tax liability that
may result from the exercise of the Option. The shares shall be valued for this
purpose at their fair market value on the date of the exercise of the Option.
As promptly as practicable after receipt of written notification and
payment, the Company shall deliver to the optionee certificates for the number
of shares with respect to which the Option has been exercised less any shares
retained to pay any withholding tax, issued in the optionee's name. Delivery
shall be deemed effected when a stock transfer agent of the Company shall have
deposited the certificates in the United States mail, addressed to the optionee,
at the address specified under this Section.
10. TRANSFERABILITY OF OPTIONS. Options shall not be transferable by the
optionee except by will or under the laws of descent and distribution, and shall
be exercisable, during his lifetime, only by him.
11. TERMINATION OF POSITION OR DEATH OF OPTIONEE. Except as may be
otherwise expressly set out in this Plan, Options shall normally terminate on
the earlier of the date of the expiration of the Option or upon severance of
that relationship between the Company and the optionee which made the individual
eligible to receive an Option under this Plan, without regard for the reason for
severance. But, if before the expiration of the Option, the optionee shall be
retired in good standing from the board of directors of the Company or its
subsidiaries, the Option shall terminate on the earlier of the date of
expiration of the Option or one day less than three months after the date of
retirement. In addition, if the optionee shall die while serving upon the board
of directors of the Company or its subsidiaries or during the three month period
after retirement in good standing and before the date of expiration of the
Option, the Option shall terminate on the earlier of the date of expiration or
one year following the date of death. After the death of the optionee, his
executors, administrators or any person or persons to whom his Option may be
transferred by will or by the laws of descent and distribution, shall have the
right, at any time prior to its termination, to exercise the Option to the
extent the optionee could have exercised it had he lived and remained on the
board of directors of the Company or its subsidiaries.
12. FORFEITURES. Notwithstanding any other provision of this Plan, if the
Committee finds by a majority vote, that the optionee, before or after
termination of his capacity as a Non-Employee Director of the Company or any
subsidiary corporation (as used in this Section, the "Company and (or) its
Affiliates"), committed fraud, embezzlement, theft, commission of felony, or
proven dishonesty in the course of his advisory relationship to the Company and
its Affiliates which conduct damaged the Company or its Affiliates, or for
disclosing trade secrets of the Company or its Affiliates, then any outstanding
options which have not been exercised by optionee shall be forfeited. The
decision of the Committee will be final. In order to provide the Company with an
opportunity to enforce this Section, an Option may not be exercised if the
Committee notifies the stock transfer agent that a forbidden action has been
raised for its determination, until it has made a decision favorable to the
optionee.
13. REQUIREMENTS OF LAW. The Company shall not be required to sell or issue
any shares under any Option if issuing the shares shall constitute a violation
by the optionee or the Company of any provisions of any law or regulation of any
governmental authority. Each Option granted under this Plan shall be subject to
the requirements that, if at any time the Company or the Committee shall
determine that the listing,
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<PAGE> 22
registration or qualification of the shares upon any securities exchange or
under any state or federal law of the United States or of any other country or
governmental subdivision, or the consent or approval of any governmental
regulatory body, or investment or other representations, are necessary or
desirable in connection with the issue or purchase of shares subject to an
Option, that Option shall not be exercised in whole or in part unless the
listing, registration, qualification, consent, approval or representations shall
have been effected or obtained free of any conditions not acceptable to the
Company. Any determination in this connection by the Committee shall be final.
In the event the shares issuable on exercise of an Option are not registered
under the Securities Act of 1933, as amended (the "Act"), the Company may
imprint on the certificate for those shares the following legend or any other
legend which counsel for the Company considers necessary or advisable to comply
with the Act or other applicable state or federal securities laws or
regulations:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities laws of
any state and may not be sold or transferred except upon registration or
upon receipt by the Corporation of an opinion of counsel satisfactory to
the Corporation, in form and substance satisfactory to the Corporation,
that registration is not required for a sale or transfer."
The Company may, but shall in no event be obligated to, register any securities
covered by this Plan under the Act (as now in effect or as later amended) and,
in the event any shares are registered, the Company may remove any legend on
certificates representing those shares. The Company shall not be obligated to
take any other affirmative action in order to cause the exercise of an Option or
the issuance of shares under the Option to comply with any law or regulation or
any governmental authority.
14. NO RIGHTS AS STOCKHOLDER. No optionee shall have rights as a
stockholder with respect to shares covered by his Option until the date a stock
certificate is issued for the shares. Except as provided in Section 16, no
adjustment for dividends or other matters shall be made if the record date is
prior to the date the certificate is issued.
15. NO OBLIGATION TO RETAIN OPTIONEE. The granting of any Option shall not
impose upon the Company or any of its subsidiaries any obligation to retain or
continue to retain any optionee in his capacity as a Non-Employee Director. The
right of the Company, the directors or the stockholders of the Company or of any
subsidiary of the Company to terminate any optionee shall not be diminished or
affected by reason of the fact that one or more Options have been or will be
granted to him.
16. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights of the Common Stock, or the dissolution
or liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of shares of the Common Stock outstanding, without
receiving compensation for it in money, services or property, then (a) the
number, class and per share price of shares of stock subject to outstanding
Options under this Plan shall be appropriately adjusted in a manner as to
entitle an optionee to receive upon exercise of an Option, for the same
aggregate cash consideration, the same total number and class or classes of
shares as he would have received had he exercised his Option in full immediately
prior to the event requiring the adjustment; and (b) the number and class of
shares then reserved for issuance under the Plan shall be adjusted by
substituting for the total number and class of shares of stock then reserved for
the number and class or classes of shares of stock that would have been received
by the owner of an equal number of outstanding shares of Common Stock as the
result of the event requiring the adjustment.
If the Company merges or consolidates with another corporation, whether or
not the Company is a surviving corporation, or if the Company is liquidated or
sells or otherwise disposes of substantially all its assets while unexercised
Options remain outstanding under the Plan, (a) subject to the provisions of
clause
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<PAGE> 23
(c) below, after the effective date of the merger, consolidation, liquidation,
sale or other disposition, as the case may be, each holder of an outstanding
Option shall be entitled, upon exercise of an Option, to receive, in lieu of
shares of Common Stock, the number and class or classes of shares of stock or
other securities or property to which the holder would have been entitled if,
immediately prior to the merger, consolidation, liquidation, sale or other
disposition, the holder had been the holder of record of a number of shares of
Common Stock equal to the number of shares as to which the Option may be
exercised; (b) the Board of Directors may waive any limitations set out in or
imposed pursuant to this Plan so that all Options, from and after a date prior
to the effective date of the merger, consolidation, liquidation, sale or other
disposition, as the case may be, specified by the Board of Directors, shall be
exercisable in full; and (c) all outstanding Options may be canceled by the
Board of Directors as of the effective date of any the merger, consolidation,
liquidation, sale or other disposition.
Except as expressly provided before in this Plan, the issue by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe for shares, or upon
conversion of shares or obligations of the Company convertible into shares or
other securities, shall not affect, and no adjustment by reason of it shall be
made with respect to, the number or price of shares of Common Stock then subject
to outstanding Options.
17. AMENDMENT OR TERMINATION OF PLAN. The Board of Directors may modify,
revise or terminate this Plan at any time and from time to time. However,
without the further approval of the holders of at least a majority of the
outstanding shares of voting stock, or if the provisions of the corporate
charter, by-laws or applicable state law prescribe a greater degree of
stockholder approval for this action, without the degree of stockholder approval
thus required, the Board of Directors may not (a) change the aggregate number of
shares which may be issued under Options pursuant to the provisions of this
Plan; (b) reduce the Option Price permitted for options; (c) change the class of
persons eligible to receive options; (d) extend the term during which an Option
may be exercised or the termination date of the Plan; or (e) materially increase
any other benefits accruing to the Non-Employee Directors under the Plan or
materially modify the requirements as to eligibility for participation in the
Plan unless the Board of Directors shall have obtained an opinion of legal
counsel to the effect that stockholder approval of the amendment is not required
by law or the applicable rules and regulations of, or any agreement with, any
national security exchange on which the Common Stock is listed or if the Common
Stock is not listed, the rules and regulations of, or any agreement with, the
National Association of Securities Dealers, Inc., or in order to make available
to the optionee with respect to any Option granted under the Plan, the benefits
of Rule 16b-3 of the Rules and Regulations under the Securities Exchange Act of
1934 or any similar or successor rule. In addition, the terms of the Plan
relating to the number of shares that may be subject to an Option, the times at
which Options are to be granted, and the means by which the Option Price for the
Options granted is to be determined shall not be amended more than once every
six months, other than to comport with the changes in the Internal Revenue Code
of 1986, the Employee Retirement Income Security Act or the rules under either
of those laws. All Options granted under this Plan shall be subject to the terms
and provisions of this Plan and any amendment, modification or revision of this
Plan shall be deemed to amend, modify or revise all Options outstanding under
this Plan at the time of the amendment, modification or revision. In the event
this Plan is terminated by action of the Board of Directors, all Options
outstanding under this Plan may also be terminated by such action.
18. WRITTEN AGREEMENT. Each Option granted under this Plan shall be
embodied in a written option agreement, which shall be subject to the terms and
conditions prescribed above, and shall be signed by the optionee and by the
appropriate officer of the Company for and in the name and on behalf of the
Company. Each option agreement shall contain any other provisions that the
Committee in its discretion shall deem advisable if they do not conflict with
the terms of this Plan.
19. INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS. The
Company will, to the fullest extent permitted by law, indemnify, defend and hold
harmless any person who at any time is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding
(whether civil, criminal, administrative or investigative) in any way relating
to or arising out of this Plan or any Option or Options granted under it by
reason of the fact that that person is or was at any time a director of the
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<PAGE> 24
Company or a member of the Committee against judgments, fines, penalties,
settlements and reasonable expenses (including attorneys' fees) actually
incurred by that person in connection with the action, suit or proceeding. This
right of indemnification will inure to the benefit of the heirs, executors and
administrators of each person to be protected and is in addition to all other
rights to which that person may be entitled by virtue of the certificate of
incorporation or by-laws of the Company or as a matter of law, contract or
otherwise. Nothing in this Section shall be construed to limit or otherwise
affect any right to indemnification, or payment of expenses, or any provisions
limiting the liability of any officer or director or any member of the
Committee, provided by law, the certificate of incorporation or by-laws of the
Company or otherwise.
20. EFFECTIVE DATE OF PLAN. The Plan shall become effective and shall be
deemed to have been adopted on January 22, 1997, if at the first annual meeting
of the stockholders of the Company following such date it is approved by the
holders of at least a majority of the outstanding shares of voting stock of the
Company voting in person or by proxy, or if the provisions of the certificate of
incorporation, by-laws or applicable state law prescribe a greater degree of
stockholder approval for this action, the approval by the holders of that
percentage at such annual meeting of stockholders. No Options shall be granted
pursuant to the Plan after January 22, 2007.
A-6
<PAGE> 25
AMERICAN INDEMNITY FINANCIAL CORPORATION
P.O. BOX 8985 o WILMINGTON, DELAWARE 19899-8985
THIS PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF STOCKHOLDERS ON APRIL 28, 1997
THE UNDERSIGNED hereby appoints J. Fellman Seinsheimer, III and Phillip
E. Apgar, or either of them, the attorneys and proxies of the undersigned, with
full power of substitution, for the Annual Meeting of Stockholders of American
Indemnity Financial Corporation to be held at 10:00 a.m. on Monday, April 28,
1997, in the Board of Directors Room of the United States National Bank of
Galveston, 2201 Market Street, Galveston, Texas, or at any adjournment thereof,
and to vote at such meeting the shares of Common Stock of the Company held of
record by the undersigned on the record date for such meeting.
(1) [ ] FOR the election (except as indicated to the contrary below) of
Fred C. Burns, Harris L. Kempner, Jr. and William C. Levin, M.D.
as Class III directors. TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, WRITE THE NOMINEE'S NAME IN THE SPACE
PROVIDED BELOW:
___________________________________________________________________
[ ] Authority is hereby WITHHELD to vote for each of the nominees
listed above.
(2) Proposal to approve and adopt the Company's 1997 Non-Employee
Director Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) [ ] In their discretion on such other matters as may properly come
before the meeting or any adjournment thereof.
Each of the above matters are more particularly described in the
accompanying Proxy Statement dated March 27, 1997, relating to such meeting.
<PAGE> 26
PLEASE MARK, SIGN, DATE AND RETURN IMMEDIATELY.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NOT OTHERWISE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE LISTED NOMINEES AND FOR THE
APPROVAL OF THE PROPOSALS LISTED.
AS NOTED IN THE ACCOMPANYING PROXY STATEMENT, RECEIPT OF WHICH IS
HEREBY ACKNOWLEDGED, IF ANY OF THE LISTED NOMINEES BECOMES UNAVAILABLE FOR ANY
REASON AND AUTHORITY TO VOTE FOR ELECTION OF DIRECTORS IS NOT WITHHELD, THIS
PROXY WILL BE VOTED FOR ANOTHER NOMINEE, OR OTHER NOMINEES, TO BE SELECTED BY
THE BOARD OF DIRECTORS.
Dated _______________________. 1997
___________________________________
___________________________________
(Signature of Stockholder(s)
Your signature should correspond
with your name as it appears hereon.
Joint owners should each sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please set forth your full title as
it appears hereon.
PLEASE MARK, SIGN, DATE AND RETURN IMMEDIATELY.
