<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
PROVIDENT AMERICAN CORPORATION
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(Name of Issuer)
Common Voting Stock
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(Title of Class of Securities)
743832-990
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(CUSIP Number)
Anthony R. Verdi, Chief Financial Officer, Provident American Corporation, 2500
DeKalb Pike, P. O. Box 511, Norristown, PA 19404-0511 Telephone: (610) 279-2500
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
March 10, 1997
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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 which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
CUSIP No. 743832-990
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<TABLE>
<S> <C> <C>
1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above
Persons
Alvin H. Clemens ("Mr. Clemens") ...............................Social Security No.: ###-##-####
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2) Check the Appropriate Box if a Member of a Group (See Instructions)
(a) .............................................................................................
(b) ........................................................................................... X
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3) SEC Use Only
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4) Source of Funds (See Instructions) ....................................................SC, BK, PF
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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 Organization.....................................United States of America
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Number of 7) Sole Voting Power.....................................................3,827,869
Shares Bene-
ficially 8) Shared Voting Power............................................................
Owned by
Each 9) Sole Dispositive Power................................................3,827,869
Reporting Person
With 10) Shared Dispositive Power.......................................................
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11) Aggregate Amount Beneficially Owned by Each Reporting
Person..................................................................................3,827,869
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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)............................................38%
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14) Type of Reporting Person (See Instructions)....................................................IN
.................................................................................................
.................................................................................................
.................................................................................................
.................................................................................................
</TABLE>
<PAGE>
Item 1. Security and Issuer.
Common Voting Stock
Provident American Corporation
2500 DeKalb Pike
P. O. Box 511
Norristown, PA 19404-0511
Item 2. Identity and Background.
(a) Alvin H. Clemens ("Mr. Clemens")
(b) 2500 DeKalb Pike, Norristown, Pennsylvania 19404-0511
(c) Chairman and Chief Executive Officer
Provident American Corporation
2500 DeKalb Pike, P.O. Box 511
Norristown, PA 19404-0511
Holding Company for Life Insurance Company
(d) Mr. Clemens has not, during the last five years, been
convicted in a criminal proceeding.
(e) Mr. Clemens has not, during the last five years, been
a party to a civil proceeding resulting in 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.
(f) United States of America
Item 3. Source and Amount of Funds or Other Consideration.
o Pursuant to the terms of an Amended and Restated
Stock Exchange Agreement entered into as of February
27, 1989 (the "Stock Exchange Agreement"), a copy of
which was attached as Exhibit "A" to Mr. Clemens's
Schedule 13D filed on or about October 17, 1989, Mr.
Clemens acquired 2,702,902 shares of Common Voting
Stock, $.10 par value, of Issuer in exchange for
transfer to the Issuer of 200,000 shares of the
Common Stock of Maine National Life Insurance Company
("Maine National"), $5.50 par value, constituting all
of the issued and outstanding shares of the Common
Stock of Maine National. Prior to such exchange, Mr.
Clemens was the owner of all of the issued and
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outstanding shares of the Common Stock of Maine
National. The shares of Issuer issued to Mr. Clemens
in exchange for the shares of Maine National
constituted a portion of the Issuer's authorized but
unissued shares.
o On January 16, 1991, Mr. Clemens transferred 616,000
Shares to the Mark Twain Trust.
o Effective April 1, 1993, Mr. Clemens purchased
550,000 shares of Issuer's Series A Cumulative
Convertible Preferred Stock ("Series A Preferred") at
a price of $3.64 per share. Mr. Clemens was granted a
loan by Harleysville National Bank and Trust Company
(the "Bank") in the amount of $2,000,000 in order to
fund the purchase of the Series A Preferred. The
550,000 Shares of Series A Preferred are pledged as
collateral to the Bank in connection with the loan.
The Series A Preferred is voted on an "as converted"
basis, and is convertible on a share-for-share basis
into either Class A Common Stock (having four votes
per share in connection with matters submitted to
shareholders for a vote) or into Common Stock.
o Effective April 1, 1993, Mr. Clemens was granted an
Option to purchase 550,000 shares of Issuer's Series
A Cumulative Convertible Preferred Stock at an
exercise price of $3.64 per share, the terms of which
are set forth in an Amended and Restated Option to
Purchase Preferred Shares dated as of December 11,
1996.
o Mr. Clemens was granted an Option to purchase 25,000
shares of Issuer's Common Stock at an exercise price
of $8.75 per share effective as of July 16, 1996,
which vest over a period of three years. As of the
present date, 8,333 shares have become exercisable.
o Pursuant to an Agreement to Grant Options dated as of
March 10, 1997 (the "Option Contract"), the Issuer
agreed to grant Mr. Clemens an option to successively
purchase up to 3,300,000 shares of the Issuer's
Series A Cumulative Convertible Preferred Stock
("Series A Preferred"), which option or options will
be granted upon any exercise by Mr. Clemens of any
previously granted option to purchase Series A
Preferred, and each subsequently granted option to
purchase shares of Series A Preferred from time to
time. The rights set forth in the Option Contract are
limited as follows: (1) the number of shares of
Series A Preferred issuable upon each exercise of the
Option Contract shall be limited by the number of
shares of Series A Preferred which shall, as of the
date of any such exercise, be authorized and
unissued; (2) the number of shares of Series A
Preferred issuable upon the exercise of all of the
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Options granted to Mr. Clemens under the Option
Contract and under a previously granted option to
purchase 550,000 shares of Series A Preferred shall
not in the aggregate exceed 3,850,000 shares of
Series A Preferred; and (3) except upon the
occurrence of a "change in control" (as defined
herein), Mr. Clemens shall not be permitted to
exercise an option granted under the Option Contract
(i) to purchase more than 550,000 shares of Series A
Preferred in any six-month period, or (ii) the effect
of which would be to permit Mr. Clemens to vote more
than 55% of the number of shares of the Issuer's
Common Stock owned by Mr. Clemens at such time. Upon
the occurrence of a "change of control" of the
Issuer, Mr. Clemens shall have the right to
immediately exercise all options to purchase shares
of Series A Preferred, and the Issuer will make a
loan to him in an amount equal to the aggregate
exercise price of all options to purchase shares of
Series A Preferred which Mr. Clemens may then be
entitled to exercise, plus an amount equal to all
federal and state income taxes incurred by Mr.
Clemens in connection with the exercise (the "Loan").
The Loan shall be unsecured, and shall bear interest
at the then applicable federal short-term rate, but
not less than six (6%) percent per annum, with
interest and principal due and payable in full five
(5) years from the date of the Loan. For this
purpose, a "change of control" shall mean the
acquisition by any individual, entity or group
(within the meaning of the Securities Exchange Act of
1934, as amended), of beneficial ownership of 25% or
more of either the then outstanding shares of the
Common Stock of the Issuer, or the combined voting
power of the then outstanding voting securities of
the Issuer entitled to vote generally in the election
of directors.
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Item 4. Purpose of Transaction.
Investment
Item 5. Interest in Securities of the Issuer.
Alvin H. Clemens
(a) 3,827,869 shares of Issuer's Common Voting
Stock, representing 38% of outstanding
shares
(b) Sole power to vote and dispose of 3,827,869
shares
(c) None
(d) Not applicable
(e) Not applicable
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
o See Response to Item 3 above.
o In April 1996 the Issuer made a loan in the amount of
$300,000 to Mr. Clemens and increased the principal
balance of the loan to $600,000 in April 1997. The
loan is collateralized by 120,000 shares of Issuer's
Common Voting Stock
Item 7. Material to be Filed as Exhibits.
(1) Amended and Restated Option to Purchase
Preferred Shares of Issuer dated as of
December 11, 1996, granted to Alvin H.
Clemens.
(2) Option to Purchase 25,000 shares of Issuer's
Common Stock dated as of July 16, 1996,
granted to Alvin H. Clemens.
(3) Agreement to Grant Options dated as of March
10, 1997, between Issuer and Alvin H.
Clemens.
(4) Promissory Note in the principal amount of
$2,000,000 dated March 31, 1993, delivered
by Alvin H. Clemens to Harleysville National
Bank and Trust Company.
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(5) Promissory Note in the original principal
amount of $300,000 dated April 8, 1996, as
amended by Amendment to Promissory Note
dated April 8, 1997, increasing the
principal balance to $600,000.
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.
July , 1997
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Date
s/s Alvin H. Clemens
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Signature
Alvin H. Clemens
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Name/Title
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<PAGE>
AMENDED AND RESTATED OPTION TO PURCHASE PREFERRED SHARES
OF
PROVIDENT AMERICAN CORPORATION
THIS AMENDED AND RESTATED OPTION is dated as of the 11th day of
December, 1996, effective as hereinafter set forth. PROVIDENT AMERICAN
CORPORATION ("PAMCO"), intending to be legally bound, hereby grants to ALVIN H.
CLEMENS ("Owner"), a Stock Option ("Option") to purchase all or any part of an
aggregate of FIVE HUNDRED FIFTY THOUSAND (550,000) shares of the Series A
Cumulative Convertible Preferred Stock (the "Preferred Stock"), of PAMCO, $1.00
par value (the "Shares"), on the terms and conditions hereinafter set forth.
This Amended and Restated Option supersedes the Option to purchase 550,000
shares of the Preferred Stock dated as of April 1, 1993, as amended, which was
granted to Owner in connection with Owner's purchase of 550,000 shares of Series
A Preferred as of that date (the "1993 Option").
1. Purchase Price. The Shares of Preferred Stock may be purchased
pursuant to this Option Agreement at a price of $3.64 per share, subject to
adjustment as provided in Paragraph 6 hereof.
2. Effective Date of Grant; Termination of Option. The Option became
effective and exercisable as of July 7, 1993 (the "Effective Date"). Unless
sooner exercised, the Option herein granted shall expire at 5:00 p.m., ten (10)
years from the Effective Date. The Option or any part hereof may be exercised at
any time or from time to time up to ten (10) years from the Effective Date.
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3. Method of Exercise.
a. Subject to the terms and conditions hereof, the Option or
any part thereof may be exercised in accordance with the terms hereof, in whole
or in part, by written notice to PAMCO.
b. The notice of exercise shall specify the number of Shares
of Preferred Stock to be purchased, acknowledge and agree that such Shares of
Preferred Stock are being purchased for investment and not for distribution or
resale, and shall be accompanied by payment in cash, by certified or bank
cashier's check payable to the order of PAMCO for the aggregate purchase price
of the Shares of Preferred Stock purchased, or by delivery of shares of either
PAMCO Common Stock, Preferred Stock, or Class A Common Stock, together with duly
executed stock powers, having a Current Market Price (as hereinafter defined)
equal to such purchase price. Such exercise (subject to the restrictions
contained in Paragraph 7) shall be effective upon the actual receipt of such
written notice and payment to PAMCO. As used herein, the term "Current Market
Price" shall mean, with respect to one share of PAMCO Common Stock at any date,
the average of the daily closing prices for the 30 consecutive business days
before the day in question, as adjusted for any stock dividend, split,
combination or reclassification that took effect during such 30 business day
period, or, in case no sales took place on any day in question during such 30
business day period, the last bid price on such day, in either case on the
principal national securities exchange on which the Common Stock is then listed
or admitted to trading or on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ") National Market System, or, if the Common
Stock is not listed or admitted for trading on any such exchange or on the
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NASDAQ National Market System on any day in question, then such price as shall
be deemed to be the last bid price quoted on the NASDAQ interdealer quotation
system, then said price shall be deemed to be the last reported bid price on
such day as reported by the National Quotation Bureau, Inc., provided, however,
that if the Common Stock is not traded in such matter that the quotations
referred to in this subsection (b) are available for the period required
hereunder, the Current Market Price shall be determined on an as converted
basis, or in the absence thereof, in good faith by at least a majority of the
members of the Board of Directors of PAMCO.
c. No rights or privileges of a shareholder of PAMCO in
respect of any of the Shares of Preferred Stock issuable upon the exercise of
any part of the Option shall inure to Owner, or any other person entitled to
exercise the Option as herein provided, unless and until certificates
representing such Shares of Preferred Stock shall have been delivered, which
certificate or certificates may bear an appropriate legend indicating that the
Shares of Preferred Stock represented thereby have been purchased for investment
and not for distribution or resale.
d. Upon the partial exercise of the Option herein granted, the
Owner of the Option, upon written notification to PAMCO and the surrender of
this Option to PAMCO, shall be entitled to be issued an Option to purchase such
lesser number of Shares of Preferred Stock as Owner shall request.
4. Transferability. The Option shall be freely transferable by Owner in
respect of the Shares of Preferred Stock for which the Option shall be
exercisable at the principal office of PAMCO by Owner by presentation of the
Option, properly endorsed for transfer. In the event that the Option is
transferred, Owner agrees by holding this Option that Owner's Option, when
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<PAGE>
endorsed in blank, may be deemed negotiable and that Owner, when this Option
shall have been endorsed, may be treated by PAMCO and all other persons dealing
with the Option as the absolute owner thereof for any purpose, and as the party
entitled to exercise the rights represented by this Option, or to the transfer
thereof on the books of PAMCO, any notice to the contrary notwithstanding. The
form of this Option is exchangeable upon the surrender thereof by Owner at the
principal office of PAMCO for new Options of like tenor representing in the
aggregate the right to purchase the number of Shares of Preferred Stock
purchasable under the Option being exchanged, each such new Option to represent
the right to purchase such number of Shares of Preferred Stock as shall be
designated by Owner at the time of such surrender, but not to exceed in the
aggregate the number of Shares of Preferred Stock subject hereto.
5. Dilution. In the event that prior to the delivery by PAMCO of all of
the Shares of Preferred Stock in respect of which the aforesaid Option is
granted, the outstanding Shares of Preferred Stock of PAMCO, including any
common stock into which the Preferred Stock shall be convertible, shall be
changed in number or class or exchanged for a different number or kind of shares
of stock or other securities of PAMCO, whether by reason of recapitalization,
reclassification, reorganization, combination, stock split or reverse stock
split, or payment of a stock dividend or other similar change in capitalization,
effected without receipt of consideration by PAMCO, the remaining number of
Shares of Preferred Stock still subject to the Option and the purchase price
therefor shall be adjusted in a manner determined by PAMCO so that the adjusted
number of shares and the adjusted purchase price shall be substantially
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equivalent to the remaining number of Shares of Preferred Stock still subject to
the Option and the purchase price thereof prior to such change.
6. Registration. If the registration or qualification of the Shares of
Preferred Stock subject to the Option under any federal or state law or the
consent or approval of any governmental regulatory body or a national stock
exchange is necessary as a condition of or in connection with the purchase or
issuance of such Shares of Preferred Stock, PAMCO shall not be obligated to
issue or deliver the certificates representing the Shares of Preferred Stock as
to which the Option has been exercised unless and until such registration,
qualification, consent or approval shall have been effected or obtained.
7. Owner's Obligation. Owner, by acceptance of this Option, expressly
acknowledges and agrees that: (1) Owner will be solely responsible for all taxes
levied by or under federal, state or municipal authority, to which Owner may be
or become subject arising out of or resulting from receipt of this Option,
holding or exercise thereof or holding, sale, transfer or other disposition of
shares acquired on such exercise; and (2) Owner will indemnify PAMCO and its
affiliates, and hold such person harmless, of, from and against any and all
loss, damage, obligation or liability, and all costs and expenses (including
attorneys' fees) incurred in connection therewith, which it may suffer or incur
on account or by reason of any act or omission of Owner, or Owner's heirs,
executors, administrators, personal representatives, successors and assigns in
breach or violation of the covenants and agreements of Owner set forth herein.
8. Notification. Any notice to be given to PAMCO shall be marked to the
attention of the Secretary and addressed to PAMCO at its then principal office,
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and any notice to be given to Owner shall be addressed to the address then
appearing in the personal records of PAMCO for Owner, or at such other address
as either party may hereafter designate in writing to the other. Any such notice
shall be deemed to have been properly given if and when enclosed in a properly
sealed envelope addressed as aforesaid, registered or certified mail, and
deposited, postage prepaid, in a post office regularly maintained by the United
States Government.
9. Amendments. This Amended and Restated Stock Option Agreement
supersedes the 1993 Option. Any amendments to this Amended and Restated Stock
Option Agreement must be in writing, signed by each party hereto.
IN WITNESS WHEREOF, PAMCO has caused this Amended and Restated Stock
Option Agreement to be executed as of the day and year above first written.
PROVIDENT AMERICAN CORPORATION
Attest:
/s/ M. F. Beausang, Jr. By: /s/ James O. Bowles
- ----------------------------------- ------------------------------------
Michael F. Beausang, Jr., Secretary James O. Bowles, President
[SEAL]
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<PAGE>
PURCHASE AGREEMENT
To: Secretary of Provident American Corporation
The undersigned, pursuant to the provisions of the attached
Option, agrees to purchase _______________________ (________) Shares of the
Series A Cumulative Convertible Preferred Stock of Provident American
Corporation, $1.00 par value, and makes payment herewith in full therefore at
the price per share provided by such Option.
Date:___________________________ Signature:_____________________________
Address: ______________________________
______________________________
ASSIGNMENT
FOR VALUE RECEIVED, _________________________________ hereby
sells, assigns, and transfers all of the rights of the undersigned under the
Option attached hereto, with respect to the number of Shares of Preferred Stock
of Provident American Corporation covered by such Option to:
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
- ---------------- ------- -------------
Date:______________________________ Signature:_______________________
Witness:_________________________
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<PAGE>
CASHLESS OPTION SUBSCRIPTION
The undersigned, Owner of a certain Option to purchase Shares of the
Preferred Stock of PAMCO, hereby agrees to subscribe to that number of Shares of
the Common Stock or Class A Common Stock of PAMCO as are issuable in accordance
with the provisions set forth in Paragraph 3.b of the Option, and makes payment
therefor in full by surrender and delivery of this Option.
Dated:__________________________ Signature:_____________________________
Print Name:____________________________
Address:_______________________________
_______________________________
Social Security No.:___________________
<PAGE>
OPTION NO.: 020D
DATE OF ISSUE: July 16, 1996
OPTION TO PURCHASE TWENTY FIVE THOUSAND (25,000) COMMON SHARES
OF
PROVIDENT AMERICAN CORPORATION
STOCK OPTION PLAN FOR DIRECTORS
VOID AFTER 5:00 P.M. ON JULY 16, 2006, AS PROVIDED HEREIN
Provident American Corporation ("PAMCO") intending to be legally bound,
and pursuant to the Stock Option Plan for Directors, as amended, hereby grants
to ALVIN H. CLEMENS ("Owner") a Stock Option ("Option") to purchase all or any
part of an aggregate of TWENTY FIVE THOUSAND (25,000) common shares, $0.10 par
value (the "Shares") of PAMCO on the terms and conditions hereinafter set forth.
1. Purchase Price. The Shares may be purchased pursuant to this Option
Agreement at a purchase price of $8.75 per Share, subject to adjustment as
provided in Paragraph 5 hereof.
2. Termination of Option. Unless sooner exercised or terminated, the
Option herein granted shall expire at 5:00 p.m., ten (10) years from the date
hereof; provided, however, that any unvested portion of the Option shall
terminate upon the Owner's resignation as a Director of PAMCO prior to two (2)
years from the date hereof.
<PAGE>
3. Conditions and Method of Exercise.
a. Subject to the terms and conditions hereof, the Option
shall vest and become exercisable as follows: (i) 8,333 Shares upon the issuance
of the Option, (ii) an additional 8,333 Shares one (1) year from the date
hereof, and (iii) the remaining balance of 8,334 Shares two (2) years from the
date hereof. Notwithstanding the foregoing, the Option herein granted shall
become immediately exercisable in the event that 25% or more of the issued and
outstanding Shares of the capital stock of PAMCO are transferred in a single
transaction or a series of transactions extending over a period of one (1) year
to a person or entity or persons or entities affiliated therewith who are not
presently shareholders of PAMCO.
b. An Option which is vested shall be exercisable by written
notice to PAMCO. The notice of exercise shall specify the number of Shares to be
purchased, acknowledge and agree that such Shares are being purchased for
investment and not for distribution or resale, and shall be accompanied by
payment in cash or by certified or bank cashier's check payable to the order of
PAMCO for the aggregate Option price of the Shares purchased. The exercise
(subject to the restrictions contained in Paragraph 7) shall be effective upon
the actual receipt of such written notice and payment to PAMCO.
c. No rights or privileges of a shareholder of PAMCO in
respect of any Shares issuable upon the exercise of any part of an Option shall
inure to the Owner, or any other person entitled to exercise an Option as herein
provided, unless and until certificates representing such Shares have been
delivered, which certificate(s) may bear an appropriate legend indicating that
the Shares represented thereby have been purchased for investment and not for
distribution or resale.
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<PAGE>
d. Upon the partial exercise of an Option, the Owner of the
Option, upon written notification and surrender of the Option to PAMCO, shall be
entitled to be issued an Option to purchase such lesser number of Shares as the
Owner shall request.
4. Transferability. An Option shall be freely transferable by the Owner
in respect of the Shares for which the Option shall be exercisable by
presentation of the Option at the principal office of PAMCO, properly endorsed
for transfer. In the event an Option is transferred, the Owner agrees by holding
the Option that when endorsed in blank, the Option may be deemed negotiable and
the Owner may be treated by PAMCO and all other persons dealing with the Option
as the absolute owner thereof for any purpose, and as the party entitled to
exercise the rights represented by the Option, or to the transfer thereof on the
books of PAMCO, any notice to the contrary notwithstanding. The form of an
Option is exchangeable upon its surrender by the Owner at the principal office
of PAMCO for new Options of like tenor representing in the aggregate the right
to purchase the number of Shares purchasable under the Option being exchanged,
each such new Option to represent the right to purchase such number of Shares as
shall be designated by the Owner at the time of surrender, but not to exceed in
the aggregate the number of Shares subject hereto.
5. Dilution. In the event that prior to the delivery by PAMCO of all of
the Shares of common stock in respect of which the Option is granted, the
outstanding Shares of common stock of PAMCO shall be changed in number or class
or exchanged for a different number or kind of shares of stock or other
securities of PAMCO, whether by reason of recapitalization, reclassification,
reorganization, combination, stock split or reverse stock split, or payment of
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<PAGE>
a stock dividend or other similar change in capitalization, effected without
receipt of consideration by PAMCO, the remaining number of Shares of common
stock still subject to the Option and the purchase price therefor shall be
adjusted in a manner determined by PAMCO so that the adjusted number of Shares
and the adjusted purchase price shall be substantially equivalent to the
remaining number of Shares still subject to the Option and the purchase price
thereof prior to such change.
6. Registration. If the registration or qualification of the Shares
subject to an Option under any federal or state law or the consent or approval
of any governmental regulatory body or a national stock exchange is necessary as
a condition of or in connection with the purchase or issuance of such Shares,
PAMCO shall not be obligated to issue or deliver the certificates representing
the Shares as to which the Option has been exercised unless and until such
registration, qualification, consent or approval has been effected or obtained.
7. Owner's Obligation. The Owner, by acceptance of this Option,
expressly acknowledges and agrees that: (1) Owner will be solely responsible for
all taxes levied by or under federal, state or municipal authority to which
Owner may be or become subject arising out of or resulting from receipt of this
Option, holding or exercise thereof or the holding, sale, transfer, or other
disposition of shares acquired on such exercise; and (2) Owner will indemnify
PAMCO and its affiliates, and hold such persons harmless, of, from and against
any and all loss, damage, obligation or liability, and all costs and expenses
(including attorneys' fees) incurred in connection therewith, which it may
suffer or incur on account or by reason of any act or omission of the Owner, or
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<PAGE>
Owner's heirs, executors, administrators, personal representatives, successors
and assigns in breach or violation of the covenants and agreements of the Owner
set forth herein.
8. Notification. Any notice to be given to PAMCO shall be marked to the
attention of the Secretary and addressed to PAMCO at its then principal office,
and any notice to be given to the Owner shall be addressed to the address then
appearing in the personal records of PAMCO for the Owner, or at such other
address as either party may hereafter designate in writing to the other. Any
such notice shall be deemed to have been properly given if and when enclosed in
a properly sealed envelope addressed as aforesaid, registered or certified mail,
and deposited, postage prepaid, in a post office regularly maintained by the
United States Government.
PROVIDENT AMERICAN CORPORATION
ATTEST: /s/ Michael F. Beausang, Jr. By: /s/ Alvin H. Clemens
----------------------------- ---------------------------
Michael F. Beausang, Jr. Alvin H. Clemens
Secretary President
[SEAL]
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<PAGE>
PURCHASE AGREEMENT
To:______________________________ Date:_________________
The undersigned, pursuant to the provisions of the foregoing
Option, agrees to purchase __________________________ (_________) Shares of the
Common Stock of Provident American Corporation, $0.10 par value, and makes
payment herewith in full therefore at the price per share provided by such
Option.
Signature:_____________________________
Address: ______________________________
______________________________
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ASSIGNMENT
FOR VALUE RECEIVED, hereby sells, assigns, and transfers all of
the rights of the undersigned under the Option attached hereto, with respect to
the number of Shares of Provident American Corporation covered by such Option
to:
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
- ---------------- ------- -------------
Date:______________________________ Signature:_______________________
Witness:_________________________
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<PAGE>
AGREEMENT TO GRANT OPTIONS TO PURCHASE
UP TO 3,300,000 SHARES OF SERIES A PREFERRED STOCK
OF
PROVIDENT AMERICAN CORPORATION
THIS AGREEMENT is dated as of the 10th day of March, 1997. PROVIDENT
AMERICAN CORPORATION ("PAMCO"), intending to be legally bound, hereby agrees to
grant to ALVIN H. CLEMENS ("Owner") an option ("Option") to purchase shares of
the Series A Cumulative Convertible Preferred Stock (the "Series A Preferred
Stock"), of PAMCO, $1.00 par value, upon the terms and conditions hereinafter
set forth, as follows:
1. Grant of Options.
a. Owner is the owner of an Option to purchase 550,000 shares
of Series A Preferred Stock in accordance with the terms and conditions of an
Option to Purchase Preferred Shares dated as of April 1, 1993, as amended (the
"1993 Option").
b. PAMCO hereby agrees to grant to Owner an Option to purchase
up to an additional 3,300,000 shares of Series A Preferred Stock, upon the
following terms and conditions: Upon the exercise of an Option or Options to
purchase a share or shares of Series A Preferred Stock by Owner (either pursuant
to the 1993 Option or with respect to an Option granted under this Agreement),
without further action, PAMCO shall be deemed to have successively granted to
Owner an option or options to purchase that number of shares of Series A
Preferred Stock as shall equal the number of shares of Series A Preferred Stock
for which an Option or Options has theretofore been exercised by Owner, it being
the intention of PAMCO that Owner shall successively be granted an Option or
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Options in order that Owner shall at all times and notwithstanding any prior
exercise of any Option or Options, have the right and option to purchase 550,000
shares of Series A Preferred Stock. The obligation of PAMCO to issue Options to
Owner shall be limited as follows: (1) the number of shares of Series A
Preferred Stock issuable upon each exercise of this Option shall be limited by
the number of shares of Series A Preferred Stock which shall, as of the date of
any such exercise, be authorized and unissued; (2) the number of Shares of
Series A Preferred Stock issuable upon the exercise of all of the Options
granted to Owner hereunder and under the 1993 Option shall not in the aggregate
exceed 3,850,000 shares of Series A Preferred Stock; and (3) except upon the
occurrence of a "change of control" (as hereinafter defined), Owner shall not be
permitted to exercise an option granted hereunder (i) to purchase more than
550,000 shares of Series A Preferred Stock in any six-month period or (ii) to
purchase shares of Series A Preferred Stock which would result in Owner
controlling more than 55% of the outstanding voting rights for all classes of
PAMCO's Common Voting Stock, $.10 par value ("Common Stock") from time to time
outstanding and entitled to vote, after giving effect to all other shares of
PAMCO's Common Stock owned by Owner at such time.
c. Notwithstanding the foregoing, upon the occurrence of a
"change of control" of PAMCO, the limitation set forth in subparagraph 1.b.(2)
above shall no longer be applicable, and Owner shall be permitted to immediately
and successively exercise Options to purchase Series A Preferred Stock subject
only to the limitations set forth in subparagraphs 1.b.(1) and (3) above.
2. Purchase Price. The exercise price for the purchase of the shares of
Series A Preferred Stock pursuant to this Agreement shall be equal to the
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Current Market Price (as hereinafter defined) per share of PAMCO's Common Stock
as of the date of grant, subject to adjustment as provided in Paragraph 7
hereof. As used herein, the term "Current Market Price" shall mean, with respect
to one share of PAMCO Common Stock at any date, the average of the daily closing
prices for the 30 consecutive business days before the day in question, as
adjusted for any stock dividend, split, combination or reclassification that
took effect during such 30 business day period, or, in case no sales took place
on any day in question during such 30 business day period, the last bid price on
such day, in either case on the principal national securities exchange on which
the Common Stock is then listed or admitted to trading or on the National
Association of Securities Dealers Automated Quotations System ("NASDAQ")
National Market System, or, if the Common Stock is not listed or admitted for
trading on any such exchange or on the NASDAQ National Market System on any day
in question, then such price as shall be deemed to be the last bid price quoted
on the NASDAQ interdealer quotation system, then said price shall be deemed to
be the last reported bid price on such day as reported by the National Quotation
Bureau, Inc., provided, however, that if the Common Stock is not traded in such
matter that the quotations referred to in this subsection (b) are available for
the period required hereunder, the Current Market Price shall be determined in
good faith by at least a majority of the members of the Board of Directors of
PAMCO.
3. Effective Date of Grant; Termination of Option.
a. This Agreement shall become effective as of March 10, 1997
("Effective Date").
b. Unless sooner exercised, the Option or Options to be
granted hereunder shall expire at 5:00 p.m., ten (10) years from the date of
grant.
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4. Method of Exercise.
a. Subject to the terms and conditions hereof, the Option or
any part thereof may be exercised in accordance with the terms hereof, in whole
or in part, by written notice to PAMCO.
b. The notice of exercise shall specify the number of shares
of Series A Preferred Stock to be purchased, acknowledge and agree that such
shares of Series A Preferred Stock are being purchased for investment and not
for distribution or resale, and shall be accompanied by payment in cash, by
certified or bank cashier's check payable to the order of PAMCO for the
aggregate purchase price of the shares of Series A Preferred Stock purchased.
Such exercise (subject to the restrictions contained in Paragraph 9) shall be
effective upon the actual receipt of such written notice and payment to PAMCO.
c. No rights or privileges of a shareholder of PAMCO in
respect of any of the shares of Series A Preferred Stock issuable upon the
exercise of any part of the Option shall inure to Owner, or any other person
entitled to exercise the Option as herein provided, unless and until
certificates representing such shares of Series A Preferred Stock shall have
been delivered, which certificate or certificates may bear an appropriate legend
indicating that the shares of Series A Preferred Stock represented thereby have
been purchased for investment and not for distribution or resale.
5. Loan Upon Change of Control.
a. Upon the occurrence of a "change of control" (as
hereinafter defined) of PAMCO, PAMCO shall make a loan to Owner (the "Loan").
The Loan shall be in an amount equal to the total exercise price payable by
Owner to PAMCO for Owner to exercise all of the Series A Preferred Stock
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Options, limited in the aggregate to the purchase of 3,850,000 shares of Series
A Preferred Stock, plus an amount equal to all federal, state, and local income
taxes incurred by Owner in connection with the exercise of all of such Options.
b. In the alternative, Owner shall have the right to give
written notice to PAMCO that Owner has exercised that number of Series A
Preferred Stock Options, up to the aggregate total of 3,850,000 Options
(limited, however, as set forth in Paragraph 1.b hereof), and advise PAMCO of
the amount of the total exercise price thereof. In such event, the total
exercise price thereof shall be deemed to have been paid by Owner as if PAMCO
had made a portion of the Loan to Owner, and Owner had used the portion of the
Loan to pay the total exercise price. Simultaneously, PAMCO shall lend to Owner
the balance of the Loan in an amount equal to the aggregate total federal,
state, and local income taxes incurred by Owner as set forth herein.
d. The Loan shall be unsecured and shall bear interest at the
then applicable federal short-term rate, but not less than six (6%) percent per
annum. Interest shall accrue and the entire balance of principal and interest
shall be due and payable in full five (5) years from the date of the Loan. For
purposes hereof, a "change of control" shall mean the acquisition by any
individual, entity or group (within the meaning of the Securities Exchange Act
of 1934, as amended), of beneficial ownership of 25% or more of either the then
outstanding shares of the Common Stock of PAMCO, or the combined voting power of
the then outstanding voting securities of PAMCO entitled to vote generally in
the election of directors.
6. Transferability. The Option shall not be transferable by Owner to
any other person or entity without the prior written consent of PAMCO, except
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that it shall be transferable by will or in accordance with the laws of descent
and distribution, and in such event, shall be exercisable by Owner's heirs or
the personal representative of Owner's estate.
7. Dilution. In the event that prior to the delivery by PAMCO of all of
the shares of Series A Preferred Stock in respect of which the aforesaid Option
is granted, the outstanding shares of Series A Preferred Stock of PAMCO,
including any common stock into which the Series A Preferred Stock shall be
convertible, shall be changed in number or class or exchanged for a different
number or kind of shares of stock or other securities of PAMCO, whether by
reason of recapitalization, reclassification, reorganization, combination, stock
split or reverse stock split, or payment of a stock dividend or other similar
change in capitalization, effected without receipt of consideration by PAMCO,
the remaining number of shares of Series A Preferred Stock still subject to the
Option and the purchase price therefor shall be adjusted in a manner determined
by PAMCO so that the adjusted number of shares and the adjusted purchase price
shall be substantially equivalent to the remaining number of shares of Series A
Preferred Stock still subject to the Option and the purchase price thereof prior
to such change.
8. Registration.
a. If the registration or qualification of the shares of
Series A Preferred Stock, or any shares into which such may be converted, is
required under any federal or state law or the consent or approval of any
governmental regulatory body or a national stock exchange is necessary as a
condition of or in connection with the purchase or issuance of any such shares,
PAMCO shall not be obligated to issue or deliver the certificates representing
such shares unless (i) it shall have received an opinion of counsel in form and
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substance satisfactory to PAMCO that an exemption therefrom exists, or (ii)
until such registration, qualification, consent, or approval shall have been
effected or obtained.
b. Owner shall have the right to demand the registration of
all of the shares which are issuable upon exercise of all of the Options that
are the subject of this Agreement, including the 1993 Option, in accordance with
the terms and conditions of the Amended and Restated Registration Rights
Agreement dated as of February 27, 1989 ("Registration Rights Agreement")
entered into between Owner and PAMCO. The Registration Rights Agreement shall be
deemed to be amended hereby as follows:
(1) The definition of the term "Shares" set forth in
Paragraph 2, Certain Definitions, shall be amended in its entirety to
read as follows:
"Shares" shall mean (i) the 2,702,902 shares of PAMCO Common
Stock issued to Clemens pursuant to the Stock Exchange
Agreement, (ii) all of the shares of PAMCO's Series A
Cumulative Convertible Preferred Stock, $1.00 par value
("Series A Preferred"), all of the shares of PAMCO's Class A
Common Stock, $.10 par value, into which the Series A
Preferred shall have been converted, and all of the shares of
PAMCO Common Stock into which the Class A Common Stock shall
have been converted, (iii) all shares of PAMCO Common Stock,
Series A Preferred, and Class A Common Stock issued to Clemens
in the future upon his exercise of any option granted to him
pursuant to the Amended and Restated Stock Option Agreement
dated as of February 27, 1989, the Amended and Restated Option
to Purchase Preferred Shares dated as of April 1, 1993, and
the Agreement to Grant Options to Purchase up to 3,300,000
Shares of Series A Preferred Stock dated as of March 10, 1997,
and (iv) any PAMCO Common Stock, Series A Preferred, and/or
Class A Common Stock issued to Clemens upon any stock split,
stock dividend, recapitalization or similar event."
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(2) Paragraph 5.(a), Request For Registration, shall
be amended to read as follows:
"(a) Request for Registration. If PAMCO shall receive from
Clemens at any time or times a written request that PAMCO
effect any registration with respect to all or a part of the
Shares, PAMCO will:"
(3) Paragraph 7, Expenses of Registration, shall be
amended to read as follows:
"7. Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or
compliance pursuant to this Agreement shall be borne by PAMCO,
and all Selling Expenses shall be borne by the Holders,
including PAMCO, of the securities so registered pro rata on
the basis of the number of their shares so registered;
provided, however, that Clemens shall be required to pay
one-half of any Registration Expenses if the registration was
requested by Clemens, and shall be required to pay all of the
Registration Expenses if the registration statement does not
become effective as a result of the withdrawal of a request
for registration by Clemens, unless such withdrawal is due to
the misconduct of PAMCO or due to a material adverse change in
the assets, business, condition or prospects of PAMCO
occurring prior to the effectiveness of the registration
statement, in which case PAMCO shall continue to bear such
expenses."
9. Owner's Obligation. Owner, by acceptance of this Option, expressly
acknowledges and agrees that: (1) Owner will be solely responsible for all taxes
levied by or under federal, state or municipal authority, to which Owner may be
or become subject arising out of or resulting from receipt of this Option,
holding or exercise thereof or holding, sale, transfer or other disposition of
shares acquired on such exercise; and (2) Owner will indemnify PAMCO and its
affiliates, and hold such person harmless, of, from and against
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any and all loss, damage, obligation or liability, and all costs and expenses
(including attorneys' fees) incurred in connection therewith, which it may
suffer or incur on account or by reason of any act or omission of Owner, or
Owner's heirs, executors, administrators, personal representatives, successors
and assigns in breach or violation of the covenants and agreements of Owner set
forth herein.
10. Notification. Any notice to be given to PAMCO shall be marked to
the attention of the Secretary and addressed to PAMCO at its then principal
office, and any notice to be given to Owner shall be addressed to the address
then appearing in the personal records of PAMCO for Owner, or at such other
address as either party may hereafter designate in writing to the other. Any
such notice shall be deemed to have been properly given if and when enclosed in
a properly sealed envelope addressed as aforesaid, registered or certified mail,
and deposited, postage prepaid, in a post office regularly maintained by the
United States Government.
11. Miscellaneous.
a. Time of Essence. Time is of the essence of each and every
term and condition of this Agreement.
b. Withholding of Taxes in Shares of Stock. In the event that
any federal or state income taxes are due by Owner upon the exercise of any
option to purchase shares of Series A Preferred Stock, including the 1993
Option, then Owner shall have the right to deliver to PAMCO shares of PAMCO
Common Stock, Class A Common Stock, or shares of Series A Preferred Stock having
a Current Market Price equal to the income taxes required to be withheld.
c. Governing Law/Consent to Jurisdiction. This Agreement shall
be governed by and construed in accordance with the laws of the Commonwealth of
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Pennsylvania. The parties hereto agree to consent to the jurisdiction and venue
of the courts of the Commonwealth of Pennsylvania located in Montgomery County,
Pennsylvania, and of the United States District Court for the Eastern District
of Pennsylvania, and agree that all disputes between the parties shall be
litigated only therein.
d. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
administrators, successors and assigns.
IN WITNESS WHEREOF, PAMCO has caused this Agreement to be executed as of
the day and year above first written.
PROVIDENT AMERICAN CORPORATION
Attest:
Michael F. Beausang, Jr. By: /s/ James O. Bowles
- ----------------------------------- --------------------------
Michael F. Beausang, Jr., Secretary James O. Bowles, President
[SEAL]
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<PAGE>
PURCHASE AGREEMENT
To: Secretary of Provident American Corporation
The undersigned, pursuant to the provisions of the attached
Option, agrees to purchase _______________________ (________) Shares of the
Series A Cumulative Convertible Preferred Stock of Provident American
Corporation, $1.00 par value, and makes payment herewith in full therefore at
the price per share provided by such Option.
Date:______________________ Signature:_____________________________
Address: ______________________________
______________________________
Tax I.D. No.___________________________
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PROMISSORY NOTE
$300,000.00 April 8, 1996
The undersigned, ALVIN H. CLEMENS ("Clemens"), hereby promises to pay
to the order of PROVIDENT AMERICAN CORPORATION, a Pennsylvania corporation, the
sum of Three Hundred Thousand and 00/100 ($300,000.00) Dollars, together with
interest at the rate of five and one-third (5.33%) percent per annum. The Note
shall be repayable interest only for two (2) years from the date hereof, the
first interest payment being due and payable on April 8, 1997, and the second
interest payment being due and payable on April 8, 1998; the entire principal
balance, together with all accrued and unpaid interest thereon, shall be due and
payable on April 8, 1999.
The undersigned shall have the right to prepay in whole or in part any
amounts due under this Note, without penalty.
And further, the undersigned does hereby authorize and empower the
Prothonotary, Clerk of Court or any Attorney of any Court of Record of
Pennsylvania, or elsewhere, to appear for and to confess judgment against him
for the above sum, as of any term, past, present or future, with or without
declaration, with costs of suit, release of errors, without stay of execution,
and with 15% added for collection fees; and the undersigned also waives the
right of inquisition on any real estate that may be levied upon to collect this
Note and does hereby voluntarily condemn the same and authorize the Prothonotary
to enter upon the writ of execution his said voluntary condemnation, and he
further agrees that said real estate may be sold on a writ of execution and he
hereby waives and releases all relief from any and all appraisement, stay or
exemption laws of any State, now in force or hereafter to be passed.
-------------------------------------
ALVIN H. CLEMENS
<PAGE>
AMENDMENT TO PROMISSORY NOTE
THIS AMENDMENT TO PROMISSORY NOTE ("Note") is made and dated as of the
8th day of April, 1997, by and between Alvin H. Clemens ("Clemens"), an
individual residing at 907 Exeter Crest, Villanova, Pennsylvania, and PROVIDENT
AMERICAN CORPORATION, a Pennsylvania corporation ("PAMCO").
BACKGROUND
A. Clemens executed and delivered to PAMCO a Promissory Note dated April
8, 1996 in the original principal amount of $300,000 (the "Note").
B. The parties are desirous of amending the Note as hereinafter set
forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, and intending to be legally bound hereby, the
parties hereby agree as follows:
1. Principal Balance. The principal balance of the Note shall
be increased to Six Hundred Thousand ($600,000) Dollars.
2. Repayment of Principal. The entire principal balance of the
Note shall be due and payable in full on April 8, 1999.
3. Payment of Interest. The Note shall bear interest at the
rate of five and one-third (5.33%) percent per annum through April 7, 1997, and
shall bear interest at the rate of five and three-quarters (5.75%) percent per
annum thereafter. Interest shall accrue and shall be due and payable, together
with the principal balance, on April 8, 1999.
4. Ratification. As herein amended, the Note is ratified,
approved, and affirmed, and remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Promissory Note as of the day and year first above-written.
Witness:
/s/ Eva M. Seeton /s/ Alvin H. Clemens (SEAL)
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ALVIN H. CLEMENS
PROVIDENT AMERICAN CORPORATION
Attest:
/s/ M. F. Beausang, Jr. By: /s/ James O. Bowles
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M. F. Beausang, Jr., Secretary James O. Bowles, President
