<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 20, 1996
REGISTRATION NO. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------
FIRST COMMONWEALTH, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
-----------------------------
DELAWARE 75-2154228
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
SUITE 600
444 NORTH WELLS STREET
CHICAGO, ILLINOIS 60610
(312) 644-1800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
-----------------------------
CHRISTOPHER C. MULTHAUF
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
FIRST COMMONWEALTH, INC.
SUITE 600
444 NORTH WELLS STREET
CHICAGO, ILLINOIS 60610
(312) 644-1800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
JOHN J. SABL
SIDLEY & AUSTIN
ONE FIRST NATIONAL PLAZA
CHICAGO, ILLINOIS 60603
(312) 853-7000
-----------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the Registration Statement becomes effective.
<PAGE>
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [_] ___________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_] _______________
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $.001 par value(2)(3) 231,399 shares $18.125 $4,194,107 $1,271
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</TABLE>
(1) The shares of Common Stock registered hereby may be sold from time to time
at prices computed upon the basis of fluctuating market prices.
Accordingly, the proposed maximum offering price per share has been
estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based
upon the average of the high and low prices of $18.50 and $ 17.75,
respectively, for such shares on the Nasdaq National Market on December 16,
1996.
(2) Includes 231,399 associated preferred stock purchase rights ("Rights") to
purchase 1/100 of a share of Series A Junior Participating Preferred Stock,
par value $.001 per share. Rights initially are attached to and trade with
the Common Stock of the Registrant. The value attributable to such Rights,
if any, is reflected in the market price of the Common Stock.
(3) Pursuant to Rule 416 under the Securities Act, there is also registered
hereby an indeterminate number of securities that may be issued with
respect to such shares of Common Stock as a result of stock splits, stock
dividends or similar transactions.
-----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ Information contained herein is subject to completion or amendment. A +
+ registration statement relating to these securities has been filed with the +
+ Securities and Exchange Commission. These securities may not be sold nor +
+ may offers to buy be accepted prior to the time the registration statement +
+ becomes effective. This prospectus shall not constitute an offer to sell or +
+ the solicitation of an offer to buy nor shall there be any sale of these +
+ securities in any State in which such offer, solicitation or sale would be +
+ unlawful prior to registration or qualification under the securities laws +
+ of any such State. +
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED DECEMBER 20, 1996
PROSPECTUS
231,399 Shares
FIRST COMMONWEALTH, INC.
Common Stock
This Prospectus relates to 231,399 shares (the "Shares") of Common Stock,
par value $.001 per share, including associated preferred stock purchase rights
(the "Common Stock"), of First Commonwealth, Inc. a Delaware corporation (the
"Company"), for reoffer and resale from time to time by the Selling Stockholders
identified in this Prospectus. See "Stockholders." The Company will
not receive any proceeds from the sale of Shares by the Selling Stockholders.
The Common Stock trades on the Nasdaq National Market under the symbol
FCWI. On December 16, 1996, the closing price of the Common Stock on the Nasdaq
National Market was $18.50 per share.
The Selling Stockholders intend to dispose of the Shares offered hereby
from time to time in one or more of the following transactions: (a) to
underwriters who will acquire the shares for their own account and resell them
in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale (any
public offering price and any discount or concessions allowed or reallowed or
paid to dealers may be changed from time to time); (b) through brokers, acting
as principal or agent, in transactions (which may involve crosses and block
transactions) in the over-the-counter market, in special offerings, or
otherwise, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices, at negotiated prices or at fixed prices; (c)
directly or through brokers or agents in private sales at negotiated prices, or
(d) by any other legally available means. See "Plan of Distribution."
All of the Shares being offered hereby were issued by the Company to the
Selling Stockholders in connection with the acquisition by the Company of
Smileage Dental Services, Inc. on July 18, 1996. The Shares have been registered
with the Securities and Exchange Commission pursuant to a Registration Rights
Agreement entered into in connection with such acquisition. Pursuant to such
Registration Rights Agreement, the Company has agreed to indemnify the Selling
Stockholders against certain civil liabilities, including certain liabilities
under the Securities Act of 1933, as amended (the "Securities Act"), or to
contribute to payments the Selling Stockholders may be required to make if such
indemnification is not available. Pursuant to such Registration Rights
Agreement, the Company is also required to bear and pay all expenses, estimated
to be $20,000, incurred in connection with such registration, other than
underwriting discounts and commissions relating to the Shares, if any, which
will be paid by the Selling Stockholders on a pro rata basis. See "Selling
Stockholders."
The Selling Stockholders and any broker-dealers, agents or underwriters
which participate in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any commissions or
purchase discounts received by them may be deemed to be commissions or discounts
under the Securities Act. If required, the names of any underwriters, brokers,
dealers or agents involved in the sale of the Shares and the applicable
commission or discount, if any, will be set forth in an accompanying supplement
to this Prospectus.
PROSPECTIVE PURCHASERS SHOULD CAREFULLY CONSIDER THE FACTORS SET
FORTH UNDER "RISK FACTORS" BEGINNING ON PAGE 3.
-----------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS DECEMBER __, 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549; New York Regional Office, Public Reference Room, Seven
World Trade Center, 13th Floor, New York, New York 10048; and Chicago Regional
Office, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661. Copies of
such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Additionally, copies of reports, proxy statements and other information
filed with the Commission electronically by the Company may be inspected by
accessing the Commission's Internet site at http://www.sec.gov. The Company's
Common Shares are listed on the Nasdaq National Market, and reports, proxy
statements and other information concerning the Company may be inspected at the
office of the National Association of Securities Dealers, Inc., 1735 K. Street,
N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 (including all amendments thereto, the "Registration Statement")
under the Securities Act with respect to the Common Stock offered hereby. As
permitted by the rules and regulations of the Commission, this Prospectus omits
certain information contained in the Registration Statement. For further
information with respect to the Company and the Common Stock offered hereby,
reference is hereby made to the Registration Statement and to the exhibits and
schedules filed therewith. Statements contained in this Prospectus regarding the
contents of any agreement or other document filed as an exhibit to the
Registration Statement are not necessarily complete, and in each instance
reference is made to the copy of such agreement filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. The Registration Statement, including the exhibits and schedules
thereto, may be inspected at the public reference facilities maintained by the
Commission as described above and copies of all or any part thereof may be
obtained from such office upon payment of the prescribed fees.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, which have heretofore been filed by the Company
with the Commission pursuant to the Exchange Act, are incorporated by reference
herein and shall be deemed to be a part hereof: (i) the Company's Annual Report
on Form 10-K for the year ended December 31, 1995; (ii) the Company's Quarterly
Reports on Form 10-Q dated March 31, June 30 and September 30, 1996; (iii) the
Company's Current Report on Form 8-K dated July 18, 1996, as amended on
September 30, 1996 and December 17, 1996; (iv) the description of the Common
Stock, par value $.001 per share, including associated Preferred Stock Purchase
Rights, of the Company contained in the Company's Report on Form 8-A, as filed
with the Commission on October 24, 1995; and (v) all other reports filed by the
Company pursuant to Section 13(a) and 15(d) of the Exchange Act since December
31, 1995.
All documents, subsequently filed by the Company with the Commission to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment to the Registration Statement of which this
Prospectus is a part which indicates that all securities offered have been sold
or which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Prospectus and made a part hereof from their
respective dates of filing (such documents, and the documents enumerated above,
being hereinafter referred to as "Incorporated Documents"). Any statement
contained in an Incorporated Document shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed Incorporated Document
modifies or supersedes such statement. Any such statements so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, on the written or oral request of such
person, a copy of any and all of the Incorporated Documents, other than exhibits
to such documents unless such exhibits are specifically incorporated by
reference therein. Requests should be directed to Investor Relations, First
Commonwealth Inc., Suite 600, 444 North Wells Street, Chicago, Illinois 60610,
telephone number (312) 644-1800.
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<PAGE>
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
Certain statements included or incorporated by reference in this Prospectus
under the caption "Risk Factors" and elsewhere in this Prospectus constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance, or achievements of the Company to be materially different
from any future results, performance, or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things,
increased competition in the markets in which the Company operates; changes in
regulation affecting the Company; changes in the utilization of services;
changes in arrangements relating to payments to providers; the level of the
Company's indemnity enrollment and the related indemnity risk of indemnity
plans; the ability to integrate and successfully operate acquired businesses and
the risks associated with such businesses; the possible need for, and ability to
obtain if needed, financing on acceptable terms to finance the Company's growth
strategy; the ability of the Company to operate within the limitations imposed
by any such financing arrangements; and other factors referenced or incorporated
by reference in this Prospectus.
THE COMPANY
The Company is a regionally focused managed dental benefits company which
has operations in Illinois, Northern Indiana, and Wisconsin and which is in the
process of expanding into Detroit, Michigan, Indianapolis, Indiana and St.
Louis, Missouri. The Company markets a broad range of innovative dental products
designed to meet the needs of a wide range of employers. The Company currently
serves over 420,000 members through its managed care, indemnity/PPO and fee
income products. Unless the context otherwise requires, all references to the
"Company" herein shall mean First Commonwealth, Inc., a Delaware corporation and
its subsidiaries.
RISK FACTORS
In addition to the other information included or incorporated by reference
in this Prospectus, prospective purchasers of the Shares should carefully
consider the following factors in evaluating an investment in the shares of
Common Stock offered hereby.
Competition. The Company operates in a highly competitive environment. Its
competitors principally include insurance companies, which often offer both
managed dental care and indemnity dental products in the Company's market, and
smaller independent companies offering managed dental care products similar to
those offered by the Company. The Company also competes with numerous other
types of businesses in the health care industry, including health maintenance
organizations, limited health services corporations, self-funded plans which are
administered by third party administrators, preferred provider organizations and
other discount fee-for-service dental plans. The Company has experienced, and
expects that it will continue to experience in the future, increased competition
from all such sources. Many of the Company's competitors are larger and have
substantially greater financial and other resources than the Company. Price
considerations have been a significant competitive factor in the past and the
Company believes pricing will continue to be a significant competitive factor in
the future, especially with respect to large government and labor union
contracts awarded on the basis of competitive bidding. Currently such contracts
constitute less than 5% of the Company's total revenues. No assurance can be
given that the Company will be able to compete effectively in the future.
Geographic Concentration. The Company's operations are located primarily in
the Chicago metropolitan area and the Company is expanding to markets which are
contiguous to its primary market. Accordingly, the Company's results of
operations may be more adversely affected by localized economic, regulatory or
competitive conditions than more geographically diverse companies.
Dependence on Large Groups. A substantial proportion of the Company's
revenues and gross margin are derived from contracts with a limited number of
large groups. Most of the Company's contracts with groups are subject to annual
renewal. There can be no assurance that the Company will continue to provide
dental benefit products to any particular group after its renewal date, or that
the current terms of its agreement with any such group, including pricing terms,
will not
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<PAGE>
be changed upon renewal. The loss of one or more of such large groups or the
renewal of the agreement of any such group on terms less favorable to the
Company could have a material adverse effect on the Company's business,
operating results or financial condition.
Regulation. The business of the Company is subject to extensive regulation,
by, as may be applicable, the insurance statutes and regulations of the states
in which the Company operates with respect to prepaid health plans, insurance,
reinsurance and related operations (''Insurance Regulation''). Insurance
Regulation, which may vary from state to state, establishes extensive
operational, financial, reporting, and other requirements applicable to the
Company's business in such state. Depending upon the nature and scope of
regulatory requirements adopted from time to time in each of the states having
jurisdiction over the legal entities or operations of the Company, Insurance
Regulation may materially and adversely affect the business, operating results
and financial condition of the Company. Insurance Regulation generally requires
the Company to be licensed by the state insurance department in order to offer
its dental care products, administrative services or preferred provider network
in such state and otherwise conduct its operations in such state. In addition,
Insurance Regulation generally prescribes minimum levels of net worth and
reserves, limits the ability of the Company's subsidiaries to pay dividends to
the extent required surplus would be impaired, requires filings for approval of
products and services offered by the Company and its subsidiaries and the filing
of rate schedules, certain product literature, forms of contracts with
subscribers, dentists and others (which may entail substantial delay in
implementing changes or introducing new products), establishes minimum benefit
levels for the Company's dental products in some cases, provides for periodic
examinations, including quality assessment review, establishes standards for the
Company's management and other personnel, specifies measures for resolving
grievances and requires prior approval if more than a certain percentage of the
Company's outstanding voting securities are to be acquired. Changes in Insurance
Regulation or the application thereof could involve, among other things,
increased capitalization requirements, limitations on the payment of dividends,
distributions, or principal or interest on subordinated debt, the imposition of
guaranty fund assessments, mandated health benefits and other terms of
enrollment contracts, restrictions on the use of ''fronting arrangements'' and
reinsurance agreements, requirements for admission of or licensing as foreign
reinsurance companies, limited health service organizations, preferred provider
administrators and third party administrators, state health insurance reforms
for groups and individuals, ''any willing provider'' requirements limiting the
Company's right to restrict the size of its provider network, minimum loss ratio
requirements, or other matters. There can be no assurance that changes in
Insurance Regulation or the application of existing Insurance Regulation will
not materially and adversely affect the business or financial condition of the
Company. Failure of the Company to comply with the Insurance Regulation could
subject the Company to financial penalties, cease and desist orders or the
revocation of one or more licenses required to conduct its business. Expansion
of the Company's business may subject the Company to additional regulation by
the state or federal governments. The insurance statutes and regulations of
certain states may limit the ability of the Company to expand its operations in
or into such states, or may substantially delay the commencement of operations
in such states as a result of the need to comply with the licensing and other
requirements of such states.
Cost Sharing and Specialty Care. The Company seeks to enter into capitation
arrangements whenever possible as its primary means of managed care dentist
compensation. In addition to capitation arrangements, the Company also may
negotiate other payment arrangements with dentists and specialists. Such
arrangements may involve, among other things, contributions by the Company
toward costs for infection control or discounted fee-for-service pricing
arrangements. Certain specialists with which the Company has provider contracts
are compensated by the Company on such a discounted fee-for-service basis and
not on a capitated basis. Accordingly, the Company retains the risk of its share
of the cost for services provided by such specialists. If the utilization of
specialty care benefits substantially increase under the Company's managed care
plans, the Company's profitability could be materially and adversely affected.
Underwriting Risk of Indemnity Plans. An increasing portion of the
Company's business is the sale of indemnity plans as part of its Managed
Choice/SM/ product. The Company retains virtually all of the underwriting risk
of its indemnity products. Due to the variability in both the utilization of
services and the cost per service under an indemnity plan, increases in
indemnity enrollment increase the underwriting risk undertaken by the Company.
Although dental indemnity plans have limitations on coverage (including limits
on procedures covered, amounts covered per procedure and annual and lifetime
benefits), any failure to effectively manage underwriting risk could have a
material adverse effect on the Company's business, operating results or
financial condition. The dental benefit costs associated with the Company's
indemnity products include an estimate of dental expenses which are insured by
the Company and incurred by its members outside of the Company's provider
network, but which have not yet been reported to the Company. If the utilization
or cost per service incurred outside
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<PAGE>
of the Company's network were to be greater than estimated, the Company's
business, operating results or financial condition could be materially and
adversely affected.
Arrangements with Providers; Insurance. The Company believes that the
development of a large, high quality network of dental service providers at
competitive terms and prices has been a critical element in its growth. Should
the Company for any reason be unable to develop, maintain or expand such a
network in new or existing areas at competitive terms and prices, its business,
operating results or financial condition may be materially and adversely
affected. The Company's agreements with providers are typically subject to
periodic renewal and to termination by either party on short notice. The Company
generally does not contract with providers on an exclusive basis.
Dental network providers are required to maintain at least a certain
minimum level of malpractice coverage and participate in the Company's quality
assessment program. The Company also maintains insurance protecting it against
liability relating to acts or omissions of its participating providers, who are
not agents or employees of the Company. Although no material malpractice or
similar claims have been asserted against the Company in the past, there can be
no assurance that the Company will not become involved in such litigation or
otherwise become subject to material claims relating to its managed care or PPO
network dentists in the future. In the event of litigation or claims against the
Company for malpractice by one of the providers or for negligence in
credentialing one of the providers in its networks, there is no assurance that
the Company's professional liability insurance will be sufficient to cover any
liability which might result from such litigation or claims.
Dependence Upon Senior Executives. The Company is currently dependent upon
the ability and experience of its senior executives and other key employees, and
there can be no assurance that the Company will be able to retain such senior
executives and key employees. If, for any reason, such personnel do not remain
active in the Company's management, the Company's business, operating results or
financial condition could be materially and adversely affected.
Internal Growth and Acquisitions. The Company's future results will be
affected by its ability to manage growth and acquisitions effectively. There can
be no assurance that the Company will be able to successfully expand into new
markets through internal growth or acquisitions. The success of any expansion of
the Company's business into new markets through internal growth will depend upon
the Company's ability to establish a competitive provider network and a network
of brokers, comply with regulatory requirements and other matters. Acquisitions
of managed dental care businesses are subject to the receipt of prior regulatory
approvals and the process of obtaining such approvals is costly and time
consuming. The success of any completed acquisition will depend in large measure
on the Company's ability to integrate the operations and management information
systems of the acquired business. The process of integrating acquired businesses
may involve unforeseen difficulties and may require a disproportionate amount of
the Company's financial and other resources, including management time.
Considering the Company's recent significant growth, the Company's historical
financial results may not be indicative of its future performance. There can be
no assurance that the Company will continue to grow or that the Company will be
effective in managing its future growth, expanding its facilities and operations
or attracting and retaining qualified personnel. Any failure to effectively
achieve or manage growth, expand its facilities and operations or attract and
retain personnel could have a material adverse effect on the Company's business,
operating results or financial condition.
Health Care Reform. During 1994, Congress considered legislation proposing
comprehensive reform of the health care system in the United States. The Company
cannot predict whether or when future health care reform initiatives at the
federal or state level or other initiatives affecting insurance and/or managed
care providers such as the Company may be proposed, enacted or implemented or
what impact such initiatives may have on the Company's business, operating
results or financial condition.
Prior Approvals of Certain Share Acquisitions; Anti-takeover Effect of
Regulatory and Charter Provisions; Stockholders Rights Plan. In general,
Insurance Regulation of the states in which the Company operates requires a
person seeking to acquire control, directly or indirectly, of certain regulated
entities or of any person controlling such an entity to file with the relevant
insurance regulatory authority an application for change of control (commonly
known as a "Form A") containing certain information regarding the identity and
background of the acquiror and its affiliates, the source and amount of funds to
be used to effect the acquisition and certain other matters. For purposes of
many of these statutes and regulations promulgated thereunder, a person that
owns or controls, directly or indirectly, 10% or more of the outstanding voting
securities of any other person is generally presumed to "control" that other
person. Accordingly, any purchase of Common
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Stock that would result in the purchaser having beneficial ownership of Common
Stock equal to or in excess of the specified threshold level, which may be lower
than 10% in some states or, as a result of future regulatory action, in one or
more of those states in which the Company currently operates, pursuant to the
offering of Common Stock made hereby or otherwise (including through purchases
in the open market), must file for and obtain prior approval from all applicable
regulatory authorities. Such prior approval could also apply to the acquisition
of proxies to vote specified percentages of the outstanding Common Stock and,
therefore, could delay or prevent a stockholder from acquiring such proxies in a
proxy contest. No assurance can be given that the Company would not seek to
invoke these laws and regulations in a proxy contest or a tender offer or merger
situation. Failure to comply with change of control provisions under applicable
state insurance statutes by an investor acquiring the Company's Common Stock at
or above the specified threshold levels could have a material adverse effect on
such investor, including the possible entry of a divestiture order, and could
also result in adverse regulatory action against the Company. Prospective and
current stockholders, and not the Company, are responsible for compliance with
Form A and similar filing and prior approval requirements. The Company assumes
no obligation with respect to these matters.
Certain provisions of the Company's Second Restated Certificate of
Incorporation and Amended and Restated By-laws and certain sections of the
Delaware General Corporation Law, including those which authorize the Company's
Board of Directors to issue shares of preferred stock and to establish the
voting rights, preferences and other terms thereof without further action by
stockholders, may be deemed to have an anti-takeover effect and may discourage
takeover attempts not first approved by the Board of Directors (including
takeovers which some stockholders may deem to be in their best interests). These
provisions could delay or frustrate the removal of incumbent directors or the
assumption of control by an acquiror, even if such removal or assumption of
control would be beneficial to stockholders. These provisions also could
discourage or make more difficult a merger, tender offer or proxy contest, even
if such events would be beneficial, in the short term, to the interest of
stockholders. Such provisions include, among other things, a classified Board of
Directors serving staggered three-year terms, the elimination of stockholder
voting by consent, a provision providing that only the Chairman of the Board of
Directors, President or Board of Directors may call special meetings of
stockholders, the removal of Directors without cause only by the holders of at
least 75% of the shares entitled to vote, a provision permitting the Board of
Directors to take into account factors in addition to potential economic
benefits to stockholders, and certain advance notice requirements for
stockholder proposals and nominations for election to the Board of Directors.
The Company is subject to Section 203 of the Delaware General Corporation Law
which, in general, imposes restrictions upon certain acquirors (including their
affiliates and associates) of 15% or more of the Company's Common Stock.
In addition, the Company has a stockholders rights plan which may be deemed
to have an anti-takeover effect and may discourage or prevent takeover attempts
not first approved by the Board of Directors (including takeovers which certain
stockholders may deem to be in their best interests).
Effective Control by Management and Principal Stockholders. The Company's
two senior executive officers, Messrs. Christopher C. Multhauf and David W.
Mulligan, together with certain other officers, directors and certain
stockholders, may, by reason of their holdings of a substantial number of shares
of Common Stock of the Company, have the ability to exert significant influence
over the election of directors and other matters, including the outcome of
certain fundamental corporate transactions (such as certain mergers and sales of
assets) requiring stockholder approval.
Possible Volatility of Stock Price. The stock market historically has
experienced volatility which has particularly affected the market prices of
securities of many companies in the health care industry and which sometimes has
been unrelated to the operating performance of such companies. The market price
of the Common Stock may be affected by many factors, including, among others,
investors' perceptions of the Company and its prospects, fluctuations in
quarterly results, and general and economic market conditions.
No Dividends. The Company has never paid cash dividends on its Common
Stock. The Company currently intends to retain earnings to finance the growth
and development of its business and does not anticipate paying cash dividends in
the foreseeable future. The Company's ability to pay dividends on its Common
Stock is limited by applicable regulatory requirements.
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USE OF PROCEEDS
All of the Shares are issued and outstanding shares of Common Stock, and
are being offered and sold by and on behalf of the Selling Stockholders. The
Company will not receive any proceeds from the sale of the Shares by the Selling
Stockholders.
SELLING STOCKHOLDERS
The Selling Stockholders have provided the information included in the
following table and footnotes thereto relating to the Selling Stockholders and
the Shares which may be sold pursuant to this Prospectus.
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to the Offering After Offering
--------------------- Shares Being --------------------
Name of Selling Stockholder Number Percent Offered(3) Number Percent
- ----------------------------- ----- ------- ---------- ------ -------
<S> <C> <C> <C> <C> <C>
Robert F. Chojnacki.......... 56,992 1.6% 56,849 143 *
David H. Erickson............ 58,199(1) 1.6% 56,849 1,350(1) *
John Sebanc.................. 39,794 1.1% 39,794 -- --
Stephen F. Froehlich......... 29,151 * 28,751 400 *
Jesley C. Ruff............... 23,020 * 19,930 3,090 *
Ann Sebanc, Trustee of
the Ann Sebanc Trust....... 17,055 * 17,055 -- --
Don Deike.................... 7,218(2) * 6,943 275(2) *
Gerald D. Patterson.......... 5,728 * 5,228 500 *
------- --- ------- ----- -------
TOTAL...................... 237,157 6.6% 231,399 5,758 *
======= === ======= ===== =======
</TABLE>
- -----------
* Less than 1%
(1) Includes 350 shares of Common Stock held in trust for his children.
(2) Includes 125 shares of Common Stock held by spouse.
(3) Assumes the Selling Stockholders sell all the Shares.
All of the shares of Common Stock being offered hereby were acquired by the
Selling Stockholders in connection with the acquisition by the Company of
Smileage Dental Services, Inc. on July 18, 1996. In connection with such
acquisition, the Company entered into a Registration Rights Agreement, dated
July 18, 1996 (the "Registration Rights Agreement"), with the Selling
Stockholders pursuant to which the Company granted the Selling Stockholders
certain rights to require the Company to take action to register the Shares
under the Securities Act. The Registration Rights Agreement provides, among
other things, that at any time on or after November 16, 1996, if holders of 51%
or more of the Shares make a written request to the Company, the Company will
promptly cause there to be filed with the Commission a registration statement
for an offering on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act, and each holder of Shares will be entitled to have such holder's
Shares included in such registration statement. The Company received such a
demand from the holders of all of the 231,399 Shares and, pursuant to the
requirements of the Registration Rights Agreement, has caused the Shares to be
registered under the Securities Act. In addition, pursuant to the Registration
Rights Agreement, the Company is required to use its best efforts to keep such
registration statement continuously effective until the earlier of (i) such time
as such Shares could be disposed of pursuant to Rule 144 under the Securities
Act in a single public sale or disposition or (ii) such date as of which all
such shares have been sold in the manner described in this Prospectus.
-7-
<PAGE>
Pursuant to the Registration Rights Agreement, the Company is required to
bear and pay all expenses incurred in connection with this registration, other
than underwriting discounts and commissions relating to the Shares (which will
be paid by the Selling Stockholders). The Company has also agreed to indemnify
the Selling Stockholders against certain civil liabilities, including certain
liabilities under the Securities Act, or to contribute to payments the Selling
Stockholders may be required to make if such indemnification is not available.
None of the Selling Stockholders have had any position, office or other
material relationship with the Company or any of its predecessors or affiliates
in the last three years, except as described above.
PLAN OF DISTRIBUTION
The Selling Stockholders have informed the Company that they intend to
dispose of the shares of Common Stock offered hereby from time to time in one or
more of the following transactions: (a) to underwriters who will acquire the
shares for their own account and resell them in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale (any public offering price and any
discount or concessions allowed or reallowed or paid to dealers may be changed
from time to time); (b) through brokers, acting as principal or agent, in
transactions (which may involve crosses and block transactions) in the over-the-
counter market, in special offerings, or otherwise, at market prices prevailing
at the time of sale, at prices related to such prevailing market prices, at
negotiated prices or at fixed prices; (c) directly or through brokers or agents
in private sales at negotiated prices, or (d) by any other legally available
means.
Broker-dealers participating in any such transactions as agent may receive
commissions from Selling Stockholders (and, if they act as agent for the
purchaser of such shares, from such purchaser) and may effect resales through
other broker-dealers, in which case discounts or commissions may be allowed or
reallowed. Participating broker-dealers may agree with Selling Stockholders to
sell a specified number of shares at a stipulated price per share and, to the
extent such broker-dealer is unable to do so as agent for a Selling Stockholder,
to purchase as principal any unsold shares at the price required to fulfill the
broker-dealer's commitment to the Selling Stockholder.
The Selling Stockholders and any broker-dealers, agents or underwriters
which participate in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any commissions or
purchase discounts received by them may be deemed to be commissions or discounts
under the Securities Act.
Under the securities laws of certain jurisdictions, the Shares may not be
offered or sold in such jurisdictions except through persons who are registered
or licensed brokers or dealers in such jurisdictions.
LEGAL MATTERS
Certain legal matters with respect to the shares of Common Stock offered
hereby have been passed upon by Sidley & Austin, Chicago, Illinois.
EXPERTS
The consolidated financial statements and financial statement schedules of
the Company as of December 31, 1995 and 1994, and for each of the three years in
the period ended December 31, 1995, incorporated by reference in this Prospectus
and in the Registration Statement mentioned below have been audited by Arthur
Andersen LLP, independent public accountants, as set forth in their reports
thereon incorporated by reference in this Prospectus and in the Registration
Statement, and are so incorporated by reference in reliance upon such reports
given upon the authority of such firm as experts in auditing and accounting.
-------------
-8-
<PAGE>
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY SELLING STOCKHOLDER. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY COMMON STOCK BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING SUCH AN OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO,
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
-9-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses (other than any underwriting discounts and commissions)
payable in connection with the sale of the Common Stock offered hereby are as
follows:
<TABLE>
<CAPTION>
AMOUNT
------
<S> <C>
SEC Registration Fee.......... $ 1,271
Legal fees and expenses....... 15,000
Accounting fees and expenses.. 2,000
Miscellaneous................. 1,729
-------
Total..................... $20,000
=======
</TABLE>
Pursuant to the Registration Rights Agreement, which is incorporated by
reference herein as Exhibit 99.1 hereto, the Registrant will bear all expenses
shown above.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law and the Registrant's Second Restated
Certificate of Incorporation and Restated Bylaws provide for indemnification of
the Registrant's directors and officers for liabilities and expenses that they
may incur in such capacities. In general, directors and officers are indemnified
with respect to actions taken in good faith in a manner reasonably believed to
be in, or not opposed to, the best interests of the Registrant, and with respect
to any criminal action or proceeding, actions that the indemnitee had no
reasonable cause to believe were unlawful. Reference is made to the Registrant's
Second Restated Certificate of Incorporation and Restated Bylaws, which are
incorporated by reference as Exhibits 4.1 and 4.2 hereto, respectively.
The Registrant also has a directors and officers liability insurance policy
which provides for indemnification of its directors and officers against certain
liabilities incurred in their capacities as such which may include liabilities
under the Securities Act.
The Registration Rights Agreement, which is incorporated by reference as
Exhibit 99.1 hereto, provides that the Selling Stockholders are obligated, under
certain circumstances, to indemnify the Registrant and directors, officers and
controlling persons of the Registrant against certain liabilities, including
liabilities under the Securities Act of 1933, or to contribute to payments the
Registrant or such persons may be required to make if such indemnification is
not available.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
---------- -----------
<C> <S>
4.1 -- Second Restated Certificate of Incorporation of the
Registrant as amended (incorporated herein by reference
to Exhibit 3.1 as filed with the Registrant's
Registration Statement on Form S-1, as amended,
Registration No. 33-97426).
4.2 -- Restated By-laws of the Registrant, as amended
(incorporated herein by reference to Exhibit 3.2 as filed
with the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996).
4.3 -- Stockholders Rights Agreement between the Registrant and
First Chicago Trust Registrant of New York (incorporated
herein by reference to Exhibit 4.1 as filed with the
Registrant's Registration Statement on Form S-1, as
amended, Registration No. 33-97426).
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
5.1 -- Opinion of Sidley & Austin
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Sidley & Austin (included in Exhibit 5.1)
24.1 -- Powers of Attorney (included on signature page)
99.1 -- Registration Rights Agreement, dated July 18, 1996, among the
Registrant and the Selling Shareholders (incorporated herein by
reference to Exhibit 99.1 as filed with the Registrant's Current
Report on Form 8-K, dated July 18, 1996).
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(b) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(c) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
provided, however, that paragraphs 1.(a) and 1.(b) do not apply
if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by reference in this
Registration Statement.
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered hereby which
remain unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering hereof.
II-2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to provisions described in Item 15 above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Chicago, Illinois on December 20, 1996.
FIRST COMMONWEALTH, INC.
By: /s/ Christopher C. Multhauf
----------------------------------
Christopher C. Multhauf
Chairman of the Board of Directors
and Chief Executive Officer
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of First Commonwealth, Inc.,
hereby severally constitute and appoint Christopher C. Multhauf and David W.
Mulligan, and each of them singly, our true and lawful attorneys, with full
power to them and each of them singly, to sign for us in our names in the
capacities indicated below, all pre-effective and post-effective amendments to
this registration statement, including any filings pursuant to Rule 462(b) under
the Securities Act of 1933, as amended, and generally to do all things in our
names and on our behalf in such capacities to enable First Commonwealth, Inc. to
comply with the provisions of the Securities Act of 1933, as amended, and all
requirements of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed on December 20, 1996 by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE(S)
--------- --------
<S> <C>
/s/ Christopher C. Multhauf Chairman of the Board of Directors and Chief
- --------------------------- Executive Officer (principle executive officer)
Christopher C. Multhauf
/s/ David W. Mulligan Director, President and Chief Operating Officer
- ---------------------------
David W. Mulligan
/s/ Scott B. Sanders Chief Financial Officer and Treasurer (principal
- --------------------------- financial and accounting officer)
Scott B. Sanders
/s/ Richard M. Burdge, Sr. Director
- ---------------------------
Richard M. Burdge, Sr.
/s/ Jackson W. Smart, Jr. Director
- ---------------------------
Jackson W. Smart, Jr.
/s/ William J. McBride Director
- ----------------------------
William J. McBride
</TABLE>
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
---------- -----------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
4.1 -- Second Restated Certificate of Incorporation of
the Registrant as amended (incorporated herein
by reference to Exhibit 3.1 as filed with the
Registrant's Registration Statement on Form S-1,
as amended, Registration No. 33-97426).
4.2 -- Restated By-laws of the Registrant, as amended
(incorporated herein by reference to Exhibit
3.2 as filed with the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June
30, 1996).
4.3 -- Stockholders Rights Agreement between the
Registrant and First Chicago Trust Registrant of
New York (incorporated herein by reference to
Exhibit 4.1 as filed with the Registrant's
Registration Statement on Form S-1, as amended,
Registration No. 33-97426).
5.1 -- Opinion of Sidley & Austin
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Sidley & Austin (included in Exhibit
5.1)
24.1 -- Powers of Attorney (included on signature page)
99.1 -- Registration Rights Agreement, dated July 18,
1996, among the Registrant and the Selling
Shareholders (incorporated herein by reference
to Exhibit 99.1 as filed with the Registrant's
Current Report on Form 8-K, dated July 18,
1996).
</TABLE>
<PAGE>
EXHIBIT 5
SIDLEY & AUSTIN
ONE FIRST NATIONAL PLAZA
CHICAGO, ILLINOIS 60603
December 20, 1996
First Commonwealth, Inc.
Suite 600
444 North Wells Street
Chicago, Illinois 60610
Re: Registration of 231,399 Shares of Common Stock, $.001 par value,
and associated Preferred Stock Purchase Rights
----------------------------------------------------------------
Ladies and Gentlemen:
We refer to the Registration Statement on Form S-3 (the "Registration
Statement") being filed on the date hereof by First Commonwealth, Inc., a
Delaware corporation (the "Company"), with the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, as amended (the "Securities
Act"), relating to the registration of 231,399 shares of Common Stock, $.001 par
value (the "Shares"), of the Company, together with 231,399 Preferred Stock
Purchase Rights (the "Rights") associated therewith, to be sold by certain
selling stockholders (the "Selling Stockholders") identified in the Registration
Statement. The terms of the Rights are set forth in the Rights Agreement dated
as of November 1, 1995 (the "Rights Agreement") between the Company and First
Chicago Trust Company of New York, as Rights Agent.
We are familiar with the proceedings to date with respect to the proposed
offering and sale of the Shares, together with the associated Rights, and have
examined such records, documents and questions of law, and satisfied ourselves
as to such matters of fact, as we have considered relevant and necessary as a
basis for this opinion.
Based on the foregoing, we are of the opinion that:
1. The Company is duly incorporated and validly existing under the
laws of the State of Delaware.
2. The Shares are legally issued, fully paid and non-assessable.
<PAGE>
First commonwealth, Inc.
December 20, 1996
Page 2
3. Rights associated with the Shares will be legally issued when such
Rights shall have been duly issued in accordance with the terms of the Rights
Agreement.
We do not find it necessary for the purposes of this opinion to cover, and
accordingly we express no opinion as to, the application of the securities or
blue sky laws of the various states to the sale of the Shares.
This opinion is limited to the General Corporation Law of the State of
Delaware and the Securities Act.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to all references to our Firm included in or made a
part of the Registration Statement.
Very truly yours,
Sidley & Austin
<PAGE>
EXHIBIT 23.1
CONSENT OF ARTHUR ANDERSEN LLP
As independent accountants, we hereby consent to the incorporation by
reference in this S-3 Registration Statement of our reports dated February 12,
1996 on the consolidated financial statements and schedules included in First
Commonwealth, Inc. and Subsidiaries' Annual Report on Form 10-K for the year
ended December 31, 1995, and to all references to our Firm included in this
Registration Statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois
December 17, 1996
