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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)*
HealthExtras, Inc.
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(Name of Issuer)
Common Stock (par value, $.01 per share)
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(Title of Class of Securities)
422211102
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(CUSIP Number)
Thomas L. Blair, 2273 Research Boulevard, Fourth Floor,
Rockville, Maryland 20850 [301-548-1000]
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
September 18, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box. |_|
NOTE: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Section
240.13d-7(b) for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM
DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1746 (2-98)
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CUSIP No. 422211102
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1. Names of Reporting Persons
I.R.S. Identification Nos. of Above Persons (entities only).
Thomas L. Blair and Alice M. Blair IRS Id. No. ###-##-####
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) |_|
(b) |_|
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3. SEC Use Only
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4. Source of Funds (See Instructions) 00
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) |_|
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6. Citizenship or Place of Reorganization: USA
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Number of 7. Sole Voting Power 8,546,200 shares
Shares Bene- ----------------------------------------------------------------
ficially Owned 8. Shared Voting Power 0 shares
by Each ----------------------------------------------------------------
Reporting 9. Sole Dispositive Power 8,546,200 shares
Person With ----------------------------------------------------------------
10. Shared Dispositive Power 0 shares
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
8,546,200 shares
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) |_|
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13. Percent of Class Represented by Amount in Row (11) 31%
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14. Type of Reporting Person (See Instructions)
IN
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ITEM 1. SECURITY AND ISSUER
This Schedule 13D (this "Schedule") relates to shares of common stock (the
"Common Stock"), par value $.01 per share, of HealthExtras, Inc., (the
"Company"), a corporation organized under the laws of the State of Delaware. The
principal executive offices of the Company are located at 2273 Research
Boulevard, Second Floor, Rockville, Maryland 20850.
ITEM 2. IDENTITY AND BACKGROUND
(a) Name - This statement is being filed by Thomas L. Blair ("Blair") and his
wife Alice M. Blair (together with Blair, the "Reporting Persons").
(b) Residence or business address - The business address of Thomas L. Blair is
2273 Research Boulevard, Fourth Floor, Rockville, Maryland 20850
(c) Present occupation or employment: Blair is a consultant to United Payors &
United Providers, Inc. Alice M. Blair is not employed.
(d) Whether or not, during the last five years, such person has been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors) and, if so, give the dates, nature of conviction, name and
location of court, any penalty imposed, or other disposition of the case:
No.
(e) Whether or not, during the last five years, such person was a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws; and,
if so, identify and describe such proceedings and summarize the terms of
such judgment, decree or final order: No.
(f) Citizenship - USA.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On September 18, 2000, Highland Investments, LLC, of which Blair is a
member and may be considered a controlling person, distributed to its members
the 17,680,000 shares of Common Stock owned by it. As a result, Blair received
directly 8,840,000 shares of Common Stock. Previously, Blair had filed a joint
Schedule 13D with Highland Investments and Principal Mutual Holding Company
("Principal Mutual") relating to the aggregate of 17,680,000 shares of Common
Stock. Blair, Highland Investments and Principal Mutual no longer intend to make
joint filings with respect to the Common Stock.
ITEM 4. PURPOSE OF TRANSACTION
State the purpose or purposes of the acquisition of securities of the
issuer. Describe any plans or proposals which the reporting persons may have
which relate to or would result in:
(a) The acquisition by any person of additional securities of the issuer, or
the disposition of securities of the issuer;
(b) An extraordinary corporate transaction, such as a merger, reorganization
or liquidation, involving the issuer or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of the issuer or any of
its subsidiaries;
(d) Any change in the present board of directors or management of the issuer,
including any plans or proposals to change the number or term of directors
or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend policy of
the issuer;
(f) Any other material change in the issuer's business or corporate structure
including but not limited to, if the issuer is a registered closed-end
investment company, any plans or proposals to make any changes in its
investment policy for which a vote is required by Section 13 of the
Investment Company Act of 1940;
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(g) Changes in the issuer's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control of
the issuer by any person;
(h) Causing a class of securities of the issuer to be delisted from a national
securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities
association;
(i) A class of equity securities of the issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Act; or
(j) Any action similar to any of those enumerated above.
As the Chairman of the Board of Directors and beneficial owner of 31% of
the outstanding Common Stock, Blair may be considered a controlling person of
the Company. The Reporting Persons reserve the right to vote their shares and to
take any action regarding the management of the affairs of the Company as they
deem appropriate, consistent with their legal obligations. In addition, the
Reporting Persons may review, as appropriate, their investment in the Company.
Depending upon future evaluations of the business prospects of the Company and
upon other developments, including, but not limited to, general economic and
business conditions and stock market conditions, the Reporting Persons may
retain or from time to time increase or dispose of all or a portion of their
holdings, subject to any applicable legal and contractual restrictions on their
ability to do so.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) The Reporting Persons are the beneficial owner of 8,546,200 shares of
Common Stock, which based on calculations made in accordance with Rule
13d-3(d) of the Exchange Act represents 31% of the outstanding shares of
Common Stock.
(b) The Reporting Persons hold sole power to vote or direct the vote and to
dispose of or direct the disposition of 8,546,200 shares of Common Stock.
(c) On September 18, 2000, Blair received 8,840,000 shares of Common Stock as
a result of the distribution by Highland Investments to its members
identified in Item 3 above.
The shares of Healthextras, Inc. Common Stock so distributed were
transferred as follows:
(i) 1,110,000 shares to the Reporting Persons as joint tenants
(ii) 410,000 shares to Alice M. Blair;
(iii) 2,810,000 shares to Alice M. Blair as trustee for the
Reporting Persons' grandchildren;
(iv) 4,045,000 shares to Highland Investments II, LLC, a Delaware
limited liability company, of which Blair is the sole member;
(v) An aggregate of 400,000 shares as gifts to a total of 31
persons; and
(vi) An aggregate of 65,000 shares as gifts to a total of 650
employees of the Company and other affiliated companies.
No consideration was paid for any of these transfers.
(d) On October 8, 1999, Thomas L. and Alice M. Blair granted an option to
United Payors & United Providers, Inc. ("UP & UP") to purchase 4,330,000
shares of Healthextras common stock under their control for an aggregate
exercise price of $4 million, subject to a change in control provision
with respect to UP&UP. In connection with the February 4, 2000 acquisition
of UP&UP by BCE Emergis, Inc., Blair waived the change in control
provision with respect to the shares held under his control. UP&UP is now
an indirect wholly-owned subsidiary of BCE Emergis, Inc. BCE Emergis, Inc.
is an indirect majority-owned subsidiary of BCE, Inc.
(e) Not applicable.
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Describe any contracts, arrangements, understandings or relationships
(legal or otherwise) among the persons named in Item 2 and between such persons
and any person with respect to any securities of the issuer, including but not
limited to transfer or voting of any of the securities, finder's fees, joint
ventures, loan or option arrangements, put or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of proxies, naming the
persons with whom such contracts, arrangements, understandings or relationships
have been entered into. Include such information for any of the securities that
are pledged or otherwise subject to a contingency the occurrence of which would
give another person voting power or investment power over such securities except
that disclosure of standard default and similar provisions contained in loan
agreements need not be included.
In connection with a reorganization pursuant to which the predecessors of
the Company merged into the Company, the Company, Highland Investments and its
members, Blair and Principal Holding Company ("PHC"), an indirect wholly-owned
subsidiary of Principal Mutual, and Health Partners entered into a Stockholders
Agreement dated as of December 9, 1999. This Stockholders Agreement contains
provisions regarding registration rights, the composition of the Board of
Directors of the Company, and tag-along rights, rights of first offer and
preemptive rights with respect to certain sales of Common Stock.
REGISTRATION RIGHTS
Pursuant to the Stockholders Agreement, Highland Investments and PHC and
the Reporting Persons and Health Partners, to the extent they hold shares of
Common Stock, have been granted certain registration rights with respect to
shares of Common Stock. The Stockholders Agreement provides for an aggregate of
four demand registration statements under the Securities Act of 1933 beginning
180 days after December 13, 1999. Highland Investments, PHC and the Reporting
Persons may require that the Company file two of those demand registration
statements, subject to certain conditions. If Health Partners or Highland
Investments, PHC and the Reporting Persons exercise a demand registration right,
the others also can participate in the offering on a proportionate basis to
their respective ownership positions. These stockholders are also entitled to
require the Company to register their shares of Common Stock on a registration
statement on Form S-3 if the Company is eligible to use a Form S-3 in connection
with such registrations. In addition, these stockholders are entitled to require
the Company to include their shares of Common Stock in future registration
statements the Company files under the Securities Act, often referred to as
"piggyback" registration rights. However, holders of these registration rights
will be restricted from exercising these rights under certain circumstances, for
agreed-upon periods after the filing of subsequent registration statements.
Also, the shares required to be included in a registration relating to an
underwritten offering generally are subject to underwriter cut back provisions.
DIRECTORS
Under the Stockholders Agreement, Highland Investments, PHC and the
Reporting Persons and Health Partners, were granted certain rights to designate
persons for election as Directors of the Company. The Stockholders Agreement
provides that:
Highland Investments, PHC and the Reporting Persons may designate five
people for election as Directors of the Company if they own an aggregate of at
least 40% of outstanding Common Stock; three people for election as Directors if
own at least 25% of outstanding Common Stock; two people for election as
Directors if own at least 10% of outstanding Common Stock; and one person for
election as Director if they own at least 5% of outstanding Common Stock.
Highland Investments, PHC and the Reporting Persons also may be entitled to
increase the number of Directors that they may designate for election if the
total number of Directors is increased.
Under the Stockholders Agreement, five representatives of Highland
Investments, initially Blair, David T. Blair, who is Blair's son and Chief
Executive Officer of the Company, and Thomas J. Graf, Julia M. Lawler, and Karen
E. Shaff, who are officers of Principal Mutual or its subsidiaries, are
Directors of the Company.
RIGHTS OF FIRST OFFER AND TAG-ALONG RIGHTS
The Stockholders Agreement provides that Highland Investments, PHC, the
Reporting Persons and Health Partners must give notice to the Company and to
each other if they propose to sell Common Stock aggregating more than 10% of
outstanding Common Stock to a single person or group who is not a family member
(if a natural person), an affiliate (if an entity), or an employee or manager of
the Company.
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Upon receipt of notice, the non-transferring stockholder may elect to
participate in the transfer by delivering written notice to the transferring
stockholder. This right to participate in the transfer is called "tag-along"
rights. If a stockholder elects to participate in the transfer, the aggregate
sales proceeds shall be divided proportionally according to the electing
stockholder's and the transferring stockholder's respective shares of the
proceeds of a hypothetical liquidation of the Company. In order to calculate the
proceeds of a hypothetical liquidation, the value of the Company will be implied
by the transferring stockholder's proposed sales price.
Alternately, upon receipt of notice, the Company may elect to purchase all
of the shares that the transferring stockholder proposes to sell. If the Company
does not elect to purchase the shares, the non-transferring stockholders may
elect to purchase all of the shares offered. This right to preempt a sale, and
therefore a possible change in control, by purchasing the shares offered is
called the "first offer right." If the Company exercises its first offer rights,
the Company must purchase all of the shares offered upon the same terms and
conditions as originally offered. If the non-transferring stockholder exercises
its first offer rights, it may purchase a pro rata portion of the shares offered
upon the same terms and conditions as originally offered.
PREEMPTIVE RIGHTS
The Stockholders Agreement prohibits the Company from offering its Common
Stock for sale other than in a public offering, in connection with an
acquisition or pursuant to employee benefit plan or arrangement, unless the
Company first offers a proportionate number of shares of Common Stock to
Highland Investments, PHC and the Reporting Persons and Health Partners, to the
extent they hold shares of Common Stock. The preemptive offer must be in
writing, on the same terms and conditions as the offering and at the equivalent
price, and must enable Highland Investments, PHC and Reporting Persons and
Health Partners to retain the same proportionate ownership of Common Stock that
they hold prior to the offering. This provision allows Highland Investments, PHC
and the Reporting Persons and Health Partners to retain control of the Company
even if the Company decides to privately issue additional Common Stock at a
later date.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following shall be filed as exhibits: copies of written agreements
relating to the filing of joint acquisition statements as required by
ss.240.13d-1(k) and copies of all written agreements, contracts, arrangements,
understandings, plans or proposals relating to (1) the borrowing of funds to
finance the acquisition as disclosed in Item 3; (2) the acquisition of issuer
control, liquidation, sale of assets, merger, or change in business or corporate
structure or any other matter as disclosed in Item 4; and (3) the transfer or
voting of the securities, finder's fees, joint ventures, options, puts, calls,
guarantees of loans, guarantees against loss or of profit, or the giving or
withholding of any Proxy as disclosed in Item 6.
Exhibits.
2.1 Form of Reorganization Agreement by and among HealthExtras, Inc.,
HealthExtras, LLC, and CZHH is filed as Exhibit 2.1 to Registration
Statement on Form S-1, No. 333-83761, filed on September 21, 1999,
and is incorporated herein by reference.
4.2 Form of Stockholders Agreement by and among Highland Investments,
LLC, HealthExtras, LLC, HealthExtras, Inc., Principal Mutual Holding
Company, Thomas L. Blair, Health Partners, Capital Z Financial
Services Fund, II, L.P., Capital Z Financial Services Private Fund,
II, L.P., Capital Z Partners, Ltd., and Capital Z Management, LLC.
is filed as Exhibit 4.2 to Registration Statement on Form S-1, No.
333-83761, filed on September 21, 1999, and is incorporated herein
by reference.
10.10 Form of Registration Rights Agreement by and among Health Partners,
Highland Investments, LLC and HealthExtras, Inc. is filed as Exhibit
10.10 to Registration Statement on Form S-1, No. 333-83761, filed on
September 21, 1999, and is incorporated herein by reference.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
September 27, 2000 /s/ Thomas L. Blair
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Date Thomas L. Blair
September 27, 2000 /s/ Alice M. Blair
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Date Alice M. Blair
The original statement shall be signed by each person on whose behalf the
statement is filed or his authorized representative. If the statement is signed
on behalf of a person by his authorized representative (other than an executive
officer or general partner of this filing person), evidence of the
representative's authority to sign on behalf of such person shall be filed with
the statement, provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by reference.
The name and any title of each person who signs the statement shall be typed or
printed beneath his signature.
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL
CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001)
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