<PAGE> 1
As filed with the Securities and Exchange Commission on March 25, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
UICI
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(Exact name of registrant as specified in its charter)
Delaware 75-2044750
- --------------------------------------------- -----------------------
(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
4001 McEwen Drive, Suite 200, Dallas, Texas 75244
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 960-8497
--------------
Vernon R. Woelke Vernon R. Woelke
4001 McEwen Drive, Suite 200 4001 McEwen Drive, Suite 200
Dallas, Texas 75244 Dallas, Texas 75244
(972) 960-8497 (972) 960-8497
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(Name, address, including zip (Copies of Communications to)
code and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to public: From time to
time after this Registration Statement becomes effective.
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, check the following box: X
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If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item ll(A)
(1) of this Form, check the following box:
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If this Form is filed to register additional securities for an offering
pursuant to the Rule 462 (b) under the Securities Act, please check the
following box and list 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.
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box:
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CALCULATION OF REGISTRATION FEE
<TABLE>
=========================================================================================================
<S> <C>
Title of Each Class of Securities To Be Registered................ Common Stock, $0.01 par value
- ---------------------------------------------------------------------------------------------------------
Amount To Be Registered........................................... 1,634,876 shares
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Proposed Maximum Offering Price Per Share (1)..................... $26.10
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Proposed Maximum Aggregate Offering Price(1)...................... $42,670,264
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Amount of Registration Fee........................................ $12,931
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</TABLE>
(1) Calculated based on the average of the high and low reported sale
prices of a share of the Company's Common Stock as reported by NASDAQ
as of a date within five (5) business days of the date of this
Registration Statement in accordance with the provisions of Rule
457(c) under the Securities Act of 1933, as amended.
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 that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
<PAGE> 2
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
PRELIMINARY PROSPECTUS DATED MARCH 25, 1997
PROSPECTUS
1,634,876 SHARES
UICI
COMMON STOCK
------------------------------
The shares offered hereby (the "Shares") consist of 1,634,876 shares
of common stock, par value $0.01 per share (the "Common Stock"), of UICI, a
Delaware corporation (the "Company"). The Shares may be offered from time to
time by certain stockholders (the 'Selling Stockholders') identified herein.
See "Selling Stockholders and Plan of Distribution." The Company will not
receive any part of the proceeds from the sales of the Shares. All expenses of
registration incurred in connection herewith are being borne by the Company,
but all selling and other expenses incurred by the Selling Stockholders will be
borne by the Selling Stockholders.
The Selling Stockholders have not advised the Company of any specific
plans for the distribution of the Shares covered by this Prospectus, but it is
anticipated that the Shares will be sold from time to time in transactions
(which may include block transactions) on the National Association of
Securities Dealers Automated Quotation ("NASDAQ") System at the market price
then prevailing or at prices related to prevailing prices, in negotiated
transactions at negotiated prices or otherwise. See "Selling Stockholders and
Plan of Distribution".
The Company's Common Stock trades on the NASDAQ National Market tier
of The NASDAQ Stock Market under the symbol UICI. On March 24, 1997, the
closing sale price of the Common Stock was $24 7/8 per share.
THE PURCHASE OF THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.
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 _____, 1997.
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No dealer, salesperson or other person has been authorized to give any
information or to make any representations, other than those contained or
incorporated by reference in this Prospectus, in connection with the offering
contained herein and, if given or made, such information must not be relied
upon as having been authorized by the Company or the Selling Stockholders.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make such offer in such jurisdiction. Neither
the delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create any implication that there has been no change in the
affairs of the Company since the date hereof.
TABLE OF CONTENTS
<TABLE>
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Page Page
<S> <C> <C> <C>
Available Information..................... 3 Selling Stockholders and
Plan of Distribution.................. 10
Incorporation of Certain Documents
by Reference............................ 4 Description of Capital Stock............ 13
The Company............................... 5 Experts................................. 14
Risk Factors.............................. 7 Legal Matters........................... 14
Use of Proceeds........................... 10
</TABLE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities and 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
and information statements filed by the Company may be inspected and copied at
the Public Reference Section of the Commission at 450 Fifth Street, N.W.
Washington, D.C. 20549, and at the Commission's Regional Offices at Seven
World Trade Center, 13th Floor, New York, New York 10048 and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can also be obtained from the Public Reference Section
of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street N.W.,
Washington D.C. 20549 at prescribed rates. The Company's securities are quoted
on the NASDAQ National Market. Reports and other information about the Company
may be inspected at the offices maintained by the National Association of
Securities Dealers, Inc., NASDAQ Reports Section, 1735 K Street, N.W.,
Washington, D.C. 20006. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding the
Company; the address of such site is http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the "Act"), with respect to the Common Stock offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. Any statements contained herein concerning the provisions of any
document are not necessarily complete
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and, in each instance, reference is made to the copy of such document filed as
an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such
reference. Copies of the Registration Statement, including all exhibits
thereto, may be obtained from the Commission's principal office in Washington
D.C. upon payment of the fees prescribed by the Commission or may be examined
without charge at the offices of the Commission as described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions of documents filed by the Company
with the Commission are incorporated by reference in this Prospectus:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1996, filed on March 24, 1997.
(b) The registration statement on Form 8-A filed on March 17, 1986,
which discusses the terms of the Common Stock as updated by Quarterly Report on
10-Q for quarter ended June 30, 1996 filed on August 13, 1996.
Each document filed subsequent to the date of this Prospectus by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of the filing of such reports and documents.
Any statement contained in a document, all or a portion of which is
incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained or
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person
to whom a copy of this Prospectus has been delivered, upon the written or oral
request of any such person, a copy of any or all such documents which are
incorporated herein by reference (other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into the documents
that this Prospectus incorporates). Written or oral requests for copies should
be directed to: Investor Relations, UICI, 4001 McEwen Drive, Suite 200, Dallas,
Texas 75244-5082, (telephone number (972) 960-8497).
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THE COMPANY
UICI and subsidiaries (the "Company"), provides health and life
insurance and other service financial products to selected niche markets. On
June 27, 1996, the Company announced that shareholders had approved a name
change for the Company from United Insurance Companies, Inc. to UICI. The
change was effective July 1, 1996. The name change is indicative of the
Company's broadening activities beyond its historical core life, accident and
health insurance business. The Company issues health insurance policies to the
self-employed and student markets. For the self-employed market, which includes
self-employed individuals and individuals who work for small businesses with
five or fewer employees, the Company offers a range of health insurance
products. Catastrophic hospital and basic hospital-medical expense plans are
tailored to an insured's individual needs and include managed care options such
as a Preferred Provider Organization ("PPO") plan as well as other coverage
modifications. The Company markets these products through "dedicated" agency
sales forces, consisting of over 5,000 independent contractors who primarily
sell the Company's products. For the student market, the Company offers
tailored insurance programs which generally provide single school year coverage
to individual students primarily at universities but also at public and private
schools for kindergarten through grade 12. In this market, the Company sells
its products through in-house account executives who focus on colleges and
universities on a national basis. Health insurance premiums were $501.2 million
in 1996, or 69% of the Company's total revenues.
The Company issues life insurance products to selected niche markets
and acquires blocks of life insurance and annuity policies from other insurers
on an opportunistic basis. The life insurance policies issued by the Company
are marketed through a dedicated agency sales force. In addition, the Company
assists individuals with no, or troubled, credit experience in obtaining a
nationally recognized credit card by providing financial support for the card.
This product is marketed through a sales force of independent contractors. The
Company also offers a variety of services and technologies focused on lower cost
associated with healthcare administration. The Company acquired a real estate
organization in 1996 that is focused on the development, acquisition and
management of institutional quality multifamily communities in the Southeast,
Southwest and Midwest areas of the United States.
At its inception in 1984, the Company's business consisted solely of
coinsurance of health and term life insurance policies sold by United Group
Association, Inc. ("UGA") agents to the self-employed market and issued by
subsidiaries of AEGON USA, Inc. (together with its subsidiaries, "AEGON").
Principally through acquisitions of insurance companies and blocks of life
insurance and annuity policies, and the development of the underwriting and
administrative capabilities to issue insurance policies directly, the
percentage of the Company's total revenues in 1996 relating to the coinsurance
business decreased to 32% from 35% in 1995 (although in absolute terms such
revenues continued to increase over prior years).
On April 1, 1996 the Company acquired AEGON's underwriting, claims
management and administrative capabilities related to products coinsured by the
Company. In connection with this transaction, UGA agents began to market
health insurance products of the Company rather than the coinsured product.
Effective January 1, 1997, the Company acquired the agency force and certain
assets of UGA for a price equal to the net book value of the tangible assets
acquired and assumed certain agent commitments which are estimated not to
exceed $5.0 million. UGA was owned 100%
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by the Company's Chairman at December 31, 1996. The tangible assets acquired
consist primarily of agent debit balances, a building, and related furniture
and fixtures having a net book value of approximately $11.0 million, which
approximates market value of the tangible assets. The elimination of the
sharing of business with AEGON and the acquisition of the agency force are
expected to have a positive impact on the long term future of the Company.
The Company's principal subsidiaries through which the business of the
Self-Employed Health Insurance Division, Student Health Insurance Division and
the Life Insurance and Annuity Division are conducted are The MEGA Life and
Health Insurance Company ("MEGA"), which is wholly-owned by the Company,
Mid-West National Life Insurance Company of Tennessee ("Mid-West"), in which
the Company owns 99% of the outstanding stock, and The Chesapeake Life
Insurance Company ("Chesapeake"), in which the Company owns 78% of the
outstanding stock. MEGA is an insurance company domiciled in Oklahoma and is
licensed to issue health and life insurance policies in all states except New
York. Mid-West is an insurance company domiciled in Tennessee and is licensed
to issue health and life insurance policies in Puerto Rico and all states
except Maine, New Hampshire, New York, and Vermont. Chesapeake is an insurance
company domiciled in Oklahoma and is licensed to issue health and life
insurance policies in all states except Kansas, New Jersey, New York and
Vermont. MEGA is currently rated "A (Excellent)," Mid-West is currently rated
"A- (Excellent)," and Chesapeake is currently rated "B++ (Very Good)" by A.M.
Best. A.M. Best's ratings currently range from "A++ (Superior)" to "F
(Liquidation)." A.M. Best's ratings are based upon factors relevant to
policyholders, agents, insurance brokers and intermediaries and are not
directed to the protection of investors.
The business of the Credit Services Division is conducted primarily
through UICI, Specialized Card Services, Inc., a wholly-owned subsidiary, and
United Membership Marketing Group, LLC, in which the Company owns 85% of the
outstanding equity.
The HealthCare Solutions Division operates through a number of
wholly-owned and partially owned subsidiaries, as well as companies in which
the Company does not hold a majority interest. Effective January 1, 1997, the
Company acquired the remaining interest of its subsidiaries Insurdata
Incorporated ("Insurdata") and UICI Insurance Administrators, Incorporated
("UAI"), formerly Insurnational Insurance Administrators Inc., based on a
predetermined formula price of $15.1 million. The Company acquired a majority
interest in Insurdata and UAI in October 1995.
In November 1996, the Company acquired through a privately negotiated
stock exchange agreement 100% of Amli Realty Co. ("ARC"). ARC is a
full-service real estate organization whose principal investment is a 11%
equity interest in Amli Residential Properties Trust, a publicly traded real
estate investment trust. The Company, including ARC, has a 14% equity interest
in Amli Residential Properties Trust.
The Company's principal executive offices are located at 4001 McEwen
Drive, Suite 200, Dallas, Texas 75244. Its telephone number is (972) 960-8497.
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RISK FACTORS
The following information, in addition to the other information
contained in this Prospectus, should be considered carefully by prospective
purchasers of the Common Stock in evaluating the Company, its business and an
investment in the shares of Common Stock offered hereby.
Certain statements set forth herein or incorporated by reference herein
from the Company's filings that are not historical facts are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act.
Actual results may differ materially from those included in the forward-looking
statements. These forward-looking statements involve risks and uncertainties
including, but not limited to, the following:
HEALTH CARE REFORM
Many proposals have been introduced in Congress and various state
legislatures to reform the present health care system. Some of these proposals
are specifically directed at the small group health care market, which could
affect the Company's principal business. At the state level, a number of
states have passed or are considering legislation that would limit the
differentials in rates that carriers could charge between new business and
renewal business and with respect to similar demographic groups. Legislation
also has been adopted or is being considered that would make health insurance
available to all small groups by requiring coverage of all employees and their
dependents, by limiting the applicability of pre-existing conditions
exclusions, by requiring carriers to offer a basic plan exempt from certain
mandated benefits as well as a standard plan and by establishing a mechanism to
spread the risk of high risk employees to all small group carriers.
At the federal level, several competing proposals have been introduced
or passed in Congress. One law which was introduced by Senators Nancy
Kassebaum and Edward Kennedy (the "Kassebaum-Kennedy legislation") was passed
in 1996. The Kassebaum-Kennedy legislation builds upon state initiatives by
guaranteeing "group-to-individual" portability. Under the legislation, any
person governed by a group insurance plan for at least eighteen months will, on
leaving the group plan, have the right to buy an individual policy from any
insurance company selling individual health insurance policies in that person's
state regardless of whether that person has a preexisting condition. This
provision could result in the Company insuring individuals who under the
Company's current underwriting standards would not be insured by the Company,
which could have a material adverse effect on the Company.
The Company is unable to predict when or whether any federal or state
proposals, or some combination thereof, will be enacted or, if enacted, the
likely impact on the Company. It is possible, however, that the enactment of
such health care reform legislation could adversely affect the Company's
results of operations. The Company has ceased issuing or coinsuring insurance
in the self-employed market in two states as a result of legislative
developments.
INCREASING HEALTH CARE COSTS
The Company's profitability depends in large part on its ability to
predict and effectively manage claims related to health care costs. The aging
of the population and other demographic characteristics and advances in medical
technology continue to contribute to rising health care costs.
Government-imposed limitations on Medicare and Medicaid reimbursements also
have caused the private sector to bear a greater share of increasing health
care costs. Changes in health care
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practices, inflation, new technologies, major epidemics, natural disasters and
numerous other factors affecting the delivery and cost of health care are
beyond any company's control and may limit the Company's ability to predict and
control health care costs and claims.
REGULATION
The Company's insurance subsidiaries, and the manner in which their
businesses are conducted, are subject to extensive regulation in their
domiciliary states and the other states in which they do business. Such
regulation is primarily intended to protect policyholders rather than
investors. Federal regulation, such as the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), also affects the manner in which the
Company's insurance subsidiaries conduct their business. Certain of the
Company's subsidiaries, and the manner in which their businesses are conducted,
are also subject to regulation not directly related to the business of
insurance, including regulation of student loans and the marketing of credit
cards.
Compliance with legal or regulatory restrictions limits the ability of
the Company's subsidiaries to conduct their operations. A failure to comply
may subject the affected subsidiary to a loss or suspension of a right to
engage in certain businesses or business practices, criminal or civil fines, an
obligation to make restitution or pay refunds or other sanctions, which could
adversely affect the manner in which the Company's subsidiaries conduct their
businesses and the Company's results of operations.
State and federal regulation is continually changing and the Company
is unable to predict whether or when any such changes will be adopted. It is
possible, however, that the adoption of such changes could adversely affect the
manner in which the Company's subsidiaries conduct their business and the
Company's results of operations.
RELIANCE ON KEY MANAGEMENT
The Company relies on its senior management, including Mr. Ronald L.
Jensen, Chairman of the Board, and the executives who are responsible for the
business of the Company's various divisions. Such executives are given
substantial autonomy for their respective divisions. The loss of the services
of any of these persons could have a material adverse effect on the Company's
results of operations.
CONFLICTS OF INTERESTS WITH MR. JENSEN AND JENSEN-OWNED COMPANIES
Mr. Jensen owns approximately 18% of the Common Stock as of the date
of this Prospectus. The Company depends on certain relationships with other
companies owned by Mr. Jensen. The interests of Mr. Jensen and other companies
in which Mr. Jensen owns an interest may conflict with the interests of the
Company, including with respect to the amount of compensation payable by the
Company and the freedom of Mr. Jensen and such companies to engage in other
activities, and with respect to any negotiations of, disputes under, or
breaches of, any such agreements or arrangements. Certain officers and
employees of the Company, in addition to Mr. Jensen, also serve as officers or
directors of, or provide services to other companies in which Mr. Jensen owns
an interest.
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Mr. Jensen and other companies in which Mr. Jensen owns an interest
have engaged in a number of financial and other transactions with the Company.
The Board has adopted a policy that all material transactions in which there
may be a conflict of interest between the Company and Mr. Jensen are reviewed
and approved by a majority of the independent members of the Board.
CONTROL BY JENSEN FAMILY
Mr. Jensen beneficially owns approximately 18% of the outstanding
Common Stock and remains the Company's largest stockholder. In addition, his
adult children, directly and through Onward and Upward, Inc., own approximately
13% of the Common Stock. Accordingly, Mr. Jensen can be expected to have the
ability to control the direction of the Company.
COMPETITION
The Company operates in highly competitive industries. The Company's
insurance divisions compete with large national insurers, regional insurers and
specialty insurers, many of which are larger and have substantially greater
financial resources or higher A.M. Best ratings than the Company. In addition
to claims paying ratings, insurers compete on the basis of price, breadth and
flexibility of coverage, ability to attract and retain agents and the quality
and level of agent and policyholder services provided. The Company's other
divisions compete with financial services companies, managed care consultants,
and third party administrators, among others. Many of the competitors may have
greater financial resources, broader product lines or greater experience in
particular lines of business. The HealthCare Solutions Division has only
recently been formed and therefore competes with other companies with
significantly greater experience in highly competitive markets. There can be
no assurance that the HealthCare Solutions Division will be successful
competing in such markets.
ADEQUACY OF CLAIMS LIABILITIES
The liability for claims established by the Company are estimates of
amounts needed to pay reported and unreported claims based on facts and
circumstances known at the time the liabilities are established. Liabilities
are based on historical claims information, industry statistics and other
factors. The establishment of appropriate liabilities is an inherently
uncertain process, and there can be no assurance that the ultimate liability
will not materially exceed the Company's claims liability and have a material
adverse effect on the Company's results of operations and financial condition.
Due to the inherent uncertainty of estimating claims liabilities, it has been
necessary, and may in the future be necessary, to revise estimated future
liabilities as reflected in the Company's claims liability. When the Company
acquires blocks of insurance policies or insurers owning such blocks, the
Company's assessment of the adequacy of transferred policy liabilities is
subject to similar uncertainties. The Company has not had a revision in claims
liabilities in the last five years which resulted in recording an increase in
the liability for prior years.
CERTAIN RISKS ASSOCIATED WITH CREDIT CARD BUSINESS
There are certain risks associated with the credit card business. The
primary risk involves the possibility of future economic downturns causing an
increase in credit losses. The Company currently targets the market of
individuals with no, or troubled, credit experience, for which market there is
generally limited historical loss information available. Accordingly, the
Company has
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experienced, and expects to continue to experience, higher credit losses than
industry averages. While the Company does not directly bear the risk of credit
losses on securitized credit card loans, certain risks are associated with the
securitized loans, including the risk of early amortization upon the occurrence
of certain events, which could accelerate the need for funding. The Company's
ability to sustain the recent rate of growth in its credit card portfolio is
dependent upon the success of its marketing programs.
INVESTMENT PORTFOLIO
The Company's investment portfolio primarily consists of fixed
maturity securities such as investment grade publicly traded debt securities
and mortgage-backed securities, including collateralized mortgage obligations.
At December 31, 1996, approximately 71% of the Company's invested assets were
fixed maturity securities, of which approximately 64% were fixed income
securities and approximately 36% were mortgage-backed securities. Certain
risks are inherent in connection with fixed income securities, including loss
upon default and price volatility in reaction to changes in interest rates and
general market factors. Certain additional risks are inherent with
mortgage-backed securities, including the risks associated with reinvestment of
proceeds due to prepayments of such obligations.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
by the Selling Stockholders.
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
In November 1996, the Company acquired through a negotiated stock
exchange agreement 100% of Amli Realty Co. ("ARC"). The Company exchanged
1,634,876 shares of its Common Stock for all of the outstanding Common Stock of
ARC. ARC is a real estate organization whose principal investment is a 11%
equity interest in Amli Residential Properties Trust, a publicly traded real
estate investment trust. The 1,634,876 shares offered hereby consist of the
Common Stock issued by the Company to the stockholders of ARC pursuant to the
stock exchange agreement.
The following table sets forth as of March 20, 1997, information
regarding the beneficial ownership of the Company's Common Stock held by each
Selling Stockholder who may sell the Shares pursuant to this Prospectus as of
such date including as a percentage of the Company's total outstanding shares
of Common Stock as of March 20, 1997, the number of Shares offered hereunder
by each such Selling Stockholder and the net ownership of shares of Common
Stock, if all such Shares so offered are sold by each Selling Stockholder.
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<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Before Offering After Offering
------------------------- ---------------------
Shares
Name of Selling Offered
Stockholder Shares(1) Percentage Hereby Shares(1) Percentage
------------------- ---------- ---------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
John E. Allen 50,808 (2) 50,808 (2)
Thomas E. Allen 2,478 (2) 2,478 (2)
Timothy J. Allen 2,478 (2) 2,478 (2)
Tracy M. Allen 2,478 (2) 2,478 (2)
Teri A. Allen 2,478 (2) 2,478 (2)
Baldwin & Lyons, Inc. 1,086,078 2.41% 617,278 468,800 1.00%
Anita V. Brotonel 1,515 (2) 1,515 (2)
Eugene J. Carr 3,993 (2) 3,993 (2)
Robert L. Cunningham 688 (2) 688 (2)
Jane F. Dearborn 826 (2) 826 (2)
John B. Diamond 22,031 (2) 22,031 (2)
Jamie Diamond Schwartz 22,031 (2) 22,031 (2)
Jennifer Diamond 22,031 (2) 22,031 (2)
Marilyn Diamond 2,616 (2) 2,616 (2)
Terry Diamond 2,891 (2) 2,891 (2)
Terry and Muriel Diamond, Trustees 10,464 (2) 10,464 (2)
Edith B. Everett 34,147 (2) 34,147 (2)
Donald N. Fawcett 826 (2) 826 (2)
Dwight P. Fawcett 826 (2) 826 (2)
Dwight W. Fawcett 14,044 (2) 14,044 (2)
Michael R. Fayhee 5,411 (2) 5,411 (2)
Patrick J. Fox 8,124 (2) 8,124 (2)
Eric M. Friedler 9,363 (2) 9,363 (2)
Georgia Greenwood 2,368 (2) 2,368 (2)
Kathryn Jonas 826 (2) 826 (2)
Frank J. Karoly 10,878 (2) 10,878 (2)
Charles C. Kraft 17,487 (2) 17,487 (2)
Charles C. Kraft, Trustee 1,239 (2) 1,239 (2)
Rebecca J. (c/f Laura) Kraft 688 (2) 688 (2)
Sarah Paris Kraft, Trustee 3,442 (2) 3,442 (2)
David C. Lambert 26,299 (2) 26,299 (2)
Rosita A. Lina 10,464 (2) 10,464 (2)
Michael P. Murphy 2,341 (2) 2,341 (2)
Gregory T. Mutz 215,512 (2) 215,512 (2)
Gregory T. Mutz c/f Andrew 3,525 (2) 3,525 (2)
Gregory T. Mutz c/f Rebecca 3,525 (2) 3,525 (2)
Gregory T. Mutz c/f Sarah 3,525 (2) 3,525 (2)
Carol J. Mutz Residual Trust 48,192 (2) 48,192 (2)
Unique Indoor Comfort, Inc. 5,645 (2) 5,645 (2)
Joyce C. Mutz 1993 Family Trust 48,192 (2) 48,192 (2)
Thomas R. Mutz Family Trust 34,836 (2) 34,836 (2)
Thomas R. Mutz Marital Trust 4,131 (2) 4,131 (2)
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Before Offering After Offering
------------------------- -------------------------
Shares
Name of Selling Offered
Stockholder Shares(1) Percentage Hereby Shares(1) Percentage
------------------- ----------- ---------- -------- --------- ----------
<S> <C> <C> <C> <C>
Estate of Thomas R. Mutz 6,196 (2) 6,196 (2)
Mutz Properties 41,995 (2) 41,995 (2)
Frank M. Mutz 1,102 (2) 1,102 (2)
Michael E. Nadolski 5,232 (2) 5,232 (2)
Jeffrey C. Neal 52,503 (2) 47,503 5,000 (2)
Franklin W. Nitikman 7,298 (2) 7,298 (2)
John M. O'Mara 826 (2) 826 (2)
Juanita McWilliams Trust 8,261 (2) 8,261 (2)
Thomas H. Patrick 82,394 (2) 82,394 (2)
John A. Pigott 4,310 (2) 4,310 (2)
Ed and Barbara Rothe 5,508 (2) 5,508 (2)
Richard C. Schroeder 4,957 (2) 4,957 (2)
Steven W. Sweet 20,654 (2) 20,654 (2)
Allan J. Sweet 22,155 (2) 21,755 400 (2)
Bonnie L. Sweet 7,096 (2) 6,196 900 (2)
Bonnie L. Sweet c/f Stacy 3,152 (2) 1,652 1,500 (2)
Bonnie L. Sweet c/f Allison 3,152 (2) 1,652 1,500 (2)
Helen D. Sweet, Trustee 17,349 (2) 17,349 (2)
Sharon Sweet 2,152 (2) 1,652 500 (2)
Philip N. Tague 51,358 (2) 51,358 (2)
Sondra Talley 4,957 (2) 4,957 (2)
Richard and Sondra Talley 688 (2) 688 (2)
Arshad Zakaria 4,310 (2) 4,310 (2)
H. Mason Zimmerman 4,131 (2) 4,131 (2)
--------- --------- ---------
Total 2,113,476 1,634,876 478,600
========= ========= =========
</TABLE>
(1) Except as otherwise noted, all shares are beneficially owned and sole
voting and investment power is held by the party named.
(2) Less than 1%.
None of the selling stockholders have held any position, office or
other material relationship with the Company or its affiliates.
The Selling Stockholders may sell some or all of the Shares in
transactions involving broker/dealers, who may act as agent or acquire the
Shares as principal. Any broker/dealer participating in such transactions as
agent may receive a commission from the Selling Stockholders (and, if they act
as agent for the purchaser of such Shares, from such purchaser). Usual and
customary brokerage fees will be paid by the Selling Stockholders.
Broker/dealers may agree with the 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 acting as agent for the Selling Stockholders,
to purchase as principal any unsold Shares at the price required to fulfill the
respective broker/dealer's commitment to the Selling Stockholders.
Broker/dealers who acquire Shares as principals may thereafter resell such
Shares from time to time in transactions (which may involve cross and block
transactions and which may involve sales to and through other broker/dealers,
including transactions of the nature described above) in the over-the-counter
market, in negotiated transactions or otherwise, at market prices prevailing at
the time of sale or at negotiated prices, and in connection
12
<PAGE> 13
which such resales may pay to or receive commissions from the purchasers of
such Shares. The Selling Stockholders also may sell some or all of the Shares
directly to purchasers without the assistance of any broker/dealer.
The Company is bearing all costs relating to the registration of the
Shares. Any commissions or other fees payable to broker/dealers in connection
with any sale of the Shares will be borne by the Selling Stockholders or other
party selling such Shares.
The Selling Stockholders must comply with the requirements of the Act
and the Exchange Act and the rules and regulations thereunder in the offer and
sale of the Shares. In particular, during such times as the Selling
Stockholders may be deemed to be engaged in a distribution of the Common Stock,
and therefore be deemed to be underwriters, under the Act, they must comply
with Rules l0b-6 and 10b-7 under the Exchange Act, and will, among other
things:
(a) not engage in any stabilization activities in connection with
the Company's securities;
(b) furnish each broker/dealer through which Shares may be offered
such copies of this Prospectus, as amended from time to time,
as may be required by such broker/dealer; and
(c) not bid for or purchase any securities of the Company or
attempt to induce any person to purchase any securities of the
Company other than as permitted under the Exchange Act.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, par value $0.01 per share.
As of March 20, 1997, the Company had outstanding 45,130,859 shares of
Common Stock.
Common Stock
The Company has not paid cash dividends on its Common Stock to date.
The Company currently intends to retain all future earnings to finance
continued expansion and operation of its business and subsidiaries. Any
decision as to the payment of dividends to the stockholders of the Company will
be made by the Company's Board of Directors and will depend upon the Company's
future results of operations, financial condition, capital requirements and
such other factors as the Board of Directors considers appropriate.
Transfer Agent
The Transfer Agent and registrar for the Common Stock is UICI.
13
<PAGE> 14
EXPERTS
The consolidated financial statements of the Company as of December
31, 1996 and 1995 and for the three years ended December 31, 1996, 1995, and
1994 incorporated in reliance on the report of Ernst & Young LLP, independent
auditors, given on the authority of said firm as experts in accounting and
auditing.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon
for the Company by Robert B. Vlach, General Counsel of the Company. Mr. Vlach
is the beneficial owner of 33,817 shares of Common Stock.
14
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
OTHER EXPENSES
Item 14. Other Expenses of Issuance and Distribution (1)
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee: $ 12,931
Accounting fees and expenses: 7,500
Legal fees and expenses: 10,000
Blue Sky fees and expenses: 1,000
Miscellaneous: 1,000
---------
$ 32,431
=========
</TABLE>
(1) All amounts are estimates other than the Commission's
registration fee. No portion of these expenses will be borne
by the Selling Stockholders.
INDEMNIFICATION
Item 15. Indemnification of Directors and Officers
(a) The General Corporation Law of Delaware (Section 145) gives
Delaware corporations broad powers to indemnify their present and former
directors and officers and those of affiliated corporations against expenses
incurred in the defense of any lawsuit to which they are made parties by reason
of being or having been such directors or officers, subject to specified
conditions and exclusions; gives a director or officer who successfully defends
an action the right to be so indemnified; and authorizes the Company to buy
directors' and officers' liability insurance. Such indemnification is not
exclusive of any other rights to which those indemnified may be entitled under
any by-laws, agreement, vote of stockholders or otherwise.
(b) Article 8.08 of the By-Laws of the Company provides for
indemnification of, and the advancement of expenses which may become subject to
indemnification under the By-Laws to, directors and officers and any person who
served at the Company's request as a director or officer of another
corporation. The indemnification and advancement of expenses provisions
contained in the By-Laws are not exclusive of any other rights.
II - 1
<PAGE> 16
EXHIBITS SCHEDULES
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibit Number
- ------ ---------------------- ------
<S> <C> <C>
2.1 Plan of Reorganization of United Group Insurance Company, as
subsidiary of United Group Companies, Inc. and Plan and
Agreement of Merger of United Group Companies, Inc. into United
Insurance Companies, Inc. filed as Exhibit 2-1 to the
Registration Statement on Form S-1, File No. 33-2998, filed with
the Securities and Exchange Commission on January 30, 1986 and
incorporated by reference herein.
3.1(A) Certificate of Incorporation of UICI, as amended, filed as
Exhibit 3.1 to the Form 10-Q dated June 30, 1996, filed on
August 13, 1996, File No. 0-14320, and incorporated by reference
herein.
3.2(A) Restated By-Laws, as amended, of the Company filed as Exhibit 3.2
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, filed on March 29, 1996 and incorporated by
reference herein.
4.1 Refer to Exhibits 3.1 and 3.2 to this Registration Statement
5.1 Opinion of Robert B. Vlach, Esquire
10.31 Stock Exchange agreement dated October 1996 by and between Amli
Realty Co. and UICI, as amended by that First Amendment to Stock
Exchange Agreement dated November 4, 1996.
23 Consent of Ernst & Young LLP
23.2 Consent of Robert B. Vlach, Esquire (contained in his opinion
filed as Exhibit 5.1 to this Registration Statement).
24.1 Powers of Attorney (included on signature page of this
Registration Statement).
27 Financial Data Schedule. Filed as Exhibit 27 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996,
filed on March 24, 1997 and incorporated herein by reference.
</TABLE>
II - 2
<PAGE> 17
UNDERTAKINGS
Item 17. Undertaking.
(a) The undersigned registrant hereby undertakes that, for
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 that is incorporated by reference in this 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 thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions set forth or described in Item 15
(except as set forth in paragraphs (c) and (d) therein) of this Registration
Statement, 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, or claims to the extent covered by contracts of
insurance) 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.
(c) The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) 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;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement;
Provided, however, that paragraphs (a)(i) and
(a)(ii) do not apply if the registration
statement is on Form S-3 or Form S-8, and 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 Securities
II - 3
<PAGE> 18
Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(b) 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.
(c) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all 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 the City of Dallas, State of Texas, on March 24, 1997.
UICI
By: Vernon R. Woelke
--------------------
Vernon R. Woelke
Vice President
II - 4
<PAGE> 19
Each person whose signature appears below constitutes and appoints
Vernon R. Woelke and Robert B. Vlach, and each of them, the true and lawful
attorneys-in-fact and agents of the undersigned, with full power of
substitution, for and in the name, place and stead of the undersigned, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to the Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission and hereby grants to such attorneys-in-fact
and agents, and each of them full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully for all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on March 24, 1997.
<TABLE>
<CAPTION>
Signature Capacity in Which Signed Date
- --------- ------------------------ ----
<S> <C> <C>
/s/ Ronald L. Jensen Chairman of the Board March 24, 1997
- --------------------- and Director --------------
Ronald L. Jensen
/s/ W. Brian Harrigan President (Principal Executive March 24, 1997
- ---------------------- Officer) and Director --------------
W/. Brian Harrigan
/s/ Richard J. Estell Director and Executive March 24, 1997
- ---------------------- Vice President --------------
Richard J. Estell
/s/ J. Michael Jaynes Director March 24, 1997
- ---------------------- --------------
J. Michael Jaynes
/s/ Richard T. Mockler Director March 24, 1997
- ----------------------- --------------
Richard T. Mockler
/s/ Gary L. Friedman Director March 24, 1997
- --------------------- --------------
Gary L. Friedman
/s/ Vernon R. Woelke Vice President, Treasurer March 24, 1997
- --------------------- --------------
Vernon R. Woelke (Principal Financial Officer and
Principal Accounting Officer) and Director
/s/ Charles T. Prater Vice President and Director March 24, 1997
- ---------------------- --------------
Charles T. Prater
</TABLE>
II - 5
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibit Number
- ------ ---------------------- ------
<S> <C> <C>
2.1 Plan of Reorganization of United Group Insurance Company, as
subsidiary of United Group Companies, Inc. and Plan and
Agreement of Merger of United Group Companies, Inc. into United
Insurance Companies, Inc. filed as Exhibit 2-1 to the
Registration Statement on Form S-1, File No. 33-2998, filed with
the Securities and Exchange Commission on January 30, 1986 and
incorporated by reference herein.
3.1 Certificate of Incorporation of UICI, as amended, filed as
Exhibit 3.1 to the Form 10-Q dated June 30, 1996, filed on
August 13, 1996, File No. 0-14320, and incorporated by reference
herein.
3.2 Restated By-Laws, as amended, of the Company filed as Exhibit 3.2
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, filed on March 29, 1996 and incorporated by
reference herein.
4.1 Refer to Exhibits 3.1 and 3.2 to this Registration Statement
5.1 Opinion of Robert B. Vlach, Esquire
10.31 Stock Exchange agreement dated October 1996 by and between Amli
Realty Co. and UICI, as amended by that First Amendment to Stock
Exchange Agreement dated November 4, 1996.
23 Consent of Ernst & Young LLP
23.2 Consent of Robert B. Vlach, Esquire (contained in his opinion
filed as Exhibit 5.1 to this Registration Statement).
24.1 Powers of Attorney (included on signature page of this
Registration Statement).
27 Financial Data Schedule. Filed as Exhibit 27 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996,
filed on March 24, 1997 and incorporated herein by reference.
</TABLE>
<PAGE> 1
ROBERT B. VLACH, ESQ.
GENERAL COUNSEL
UICI
4001 MCEWEN DRIVE, SUITE 200
DALLAS, TEXAS 75244
Exhibit 5.1
March 24, 1997
Securities and Exchange Commission
450 5th Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Subject: Common Stock, $0.01 par value
Ladies and Gentlemen:
I am the general counsel of UICI, a Delaware corporation (the "Company"). I
have reviewed the issuance of the 1,634,876 shares (the "Subject Shares") of
the Company's Common Stock, $0.01 par value per share (the "Common Stock"), to
certain persons (the "Selling Stockholders") in connection with the stock
exchange agreement between the Company and Amli Realty Co. The Subject Shares
are being registered with the Securities and Exchange Commission on the Form
S-3 Registration Statement to which this letter is attached as Exhibit 5.1. I
have examined such corporate and other records, instruments, certificates and
documents as I considered necessary to enable me to express this opinion.
Based on the foregoing, I am of the opinion that the Subject Shares were duly
authorized for issuance and that the Seller Stockholders have obtained validly
issued, fully paid and non-assessable shares of Common Stock.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to me under the caption "Legal Matters."
Very truly yours,
Robert B. Vlach, Esq.
<PAGE> 1
EXHIBIT 10.31
STOCK EXCHANGE AGREEMENT
THIS AGREEMENT made this 15th day of October, 1996 by and between AMLI REALTY
CO., a Delaware Corporation, ("AMLI") and UICI, a Delaware Corporation
("UICI").
1. STOCK EXCHANGE
At closing AMLI Stockholders (listed on Exhibit A attached hereto)
will deliver to UICI 11,874 properly endorsed, unencumbered AMLI
common shares, representing 100% of the outstanding AMLI shares, in
exchange for 1,634,876 UICI shares which will not be registered. UICI
agrees to file and cause to be effective a registration statement as
soon as reasonably practicable, and to maintain such registration
statement so that all UICI shares exchanged hereunder are registered
under the Securities Act of 1933 for issuance to the Stockholders so
that such shares are readily tradeable and marketable. Each
Stockholder will sign and deliver at closing an EXCHANGE STATEMENT in
the form attached hereto as Exhibit B.
2. AMLI NONQUALIFIED STOCK OPTIONS: EMPLOYEE LOANS
At closing AMLI will cancel all AMLI nonqualified stock options
(covering 662 AMLI shares). UICI will issue 91,150 UICI nonqualified
options with a 5 year exercise period and varying exercise prices to
those employees surrendering AMLI options as set forth on Exhibit F.
Employee loans, some of which have been used to acquire AMLI shares,
will remain outstanding in accord with their existing terms,
provided, however, where AMLI shares have been used to collateralize
such loans UICI shares will be substituted. Exhibit C attached hereto
details such loan collateral positions.
3. AMLI OPERATIONS: INVESTMENT PURPOSES
UICI will own AMLI and operate its business in the ordinary course
and has no intention of disposing of significant assets. All
exchanged shares will be held for investment purposes only.
4. POOLING OF INTERESTS
The parties intend that the transaction will be treated as a pooling
of interests and agree to abide the restrictions contained in
Accounting Series Release 135. In this connection, certain designated
AMLI stockholders will execute and deliver the AMLI AFFILIATE
AGREEMENT attached as Exhibit D.
5. INCOME TAX TREATMENT
The parties intend that the transaction will be treated as a tax free
reorganization under IRC Section 368(a)(1)(B) and will take no
actions which will violate applicable requirements.
<PAGE> 2
6. HSR FILING
To the extent necessary, the parties will file all necessary papers
required by applicable laws to comply with HSR notifications.
7. AMLI REPRESENTATIONS
a) AMLI represents to UICI as follows:
1) AMLI is duly organized and validly exists as a Delaware
corporation.
2) This Agreement has been duly authorized by the AMLI Board
of Directors.
3) The transaction contemplated hereby will not cause any
default or breach in any material contract, loan agreement
or other instrument to which AMLI is a party.
4) The delivery of all shares listed on Exhibit A will give
UICI complete, unencumbered ownership of AMLI.
5) The financial statements attached hereto as Exhibit E are
complete, accurate and fairly reflect the financial
condition and results of AMLI operations as of the date
specified. Since the date of the attached financials there
have been no material adverse changes to the business or
condition of AMLI.
6) AMLI will provide UICI copies of the prior three years
federal and state income tax returns and represents that it
believes such returns fairly reflect AMLI's tax obligations
for such periods and that no adjustments for such periods
have been proposed.
b) Conditions to Closing:
1) Prior to closing UICI representatives will be granted full
access to AMLI facilities, books and records for the
purpose of conducting due diligence reviews. AMLI will
cooperate in assisting UICI representatives in conducting
reasonable environmental reviews of real estate in which
AMLI holds an interest.
2) The continued accuracy of the AMLI representations will be
a condition to closing.
3) The AMLI representations will lapse at closing.
8. CLOSING
Upon satisfaction of all necessary HSR filing requirements, passage
of required HSR time frames, and receipt of any additional required
consents the parties will close.
-2-
<PAGE> 3
9. GOVERNING LAW
This Agreement is governed by Delaware law.
AMLI REALTY CO. UICI
/s/ GREGORY T. MUTZ /s/ RONALD L. JENSEN
- --------------------------------- ---------------------------------
By Gregory T. Mutz By Ronald L. Jensen
Chairman (duly authorize) Chairman (duly authorized)
-3-
<PAGE> 4
EXHIBIT A
Amli Realty Co.
Shareholders After ISO Exercise
October 1996
<TABLE>
<CAPTION>
Number of Common Share Number of Total Amli UICI Shares
Amli Preferred Equivalents Amli Common Common Shares @ 137.69
Name Shares @ 110% Shares and Equivalents Exchange Ratio
- ---------------------------- -------------- ----------- ---------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Allen, John E. 369 369.00 50,808
Allen, Thomas E. 18 18.00 2,478
Allen, Timothy J. 18 18.00 2,478
Allen, Tracy M. 18 18.00 2,478
Allen, Teri A. 18 18.00 2,478
Baldwin & Lyons, Inc. 241 265.10 4,218 4,483.10 617,278
Brotonel, Anita V. 11 11.00 1,515
Carr, Eugene J. 29 29.00 3,993
Cunningham, Robert L. 5 5.00 688
Dearborn, Jane F. 6 6.00 826
Diamond, John B. 160 160.00 22,031
Diamond Scwartz, Jamie 160 160.00 22,031
Diamond, Jennifer 160 160.00 22,031
Diamond, Marilyn 19 19.00 2,616
Diamond, Terry 21 21.00 2,891
Diamond, Terry and -- --
Muriel, Trustees 76 76.00 10,464
Everett, Edith B. 248 248.00 34,147
Fawcett, Donald N. 6 6.00 826
Fawcett, Dwight P. 6 6.00 826
Fawcett, Dwight W. 102 102.00 14,044
Fayhee, Michael R. 3 3.30 36 39.30 5,411
Fox, Patrick J. 2 2.20 59 61.20 8,427
Friedler, Eric M. 68 68.00 9,363
Greenwood, Georgia 15 15.00 2,065
Jonas, Kathryn 6 6.00 826
Karoly, Frank J. 79 79.00 10,878
Kraft, Charles C. 127 127.00 17,487
Kraft, Charles C., Trustee 9 9.00 1,239
Kraft, Rebecca J., C/F Laura 5 5.00 688
Kraft, Sarah Paris, Trustee 25 25.00 3,442
Lambert, David C. 191 191.00 26,299
Lina, Rosita A. 76 76.00 10,464
Murphy, Michael P. 17 17.00 2,341
Mutz, Gregory T. 42 46.20 1,519 1,565.20 215,512
C/F Andrew 6 6.60 19 25.60 3,525
C/F Rebecca 6 6.60 19 25.60 3,525
C/F Sarah 6 6.60 19 25.60 3,525
Carol J. Mutz Residual Trust 350 350.00 48,192
Unique Indoor Comfort, Inc. 41 41.00 5,645
Joyce C. Mutz 1993 Family -- --
Trust 350 350.00 48,192
Thomas R. Mutz Family Trust 253 253.00 34,836
Thomas R. Mutz Marital Trust 30 30.00 4,131
Estate of Thomas R. Mutz 45 45.00 6,196
Mutz Properties 50 55.00 250 305.00 41,995
Mutz, Frank M. 8 8.00 1,102
</TABLE>
<PAGE> 5
EXHIBIT A
Amli Realty Co.
Shareholders After ISO Exercise
October 1996
(continued)
<TABLE>
<S> <C> <C> <C> <C> <C>
Nadolski, Michael E. 38 38.00 5,232
Neal, Jeffrey C. 30 33.00 312 345.00 47,503
Nitikman, Franklin W. 10 11.00 42 53.00 7,298
O'Mara, John M. 6 6.00 826
Juanita McWilliams Trust 60 60.00 8,261
Patrick, Thomas H. 14 15.40 583 598.40 82,394
Pigott, John A. 3 3.30 28 31.30 4,310
Rothe, Ed and Barbara 40 40.00 5,508
Schroeder, Richard C. 36 36.00 4,957
Sweet, Steven W. 150 150.00 20,654
Sweet, Allan J. 158 158.00 21,755
Sweet, Bonnie L. 45 45.00 6,196
C/F Stacy 12 12.00 1,652
C/F Allison 12 12.00 1,652
Sweet, Helen D., Trustee 126 126.00 17,349
Sweet, Sharon 12 12.00 1,652
Tague, Philip N. 373 373.00 51,358
Talley, Sondra 36 36.00 4,957
Talley, Richard and Sondra 5 5.00 688
Zakaria, Arshad 3 3.30 28 31.30 4,310
Zimmerman, H. Mason 30 30.00 4,131
---------- ---------- ---------- ---------- ----------
Total 416 457.60 11,416 11,873.60 1,634,876
========== ========== ========== ========== ==========
</TABLE>
<PAGE> 6
EXHIBIT B
EXCHANGE STATEMENT (COMMON SHARES)
STOCKHOLDER:__________________________
NUMBER OF AMLI COMMON SHARES:_________
In connection with an intended exchange of AMLI REALTY CO. shares for shares in
UICI on a 1:137.69 basis, I hereby direct that all AMLI shares registered as
set forth above are to be exchanged for UICI shares. The officers of AMLI are
authorized to take all action on my behalf to consummate such exchange. All
UICI shares received are to be registered the same as my AMLI shares.
I hereby represent and warrant that I have full power to direct the exchange of
the AMLI shares registered as set forth above and that such shares are free and
clear of any liens or encumbrances.
Signature:
-----------------------------
Print Name:
----------------------------
Date:
----------------------------------
<PAGE> 7
EXHIBIT B-1
EXCHANGE STATEMENT
(COMMON/PREFERRED SHARES)
STOCKHOLDER:__________________________
NUMBER OF AMLI COMMON SHARES: _________
NUMBER OF AMLI PREFERRED SHARES: _________
TOTAL NUMBER OF AMLI COMMON SHARES
INCLUDING CONVERSION OF PREFERRED SHARES: _________
In connection with an intended exchange of AMLI REALTY CO. shares for shares in
UICI on a 1:137.69 basis, I (a) hereby exercise the conversion of my AMLI
preferred shares to AMLI common shares at a 1.1 premium and (2) hereby direct
that all AMLI shares registered as set forth above are to be exchanged for UICI
shares. The officers of AMLI are authorized to take all action on my behalf to
consummate such exchange. All UICI shares received are to be registered the
same as my AMLI shares.
I hereby represent and warrant that I have full power to direct conversion of
and the exchange of the AMLI shares registered as set forth above and that such
shares are free and clear of any liens or encumbrances.
Signature:
-----------------------------
Print Name:
----------------------------
Date:
----------------------------------
<PAGE> 8
EXHIBIT C
Amli Realty Co.
Shareholder Loans
October 1996
<TABLE>
<CAPTION>
Number of Number of Original Current
Amli UICI Loan Loan Interest Maturity
Shares Shares Balance Balance Rate Date
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
EXISTING SHAREHOLDER LOANS
Allen 50 6,884.50 90,040.00 68,735.95 4.00% Dec 31, 1998
Allen 86 11,841.34 54,586.61 23,145.32 4.00% Sep 30, 1998
Brotonel 4 550.76 6,335.72 6,063.41 6.25% Jun 30, 1999
Lambert 25 3,442.25 45,020.00 34,367.97 4.00% Dec 31, 1998
Lina 9 1,239.21 11,656.54 11,018.77 6.25% Dec 31, 2000
Mutz 265 36,487.85 270,000.00 270,000.00 4.00% Dec 31, 1998
Nadolski 10 1,376.90 15,241.19 15,241.19 6.25% Jan 15, 1997
Sweet 38 5,232.22 19,262.52 15,907.78 6.75% Sep 30, 2000
Sweet 25 3,442.25 45,020.00 34,367.97 4.00% Dec 31, 1998
Sweet 30 4,130.70 54,024.00 42,462.28 4.00% Mar 31, 1999
Sweet 26 3,579.94 44,506.80 34,981.86 4.00% Mar 31, 1999
Tague 45 6,196.05 27,657.30 10,311.89 4.00% Jun 30, 1998
Tague 25 3,442.25 93,836.00 62,938.47 4.00% Dec 31, 1997
Tague 25 3,442.25 45,020.00 34,367.97 4.00% Dec 31, 1998
------------ ------------ ------------ ------------
Total Existing Loans 663 91,288.47 822,206.68 663,911.33
------------ ------------ ------------ ------------
NEW SHAREHOLDER LOANS FROM EXERCISE OF ISO'S
Allen 94 12,942.86 157,849.20 157,849.20 6.25% Dec 31, 2001
Brotonel 7 963.83 11,982.60 11,982.60 6.25% Dec 31, 2001
Fox 22 3,029.18 36,809.60 36,809.60 6.25% Dec 31, 2001
Friedler 56 7,710.64 111,090.80 111,090.80 6.25% Dec 31, 2001
Jonas 6 826.14 10,270.80 10,270.80 6.25% Dec 31, 2001
Kraft 66 9,087.54 128,208.80 128,208.80 6.25% Dec 31, 2001
Lambert 110 15,145.90 207,018.00 207,018.00 6.25% Dec 31, 2001
Lina 44 6,058.36 90,549.20 90,549.20 6.25% Dec 31, 2001
Murphy 15 2,065.35 25,677.00 25,677.00 6.25% Dec 31, 2001
Mutz 89 12,254.41 164,274.20 164,274.20 6.25% Dec 31, 2001
Nadolski 27 3,717.63 45,368.60 45,368.60 6.25% Dec 31, 2001
Tague 90 12,392.10 151,342.00 151,342.00 6.25% Dec 31, 2001
------------ ------------ ------------ ------------
Total New Loans 626 86,193.94 1,140,440.80 1,140,440.80
------------ ------------ ------------ ------------
Total Loans 1,289 177,482.41 1,962,647.48 1,804,352.13
============ ============ ============ ============
</TABLE>
Note - Shareholder loans require quarterly payments of principal and interest
based on a ten year amortization schedule.
<PAGE> 9
EXHIBIT D
AMLI AFFILIATE AGREEMENT
AMLI REALTY CO. shareholders intend to exchange their AMLI shares for shares in
UICI. Because the transaction is intended to be a tax-free exchange of shares
and also qualify for pooling of interests treatment, the undersigned hereby
agree to restrict sales of stock in accordance with the rules governing these
income tax and financial accounting treatments. In particular, no shares will
be sold prior to 30 days following release of UICI and AMLI combined earnings
in accord with ASR 135. Thereafter, none of the undersigned will sell more than
25% of their shares for a period of 24 months following the closing.
Stockholder: Gregory T. Mutz
Number of AMLI shares owned: __________________
Signature: ____________________________________
Date: ____________________________________
Stockholder: John E. Allen
Number of AMLI shares owned: __________________
Signature: ____________________________________
Date: ____________________________________
Stockholder: Baldwin & Lyons
Number of AMLI shares owned: __________________
Signature: ____________________________________
Date: ____________________________________
Stockholder: Thomas Patrick
Number of AMLI shares owned: __________________
Signature: ____________________________________
Date: ____________________________________
<PAGE> 10
EXHIBIT E
FINANCIAL STATEMENTS
The following Financial Statements have been provided to UICI under separate
cover:
1. Amli Realty Co. Consolidated Financial Statements for the years ended
December 31, 1993 and December 31, 1994, together with Independent
Accountant's Report thereon.
2. Amli Realty Co. Consolidated Financial Statements for the year ended
December 31, 1995, together with Independent Accountant's Report thereon.
3. Amli Realty Co. Consolidated Financial Statements for the nine months
ended September 30, 1996 (unaudited).
NOTE: Financial statements are not filed as part of this agreement but will be
provided supplementally to the Commission upon request.
<PAGE> 11
EXHIBIT F
NON-ISO OPTIONS
<TABLE>
<CAPTION>
Number of Amli Amli Strike Number of UICI Strike Current Option
Optionholder Options Price UICI Options Price Exercise Date
- ------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Allen, John E. 128 $1,712.00 17,624 $12.43 1/15/04
Lambert, David C. 59 $1,712.00 8,124 $12.43 1/15/04
Mutz, Gregory T. 261 $1,712.00 35,937 $12.43 1/15/04
Sweet, Allan J. 86 $1,712.00 11,841 $12.43 1/15/04
Sweet, Allan J. 54 $1,801.00 7,435 $13.08 4/l/97
Tague, Philip N. 59 $1,712.00 8,124 $12.43 1/15/04
Zimmerman, Mason 15 $2,874.00 2,065 $20.87 1/15/02
------
Total UICI Options: 91,150
</TABLE>
<PAGE> 12
FIRST AMENDMENT TO
STOCK EXCHANGE AGREEMENT
This First Amendment to Stock Exchange Agreement (the "Amendment") is made
this 4th day of November, 1996 by and between AMLI REALTY CO., a Delaware
corporation, ("AMLI") and UICI, a Delaware corporation ("UICI");
RECITALS
WHEREAS, AMLI and UICI entered into that certain Stock Exchange Agreement
dated October 15, 1996 (such agreement as it may be modified or amended
hereafter is called the "Agreement") pursuant to which AMLI and UICI agreed on
an exchange of stock and related matters as more particularly set forth in the
Agreement;
WHEREAS, AMLI and UICI desire to make corrections to certain terminology
contained in said Agreement;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficient of which
are hereby acknowledged, AMLI and UICI hereby agree as follows:
1. Second grammatical sentence in Paragraph No. 2 of the Agreement shall be
replaced with the following: "UICI will issue 91,150 UICI nonqualified options
with option expiration dates and exercise prices as set forth on Exhibit F."
The intent of AMLI and UICI is that all terms of the UICI options, whose strike
prices have been adjusted based on the 137.69 Exchange Ratio as indicated on
Exhibit A to the Agreement, will be the same as the terms of the AMLI options
being exchanged.
2. Exhibit F shall be replaced with Exhibit F attached hereto (to correct the
labeling of the last column).
3. AMLI and UICI hereby agree that (a) this Amendment is incorporated into
and made a part of the Agreement, (b) any and all references to the Agreement
hereafter shall include this Amendment, and (c) the Agreement and all other
terms, conditions and provisions of the Agreement are in full force and effect
as of the date hereof, except as expressly modified and amended hereinabove.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
AMLI REALTY CO. UICI
By: /s/ GREGORY T. MUTZ By: /s/ RONALD L. JENSEN
------------------------------ ------------------------------
Gregory T. Mutz Ronald L. Jensen
Chairman Chairman
<PAGE> 13
EXHIBIT F
NON-ISO OPTIONS
<TABLE>
<CAPTION>
Number of Amli Amli Strike Number of UICI Strike Option
Optionholder Options Price UICI Options Price Expiration Date
- ------------ -------------- ------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
Allen, John E. 128 $1,712.00 17,624 $12.43 1/15/04
Lambert, David C. 59 $1,712.00 8,124 $12.43 1/15/04
Mutz, Gregory T. 261 $1,712.00 35,937 $12.43 1/15/04
Sweet, Allan J. 86 $1,712.00 11,841 $12.43 1/15/04
Sweet, Allan J. 54 $1,801.00 7,435 $13.08 4/l/97
Tague, Philip N. 59 $1,712.00 8,124 $12.43 1/15/04
Zimmerman, Mason 15 $2,874.00 2,065 $20.87 1/15/02
------
Total UICI Options: 91,150
</TABLE>
<PAGE> 1
EXHIBIT 23.1 - CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of UICI for the
registration of 1,634,876 shares of its common stock and to the incorporation
by reference therein of our report dated March 14, 1997, with respect to the
consolidated financial statements and schedules of UICI included in its Annual
Report (Form 10-K) for the year ended December 31, 1996, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Dallas, Texas
March 25, 1997
