SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. 2)
___________________________________________________________________________
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 b Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Regan Holding Corp.
______________________________________________________________________
(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 0-11(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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[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:
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4) Date Filed:
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REGAN HOLDING CORP.
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
August 2, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Regan Holding Corp. (the "Company")
hereby appoints Lynda L. Regan and R. Preston Pitts or any one of them
(with full power to act alone and to designate substitute) Proxies of the
undersigned, with authority to vote and act with respect to all shares of
Common Stock of the Company which the undersigned would be entitled to vote
at the Annual Meeting of Shareholders to be held on August 2, 1996 at 8:00
a.m. Pacific time, at Embassy Suites, 101 McInnis Parkway, San Rafael,
California 94903, and any adjournment thereof, with all the powers the
undersigned would possess if personally present, upon matters noted below
and upon such other matters as may properly come before the meeting. The
shares represented by this Proxy shall be voted as follows:
(1) Approval of an amendment to the Company's Amended and Restated
Articles of Incorporation (the "Articles") to eliminate the right of
holders of shares of Series A Common Stock to elect four (4)
Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) Approval of an amendment to the Company's Bylaws to reduce the minimum
number of Directors from eight (8) to three (3), and reduce the
maximum number of Directors from fifteen (15) to seven (7).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Election of the following four (4) nominees as Directors to hold
office until the Annual Meeting of Shareholders in 1997 and until
their successors are duly elected:
Steve C. Anderson
Ashley A. Penney
R. Preston Pitts
Lynda L. Regan
[ ] FOR all foregoing Nominees [ ] WITHHOLD AUTHORITY
to vote for all
nominees
Note: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name. Unless authority to vote for all
the foregoing nominees is withheld, this Proxy will be deemed to
confer authority to vote for every nominee whose name is not struck.
(4) Approval of amendments to the Company's Articles and Bylaws to remove
provisions contained therein providing a right of first refusal and a
repurchase right with respect to the Common Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Ratification of the appointment of Coopers & Lybrand, L.L.P. as the
Company's independent auditors for the five (5) months ended December
31, 1993 and the years ended December 31, 1994, 1995 and 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) Consideration of any other matters which may properly come before the
meeting or any adjournments of the meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY CONFERS AUTHORITY TO VOTE "FOR" EACH PROPOSITION LISTED
ABOVE UNLESS OTHERWISE INDICATED. The Proxy is solicited on behalf of the
Board of Directors of Regan Holding Corp. and may be revoked prior to its
exercise.
Date:________________________________
_____________________________________
Signature of Shareholder
____________________________________
Signature of Shareholder
NOTE: Please sign exactly as your name appears hereon. When shares are
held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in partnership
name by authorized person.
REGAN HOLDING CORP.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held August 2, 1996
TO OUR SHAREHOLDERS:
You are cordially invited to attend the Annual Meeting of Shareholders
of Regan Holding Corp. (the "Company"), to be held at Embassy Suites, 101
McInnis Parkway, San Rafael, California 94903, on August 2, 1996 at 8:00
a.m. Pacific time, to consider and act upon the matters listed below:
(1) Approval of an amendment to the Company's Amended and Restated
Articles of Incorporation (the "Articles") to eliminate the right
of holders of shares of Series A Common Stock to elect four (4)
Directors;
(2) Approval of an amendment to the Company's Bylaws to reduce the
minimum number of Directors from eight (8) to three (3), and
reduce the maximum number of Directors from fifteen (15) to seven
(7);
(3) Election of four (4) Directors to hold office until the Annual
Meeting of Shareholders in 1997 and until their successors are
duly elected;
(4) Approval of amendments to the Company's Articles and Bylaws to
remove provisions contained therein providing a right of first
refusal and a repurchase right with respect to the Common Stock;
(5) Ratification of the appointment of Coopers & Lybrand, L.L.P. as
the Company's independent auditors for the five (5) months ended
December 31, 1993 and the years ended December 31, 1994, 1995 and
1996; and
(6) Consideration of any other matters which may properly come before
the meeting or any adjournments of the meeting.
Shareholders of record at the close of business on June 28, 1996 are
entitled to notice of and to vote at the Annual Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD. YOU ARE INVITED TO ATTEND THE
MEETING IN PERSON, BUT WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE COMPLETE,
DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. IF
YOU DO ATTEND THE MEETING, YOU MAY, IF YOU PREFER, REVOKE YOUR PROXY AND
VOTE YOUR SHARES IN PERSON.
BY ORDER OF THE BOARD OF DIRECTORS
1179 N. McDowell Boulevard
Petaluma, California 94954
June 12, 1996
REGAN HOLDING CORP.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To be held August 2, 1996
This Proxy Statement is furnished in connection with the solicitation
of Proxies by the Board of Directors of Regan Holding Corp., a California
corporation, with its principal executive offices located at 1179 N.
McDowell Boulevard, Petaluma, California 94954 (the "Company"), for use at
the Annual Meeting of Shareholders to be held at Embassy Suites, 101
McInnis Parkway, San Rafael, California 94903, on August 2, 1996 at 8:00
a.m. Pacific time. Accompanying this Proxy Statement is the Board of
Directors' Proxy for the Annual Meeting, which you may use to indicate your
vote on the proposals described in this Proxy Statement.
All Proxies which are properly completed, signed and returned to the
Company prior to the Annual Meeting, and which have not been revoked, will
unless otherwise directed be voted in accordance with the recommendations
of the Board of Directors set forth in this Proxy Statement. A shareholder
may revoke his or her Proxy at any time before it is voted either by filing
with the Secretary of the Company, at its principal executive offices, a
written notice of revocation or a duly executed proxy bearing a later date,
or by attending the Annual Meeting and expressing a desire to vote his or
her shares in person.
The close of business on June 28, 1996 has been fixed as the record
date for the determination of shareholders entitled to notice of and to
vote at the Annual Meeting or any adjournments thereof. As of the record
date, the Company had outstanding 27,005,885 shares of Common Stock-Series
A, no par value (the "Series A Stock"), and 610,688 shares of Common Stock-
Series B, no par value (the "Series B Stock"). As of the date of this
Proxy Statement, the Company is not in arrears in dividends or in default
in principal or interest with respect to any of its outstanding securities.
Except with respect to the right of holders of Series A Stock to elect four
(4) Directors and the proposed amendment to eliminate that right, and the
elimination of certain repurchase provisions which are applicable to only
the Series A Stock and which are described herein, shares of Series A Stock
and Series B Stock vote together as a single class and are collectively
referred to as the "Common Stock". The shares of Common Stock are the only
outstanding voting securities of the Company. A holder of a share of
Common Stock is entitled to cast one vote for each share held of record on
the record date on all matters to be considered at the Annual Meeting. As
explained under Item 3 of this Proxy Statement, cumulative voting will be
permitted with respect to the election of Directors.
The holders of a majority of the votes entitled to be cast present in
person or by proxy shall constitute a quorum for purposes of the Annual
Meeting. Abstentions and broker non-votes are counted for purposes of
determining whether a quorum is present on any matter. For actions
requiring approval based on a percentage of votes cast, abstentions and
broker non-votes will not affect the outcome of the vote. For actions
requiring approval based on the number of shares outstanding, abstentions
and broker non-votes will have the same effect as a negative vote.
ITEM 1
APPROVAL OF AMENDMENT OF THE ARTICLES TO ELIMINATE THE RIGHT OF
THE HOLDERS OF SHARES OF SERIES A STOCK TO ELECT FOUR DIRECTORS
The Company's Articles currently provide that the holders of shares of
Series A Stock are entitled to elect four (4) Directors to the Board. This
provision was adopted at a time when the Company owned an insurance company
and accordingly had anticipated needs for significant capital. It was
intended that Series A Stock would be owned by the founders of the Company
and the producers, Series B Stock by former shareholders of LifeSurance
Corporation, a Delaware corporation ("LSC"), and a third series, Common
Stock-Series C, by employees and outside investors. To date, the Company
has issued only Series A Stock and Series B Stock and has no plans to issue
any stock other than Series A Stock in the future. The Series A Stock
currently represents ninety-seven and 8/10 percent (97.8%) of the issued
and outstanding Common Stock and thus can elect all of the Directors.
Because the provision giving the holders of Series A Stock the right to
elect four (4) Directors currently serves no purpose, the Board of
Directors has approved, subject to shareholder approval, an amendment of
the Company's Articles to eliminate this provision.
The approval of this amendment requires the affirmative vote of the
holders of a majority of shares of Common Stock outstanding including the
affirmative vote of the holders of a majority of the shares of Series A
Stock outstanding.
The Board of Directors recommends that the shareholders vote FOR the
approval of the elimination of the right of holders of Series A Stock to
elect four (4) Directors to the Board and your proxy will be so voted
unless you specify otherwise.
ITEM 2
APPROVAL OF AMENDMENT OF THE BYLAWS TO REDUCE THE NUMBER OF
DIRECTORS OF THE BOARD
The Company's Bylaws currently provide that the Board of Directors
shall consist of that number of Directors as determined by the Board,
provided that the Board shall consist of not less than eight (8) nor more
than fifteen (15) Directors. However, the Company has, at times, had
difficulty finding eight individuals with the necessary degree of skill,
experience and willingness to serve as Directors. In addition, the Board
believes that for a company of this size, a Board consisting of more than
seven (7) Directors is too large to function efficiently and expeditiously.
Accordingly, the Board has approved, subject to shareholder approval, an
amendment of the Company's Bylaws which will reduce the minimum number of
Directors to three (3) and reduce the maximum number of Directors to seven
(7). The amendment will not otherwise alter the authority of the Board of
Directors to establish the number of Directors within this range.
The approval of this amendment requires the affirmative vote of the
holders of a majority of shares of Common Stock outstanding, provided, that
the holders of no more than sixteen and 2/3 percent (16-2/3%) of the shares
of Common Stock outstanding vote against the amendment.
The Board of Directors recommends that the shareholders vote FOR the
approval of the reduction of the minimum and maximum number of Directors
and your proxy will be so voted unless you specify otherwise.
ITEM 3
ELECTION OF DIRECTORS
Subject to the approval of the amendment of the Company's Articles
contained in Item 1, and subject to the approval of the amendment of the
Company's Bylaws contained in Item 2 and pursuant to the provisions of the
Company's Bylaws as so amended, the Board of Directors has fixed the number
of Directors to be elected at four (4). The Board of Directors has
nominated the persons identified below to serve as Directors until the next
Annual Meeting of Shareholders and until their respective successors shall
be elected and shall qualify. All of the nominees are currently Directors
of the Company.
Name Principal Occupation Director Since
Steve C. Anderson Mr. Anderson, born in 1948, has 1990
been a partner in Hoalst Anderson,
an independent insurance agency,
since 1983. He is a member of the
National Association of Life
Underwriters and CLU Society.
Ashley A. Penney Ms. Penney, born in 1951, has been 1990
a self employed consultant in the
human resource field since 1986,
specializing in startup companies,
and was Vice President of the
Company from 1990 to 1993.
Lynda L. Regan Ms. Regan, born in 1949, has 1990
served as Chairman and Chief
Executive Officer of the Company
since 1992. She was Senior Vice
President and Treasurer from 1990
to 1992.
R. Preston Pitts Mr. Pitts, born in 1951, is Chief 1995
Financial Officer and Secretary of
the Company. Prior to joining the
Company, he owned Pitts Company, a
CPA firm specializing in services
for insurance companies, served as
financial officer for United
Family Life Insurance Company and
American Security Insurance Group,
both Fortis-owned companies, and
was audit manager for Ernst &
Young.
Although it is not contemplated that the nominees will decline or be
unable to serve, the Proxies will be voted by the Proxy holders at their
discretion for another person, if such a contingency should arise. Unless
otherwise directed in the accompanying Proxy, or as specified above, the
persons named therein will vote FOR the election of nominees named below.
A plurality vote is required for election of Directors. The Bylaws
provide that each shareholder is entitled to cumulate such shareholder's
votes and give one nominee a number of votes equal to the number of
directors to be elected multiplied by the number of votes to which such
shareholder's shares are normally entitled, or distribute the shareholder's
votes on the same principle among as many nominees as the shareholder
considers appropriate. This cumulative voting right may not be exercised
unless the nominee's name has been placed in nomination prior to the voting
and one or more shareholders has given notice at the meeting prior to the
voting of the shareholder's intent to cumulate such shareholder's vote.
The proxy holders may exercise this cumulative voting right at their
discretion.
In the event that the amendment of the Company's Articles contained in
Item 1 is adopted, but the amendment of the Company's Bylaws contained in
Item 2 is not adopted, the Board will call a special meeting of the
shareholders to elect four (4) additional Directors. In the event that the
amendment of the Company's Articles contained in Item 1 is not adopted and
the amendment of the Company's Bylaws contained in Item 2 is not adopted,
the Board will call a special meeting of the holders of Series A Stock for
the purpose of electing four (4) additional Directors. In the event that
the amendment of the Company's Articles contained in Item 1 is not adopted
and the amendment of the Company's Bylaws contained in Item 2 is adopted,
only the holders of shares of Series A Stock will vote at the Annual
Meeting with respect to the election of the nominees named above and the
Board will call a special meeting of the holders of shares of Common Stock
for the purpose of electing one or more additional Directors.
Under an insurance brokerage agreement among the Company, Lynda Regan
and Moody Insurance Group ("MIG"), Lynda Regan has agreed that, so long as
the brokerage agreement remains in effect, she will vote her shares in
favor of the election of Robert Moody, Jr., MIG's president and sole
shareholder, as a Director of the Company should he wish to be elected.
However, at the present time, MIG engages in business activities that
compete with the Company. Therefore, in order to avoid any issue as to the
propriety of Mr. Moody's serving on the Company's Board, Mr. Moody has
agreed to relinquish his right to serve on the Board for a period of one
year in return for nominal consideration from the Company. The termination
of the brokerage agreement with MIG would not have a material effect on the
Company.
Beneficial Share Ownership of Directors and Executive Officers
The following table shows the number of shares and the percentage of
the shares of the Company's Class A Stock beneficially owned by each of the
Directors and executive officers of the Company as of May 31, 1996. No
Director or officer owns any Series B Common Stock.
Name Position Total Percent
____ ________ _____ _______
Steve C. Anderson Director 69,714 *
Ashley A. Penney Director 145,318 *
R. Preston Pitts Director & Chief
Financial Officer 800,000 3.0%
Lynda L. Regan Director, Chairman
& Chief Executive
Officer 11,379,122 42.1%(1)
Ute Scott-Smith Senior Vice President 441,738 1.6%
__________ _____
Directors and
officers as a group 12,835,892 47.5%
__________ _____
* Indicates that the percentage of the outstanding shares
beneficially owned is less than one percent (1%).
(1) Includes 900 shares owned as custodian for her daughter.
Certain Shareholders
The Company knows of no person who is the beneficial owner of more
than five percent of any class of the Company's outstanding Common Stock
other than Ms. Regan, Chairman and Chief Executive Officer of the Company,
whose ownership is listed above.
Committees
In December of 1995, the Board of Directors established an audit
committee consisting of Steve C. Anderson and Ashley A. Penney, both of
whom are outside Directors. The Audit Committee oversees management's
discharge of its financial reporting responsibilities and recommends
appointment of the Company's independent auditors. Because the Audit
Committee was not formed until December of 1995, no meetings of the
Committee were held during 1995.
The Company does not currently have a nominating or compensation
committee. The functions normally performed by these committees are
performed by the entire Board of Directors.
Director's Attendance
During the fiscal year ended December 31, 1995, four meetings of the
Board of Directors of the Company were held. Each of the incumbent
Directors attended all meetings held during their incumbency.
Director's Compensation
The Company compensates outside Directors for attending board and
committee meetings at $2,000 per meeting. Currently, Steve C. Anderson and
Ashley A. Penney are the only outside directors of the Company. The other
Directors are otherwise employed by the Company and are not compensated for
serving as Directors or attending Board or committee meetings.
Executive Compensation
The following Summary Compensation Table sets forth the compensation
of the Company's Chief Executive Officer and all other executive officers
for services in all capacities to the Company and its subsidiaries during
1995, 1994 and 1993.
Summary Compensation Table
Name and Position Year Salary Bonus (1) Other All Other
Compensation
Lynda L. Regan 1995 $408,067 $181,534 $ 4,620 (2) -
Chief Executive Officer 11,216 (5) -
1994 281,909 80,000 4,620 (2) -
10,583 (5) -
1993 139,493 45,541 5,291 (5) -
Ute Scott-Smith 1995 $175,000 $ 56,534 $ 4,620 (2) $80,313 (3)
Senior Vice President 1994 155,658 35,000 2,251 (2) 70,000 (3)
1993 132,000 2,400 (4) - -
R. Preston Pitts 1995 $300,000 $ 81,534 $ 4,620 (2) -
Chief Financial Officer 1994 63,462 6,400 (4) -
(1) Includes bonuses in the year in which they were earned.
(2) The Company matches contributions made to its 401(k) plan at a rate of
$.50 for every $1.00 deferred, up to 6% of total annual salary.
(3) Compensation related to the payment of personal income taxes due to
the exercise of stock options in 1991.
(4) Stock awards were issued to Ute Scott-Smith effective October 15, 1993
and to R. Preston Pitts (then serving as a consultant to the Company)
effective January 1, 1994. These awards had a market value at the
time of issuance, as determined for purposes of preparing the
Company's financial statements, of approximately $.008 per share.
(5) The Company pays interest on debt related to a split dollar life
insurance policy under which Lynda L. Regan is the beneficiary.
Report on Executive Compensation
The Company does not have a compensation committee. The Board of
Directors develops and administers the Company's executive compensation
policies and programs. These policies and programs are generally intended
to (i) relate the compensation of the Company's executives to the success
of the Company and the creation of shareholder value; and (ii) attract,
motivate and retain highly qualified managers. In establishing a level of
compensation, the Board considers a number of factors, including: (i) the
financial condition and performance of the Company; (ii) the compensation
levels of executives in comparable positions at companies in industries in
which the Company competes for executives, primarily the financial services
and insurance industries; and (iii) the abilities of the executives and
their contributions to the Company's goals and performance.
Each year, the Board of Directors reviews the Company's executive
compensation policies and programs with respect to the linkage between
executive compensation and the creation of shareholder value, as well as
the competitiveness of the compensation programs. In conducting this
review, the Board considers changes in the Company's mission and goals and
evaluates the competitiveness of its compensation program based on
published surveys, proxy statement analysis and advice of consultants.
Compensation for executives (including Lynda Regan) consists of two
components: base pay and bonuses. Base pay for executives (including Lynda
Regan) is determined based on the factors set forth above. It is the
Board's policy to position executive salaries in general in the second
quartile (i.e. the top 50% to 75%) of compensation levels for comparable
positions in the market, although individual salaries may be higher or
lower based on the considerations discussed above.
For 1995, the chief executive was eligible to receive a cash bonus of
up to 40% of base salary and each of the other executive officers was
eligible to receive a cash bonus of up to 20% of base salary. Achievement
of this bonus was contingent upon the individual executive achieving
performance goals designed to increase shareholder value. Examples of
performance goals for 1995 included (i) the negotiation of marketing and
administration agreements with an additional insurance carrier, (ii) the
establishment of a broker-dealer subsidiary to facilitate the marketing and
sales of variable products, and (iii) the organization of an advanced
underwriting sales support program.
In addition to the salary based bonuses described above, each
executive officer received a bonus based on the performance of the Company
during 1995. An amount equal to 5% of the Company's net income for 1995
has been allocated equally among the three executive officers of the
Company and one executive officer of Legacy Marketing Group. One third of
this amount was paid to the officers in February of 1996. The remaining
two-thirds will be paid in equal installments in February of 1997 and 1998,
contingent upon net income growth for the Company of 15% per year in 1996
and 1997.
In determining Lynda Regan's level of compensation for 1995, the Board
considered (i) her success in negotiating contracts with a new insurance
carrier, and (ii) the significant improvement in the Company's financial
condition. The Board also considered the compensation level of Ms. Regan
compared to that of individuals holding similar positions in companies
operating in comparable industries. Based on these considerations, the
Board approved Ms. Regan's base compensation and bonus for 1995 at $408,067
and $181,534, respectively.
Respectfully submitted,
Lynda L. Regan
Steve C. Anderson
Ashley A. Penney
R. Preston Pitts
Performance Data
The Company's Common Stock became subject to the Securities Exchange
Act of 1934 (the "Exchange Act") in November of 1991 as a result of the
issuance of shares of Common Stock in connection with the acquisition of
LSC. Since that time, there has been no active trading in the Common Stock
and accordingly, information as to market price per share is not available.
The only available measure of the value of the shares of Common Stock is
book value based on the financial statements of the Company. However,
beginning in 1992, the Company suffered a series of significant adverse
events, including the resignations of two outside accounting firms hired by
the Company, which prevented the Company from being able to prepare any
financial statements for the period from the time the Company became
subject to the Exchange Act through August of 1993. As of December 31,
1993, each share of Common Stock had a book value of negative $.0027 per
share compared to $.20 per share as of December 31, 1994 and $.38 per share
as of December 31, 1995 (unaudited as to December 31, 1995). The Company
has paid no dividends on the Common Stock since becoming subject to the
Exchange Act.
Compensation Committee Interlocks and Insider Participation
As noted above, the Company does not have a compensation committee.
The compensation of executive officers is determined by the Board of
Directors. Lynda Regan, who is the Chief Executive Officer of the Company,
is also Chairman of the Board of Directors and R. Preston Pitts, who is
Chief Financial Officer, is also a Director. None of the executive
officers of the Company serve as a director or member of the compensation
committee of an entity, one of whose executive officers serves as a
Director of the Company.
Certain Relationships and Related Transactions
The Company paid Ashley A. Penney, a Director, $107,293 for services
provided as a human resource consultant during 1995.
Pursuant to a salary continuation agreement related to the Company's
former Chief Executive Officer, John Regan, bi-weekly payments equal to Mr.
Regan's salary at the time of his death are payable by the Company to his
estate through April 6, 1996. Payments totalling $280,000 were made during
1995 in accordance with this agreement.
Compliance with Section 16(a) of the Exchange Act
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during the year ended December 31, 1995, and Forms
5 and amendments thereto furnished to the Company with respect to the year
ended December 31, 1995, no reports required by Section 16(a) of the
Exchange Act with respect to the Company were delinquent during the year
ended December 31, 1995.
ITEM 4
APPROVAL OF AMENDMENT TO THE ARTICLES OF INCORPORATION AND
BYLAWS TO REMOVE RIGHT OF FIRST REFUSAL AND REPURCHASE OF
COMMON STOCK
The Company's Articles as adopted in 1991 grant a right of first
refusal to the Company with respect to the sale of shares of Series A
Stock. The Bylaws of the Company in effect as of December 3, 1990, provide
a right of first refusal to the Company and to the shareholders with
respect to the sale of Common Stock. These Bylaws also include a call
right to be exercised by the Company with respect to the Common Stock held
by former producers and employees and a put right in favor of shareholders
who have held shares for more than 2 years. In either case, the call or
put price is the net present value of the stock. (These rights are
collectively referred to as the "Repurchase Provisions.") There are
certain inconsistencies between the Bylaws and the Articles relating to the
Repurchase Provisions.
At the time the provisions discussed above were adopted, the Company
owned an insurance company and issued its stock primarily to the producers
of the insurance company. The Repurchase Provisions were intended to
provide value to producers based on the net present value (as determined
pursuant to a formula adopted by the Board of Directors) of the insurance
company, the products of which they sold. The Company no longer owns an
insurance company and instead markets products issued by unrelated
insurers. It is contemplated that shareholders will now realize value
through the growth in the Company's earnings and development of a trading
market for the Common Stock. Because the Repurchase Provisions do not
correspond to the Company's current business, they are no longer necessary.
In addition, the Board feels that the Repurchase Provisions have an adverse
impact on the marketability of the Company's Common Stock. Accordingly,
the Board of Directors has approved, subject to shareholder approval,
proposed amendments to the Company's Articles and Bylaws to remove the
Repurchase Provisions. These amendments will not alter any contractual
obligations of the Company to repurchase shares of Series A Stock.
The approval of these amendments requires the affirmative vote of the
holders of a majority of all shares of Common Stock outstanding including
the affirmative vote of the holders of a majority of the shares of Series A
Stock outstanding.
The Board of Directors recommends that the shareholders vote FOR the
approval of the removal of the Repurchase Provisions, and your proxy will
be so voted unless you specify otherwise.
ITEM 5
RATIFICATION OF APPOINTMENT OF PRINCIPAL INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Coopers & Lybrand,
L.L.P. as principal independent auditors for the Company for the year ended
December 31, 1996. Representatives of Coopers & Lybrand, L.L.P. are
expected to be present at the Annual Meeting and will be available to
respond to appropriate questions. Those representatives will have the
opportunity to make a statement if they desire to do so.
During 1995, the Board of Directors of the Company engaged Coopers &
Lybrand, L.L.P., to audit its financial statements for the five months
ended December 31, 1993 and the twelve month periods ended December 31,
1994 and 1995. Prior to engaging Coopers & Lybrand, L.L.P., the Company
did not consult them regarding the application of an accounting principle
to any specified transaction or any matter either that was the subject of a
disagreement with its former auditors or that was a reportable event under
the rules of the Securities and Exchange Commission.
The approval of this appointment requires the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or by
proxy and voting.
The Board of Directors recommends that the shareholders vote FOR
ratification of the appointment of Coopers & Lybrand, L.L.P. as principal
independent auditors for the five (5) months ended December 31, 1993 and
the years ended December 31, 1994, 1995 and 1996, and your proxy will be so
voted unless you specify otherwise.
SHAREHOLDER PROPOSALS
Any shareholder who intends to present a proposal at the next Annual
Meeting of shareholders for inclusion in the Company's Proxy Statement and
Proxy form relating to such meeting must submit such proposal by January
31, 1997 to the Company at its principal executive offices.
OTHER MATTERS
Management knows of no other matters other than as set forth in this
Proxy Statement which are to be considered at the meeting. If any other
business shall properly come before the meeting, the proxy holders will, as
to such items, vote the shares represented by management proxies in
accordance with their best judgment.
SOLICITATION OF PROXIES
It is expected that the solicitation will be primarily by mail. The
cost of solicitation by management will be borne by the Company. The
Company will reimburse brokerage firms and other persons representing
beneficial owners of shares for their reasonable disbursements in
forwarding solicitation material to such beneficial owners. Proxies may
also be solicited by certain of the Company's directors and officers,
without additional compensation, personally or by mail, telephone, telegram
or otherwise.
ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 is being furnished to the shareholders concurrently with
this Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
June 12, 1996
