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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
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):
[X] $125 per Exchange Act Rules 0-11(c)(1)(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:
......................................................................
[ ] 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>
INDEPENDENCE HOLDING COMPANY
__________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 27, 1996
__________________
[PRELIMINARY COPY]
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 and authorize management to
(i) effect a reverse stock split in which each two
shares of issued 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 new 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 __, 1996
<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
solicitation, 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 Stockholders, 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 to effect a one-
for-two reverse Common Stock split, or such reduction in the
number of issued shares as determined by the Board of Directors to
be in the best interests of the Company, as more fully described
herein, 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
<PAGE>
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 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 and 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.
Common Stock
------------
Geneve Holdings, Inc.(1).......... 8,185,815
96 Cummings Point Road 55.1%
Stamford, Connecticut 06902
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<PAGE>
(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"). Edward Netter,
Chairman and Chief Executive Officer and a director of the
Company, is an executive officer and a director of Geneve.
Donald T. Netter, an executive officer and a director of the
Company, is an executive officer of Geneve. Edward Netter and
members of his family (including Donald T. Netter) own more
than 50% of the voting stock of Geneve. 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 the directors, Named Officers or directors
and executive officers as a group owns beneficially any Warrants.
Number of Percent of Class
Name Shares Entitled to Vote
- --------------------------------- ------------ ----------------
Harold E. Johnson................ 21,000 (1) *
Allan C. Kirkman................. 8,000 (1) *
Steven B. Lapin.................. 237,000 (2) 1.6%
Donald T. Netter................. - 0 - (3) -
Edward Netter.................... - 0 - (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)
(1) Constitutes or includes 8,000 shares of Common Stock subject
to options granted to each such director of which, in each
case, all shares are presently exercisable.
- 3 -
<PAGE>
(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) Edward Netter and Donald T. Netter disclaim beneficial
ownership of the shares of Common Stock shown as owned by
Geneve in the table relating to Principal Stockholders.
Reference is also made to footnote (1) to such table.
(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 shares are presently
exercisable.
(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
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<PAGE>
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,
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
- 5 -
<PAGE>
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.
___________________________________
- 6 -
<PAGE>
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 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 $3.156 per share.
EXECUTIVE OFFICERS
In addition to Messrs. Lapin, Donald T. Netter, Edward Netter
and Thung, listed above, who also serve as directors of the
Company, set forth below are each executive officer's name, age,
all positions and offices held with the Company, principal
occupations and business experience during the past five years.
Officers are elected by the Board of Directors, each to serve
until his successor is elected and has qualified, or until his
earlier resignation, removal from office or death.
TERESA A. HERBERT, age 34
Vice President and Controller
Since October 1991, Vice President and Controller of the
Company; for more than one year prior thereto, Assistant
Controller of the Company.
- 7 -
<PAGE>
DAVID T. KETTIG, age 37
Vice President - Legal and Secretary
Since March 1992, Vice President - Legal and Secretary of the
Company; since March 1992, Vice President - Legal and Secretary of
Geneve; for more than one year prior thereto, associate attorney
practicing in the areas of corporate and securities law with
Battle Fowler, a law firm located in New York, New York.
BRIAN R. SCHLIER, age 41
Vice President - Taxation
Since May 1991, Vice President - Taxation of the Company; for
more than the past five years, Director of Taxation of Geneve.
- 8 -
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation paid by the Company and its subsidiaries to the Named Officers for services
rendered for the last three fiscal years.
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Salary Bonus Compensation Awards Options Payouts Compensation
Name and Principal Position Year ($) ($) ($) ($) (#) ($) ($) (1)
- --------------------------- ---- ------- ------- ------------- ---------- ---------- ------- ------------
<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 - 1994 99,455 23,332 - - - - (7,095)
Legal and Secretary 1993 102,000 23,331 - - - - 10,152
- 9 -
</TABLE>
<PAGE>
(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 calendar years 1993 and 1994; 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.
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.
Grant Date
Individual Grants Value
------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f)
% of
Number of Total
Securities Options
Underlying Granted to Exercise Grant
Options Employees or Base Date
Granted in Fiscal Price Expiration Present
Name (#) Year ($/Sh) Date Value $ (1)
-------- ---------- ---------- -------- ---------- -----------
Steven B. 137,500 23% 3.28 4/4/05 184,250
Lapin 98,500 17% 3.84 12/29/05 132,975
Roy T.K. 112,500 19% 3.28 4/4/05 150,750
Thung 76,500 13% 3.84 12/29/05 103,275
David T.
Kettig 25,000 4% 3.28 4/4/05 33,500
(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
- 10 -
<PAGE>
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 an executive 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 an executive 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.
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End(#) FY-End($)
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise(#) Realized($) Unexercisable Unexercisable
- -----------------------------------------------------------------------
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
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.
- 11 -
<PAGE>
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.
- 12 -
<PAGE>
Specifically regarding the chief executive officer, 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 Board at the same time takes into consideration Mr.
Netter's significant interest in the Company through his
controlling ownership of Geneve. Mr. Netter elected not to receive
a bonus in 1995.
MEMBERS OF THE BOARD OF DIRECTORS:
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
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 Stock Market
Insurance Index.
Comparison of Five Year Cumulative Total Return*
Among Independence Holding Company, Nasdaq Stock Market (U.S.) Index
and Nasdaq Insurance Stocks Index
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
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NASDAQ Stock $100 $161 $187 $215 $210 $296
Market (U.S.)
Index
NASDAQ Insurance $100 $141 $191 $204 $192 $273
Stocks Index
Independence $100 $92 $184 $267 $223 $279
Holding Company
* 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)
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<PAGE>
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
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.
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<PAGE>
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 capital stock from 50,000,000 shares of Common Stock and
20,000,000 shares of Preferred Stock, par value $1.00 per share
("Preferred Stock"), to 15,000,000 shares of Common Stock and
100,000 shares of Preferred Stock, 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 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.
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<PAGE>
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 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.
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.
EEFECTIVE 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
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<PAGE>
shares of Common Stock from 70,000,000 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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<PAGE>
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 time of the
Reverse Stock Split, 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 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.
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<PAGE>
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 automatic 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.
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 automatic 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 1.41 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.
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
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<PAGE>
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 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.
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<PAGE>
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 __, 1996
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<PAGE>
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.
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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.
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
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<PAGE>
APPENDIX 1
PROXY CARD
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 (except as instructed below)
[ ] WITHHOLD AUTHORITY to vote for 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
and authorize management to (i) effect a reverse stock split
in which each two shares of issued 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.
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. (see reverse)
<PAGE>
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.
PLEASE SIGN THE PROXY EXACTLY AS YOUR NAME(S) APPEARS HEREON.
JOINT OWNERS SHOULD EACH SIGN PERSONALLY. TRUSTEES AND OTHER
FIDUCIARIES SHOULD INDICATE THE CAPACITY IN WHICH THEY SIGN, 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.
Dated........................., 1996
(L.S.)
................................
(L.S.)
................................
PLEASE DATE, SIGN AND RETURN. YOUR
PROMPT ATTENTION WILL BE APPRECIATED.
