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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)
Principal Mutual Holding Company, 711 High Street, Des Moines, Iowa 50392
(515) 247-5111
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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).
Principal Mutual Holding Company IRS Id. No. 42-0942600
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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 of Place of Reorganization: Iowa
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Number of 7. Sole Voting Power 8,840,000 shares
Shares Bene- -----------------------------------------------------------------
ficially Owned 8. Shared Voting Power
by Each -----------------------------------------------------------------
Reporting 9. Sole Dispositive Power 8,840,000 shares
Person With ------------------------------------------------------------------
10. Shared Dispositive Power
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
8,840,000 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) 32.1%
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14. Type of Reporting Person (See Instructions)
CO; HC
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ITEM 1. SECURITY AND ISSUER
This Schedule 13D (this "Schedule") relates to the 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 Principal Mutual Holding Company
("Principal Mutual"), a corporation incorporated under the laws of Iowa,
and its wholly owned subsidiary, Principal Holding Company ("PHC" and,
together with Principal Mutual, the "Reporting Persons."
(b) Residence or business address - The business address of the Reporting
Persons, which also serves as their principal offices, is 711 High Street,
Des Moines, Iowa 50392.
(c) Present occupation or employment: Insurance Holding Company
(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 - Iowa.
The following information pertains to each executive officer and director
of Principal Mutual: The information set forth on Exhibit 99.1 attached is
incorporated herein by reference.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On September 18, 2000, Highland Investments, LLC, of which PHC is a member
and may be considered a controlling person, distributed to its members the
shares of Common Stock held by it. As a result, PHC received directly 8,840,000
shares of Common Stock. Previously, the Reporting Persons had filed a joint
Schedule 13D with Highland Investments and Thomas L. Blair ("Blair") relating to
an aggregate of 17,680,000 shares of Common Stock. The Reporting Persons,
Highland and Blair no longer intend to file joint Schedule 13Ds.
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;
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(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;
(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 beneficial owner of 32.0% of the outstanding Common Stock, and
having three executive officers of it or its subsidiaries as Directors of
the Company, Principal Mutual may be considered a controlling person of
the Company.
Principal Mutual reserves the right to vote its shares and to take any
action regarding the management of the affairs of the Company as it deems
appropriate, consistent with its legal obligations. In addition, Principal
Mutual may review, as appropriate, its 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, Principal
Mutual may retain or from time to time increase its holdings or dispose of
all or a portion of its holdings, subject to any applicable legal and
contractual restrictions on its ability to do so.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) PHC is the record owner of 8,840,000 shares of Common Stock, which based
on calculations made in accordance with Rule 13d-3(d) of the Exchange Act
represents 32.0% of the outstanding shares of Common Stock.
(b) Principal Mutual (through PHC) has sole power to vote or direct the vote
and to dispose of or direct the disposition of 8,840,000 shares of Common
Stock.
(c) PHC is a member and may be considered a controlling person of Highland
Investments, Inc., which distributed all of its HealthExtras, Inc. Common
Stock to its members on September 18, 2000. As a result, PHC received
directly 8,840,000 shares of Common Stock.
(d) Each of the Reporting Persons affirms that no person other than the
Reporting Persons has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the shares of
Common Stock, owned by the Reporting Persons.
(e) Not applicable.
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.
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In connection with a reorganization pursuant to which the predecessors of
the Company merged into the Company, the Company, Highland Investments and its
members, PHC and Blair, 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 Blair and
the Reporting Persons and Health Partners, to the extent they hold shares of
Common Stock, have been granted certain registration rights. 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, Blair 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, Blair 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 the 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 the
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, Blair and the
Reporting Persons were granted certain rights to designate persons for election
as Directors of the Company. The Stockholders Agreement provides that:
Highland Investments, Blair 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 the outstanding Common Stock; three people for election as
Directors if they own at least 25% of the outstanding Common Stock; two people
for election as Directors if they own at least 10% of the outstanding Common
Stock; and one person for election as Director if they own at least 5% of the
outstanding Common Stock. Highland Investments, Blair 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, Blair, who is Chairman of the Board of the Company, 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 executive 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, Blair, 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.
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
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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 to sell a proportionate number of shares to Highland
Investments, Blair 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, Blair and the 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, Blair
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.
99.1 Information regarding executive officers and directors of Principal
Mutual Holding Company.
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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 25, 2000
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Date
PRINCIPAL MUTUAL HOLDING COMPANY
(and PRINCIPAL HOLDING COMPANY)
By: /s/ Thomas J. Graf
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Thomas J. Graf, Senior Vice President
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)
