<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
UICI
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
UICI
4001 MCEWEN DRIVE, SUITE 200
DALLAS, TEXAS 75244
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 7, 1997
The Annual Meeting of the Stockholders of UICI (the "Company"), a
Delaware corporation, will be held in the Cypress meeting room, ground level,
at The Radisson Medallion, 4099 Valley View Lane, LBJ @ Midway, Dallas, Texas,
on Wednesday, May 7, 1997 at 9:00 o'clock A.M., Central Daylight Time, for the
following purposes:
1. To elect nine (9) directors of the Company to hold office until
the next annual meeting of stockholders and until their
respective successors are chosen and qualified.
2. To ratify the appointment of Ernst & Young LLP as independent
public accountants to audit the accounts of the Company for the
fiscal year ending December 31, 1997.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed March 14, 1997 as the record date for
the meeting. Holders of the Company's Common Stock of record at the close of
business on such date will be entitled to notice of and to vote at such meeting
or any adjournment thereof. The stock transfer books will not be closed.
The Company will supply, upon written request and without charge, a
copy of the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission. Requests for the report should be directed to Investor
Relations, UICI, 4001 McEwen Drive, Suite 200, Dallas, Texas 75244.
By order of the Board of Directors
Robert B. Vlach
Secretary
Date: April 3, 1997
--------------------
IMPORTANT
UNLESS YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE FILL IN, SIGN
AND MAIL THE ENCLOSED PROXY WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. YOUR PROMPT RESPONSE WILL ASSURE A QUORUM AT THE MEETING, SAVING YOUR
COMPANY THE EXPENSE OF FURTHER SOLICITATION OF PROXIES.
<PAGE> 3
UICI
4001 MCEWEN DRIVE, SUITE 200
DALLAS, TEXAS 75244
_____________________________
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
_____________________________
This statement is furnished to the stockholders of UICI (the
"Company") in connection with the Board of Directors' solicitation of proxies
to be used at the Annual Meeting of Stockholders on May 7, 1997 at The Radisson
Medallion, 4099 Valley View lane, LBJ @ Midway, Dallas, Texas, and at any
adjournment thereof. All proxies delivered pursuant to this solicitation are
revocable at the option of the person executing the same at any time before the
proxy is voted. Proxies in the form enclosed, unless previously revoked, will
be voted at the meeting. Where a choice or instruction is specified by the
stockholder thereon, the proxy will be voted in accordance with such
specification. Where a choice or instruction is not specified by such
stockholder, the proxy will be voted as recommended by the Board of Directors.
The Company's Common Stock trades on the Nasdaq National Market tier
of The Nasdaq Stock Market under the symbol: UICI. This proxy statement is
being mailed on or about April 3, 1997 to stockholders of record at the close
of business on March 14, 1997, who are the only stockholders entitled to
receive notice of and to vote at the meeting. At March 14, 1997 the Company
had outstanding 45,130,859 shares of common stock. Each share of the
outstanding common stock is entitled to one vote. A simple majority of the
total shares outstanding is required to elect directors and ratify or approve
the other items being voted on at this time.
1. ELECTION OF DIRECTORS
The Board of Directors (the "Board") has fixed the number of directors
for the ensuing year at nine (9). At the meeting, it is intended that such
number of directors will be elected to hold office until the next Annual
Meeting of Stockholders and until their respective successors are chosen and
qualified. It is intended that the proxies will be voted to elect as directors
the nominees listed below. Although the Board does not anticipate that any of
such nominees will be unable to serve as a director, in the event of such
occurrence, the proxy holders shall have the right to vote for such substitute,
if any, as the present Board of Directors may designate.
NOMINEES
The following table sets forth the name and age of each nominee for
director, his principal occupation for the past five years, the year he became
a director of the Company, the number of shares of common stock of the Company
which he beneficially owned as of March 14, 1997 and the percentage of the
outstanding shares of common stock which that number of shares represents.
1
<PAGE> 4
<TABLE>
<CAPTION>
=======================================================================================================
YEAR FIRST SHARES OF COMMON
NOMINEE, PRINCIPAL OCCUPATION, AGE AND ELECTED STOCK BENEFICIALLY PERCENT
DIRECTORSHIPS DIRECTOR OWNED 3/14/97 OF CLASS
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RONALD L. JENSEN has served as Chairman of the 1983 8,238,986(1) 18.26%
Board of Directors of the Company and its
predecessor Company since December 1983. Mr.
Jensen served as President of the Company until
January 1995 and for the preceding five years
except for a three-month period in 1992. Mr.
Jensen is a member of the Executive and Stock
Option Committees of the Board of Directors. Mr.
Jensen is the sole owner of United Group
Association ("UGA").
Age: 66
GARY L. FRIEDMAN, has served as a Director of the 1984 151,385(2)(3) (4)
Company since 1984. He is a member of the Stock
Option Committee of the Board of Directors. Mr.
Friedman has served as Director and Treasurer of
UGA since August 1985, and as Secretary of UGA
since July 1990. Since 1994, Mr. Friedman has
served as a Director and Secretary of Matrix
Telecom, Inc., a company in which Mr. Jensen and
his adult children own a majority interest.
Age: 42
J. MICHAEL JAYNES has served as a Director of the 1989 25,796 (4)
Company since January 1989. He is a member of the
Audit and Stock Option Committees of the Board of
Directors. Mr. Jaynes has been a sole practitioner
of law in Irving, Texas since 1974.
Age: 49
RICHARD J. ESTELL has served as Executive Vice 1989 53,450(5)(6) (4)
President and Director of the Company since January
1989. He is a member of the Executive, Investment
and Audit Committees of the Board of Directors.
Mr. Estell has served as Chairman of the Board for
Mid-West National Life Insurance Company of
Tennessee ("Mid-West") and The MEGA Life and Health
Insurance Company ("MEGA") and as President of MEGA
since January 1989. He has served as Chairman of
the Board of The Chesapeake Life Insurance Company
("Chesapeake") since November 1991. He has also
served as a Director and President of National
Managers Life Insurance Company, Inc. ("National
Managers") since January 1992. Mr. Estell became a
Director of UGA in 1996. He has served as a
Director of Fidelity First Insurance Company
("Fidelity") since February 1997.
Age: 51
RICHARD T. MOCKLER has served as a Director of the 1991 7,340 (4)
Company since January 1991. Mr. Mockler is a
member of the Audit Committee of the Board of
Directors. Mr. Mockler retired as a partner with
Ernst & Young, CPAs, in 1989, after 27 years of
service. He has served as a member of the Board
of Directors of Georgetown Rail Equipment
Company since 1994 and as Treasurer since October
1996. Mr. Mockler has served as a Director of
Snead Research Labs since 1995 and as Treasurer
since October 1996.
Age: 59
=======================================================================================================
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
=======================================================================================================
YEAR FIRST SHARES OF COMMON STOCK
NOMINEE, PRINCIPAL OCCUPATION, AGE AND ELECTED BENEFICIALLY PERCENT OF
DIRECTORSHIPS DIRECTOR OWNED 3/14/97 CLASS
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VERNON R. WOELKE has served as a Director of the 1991 176,469(5) (4)
Company since January 1991 and as Vice President
and Treasurer since 1985. Mr. Woelke is a member
of the Executive and Investment Committees of the
Board of Directors. He has served as a Director of
MEGA since 1988 and as Vice President since April
1991; and as President of Mid-West since 1988 and
as a Director since 1987. He has also served as a
Director and Executive Vice President of Chesapeake
since November 1991. Mr. Woelke has served as a
Director and Treasurer of National Managers since
January 1992. He has served as a Manager of United
Membership Marketing Group, Ltd. Liability Co.
since May 1993. Mr. Woelke has also served as a
Director and President of United Group Reinsurance,
Inc. since January 1995. He has also served as a
Director of Fidelity since September 1996. Mr.
Woelke has also performed services for other
companies in which Mr. Jensen owns an interest.
Age: 48
W. BRIAN HARRIGAN has served as President and Chief 1995 452,319(5) 1.0%
Executive Officer ("CEO") of the Company since
January 1995 and as a Director since February 1995.
He is a member of the Executive Committee of the
Board of Directors. Mr. Harrigan has served as
President of WinterBrook Holdings, Inc. since
October 1993. From July 1987 until October 1993,
Mr. Harrigan served as Executive Vice President of
Westport Management Services, Inc. in which Mr.
Jensen had an ownership interest. Mr. Harrigan has
also performed services for UGA.
Age: 42
CHARLES T. PRATER has served as a Vice President of
the Company since 1993 and as a Director since
March 1996. Mr. Prater is Chairman of the 1996 104,788(5) (4)
Investment Committee of the Board of Directors.
Mr. Prater has served as Vice President of Mid-West
since March 1987, Vice President of MEGA since
April 1991, Director of MEGA and Mid-West since May
1990 and Vice President and Director of Chesapeake
since November 1991. He has served as Chairman of
the Board and President of Fidelity since September
1996.
Age: 45
JOHN E. ALLEN has served as President and Director
of Amli Realty Co. since January 1981. He has
served as Vice-Chairman of the Board of Trustees of
Amli Residential Properties Trust since February --- 50,808(5)(7) (4)
1994. Prior to co-founding Amli Realty Co. in
1980, Mr. Allen was a partner in the Chicago law
firm of Mayer, Brown & Platt.
Age: 60
=======================================================================================================
3
</TABLE>
<PAGE> 6
- --------------------------------
(1) Does not include shares owned directly or indirectly by Mr. Jensen's
five adult children, or shares owned by the R.L. Jensen Foundation
Charitable Trust as to which Mr. Jensen disclaims beneficial
ownership. Mr. Jensen's adult children directly own in the aggregate
approximately 5.7% of the outstanding common stock. Mr. Jensen's
adult children are also the stockholders of Onward and Upward, Inc.,
which owns approximately 6.9% of the outstanding common stock.
(2) Includes shares of common stock held as of March 14, 1997 by the
Trustees of a retirement trust.
(3) Includes 1,200 shares indirectly owned by Mr. Friedman through his
interest in a partnership.
(4) Owns less than 1% of the outstanding common stock.
(5) Includes shares of common stock held as of March 14, 1997 by the
Trustees under the Company's Employee Stock
Ownership Plan. (The shares held under the Plan purchased with
contributions made by the Company are subject to the vesting
requirements of the Plan.)
(6) Includes 8,000 shares owned by Mr. Estell's wife and 800 shares owned
by his minor son.
(7) Does not include shares owned directly by Mr. Allen's four adult
children as to which Mr. Allen disclaims
beneficial ownership.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth the name and address of each person known by
management to own beneficially five percent or more of the Company's common
stock as of March 14, 1997, the number of shares beneficially owned by such
person and the percent of the class so owned and the amount of common stock
beneficially owned by all directors and officers as a group and the percent of
the class so owned.
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY PERCENT
TITLE OF CLASS NAME & ADDRESS OWNED OF CLASS
- -------------- -------------- ------------ --------
<S> <C> <C> <C>
Common Stock Ronald L. Jensen 8,238,986(1) 18.3%
5215 N. O'Connor, Suite 300
Irving, Texas 75039
Common Stock Onward and Upward, Inc. 3,124,204 6.9%
2121 Precinct Line Road
Hurst, Texas 76054
Common Stock Janus Capital Corporation 2,355,550 5.2%
100 Fillmore Street
Denver, Colorado 80206-4928
Common Stock All officers and directors 9,249,155(1)(2)(3)(5)(6) 20.5%
as a group (9 individuals)
</TABLE>
Under the securities laws of the United States, the Company's directors,
executive and certain officers, and any persons holding more than ten percent
of the Company's common stock are required to report their ownership of the
Company's common stock and any changes in that ownership to the Securities and
Exchange Commission (the "Commission") and, in the Company's case, the National
Association of Securities Dealers, Inc. Specific due dates for these reports
have been established and the Company is required to report in this proxy
statement any failure to file by these dates during 1996. All of these filing
requirements were satisfied by the Company's directors, officers and ten
percent holders, except for Vernon R. Woelke, who failed to report two
dispositions in February 1996. In making this statement, the Company has
relied on the written representations of its incumbent directors, officers and
ten percent holders and copies of the reports filed with the Commission.
4
<PAGE> 7
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the fiscal year ended December 31, 1996, the Board of Directors
of the Company held eight (8) meetings.
The Audit Committee consists of three directors: namely, Richard J.
Estell, J. Michael Jaynes and Richard T. Mockler. The Committee held two (2)
meetings during 1996. The Audit Committee recommends engagement of the
independent auditors, considers the fee arrangement and scope of the audit,
reviews the financial statements and the independent auditors' report, reviews
the activities and recommendations of the Company's internal financial and
accounting staff, considers comments made by the independent auditors with
respect to the Company's internal control structure, and reviews internal
accounting procedures and controls with the Company's financial and accounting
staff.
The Executive Committee consists of four directors: namely, Ronald L.
Jensen, W. Brian Harrigan, Richard J. Estell and Vernon R. Woelke. The
Committee met eight (8) times during 1996. The Executive Committee has all of
the authority of the full Board of Directors in the management of the business
and affairs of the Company.
The Investment Committee consists of three directors: namely, Richard
J. Estell, Vernon R. Woelke and Charles T. Prater, and one non-director member,
Mark D. Hauptman. The Committee met four (4) times during 1996. The
Investment Committee oversees the Company's investments.
The Stock Option Plan Committee did not meet during 1996. Ronald L.
Jensen, Gary L. Friedman and J. Michael Jaynes have been committee members
since the last annual meeting. The Committee administers the Stock Option
Plan.
The Company does not have a Nominating Committee. Board of Director
nominees are proposed by existing Board members and Company management.
COMPENSATION OF DIRECTORS
The two outside directors of the Company, J. Michael Jaynes and
Richard T. Mockler, are entitled to receive compensation for each Board meeting
and each Audit Committee meeting attended. During 1996, Messrs. Jaynes and
Mockler received $1,500 for each Board meeting attended and $750 for each Audit
Committee meeting attended as compensation for their services.
EXECUTIVE COMPENSATION
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The Board of Directors is not directly involved in the executive
compensation policies of the Company. Mr. Jensen performs the duties of the
compensation committee and informs the Board of Directors of the proposed
compensation for the executive officers of the Company. The factors considered
by Mr. Jensen include the individual's contribution to the long-term financial
goals of the Company, his perception of the individual's potential to
contribute to the future of the Company, planned or actual changes in
functional responsibility, and other factors which he considers important.
Submitted by the Company's Board of Directors:
Ronald L. Jensen Gary L. Friedman
Richard J. Estell J. Michael Jaynes
Richard T. Mockler Vernon R. Woelke
W. Brian Harrigan Charles T. Prater
5
<PAGE> 8
The table below discloses compensation information for the CEO and the
four other most highly compensated executive officers for services rendered in
all capacities during the fiscal years ended December 31, 1996, 1995, and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation All Other
Annual Compensation ------------ Securities Compen-
Name and Principal -------------------------------------- Restricted Stock Underlying sation
Position Year Salary ($) Bonus($) Other ($) Awards(a)($) Options(#) (b)($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
W. Brian Harrigan, 1996 279,994 122,858 --- --- --- -9,000
President & CEO and 1995 226,538 --- 65,359(d) 62,000 --- 8,738
Director(c) 1994 --- --- --- --- 400,000(e) ---
Richard J. Estell, 1996 200,000 516,838 --- --- --- 9,000
Executive Vice 1995 200,000 282,009 --- --- --- 11,023
President and Director 1994 200,000 135,838 --- --- --- 10,486
Charles T. Prater, 1996 119,995 109,971 --- --- 8,111
Vice President and 1995 119,514 126,211 --- 62,000 --- 10,140
Director 1994 94,994 120,800 --- --- --- 9,010
Vernon R. Woelke, 1996 106,769 41,548 --- --- --- 8,899
Vice President, Treasurer 1995 95,000 35,269 --- --- --- 9,729
and Director 1994 95,000 --- --- --- --- 8,810
Robert B. Vlach, Vice 1996 115,000 24,970 --- --- --- 8,309
President, Secretary 1995 115,284 21,211 --- --- --- 10,212
and General Counsel 1994 101,000 15,820 --- --- --- 8,455
</TABLE>
Footnotes
- ---------
(a) This column shows the market value of restricted stock issued on date
of grant less amount paid, if any, by the individuals listed in the
table. Dividends are paid, if any, to holders with respect to
restricted stock at the same rate paid to all stockholders. The
aggregate holdings/value of restricted stock, less amount paid, if
any, on December 31, 1996 by the individuals listed in this table,
are: W. Brian Harrigan, 12,800 shares/$356,800; Charles T. Prater,
28,800 shares/$840,800; and Vernon R. Woelke, 12 ,800 shares/$392,000.
(b) Includes Company contributions to its Employee Stock Ownership Plan.
(c) W. Brian Harrigan joined the Company as President and CEO in January
1995.
(d) The Company made payments on W. Brian Harrigan's behalf related to his
relocation.
(e) Restated to reflect four-for-one stock split effective June 1, 1995.
6
<PAGE> 9
The following table summarizes for each of the named executive
officers the number of stock options, if any, exercised during the year ended
December 31, 1996, the aggregate dollar value realized upon exercise, the total
number of unexercised stock options, if any, held at December 31, 1996, and the
aggregate dollar value of in-the-money, unexercised stock options, if any, held
at December 31,1996.
AGGREGATED STOCK OPTION EXERCISES
IN 1996 AND YEAR-END VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money Stock
Shares Stock Options at Year End (#) Options at Year End ($)(a)
Acquired on Value -------------------------------------------------------------
Name Exercise(#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
W. Brian Harrigan - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Charles T. Prater - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Richard J. Estell - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Robert B. Vlach 4,000 68,375 16,000 - - - - - 474,000 - - - - -
Vernon R. Woelke - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
(a) The closing stock price at December 31, 1996 was $32.50.
7
<PAGE> 10
FIVE-YEAR PREFORMANCE COMPARISION
THE GRAPH BELOW DEMONSTRATES A COMPARISON OF CUMULATIVE TOTAL RETURNS
FOR THE COMPANY AS COMPARED WITH THE NASDAQ STOCK MARKET INDEX AND THE NASDAQ
INSURANCE STOCKS INDEX.
[GRAPH]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
1991 1992 1993 1994 1995 1996
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
UICI 100 151 195 260 578 995
- ----------------------------------------------------------------------
NASDAQ STOCK MARKET INDEX 100 116 134 131 185 227
- ----------------------------------------------------------------------
NASDAQ INSURANCE STOCKS INDEX 100 135 145 136 194 221
- ----------------------------------------------------------------------
</TABLE>
ASSUMES $100 INVESTED ON DECEMBER 31, 1991 IN UICI COMMON STOCK, THE NASDAQ
STOCK MARKET INDEX AND THE NASDAQ INSURANCE STOCKS INDEX.
8
<PAGE> 11
EMPLOYEE STOCK OWNERSHIP PLAN
The Company has an Employee Stock Ownership Plan which permits the
Company to make contributions on behalf of eligible employees either in the
form of Shares of the Company or in cash which is invested in such Shares,
thereby increasing the employees' ownership in the Company. Shares contributed
to the Plan or purchased with the Company's contributions are allocated to the
participant's account at the end of each Plan Year and forfeitures are
allocated to employees who are participants on the last day of the Plan Year
based upon the ratio of each participant's annual credited compensation (up to
$40,000) to the total annual credited compensation of all participants entitled
to share in such contributions for such Plan Year. Each participant's vested
interest in the Plan is at all times nonforfeitable and is distributable only
upon death or termination of employment.
EMPLOYEE STOCK OPTION PLAN
The purpose of the UICI Stock Option Plan (the "Plan") is (a) to
secure and retain key personnel of outstanding ability who are or may be
employed by the Company or its subsidiaries, non-employee Directors of the
Company and/or its subsidiaries, and non-employee individuals who contribute to
the success and growth of the Company by the performance of past, present or
future services to the Company and/or its subsidiaries; and (b) to provide
additional motivation to such persons to exert their best efforts on behalf of
the Company. The Stock Option Committee has the authority, in its sole
discretion, to name optionees and to grant shares to optionees. Each option is
granted in consideration of an optionee (i) being or agreeing to become an
employee or officer of the Company or a subsidiary of the Company, (ii) being
or agreeing to become a non-employee director of the Company or a subsidiary of
the Company, or (iii) performing or agreeing to perform services, on a
non-employee or independent contract basis, for or on behalf of the Company or
a subsidiary of the Company. The option price is the closing price at which
the common stock of the Company traded on the date the option is granted. If
the stock was not traded on the date the option was granted, then the option
price is determined by using the closing price for the stock on the last
trading date preceding the date the option was granted. The options become
exercisable 20% per year beginning one year following grant. The expiration
date of an option is the thirtieth day following the fifth anniversary of the
date the option is granted, except as set forth in the Plan for certain events,
including permanent disability, death or termination. Options are not
transferrable by the optionee other than by will or by the laws of descent and
distribution. The total number of shares of common stock of the Company
reserved for issuance under the Plan is 1,239,554.
In connection with the acquisition of Amli Realty Co. ("ARC") in
November 1996, the Company established the 1996 Special Stock Option Plan. The
purpose of the Plan is to provide non-qualified stock options to those
employees of ARC surrendering their then current ARC non-qualified stock
options for cancellation pursuant to a stock exchange agreement entered into in
November 1996 by the Company and ARC. The total number of shares of Common
Stock of the Company for which options were granted was 91,150 shares.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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% by Mr. Jensen as of December 31,
1996. The tangible assets acquired consist primarily of agent debit balances,
buildings, and related furniture and equipment having a net book value of
approximately $11.0, which approximates market value of the assets.
Prior to January 1, 1997, UGA agents sold insurance products issued by
AEGON USA, Inc. ("AEGON") and coinsured by the Company. UGA agents sold such
insurance pursuant to general agency agreements between UGA and AEGON. In
1996, UGA received $46.7 million in commissions.
9
<PAGE> 12
In 1996, through the coinsurance agreements with AEGON, the amount of these
commissions received by UGA attributable to the Company was $29.2 million.
Prior to January 1, 1997, UGA also marketed insurance directly issued by the
Company. During 1996, the Company paid commissions of $4.2 million to UGA
relating to such insurance.
During 1996, UGA provided customer leads to its agents, agents of
Cornerstone Marketing of America ("CMA") and other agent sales forces organized
by the Company. In 1996, the Company paid UGA $5.0 million for leads.
In November 1994, the Company extended a $10.0 million line of credit
to Excell Agent Services, LLC ("Excell"), in which Mr. Jensen owns a majority
interest. The terms of the line of credit were renegotiated in 1996 increasing
the interest rate to prime plus four percent (4%) from prime plus two percent
(2%), and maturing September 30, 1998 instead of December 31, 1997. The line
of credit is collateralized by certain of Excell's tangible assets and is
guaranteed by Mr. Jensen. At December 31, 1996, Excell had drawn the full
$10.0 million on the line of credit. In 1996, the Company received $1.1
million in interest income from Excell.
During 1996, the Company repaid an unsecured loan from Mr. Jensen in
the amount of $10.7 million, bearing interest at the prime rate of a local
bank.
During 1995, the Company and UGA entered into an agreement whereby the
Company receives a 20% interest in the profits or losses relating to certain
lead activities of UGA. The Company had gains of $2.0 million and losses of
$1.6 million for 1996 and 1995, respectively, on these activities. It is
expected that these activities will result in a small gain for the three year
period ending December 31, 1997.
Mr. Jensen and his adult children own a majority interest in Matrix
Telecom, Inc. ("Matrix"), a telephone company. In 1996, the Company paid
Matrix $1.3 million for long distance telephone services.
The adult children of Mr. Jensen own a controlling interest in
Specialized Association Services, Inc. ("SAS"). In 1996, the Company paid SAS
$167,000 for marketing, printing and graphic design services.
Performance Rewards ("Performance"), a company owned by Mr. Jensen,
processes agent commissions for a subsidiary of the Company. In 1996, the
Company paid Performance $444,000 for commissions.
Impact Productions ("Impact"), a division of UGA, is wholly-owned by
Mr. Jensen. The Company paid Impact $107,000 for marketing and advertising
services in 1996.
United Group Service Center ("UGSC") performs payroll and benefit
related services for various subsidiaries of the Company and is wholly-owned by
Mr. Jensen. In 1996, the Company paid UGSC $102,000 for payroll services.
Mr. Jensen owns a minority interest in Whetstone Technologies, Inc.
("Whetstone"). The Company paid Whetstone $281,000 for consulting services and
computer equipment during 1996.
J. Michael Jaynes, Director of the Company, performs legal services
for various subsidiaries of the Company. In 1996, the Company paid Mr. Jaynes
$196,000 related to these services.
In 1991, the Company entered into an agreement whereby it retired a
portion of its outstanding convertible subordinated debentures held by Onward
and Upward, Inc. ("Onward and Upward") at par and issued a warrant to purchase
357,600 shares of the Common Stock of the Company for $2.50 per share. Onward
and Upward is a corporation owned by the five adult children of Mr. Jensen and
is a major stockholder of the Company. During 1996, the remaining 20% of the
warrants were exercised and 71,520 shares of the Company's Common Stock was
issued for proceeds of $178,000.
10
<PAGE> 13
Effective August 1, 1996, the Company acquired an additional 20%
interest in its subsidiary, Mid-West National Life Insurance Company of
Tennessee ("Mid-West") for $9.8 million in cash. This increased the Company's
ownership percentage in Mid-West to 99% from 79%. The purchase price was based
on a predetermined formula which approximated GAAP book value. Of the 20%
acquired, 18.6% was acquired from Onward and Upward and the five adult children
of Mr. Jensen for $9.1 million.
Onward and Upward and the adult children of Mr. Jensen own a minority
interest in two subsidiaries of the Company. Onward and Upward and the adult
children of Mr. Jensen have granted the Company a right of first refusal to
purchase their ownership interests based on a predetermined formula. Onward
and Upward and the adult children of Mr. Jensen have the right to require the
Company to purchase their ownership in the subsidiaries' stock at prices based
on the same predetermined formula which approximates GAAP book value.
On December 29, 1995, the Company securitized $26.5 million of credit
card loans to a trust established for the benefit of investors in certificates
representing undivided fractional interests in the trust. Onward and Upward
purchased a $15.0 million participating interest in this trust. This
transaction was accounted for as a sale. During 1996, the trust was dissolved
and the $15.0 million certificate was retired for no gain or loss.
W. Brian Harrigan, President, Chief Executive Officer and Director of
the Company, has outstanding debt owed to the Company in the amount of $59,200
at December 31, 1996. The largest amount of debt owed by him to the Company
during 1996 was $74,000. The debt was incurred in connection with the purchase
of restricted stock of the Company. The debt bears interest at the prime rate
of a local bank and interest is due monthly. The outstanding amount of the
debt at March 1, 1997 was $44,400.
Charles T. Prater, Vice President and Director of the Company, has
outstanding debt owed to the Company in the amount of $58,000 at December 31,
1996. The largest amount of debt owed by him to the Company during 1996 was
$128,000.The debt was incurred in connection with the purchase of restricted
stock of the Company. The debt bears interest at the prime rate of a local
bank and interest is due monthly. The outstanding amount of the debt at March
1, 1997 was $44,000.
John E. Allen, nominee for election as a Director, has outstanding
debt owed to the Company in the amount of $244,890 at December 31, 1996, which
was also the largest amount of debt owed by him to the Company during 1996, and
is the outstanding amount of the debt at March 1, 1997. The debt was incurred
in connection with the purchase of restricted stock of the Company. The debt
bears interest at a range of 4% to 6.25% and interest is due quarterly.
2. RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors reappointed the firm of Ernst & Young LLP as
the Company's independent auditors to audit the financial statements of the
Company for the fiscal year ending December 31, 1997. In recommending
ratification by the stockholders of the appointment of Ernst & Young LLP, the
Board of Directors has satisfied itself as to that firm's professional
competence and standing. Representatives of Ernst & Young LLP are not expected
to be present at the Annual Meeting.
THE AUDIT COMMITTEE AND THE BOARD OF DIRECTORS RECOMMEND THE
STOCKHOLDERS VOTE "FOR" THIS RATIFICATION.
11
<PAGE> 14
3. OTHER MATTERS
As of the date of this proxy statement, the Board of Directors is not
informed of any matters, other than those stated above, that may be brought
before the meeting. However, if any matter not known is presented at the
meeting, it is the intention of the persons named in the accompanying form of
proxy to vote with respect to any such matters in accordance with their best
judgment.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the next Annual
Meeting of Stockholders to be held in 1998 must be received by the Company on
or before November 30, 1997 for inclusion in the Company's Proxy Statement and
form of proxy relating to that Annual Meeting.
EXPENSES OF SOLICITATION
The Company will bear the cost of solicitation of proxies. The
solicitation of proxies by mail may be followed by telephoning or other
personal solicitation of certain stockholders and brokers by some officers or
other employees of the Company. The Company will request banks and brokers or
other similar agents or fiduciaries to transmit the proxy material to the
beneficial owners for their voting instructions and will reimburse them for
their reasonable expenses in so doing.
By Order of the Board of Directors
Robert B. Vlach, Secretary
Date: April 3, 1997
--------------
IT IS URGED THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
STOCKHOLDERS ARE URGED TO FILL IN, SIGN AND RETURN THE ACCOMPANYING FORM OF
PROXY.
12
<PAGE> 15
UICI
PROXY
4001 MCEWEN DRIVE, SUITE 200, DALLAS, TEXAS 75244
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Connie Palacios and Robert B. Vlach as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote as designated below, all the shares of common
stock of UICI held of record by the undersigned on March 14, 1997 at the annual
meeting of stockholders to be held on May 7, 1997 or any adjournment thereof.
1. ELECTION OF DIRECTORS FOR all nominees listed below (except as
marked to the contrary below) [ ]
WITHHOLD AUTHORITY to vote for all nominees
listed below [ ]
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Ronald L. Jensen, Gary L. Friedman, Richard J. Estell, J. Michael Jaynes,
Vernon R. Woelke, Richard T. Mockler, W. Brian Harrigan, Charles T. Prater and
John E. Allen:
2. PROPOSAL TO APPROVE THE APPOINTMENT OF ERNST & YOUNG LLP as the
independent public accountants for the Company:
[ ] FOR [ ]AGAINST [ ]ABSTAIN
(Continued on other side)
<PAGE> 16
(Continued from other side)
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This Proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this Proxy will be
voted for Proposals 1 and 2. Please sign exactly as name appears on the label
below. When shares are held by joint tenants, both should sign. When signing as
attorney, as executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Dated , 1997
----------------------------------
Signature
------------------------------------
Signature
------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN PROXY
CARD PROMPTLY.
<PAGE> 17
UICI
PROXY
4001 McEwen Drive, Suite 200, Dallas, Texas 75244
Voting Instructions to ESOP Trustees
The undersigned participant in the UICI Employee Stock Ownership Plan
(the "ESOP") hereby instructs the Trustees of the ESOP to vote as directed
herein all shares of common stock of UICI held of record on March 14, 1997 by
the Trustees for the undersigned participant's account under the ESOP. Such
shares are to be voted in person or by proxy by the Trustees at the annual
meeting of stockholders to be held on May 7, 1997 or any adjournment thereof.
The substance of the proxy solicited on behalf of the Board of Directors is set
forth below.
1. ELECTION OF DIRECTORS FOR all nominees listed below (except as
marked to the contrary below)[ ]
WITHHOLD AUTHORITY to vote for all
nominees listed below [ ]
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.) Ronald L. Jensen, Gary L.
Friedman, Richard J. Estell, J. Michael Jaynes, Vernon R. Woelke, Richard T.
Mockler, W. Brian Harrigan, Charles T. Prater and John E. Allen:
2. PROPOSAL TO APPROVE THE APPOINTMENT OF ERNST & YOUNG LLP as the independent
public accountants for the Company:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued on other side)
<PAGE> 18
(Continued from other side)
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This Proxy when properly executed will direct the Trustees of the
Employee Stock Ownership Plan to vote in the manner directed herein. If no
direction is made by an ESOP participant, the shares so held by the ESOP for
such participant will be voted by the Trustees in the ratio of the results of
the Instructions received by the Trustees.
Please sign exactly as name appears on the label below.
Dated ,1997
--------------------
-----------------------------------------
Signature
PLEASE MARK, SIGN, DATE AND RETURN PROXY
CARD PROMPTLY.
