<PAGE>
<PAGE>
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 Section 240.14a-11(c) or Section 240.14a-12
INDEPENDENCE HOLDING COMPANY
................................................................................
(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):
[ ] $125 per Exchange Act Rules 0-ll(c)(l)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
.............................................................................
[x] 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.:
............................................................................
3) Filing Party:
............................................................................
4) Date Filed:
............................................................................
<PAGE>
<PAGE>
INDEPENDENCE HOLDING COMPANY
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 27, 1996
------------------------
To the Stockholders of
INDEPENDENCE HOLDING COMPANY:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
INDEPENDENCE HOLDING COMPANY (the 'Company') will be held on June 27, 1996 at
9:30 A.M., local time, at the Meeting Room, Greenwich Public Library, 101 West
Putnam Avenue, Greenwich, Connecticut for the following purposes:
1. To elect eight directors of the Company;
2. To consider and act upon a proposal of the Board of Directors of
the Company to amend the Company's Restated Certificate of Incorporation,
as amended, and authorize management to (i) effect a reverse stock split in
which each two shares of Common Stock of the Company, par value $1.00 per
share, whether issued and outstanding or held in treasury, will be
reclassified and changed into one share of Common Stock of the Company, par
value $1.00 per share; and (ii) reduce the number of authorized shares of
Common Stock of the Company from 50,000,000 shares to 15,000,000 shares,
and to reduce the number of authorized shares of Preferred Stock of the
Company, par value $1.00 per share, from 20,000,000 shares to 100,000
shares;
3. To vote upon a proposal to ratify the selection of independent
auditors; and
4. To transact such other business as may properly come before the
meeting and any adjournment thereof.
Only stockholders of record at the close of business on May 17, 1996 are
entitled to notice of, and to vote at, the Annual Meeting of Stockholders.
Your attention is directed to the Proxy Statement submitted with this
notice. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE DATE AND
SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
IN THE EVENT A STOCKHOLDER DECIDES TO ATTEND THE MEETING, SUCH STOCKHOLDER MAY
REVOKE SUCH PROXY AND VOTE SUCH SHARES IN PERSON. No postage need be affixed to
the enclosed envelope if mailed in the United States.
By Order of the Board of Directors
DAVID T. KETTIG
Secretary
June 7, 1996
<PAGE>
<PAGE>
INDEPENDENCE HOLDING COMPANY
96 CUMMINGS POINT ROAD
STAMFORD, CT 06902
203-358-8000
--------------------------
PROXY STATEMENT
--------------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Independence Holding Company (the 'Company') of
Proxies to be used at the Annual Meeting of Stockholders to be held at the
Meeting Room, Greenwich Public Library, 101 West Putnam Avenue, Greenwich,
Connecticut on June 27, 1996 at 9:30 A.M., local time. In addition to
solicitation of Proxies by mail, the directors, officers and employees of the
Company may solicit Proxies personally, by telephone, telefax or telegram. The
expense of all such solicitations, including the cost of preparing, printing and
mailing this Proxy Statement, will be borne by the Company. The Company will,
upon request, reimburse brokers, banks or other persons for their reasonable
out-of-pocket expenses in forwarding proxy material to beneficial owners of the
Company's shares. This Proxy Statement and the accompanying Proxy and the
Company's Annual Report to Shareholders, which contains financial statements for
the year ended December 31, 1995, will first be mailed to stockholders of the
Company on or about June 7, 1996.
If the enclosed form of Proxy is executed and returned, it will be voted as
directed by the stockholder. If no directions are given, Proxies will be voted
(i) for election as directors of all of the nominees specified therein, (ii) in
favor of the proposal (the 'Reverse Stock Split Proposal') to amend the
Company's Restated Certificate of Incorporation, as amended, to effect a
one-for-two reverse Common Stock split and to reduce the number of authorized
shares of the Company from 70,000,000 to 15,100,000 and (iii) for the
ratification of the selection of KPMG Peat Marwick LLP ('Peat Marwick') as
independent auditors for the calendar year 1996. A Proxy may be revoked at any
time, insofar as the authority granted thereby has not been exercised at the
Annual Meeting of Stockholders, by filing with the Secretary of the Company a
written revocation or a duly executed Proxy bearing a later date. Any
stockholder present at the meeting may vote personally on all matters brought
before the meeting and, in that event, such stockholder's Proxy will not be used
at the meeting by holders of the Proxy.
Only stockholders of record as of the close of business on May 17, 1996
will be entitled to vote at the meeting. On that date, the Company had
outstanding and entitled to one vote per share, 14,864,549 shares of Common
Stock, par value $1.00 per share ('Common Stock'). An additional 4,377,900
shares of Common Stock are held by subsidiaries of the Company and are not
entitled to vote. A majority of the outstanding shares will constitute a quorum
at the meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
Abstentions are counted in tabulations of the votes cast on proposals presented
to stockholders, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved.
If no contrary instruction is indicated, shares represented by properly
executed Proxies in the accompanying form of proxy will be voted by the persons
designated in the printed portion thereof (i) FOR the election of the nominees
named below to serve as directors for a one-year term, (ii) FOR the Reverse
Stock Split Proposal, and (iii) and FOR the ratification of the selection of
Peat Marwick as
<PAGE>
<PAGE>
independent auditors for the calendar year 1996. Each director must be elected
by the affirmative vote of a plurality of the votes cast at the meeting by the
holders of shares of Common Stock represented in person or by Proxy. Approval of
the Reverse Stock Split Proposal requires the affirmative vote of holders of a
majority of the outstanding shares of Common Stock. Approval of Peat Marwick as
independent auditors requires the affirmative vote of a majority of the shares
of Common Stock present or represented at the meeting.
Management does not know of any other matters to be brought before the
meeting at this time; however, if any other matters are brought before the
meeting, the proxy holder shall vote in his discretion with respect to the
matter. In the event a stockholder specifies a different choice on the Proxy,
such stockholder's shares will be voted or withheld in accordance with the
specifications so made. Should any nominee for director named herein become
unable or unwilling to accept nomination or election, it is intended that the
persons acting under proxy will vote for the election of such other person as
the Board of Directors of the Company may recommend unless the number of
directors is reduced by the Board of Directors. The Company has no reason to
believe that any nominee will be unable or unwilling to serve if elected to
office.
PRINCIPAL STOCKHOLDERS
Listed below are the number of shares of Common Stock beneficially owned as
of May 17, 1996 by the holders of more than 5% of the Common Stock of the
Company.
<TABLE>
<CAPTION>
COMMON STOCK
------------
<S> <C>
Geneve Holdings, Inc.(1) ..................................................... 8,185,815
96 Cummings Point Road 55.1%
Stamford, Connecticut 06902
</TABLE>
- ------------
(1) According to (i) information disclosed in Amendment No. 33 to Schedule 13D
dated May 13, 1993 of Geneve Holdings, Inc. (together with its affiliates
also referred to herein as 'Geneve') supplemented by (ii) information
provided to the Company by Geneve in response to a Company questionnaire, a
group consisting of Geneve and certain of its affiliates are the beneficial
owners of 8,185,815 shares of Common Stock. As of December 31, 1995, Geneve
did not own any of the Company's share purchase warrants (the 'Warrants').
Mr. Edward Netter, Chairman and Chief Executive Officer and a director of
the Company, is an executive officer and a director of Geneve. Mr. Donald T.
Netter, an executive officer and a director of the Company, is an executive
officer of Geneve. Mr. Edward Netter and members of his family (including
Mr. Donald T. Netter) own more than 50% of the voting stock of Geneve.
Messrs. Edward Netter and Donald T. Netter disclaim beneficial ownership as
to the shares of Common Stock owned by Geneve.
------------------------
To the best knowledge of the Company, Geneve has sole investment and voting
power with respect to the shares listed above, and no other person or persons
acting in concert own beneficially more than 5% of the Common Stock.
The following table sets forth for each director of the Company, the Chief
Executive Officer and the four other most highly compensated executive officers
of the Company for the year ended December 31, 1995 (the 'Named Officers'), and
for all directors and executive officers of the Company as a group, information
regarding beneficial ownership of Common Stock as of May 17, 1996. None of
2
<PAGE>
<PAGE>
the directors, Named Officers or directors and executive officers as a group
owns beneficially any Warrants.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER CLASS
NAME OF SHARES ENTITLED TO VOTE
- ------------------------------------------------------------- --------- ----------------
<S> <C> <C>
Harold E. Johnson............................................ 21,000(1) *
Allan C. Kirkman............................................. 8,000(1) *
Steven B. Lapin.............................................. 237,000(2) 1.6%
Donald T. Netter............................................. (3) --
Edward Netter................................................ (3) --
Edward J. Scheider........................................... 151,473(1)(4) 1.0%
Roy T.K. Thung............................................... 191,500(5) 1.3%
F. Peter Zoch, III........................................... 2,000(6) *
David T. Kettig.............................................. 25,000(7) *
All directors and executive officers as a group (11
persons)................................................... 687,073(1)(2)(3)(4) 4.5%
(5)(6)(7)(8)
</TABLE>
- ------------
(1) Constitutes or includes 8,000 shares of Common Stock subject to options
granted to each such director of which, in each case, all are presently
exercisable.
(2) Includes 137,500 shares of Common Stock subject to options granted to Mr.
Lapin in April 1995, of which one-third are presently exercisable and the
balance will vest ratably in April 1997 and April 1998, and 98,500 shares of
Common Stock subject to options granted to Mr. Lapin in December 1995 which
will vest ratably in December 1996, 1997 and 1998.
(3) As described in the table relating to Principal Stockholders, Geneve and
certain of its affiliates are the beneficial owners of 8,185,815 shares of
Common Stock, which represents 55.1% of the outstanding Common Stock as of
May 17, 1996. Mr. Edward Netter, Chairman and Chief Executive Officer and a
director of the Company, is an executive officer and a director of Geneve.
Mr. Donald T. Netter, an executive officer and a director of the Company, is
an executive officer of Geneve. Mr. Edward Netter and members of his family
(including Mr. Donald T. Netter) own more than 50% of the voting stock of
Geneve. Messrs. Edward Netter and Donald T. Netter disclaim beneficial
ownership as to the shares of Common Stock owned by Geneve.
(4) Includes 67,000 shares of Common Stock owned by Mr. Scheider's wife, as to
which shares Mr. Scheider disclaims beneficial ownership.
(5) Includes 112,500 shares of Common Stock subject to options granted to Mr.
Thung in April 1995, of which one-third are presently exercisable and the
balance will vest ratably in April 1997 and April 1998, and 76,500 shares of
Common Stock subject to options granted to Mr. Thung in December 1995 which
will vest ratably in December 1996, 1997 and 1998.
(6) Constitutes 2,000 shares of Common Stock subject to options granted to Mr.
Zoch, all of which are presently exercisable.
(footnotes continued on next page)
3
<PAGE>
<PAGE>
(footnotes continued from previous page)
(7) Includes 25,000 shares of Common Stock subject to options granted to Mr.
Kettig in April 1995, of which one-third are presently exercisable and the
balance will vest ratably in April 1997 and April 1998.
(8) Includes 50,000 shares of Common Stock subject to options granted to two
executive officers, of which 20,000 are presently exercisable and the
balance will vest ratably in April 1997 and April 1998.
* Represents less than 1% of the outstanding Common Stock.
PROPOSAL 1
NOMINEES FOR ELECTION AS DIRECTORS
Eight directors will be elected at the meeting, each to hold office until
the next Annual Meeting of Stockholders and until such director's successor
shall be elected and shall qualify.
It is intended that shares represented by Proxies will be voted for the
election of the nominees named below. If at the time of the meeting any of the
nominees should be unwilling or unable to serve, the discretionary authority
provided in the Proxy will be exercised to vote for a substitute or substitutes,
as the Board of Directors recommends. The Board has no reason to believe that
any of the nominees will be unwilling or unable to serve as a director.
The persons named below have been nominated for election as directors. All
of such nominees presently serve as directors of the Company.
HAROLD E. JOHNSON, age 77
Director
Since November 1987, director of the Company; for more than five years
prior to retirement in 1983, Executive Vice President of The Continental
Corporation, a diversified insurance and financial holding company with
principal offices in New York, New York; since November 1993, director of Queens
County Bancorp, Inc., a banking holding company with principal offices in Queens
County, New York.
ALLAN C. KIRKMAN, age 52
Director
Since December 1980, director of the Company; for more than the past five
years, Executive Vice President of Mellon Bank, N.A., a national bank with
principal offices in Pittsburgh, Pennsylvania.
STEVEN B. LAPIN, age 50
President and Chief Operating Officer
Director
Since July 1991, director of the Company; since November 1993, President
and Chief Operating Officer of the Company; for more than two years prior to
November 1993, Executive Vice President -- Operations of the Company; since
October 1993, President and Chief Operating Officer of Geneve Corporation, a
private diversified holding company with principal offices in Stamford,
Connecticut, which is an affiliate of the Company ('Geneve'); for more than two
years prior to October 1993,
4
<PAGE>
<PAGE>
Executive Vice President and Chief Operating Officer of Geneve; for more than
the past five years, director of Geneve.
DONALD T. NETTER, age 34
Senior Vice President -- Investments
Director
Since November 1993, director of the Company; since January 1995, Senior
Vice President -- Investments of the Company; since February 1994, Senior Vice
President -- Investments of Geneve; from February 1992 to August 1993, Senior
Vice President and Treasurer of Damon Corp., a clinical laboratory testing
company with principal offices in Needham Heights, Massachusetts ('Damon'); for
more than one year prior to February 1992, Vice President of Damon; for more
than three years prior to August 1993, a director of Damon. Mr. Donald T. Netter
is the son of Mr. Edward Netter.
EDWARD NETTER, age 63
Chairman and Chief Executive Officer
Director
Since December 1980, director of the Company; for more than the past five
years, Chairman and Chief Executive Officer of the Company; from December 1990
to November 1993, President of the Company; for more than the past five years,
Chairman, Chief Executive Officer and director of Geneve.
EDWARD J. SCHEIDER, age 79
Director
Since November 1987, director of the Company and Chairman of the Audit
Committee; for more than five years prior to retirement in March 1995, Vice
President of Kidder, Peabody & Co., Inc., an investment banking and brokerage
firm with principal offices in New York, New York.
ROY T.K. THUNG, age 52
Executive Vice President,
Chief Financial Officer and Treasurer
Director
Since December 1990, director of the Company; since November 1993,
Executive Vice President, Chief Financial Officer and Treasurer of the Company;
from May 1990 to November 1993, Senior Vice President, Chief Financial Officer
and Treasurer of the Company; from June 1983 to December 1986, director of the
Company; since November 1993, Executive Vice President and Chief Financial
Officer of Geneve; for more than three years prior to November 1993, Senior Vice
President and Chief Financial Officer of Geneve.
F. PETER ZOCH, III, age 53
Director
Since December 1980, director of the Company; from December 1990 to June
1993, Vice Chairman of the Board of the Company; for more than the past five
years, Chairman of the Executive Committee of the Company; for more than two
years prior to July 1992, President and director of Geneve.
Between January 1, 1995 and December 31, 1995, the Board of Directors of
the Company met five times. In addition, the Audit Committee of the Board, which
exercises responsibility in respect of the
5
<PAGE>
<PAGE>
recommendation of the Company's independent public auditors, the review of such
auditor's audit and recommendations concerning internal controls, met three
times. The Audit Committee currently consists of Messrs. Scheider and Johnson.
Each director who has been nominated for election as a director attended at
least 75% of the Board meetings and meetings of Committees on which such
director served.
Directors of the Company who are not also officers of the Company receive a
monthly fee of $500 plus $400 for each Board or Committee meeting attended.
Directors who are officers of the Company do not receive compensation for
serving as directors of the Company.
Pursuant to the Company's 1988 Stock Incentive Plan, directors of the
Company who are not also employees of the Company or a subsidiary ('Independent
Directors') are each granted non-qualified stock options with respect to 1,000
shares of Common Stock at the first meeting of the Board of Directors following
each Annual Meeting of Stockholders of the Company, which stock options vest six
months after date of grant. Outstanding options granted at such 1995 Board
meeting fully vested on December 23, 1995, and have an exercise price of $3.156
per share.
EXECUTIVE OFFICERS
In addition to Messrs. Lapin, Donald T. Netter, Edward Netter and Thung,
listed above, who also serve as directors of the Company, set forth below are
each executive officer's name, age, all positions and offices held with the
Company, principal occupations and business experience during the past five
years. Officers are elected by the Board of Directors, each to serve until his
successor is elected and has qualified, or until his earlier resignation,
removal from office or death.
TERESA A. HERBERT, age 34
Vice President and Controller
Since October 1991, Vice President and Controller of the Company; for more
than one year prior thereto, Assistant Controller of the Company.
DAVID T. KETTIG, age 37
Vice President -- Legal and Secretary
Since March 1992, Vice President -- Legal and Secretary of the Company;
since March 1992, Vice President -- Legal and Secretary of Geneve; for more than
one year prior thereto, associate attorney practicing in the areas of corporate
and securities law with Battle Fowler, a law firm located in New York, New York.
BRIAN R. SCHLIER, age 41
Vice President -- Taxation
Since May 1991, Vice President -- Taxation of the Company; for more than
the past five years, Director of Taxation of Geneve.
6
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation paid by the Company and its
subsidiaries to the Named Officers for services rendered for the last three
fiscal years.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------- ----------------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION(1)
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- -------------------------- ---- ------- ------- ------------ ---------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edward Netter ............ 1995 251,159 -- -- -- -- -- 2,584
Chairman and Chief 1994 251,040 50,000 -- -- -- -- 2,653
Executive Officer 1993 291,000 50,000 -- -- -- -- 2,538
Steven B. Lapin .......... 1995 250,851 150,000 -- -- 236,000 -- 36,826
President and Chief 1994 249,990 150,000 -- -- -- -- 113,108
Operating Officer 1993 225,000 150,000 -- -- -- -- 90,260
Roy T.K. Thung ........... 1995 200,853 120,000 -- -- 189,000 -- 32,410
Executive Vice President 1994 200,000 120,000 -- -- -- -- 98,953
Chief Financial Officer, 1993 180,000 120,000 -- -- -- -- 78,965
and Treasurer
Donald T. Netter ......... 1995 142,021 91,338 -- -- -- -- 1,872
Senior Vice President --
Investments
David T. Kettig .......... 1995 103,775 20,416 -- -- 25,000 22,250 1,051
Vice President -- Legal 1994 99,455 23,332 -- -- -- -- (7,095)
and Secretary 1993 102,000 23,331 -- -- -- -- 10,152
</TABLE>
- ------------
(1) Amounts shown for 1993, 1994 and 1995 for all of the Named Officers include
the dollar value of premiums paid for term life insurance. In addition,
amounts shown for Messrs. Lapin and Thung include amounts accrued during
1993, 1994 and 1995 under Retirement Benefit Agreements with the Company
(described below under the heading 'Retirement Benefit Agreements'). Amounts
shown for Mr. Kettig also include the value of incentive units based on the
increase or decrease in book value per share of the Company's Common Stock
for each of 1993 and 1994; the value of such units were paid in full in
1995. The Named Officers also received compensation and benefits during
1993, 1994 and 1995 from Geneve and/or its affiliates (other than the
Company) for services rendered to such companies, which amounts are not
included in this table.
7
<PAGE>
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning grants of
stock options to the Named Officers who received grants during 1995.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS GRANT
- ------------------------------------------------------------------------------- DATE
(c) (d) (e) VALUE
(a) (b) % OF ---------
NUMBER OF TOTAL
SECURITIES OPTIONS (f)
UNDERLYING GRANTED TO EXERCISE GRANT
OPTIONS EMPLOYEES OR BASE DATE
GRANTED IN FISCAL PRICE EXPIRATION PRESENT
NAME (#) YEAR ($/SH) DATE VALUE$(1)
- ---------------------- ---------- ---------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Steven B. Lapin....... 137,500 23% 3.28 4/4/05 184,250
98,500 17% 3.84 12/29/05 132,975
Roy T.K. Thung........ 112,500 19% 3.28 4/4/05 150,750
76,500 13% 3.84 12/29/05 103,275
David T. Kettig....... 25,000 4% 3.28 4/4/05 33,500
</TABLE>
- ------------
(1) Present value determinations were made using the Black-Scholes model of
theoretical options pricing, and were based on the following assumptions:
(A) expected volatility is based on the three year period, calculated
weekly, preceding the date of grant; (B) the risk-free rate of return is
based on the 10 year U.S. Treasury Note yield to maturity as at the date of
grant; (C) dividend yield assumes that the current dividend rate paid on the
Common Stock continues unchanged until the expiration date of the options;
and (D) a three-year phased-in vesting period that averages two years. The
actual value a Named Officer receives is dependent on future stock market
conditions, and there can be no assurance that the amounts reflected in
column (f) of the Option Grants Table will actually be realized. No gain
would be realized by a Named Officer without appreciation in the market
value of the Common Stock, which would benefit all stockholders
commensurately.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information concerning stock options
of the Named Officers who had options at December 31, 1995. No options were
exercised in 1995 by the Named Officers.
<TABLE>
<CAPTION>
(d)
NUMBER OF (e)
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
(b) OPTIONS AT OPTIONS AT
SHARES (c) FY-END(#) FY-END($)
(a) ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- -------------------------------------------------------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Steven B. Lapin......................................... 0 0 0/236,000 0/64,625
Roy T.K. Thung.......................................... 0 0 0/189,000 0/52,875
David T. Kettig......................................... 0 0 0/25,000 0/11,750
</TABLE>
8
<PAGE>
<PAGE>
RETIREMENT BENEFIT AGREEMENTS
In 1991, the Company entered into retirement benefit agreements with
Messrs. Lapin and Thung pursuant to which they are entitled to receive cash
payments, based upon their salaries, at such time as they retire or otherwise
terminate their employment with the Company. Such payments are fully vested.
Assuming that such individuals' employment with the Company had terminated on
December 31, 1995, Messrs. Lapin and Thung would have been entitled to receive
approximately $430,196 and $394,226, respectively, which amounts increase each
year they remain employed by the Company until they attain age 62. Of such
amounts, $34,486 and $30,070, respectively, were accrued in 1995 for Messrs.
Lapin and Thung.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
Management's recommendations as to the form and level of compensation of
the Company's executive officers are overseen by and subject to the approval of
the Company's Board of Directors. The Board of Directors has not retained a
compensation consultant.
The Company's compensation policies seek to attract and retain key
executives necessary to the long-term success of the Company, to align
compensation with both annual and long-term strategic plans and goals and to
reward performance in the continued growth and success of the Company and in the
enhancement of shareholder values. In furtherance of these goals, the Company
has employed a combination of annual base salaries, which are set at levels
which management believes to be competitive with industry and regional pay
practices and economic conditions, and annual and longer term incentive
compensation, including options to purchase Common Stock.
In 1995, the Company granted 495,000 stock options to certain of its
executive officers, which represented a significant portion of such individuals'
total 1995 compensation. The options vest ratably over a three year period
commencing with the date of grant, are issued at the fair market value of the
Common Stock at the date of grant, and are exercisable for ten years. The
Company had not previously granted stock options to Messrs. Lapin or Thung. In
recognition of their significant interest in the Company through Geneve's
ownership of Common Stock, no stock options were issued to Mr. Edward Netter or
Mr. Donald Netter. The primary objective of issuing stock options is to provide
a financial reward tied to the future performance of the Common Stock. In making
stock option awards to the Company's executive officers, the Board of Directors
takes into account incentive compensation practices employed generally by
companies for executive officers, such individuals' contributions to the
Company's performance, their anticipated contributions to the Company's
achievement of its long-term goals, and their position and scope of
responsibilities.
Management recommends annually a bonus pool for the Company's employees
(including the executive officers) to be voted upon by the independent members
of the Board. For example, in determining the bonus pool for the 1993 through
1995 calendar years, the Board based its decision, in major part, on the
performance of the Company in the aggregate, including management's
accomplishments in enhancing the insurance group's capital position,
strategically planning the direction of the insurance group, improving the
Company's profitability and increasing shareholder values.
Specifically regarding the chief executive officer, Mr. Edward Netter, base
salary has been determined by considering Company and individual performance.
Mr. Netter's annual bonus payments are subject to approval by the independent
members of the Board of Directors. Although Mr. Netter's bonus is based on his
individual performance as chief executive officer, in determining such amount,
the
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Board at the same time takes into consideration Mr. Netter's significant
interest in the Company through his ownership of Geneve. Mr. Netter elected not
to receive a bonus in 1995.
MEMBERS OF THE BOARD OF DIRECTORS:
<TABLE>
<S> <C>
HAROLD E. JOHNSON EDWARD NETTER
ALLAN C. KIRKMAN EDWARD J. SCHEIDER
STEVEN B. LAPIN ROY T.K. THUNG
DONALD T. NETTER F. PETER ZOCH, III
</TABLE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the five year cumulative total
return of the Common Stock with that of the Nasdaq Stock Market (US) Index and
the Nasdaq Insurance Stocks Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG INDEPENDENCE HOLDING COMPANY, NASDAQ STOCK MARKET (U.S.) INDEX
AND NASDAQ INSURANCE STOCKS INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
<S> <C> <C> <C> <C> <C> <C>
NASDAQ STOCK MARKET (U.S.) INDEX 100 161 187 215 210 296
NASDAQ INSURANCE STOCKS 100 141 191 204 192 273
INDEPENDENCE HOLDING COMPANY 100 92 184 267 223 279
</TABLE>
* Assumes that dividends were reinvested and is based on a $100 investment on
December 31, 1990; indices data obtained from Center for Research in Security
Price (CRSP)
RELATED PARTY TRANSACTIONS
The Company and Geneve operate under cost-sharing arrangements pursuant to
which certain items are allocated between the companies. During 1995, the
Company paid to Geneve or accrued for payment thereto approximately $190,000
under such arrangements, and paid or accrued an additional approximately $48,000
for the first quarter of 1996. Geneve also provides the Company the use of
office space as its corporate headquarters for annual consideration of $262,500.
In addition, certain current or
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former directors, officers and/or employees of the Company or its subsidiaries,
who are also current or former directors, officers and/or employees of Geneve,
received compensation and benefits from Geneve for services rendered thereto
since January 1, 1995. The foregoing is subject to the approval of the Audit
Committee of the Board of Directors at least annually, and management of the
Company believes that the terms thereof are no less favorable than could be
obtained by the Company from unrelated parties on an arm's length basis.
At various times since January 1, 1995, certain securities transfers were
made between the Company and/or certain of its subsidiaries, on the one hand,
and Geneve, on the other hand, at fair market value. The Company has invested as
a limited partner in a partnership managed by affiliates of Geneve. Consistent
with the terms of the partnership agreement applicable to all limited partners,
the Company will pay an annual management fee of 1.25% of its beginning capital
account for each quarter, commencing April 1, 1996. If the partnership earns
more than a specified rate of return, an incentive allocation will also be
payable to such affiliates at the end of each year; however, such amount cannot
be determined at this time. Amounts paid in connection with such limited
partnership investment will be offset (in whole or in part) by a reduction in
overhead and salaries in the Company's cost-sharing arrangements with Geneve.
PROPOSAL 2
PROPOSAL TO AMEND ARTICLE V OF THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, TO
DECREASE THE NUMBER OF AUTHORIZED CAPITAL SHARES AND
TO EFFECT THE ONE-FOR-TWO REVERSE COMMON STOCK SPLIT
The Board of Directors believes that the current per share price of the
Common Stock has adversely affected its marketability, increased the amount and
percentage of transaction costs paid by individual stockholders, and negatively
impacted the Company's potential ability to raise capital by issuing additional
shares.
In an effort to remedy the foregoing, on May 24, 1996, the Board of
Directors of the Company approved, subject to the stockholder approval solicited
hereby, a proposal to effect a one-for-two reverse Common Stock split ('Reverse
Stock Split'). The proposed Reverse Stock Split, together with a proposal to
amend the Company's Restated Certificate of Incorporation, as amended (the
'Certificate'), to decrease the number of authorized shares of Common Stock from
50,000,000 to 15,000,000 and the number of shares of Preferred Stock, par value
$1.00 per share ('Preferred Stock'), from 20,000,000 to 100,000, is hereinafter
referred to as the 'Reverse Stock Split Proposal.'
THE COMPANY HAS BEEN ADVISED THAT GENEVE, WHICH OWNS IN EXCESS OF 55% OF
THE OUTSTANDING SHARES OF COMMON STOCK, INTENDS TO VOTE ITS SHARES IN FAVOR OF
PROPOSAL 2.
REASONS FOR THE REVERSE STOCK SPLIT PROPOSAL
The Board of Directors of the Company believes that the current per share
market price of the Common Stock impairs the acceptability of the Common Stock
to institutional investors and certain other members of the investing public.
Although certain investors may be attracted to low-priced stock because of the
greater trading volatility sometimes associated with such securities, many
investors view low-priced stock as unattractive or, as a matter of policy, will
not extend margin credit on stock trading
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at low prices. Many brokerage houses are reluctant to recommend lower-priced
stock to their clients or to hold it in their own portfolios. Further, a variety
of brokerage house policies and practices discourage individual brokers within
those firms from dealing in low-priced stock because of the time-consuming
procedures that make the handling of low-priced stock unattractive to brokerage
houses from an economic standpoint.
In addition, since the broker's commissions on low-priced stock generally
represent a higher percentage of the stock price than commissions on higher
priced stock, the current share price of the Common Stock can result in
individual stockholders paying transaction costs (commissions, markups or
markdowns) which are a higher percentage of their total share value than would
be the case if the share price were substantially higher. This factor is also
believed to limit the willingness of institutions to purchase the Common Stock
at its current market price, although there can be no assurance that
institutions would purchase Common Stock even if the Reverse Stock Split
Proposal is approved. If approved, the Reverse Stock Split may result in some
additional stockholders owning 'odd-lots' of less than 100 shares of Common
Stock. Brokerage commissions and other costs of transactions in odd-lots may be
higher, particularly on a per-share basis, than the cost of transactions in even
multiples of 100 shares.
The Board of Directors is hopeful that the decrease in the number of shares
of Common Stock outstanding as a consequence of the proposed Reverse Stock Split
and the resulting anticipated increased price level will encourage greater
interest in the Common Stock by the financial community and the investment
public and possibly promote greater liquidity for the Company's stockholders,
although it is possible that such liquidity could be affected adversely by the
reduced number of shares outstanding after the Reverse Stock Split. The proposed
Reverse Stock Split will increase proportionately the Company's earnings per
share and book value per share as of the Effective Date. Also, although any
increase in the market price of the Common Stock resulting from the Reverse
Stock Split may be proportionately less than the decrease in the number of
shares outstanding, the proposed Reverse Stock Split could result in a market
price for the shares that would be high enough to overcome the reluctance,
policies and practices of brokerage houses and investors referred to above and
to diminish the adverse impact of correspondingly high trading commissions on
the market for the shares.
There can be no assurances, however, that all of the foregoing effects will
occur or that the market price of the Common Stock immediately after
implementation of the proposed Reverse Stock Split will be maintained for any
period of time, that such market price will be two times the market price before
the proposed Reverse Stock Split, or that such market price will exceed or
remain in excess of the current market price.
Reference is made to the Company's Annual Report to Shareholders, which
will first be mailed to stockholders of the Company on or about June 7, 1996,
for the quarterly high and low sales prices of the Common Stock for the years
1994 and 1995. The high and low sales prices for the Common Stock were $4 and
$3 5/8, respectively, for the quarter ended March 31, 1996, and $4 11/16 and
$4 1/2, respectively, on May 24, 1996, the last trading day before announcement
of the Reverse Stock Split Proposal.
As a consequence of the reduction in the number of authorized shares of
Common Stock and Preferred Stock, the Company's franchise taxes will be reduced
because the Delaware franchise tax is based in part on the number of authorized
shares.
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EFFECTIVE DATE
If the Reverse Stock Split Proposal is approved by the stockholders, the
Company will file as soon as practicable an amendment to the Certificate with
the Secretary of State of the State of Delaware (the 'Amendment'), and the
Reverse Stock Split Proposal will become effective on the date of such filing
(the 'Effective Date'). Without any further action on the part of the Company or
the stockholders, the shares of Common Stock held by stockholders of record as
of the Effective Date will be converted at the close of business on the
Effective Date into the right to receive an amount of whole shares of Common
Stock equal to the number of their shares divided by two, together with cash
representing any fractional shares.
THE AMENDMENT
Under the Reverse Stock Split Proposal, Article V of the Certificate will
be amended to reduce the number of authorized shares of Common Stock from
50,000,000 to 15,000,000 and the number of shares of Preferred Stock from
20,000,000 to 100,000, and to implement the Reverse Stock Split. The complete
text of the Amendment, in the form to be filed with the Secretary of State of
the State of Delaware, is set forth in Exhibit A attached to this proxy
statement. The discussion of the Reverse Stock Split Proposal is qualified in
its entirety by reference to Exhibit A, which is incorporated herein by
reference as if fully set forth herein.
If the Reverse Stock Split Proposal is approved, the total number of shares
of Common Stock held by each stockholder would be converted automatically into a
right to receive an amount of whole shares of Common Stock equal to the number
of shares owned immediately prior to the Reverse Stock Split divided by two. No
fractional shares will be issued. A stockholder who would be otherwise entitled
to receive a fractional share of Common Stock as a result of the Reverse Stock
Split will receive cash in lieu thereof. The price payable by the Company for
fractional shares will be determined by multiplying the fractional share of
Common Stock by the closing sale price of the Common Stock as reported on the
NASDAQ National Market on the Effective Date.
Approval of the Reverse Stock Split Proposal would not affect any
stockholder's percentage ownership interest in the Company or proportional
voting power, except for differences resulting from receiving cash in lieu of
fractional shares. The shares of Common Stock which will be issued upon approval
of the Reverse Stock Split Proposal will be fully paid and nonassessable. The
voting rights and other privileges of the holders of Common Stock would not be
affected substantially by adoption of the Reverse Stock Split Proposal or
subsequent implementation thereof.
EXCHANGE OF STOCK CERTIFICATES
As soon as practicable after the Effective Date, the Company will send a
letter of transmittal to each stockholder of record on the Effective Date for
use in transmitting certificates representing shares of Common Stock ('old
certificates') to the Company's transfer agent, Fleet National Bank, Corporate
Trust Operations, Mail Stop: CT/MO/0224, P.O. Box 1440, Hartford, Connecticut
06143 (the 'Exchange Agent'). The letter of transmittal will contain
instructions for the surrender of old certificates to the Exchange Agent in
exchange for certificates representing the number of whole shares of Common
Stock and cash representing fractional shares of Common Stock. No new
certificates will be issued to a stockholder until such stockholder has
surrendered all old certificates together with a properly completed and executed
letter of transmittal to the Exchange Agent.
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Upon proper completion and execution of the letter of transmittal and
return thereof to the Exchange Agent, together with all old certificates,
stockholders will receive a new certificate or certificates representing the
number of whole shares of Common Stock into which their shares of Common Stock
represented by the old certificates have been converted as a result of the
Reverse Stock Split. Until surrendered, outstanding old certificates held by
stockholders will be deemed for all purposes to represent the number of whole
shares of Common Stock to which such stockholders are entitled as a result of
the Reverse Stock Split. Stockholders should not send their old certificates to
the Exchange Agent until they have received the letter of transmittal. Shares
not presented for surrender as soon as is practicable after the letter of
transmittal is sent shall be exchanged at the first time they are presented for
transfer.
No service charges will be payable by stockholders in connection with the
exchange of certificates, all expenses of which will be borne by the Company.
EFFECT OF THE REVERSE STOCK SPLIT PROPOSAL
If the Reverse Stock Split Proposal is approved at the Annual Meeting, the
result would be that each stockholder who owns two or more shares of Common
Stock will receive one share of Common Stock for each two shares of Common Stock
held at the Effective Date, and cash in lieu of the issuance of a fractional
share of Common Stock. Each stockholder who owns fewer than two shares of Common
Stock on the date the Reverse Stock Split is effected will be entitled to
receive only cash in lieu of receiving a fractional share resulting from the
Reverse Stock Split. Cash in lieu of fractional shares is being done to avoid
the expense and inconvenience of issuing fractional shares and is not separately
bargained-for consideration.
The Company currently has authorized Common Stock of 50,000,000 shares. The
authorized Common Stock will be reduced to 15,000,000 shares as a result of the
Reverse Stock Split Proposal. As of May 17, 1996, the number of issued shares of
Common Stock was 19,242,449 which includes 4,377,900 shares held by subsidiaries
of the Company. Based upon the Company's best estimates, the aggregate number of
shares of Common Stock that will be outstanding after the Reverse Stock Split
will be 9,621,224, including shares held by subsidiaries of the Company. Because
of the reduction of the number of authorized shares of Common Stock, there will
remain an estimated 5,378,776 authorized but unissued shares of Common Stock as
a result of the Reverse Stock Split. The Company currently has authorized
Preferred Stock of 20,000,000 shares. The authorized Preferred Stock will be
reduced to 100,000 shares as a result of the Reverse Stock Split Proposal. There
are currently no issued shares of Preferred Stock.
As of May 17, 1996, under the Company's 1988 Stock Incentive Plan (the
'Plan'), there were outstanding options to purchase an aggregate of 632,500
shares of Common Stock and 927,884 options remained available for grant under
the Plan. The Plan provides for adjustment of the number and per share price of
outstanding options and the number of shares available for the grant of options
in the event of a change in capitalization, such as a reverse stock split.
Accordingly, upon implementation of the Reverse Stock Split, the number of
shares of Common Stock issuable upon exercise of outstanding options will be
reduced to approximately 316,250, with per share exercise prices of
approximately two times the present per share exercise prices, and the number of
shares of Common Stock available for grant under the Plan will be reduced to
463,942. The limitations on the number of shares issuable under the Plan would
likewise be adjusted to reflect the Reverse Stock Split.
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As of May 17, 1996, there were outstanding 1,287,294 Warrants, which are
exercisable through June 30, 2001, at $25.00 for 2.822 shares of Common Stock.
Such Warrants are exercisable for a maximum of 3,632,744 shares of Common Stock.
The Warrant Agreement provides for adjustment of the number of shares receivable
upon exercise in the event of a change in capitalization, such as a reverse
stock split. Accordingly, upon implementation of the Reverse Stock Split,
Warrants will be exercisable at $25.00 for 1.411 shares of Common Stock, and the
number of shares of Common Stock issuable upon exercise of outstanding Warrants
will be reduced to approximately 1,816,372.
Dissenting stockholders have no appraisal rights under Delaware law, the
Certificate or the Company's Bylaws in connection with the Reverse Stock Split
Proposal.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material anticipated Federal income tax
consequences of the Reverse Stock Split to stockholders of the Company. This
summary is based on the Federal income tax laws now in effect and as currently
interpreted; it does not take into account possible changes in such laws or
interpretations, including amendments to applicable statutes, regulations and
proposed regulations or changes in judicial or administrative rulings, some of
which may have retroactive effect. This summary is provided for general
information only and does not purport to address all aspects of the possible
Federal income tax consequences of the Reverse Stock Split and IS NOT INTENDED
AS TAX ADVICE TO ANY PERSON. In particular, and without limiting the foregoing,
this summary does not consider the Federal income tax consequences to
stockholders of the Company in light of their individual investment
circumstances or to holders subject to special treatment under the Federal
income tax laws (for example, life insurance companies, regulated investment
companies and foreign taxpayers). The summary does not address any consequence
of the Reverse Stock Split under any state, local or foreign tax laws.
No ruling from the Internal Revenue Service ('Service') or opinion of
counsel will be obtained regarding the Federal income tax consequences to the
stockholders of the Company as a result of the Reverse Stock Split. ACCORDINGLY,
EACH STOCKHOLDER IS ENCOURAGED TO CONSULT HIS OR HER TAX ADVISOR REGARDING THE
SPECIFIC TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO SUCH STOCKHOLDER,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND
OTHER TAX LAWS.
The Company believes that the Reverse Stock Split would be a tax-free
recapitalization to the Company and its stockholders. If the Reverse Stock Split
qualifies as a recapitalization under Section 368(a)(1)(E) of the Internal
Revenue Code of 1986, as amended, a stockholder of the Company who exchanges his
or her Common Stock solely for Common Stock should recognize no gain or loss for
Federal income tax purposes. A stockholder's aggregate tax basis in his or her
shares of Common Stock received from the Company should be the same as his or
her aggregate tax basis in the Common Stock exchanged therefor. The holding
period of the Common Stock received by such stockholder should include the
period during which the Common Stock surrendered in exchange therefor was held,
provided all such Common Stock was held as a capital asset on the date of the
exchange. The payment of cash in lieu of fractional share interests in the
Common Stock will be treated for federal income tax purposes as if fractional
shares were issued as part of the Reverse Stock Split and then were redeemed by
the Company. The cash payments should be treated as having been received as
distributions in full payment in exchange for the Common Stock redeemed. If a
fractional share qualifies as a capital asset
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in the hands of a stockholder, any gain or loss (measured by the difference
between the basis of the fractional share interest and the amount of cash
received) will be capital gain or loss.
VOTE REQUIRED
In order to effect the Reverse Stock Split Proposal, the Certificate must
be amended, which requires, under Delaware law, the affirmative vote of holders
of a majority of the outstanding shares of Common Stock. THE COMPANY HAS BEEN
ADVISED THAT GENEVE, WHICH OWNS IN EXCESS OF 55% OF THE OUTSTANDING SHARES OF
COMMON STOCK, INTENDS TO VOTE ITS SHARES IN FAVOR OF PROPOSAL 2.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE 'FOR' PROPOSAL 2.
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has selected Peat Marwick as the independent
auditors of the Company for the year 1996. It is anticipated that
representatives of Peat Marwick, who also served as the Company's auditors for
1995, will be present at the Annual Meeting of Stockholders and will have an
opportunity to make a statement if they so desire and to answer any appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' PROPOSAL 3.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder intends to present at the Annual Meeting
of Stockholders to be held in 1997 must be received at the Company's principal
executive office not later than December 31, 1996 in order to be includable in
the proxy material for such meeting.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
other business to be presented for action at the meeting. As to any business
which would properly come before the meeting, the Proxies confer discretionary
authority in the persons named therein and those persons will vote or act in
accordance with their best judgment with respect thereto.
By Order of the Board of Directors
DAVID T. KETTIG
Secretary
June 7, 1996
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EXHIBIT A
CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF
INCORPORATION, AS AMENDED, OF INDEPENDENCE HOLDING COMPANY
PURSUANT TO SECTION 242 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
INDEPENDENCE HOLDING COMPANY, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, does
hereby certify:
FIRST: That at a meeting of the Board of Directors of Independence Holding
Company, duly convened and held on May 24, 1996, a resolution was adopted
setting forth and declaring advisable the proposed amendment to the Restated
Certificate of Incorporation, as amended, of said Corporation.
The proposed amendment amends in its entirety Article V of the Restated
Certificate of Incorporation, as amended, to read as follows:
V.
The total number of shares of stock which the Corporation shall have the
authority to issue is Fifteen Million One Hundred Thousand (15,100,000) shares,
consisting of Fifteen Million (15,000,000) shares of Common Stock, par value
$1.00 per share ('Common Stock'), and One Hundred Thousand (100,000) shares of
Preferred Stock, par value $1.00 per share. Each two (2) shares of authorized
Common Stock issued and outstanding or standing in the name of the Corporation
at the close of business on the date of filing and recording (the 'Effective
Time') of this Certificate of Amendment ('Amendment') in the Office of the
Secretary of State of the State of Delaware shall, upon such filing and
recording, thereupon automatically be reclassified and changed into one (1)
validly issued, fully paid and nonassessable share of Common Stock. Each holder
of record of shares of Common Stock to be so reclassified and changed shall at
the Effective Time become the record owner of the number of shares of Common
Stock as shall result from such reclassification and change. Each such record
holder shall be entitled to receive, upon the surrender of the certificate or
certificates representing the shares of Common Stock to be so reclassified and
changed at the office of the transfer agent of the Corporation in such form and
accompanied by such documents, if any, as may be prescribed by the transfer
agent of the Corporation, a new certificate or certificates representing the
number of shares of Common Stock of which he or she is the record owner after
giving effect to the provisions of this Article V. The Corporation shall not
issue fractional shares with respect to the reclassification and change, and
instead shall pay cash in lieu thereof.
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
the annual meeting of the stockholders of said Corporation was duly called and
held, upon notice in accordance with the terms of Section 222 of the General
Corporation Law of the State of Delaware, at which meeting the necessary number
of shares as required by statute was voted in favor of the aforesaid amendment.
THIRD: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of Section 242 of the General Corporation Law of the State
of Delaware.
FOURTH: This Certificate of Amendment shall be effective upon the filing
hereof.
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<PAGE>
IN WITNESS WHEREOF, Independence Holding Company has caused this
Certificate of Amendment to be signed by its President and attested by its
Secretary and its corporate seal to be affixed hereto on this day
, 1996.
INDEPENDENCE HOLDING COMPANY
By: .................................
Steven B. Lapin, President
Attest:
.....................................
David T. Kettig, Secretary
<PAGE>
<PAGE>
APPENDIX 1 -- PROXY
INDEPENDENCE HOLDING COMPANY
96 CUMMINGS POINT ROAD, STAMFORD, CONNECTICUT 06902
PROXY -- SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of Independence Holding Company (the 'Company')
hereby appoints Steven B. Lapin and David T. Kettig, and each or either of them,
the true and lawful proxies, agents and attorneys of the undersigned, each with
full power to act without the other and with full power of substitution to vote
all shares of the Company which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders of the Company to be
held on Thursday, June 27, 1996 at 9:30 A.M., E.D.T., at the Meeting Room,
Greenwich Public Library, 101 West Putnam Avenue, Greenwich, Connecticut, and at
any adjournment or postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 'FOR' ALL PROPOSALS.
(1) To elect eight directors.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for
(except as instructed below) all nominees listed below
Harold E. Johnson, Allan C. Kirkman, Steven B. Lapin, Donald T. Netter,
Edward Netter, Edward J. Scheider, Roy T.K. Thung, F. Peter Zoch, III.
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name here:
...............................................................................
(2) To amend the Company's Restated Certificate of Incorporation, as amended,
and authorize management to (i) effect a reverse stock split in which each
two shares of Common Stock of the Company, par value $1.00 per share,
whether issued and outstanding or held in treasury, will be reclassified and
changed into one share of Common Stock of the Company, par value $1.00 per
share; and (ii) reduce the number of authorized shares of Common Stock of
the Company from 50,000,000 shares to 15,000,000 shares, and to reduce the
number of authorized shares of Preferred Stock of the Company, par value
$1.00 per share, from 20,000,000 shares to 100,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To ratify the appointment of KPMG Peat Marwick LLP as independent auditors
for the fiscal year ending December 31, 1996.
[ ]FOR [ ] AGAINST [ ] ABSTAIN
(4) To transact any other business that may properly come before the Annual
Meeting and any adjournment or postponement thereof.
(see reverse)
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The shares represented by this proxy card will be voted as directed above. IF NO
DIRECTION IS GIVEN AND THE PROXY CARD IS VALIDLY EXECUTED, THE SHARES WILL BE
VOTED FOR ALL LISTED PROPOSALS.
The undersigned hereby ratifies and confirms all that said proxies, agents
and attorneys, or any of them or their substitutes, lawfully may do at the
meeting and hereby revokes all proxies heretofore given by the undersigned to
vote at said meeting or any adjournment or postponement thereof.
<TABLE>
<S> <C>
PLEASE SIGN THE PROXY EXACTLY AS YOUR NAME(S) Dated ................................... , 1996
APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN (L.S.)
PERSONALLY. TRUSTEES AND OTHER FIDUCIARIES ................................................
SHOULD INDICATE THE CAPACITY IN WHICH THEY SIGN, (L.S.)
AND WHERE MORE THAN ONE NAME APPEARS, A MAJORITY ................................................
MUST SIGN. IF A CORPORATION, THE SIGNATURE
SHOULD BE THAT OF AN AUTHORIZED OFFICER WHO
SHOULD STATE HIS OR HER TITLE.
</TABLE>
PLEASE DATE, SIGN AND RETURN. YOUR PROMPT ATTENTION WILL BE APPRECIATED.
