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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): December 6, 1999
PROVIDENT AMERICAN CORPORATION
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(Exact name of registrant as specified in its charter)
Pennsylvania 0-13591 23-2214195
- ---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
2500 DeKalb Pike, Norristown, Pennsylvania 19404
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(Address of principal executive offices/Zip Code)
Registrant's telephone number, including area code: (610) 279-2500
Former name, former address, and former fiscal year, if changed since last
report: N/A
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Item 5. Other Matters.
The following information is qualified in its entirety by, and should
be read in conjunction with, the more detailed information and financial data,
including the Consolidated Financial Statements of the Provident American
Corporation ("Provident") and its subsidiaries, and the notes thereto, appearing
in Provident's reports filed with the Securities and Exchange Commission
("SEC"). Except for the historical information contained herein, this Current
Report on Form 8-K, may contain certain forward-looking statements regarding
Provident's business and prospects that are based upon numerous assumptions
about future conditions which may ultimately prove to be inaccurate and actual
events and results may materially differ from anticipated results described in
such statements. Such forward-looking statements involve risks and
uncertainties, such as historical and anticipated losses; uncertainty of future
results, new business challenges, risks associated with brand development,
competition, funding; need for additional capital, management of potential
growth, dependence on key personnel, dependence on the Internet, dependence on
strategic alliances with Internet partners, ability to grow and expand services,
technological change and new application development, quality assurance, risk of
product-related claims, limited proprietary rights, reliance on information
processing systems, customer concentration, liability for information
transmitted through the Internet, uncertain acceptance of the Internet as a
medium for health insurance sales, risk capacity constraints; system development
and other risks, dependence on third-party technology, rapid technological
change, risk of system failure, changes in the insurance industry, insurance
industry factors, healthcare reform legislation, government regulation and legal
uncertainties, control by Provident and UICI, potential conflicts of interest,
intercompany agreements not subject to arm's-length negotiations, risk
associated with the Year 2000, absence of dividends, absence of public market;
restrictions of transferability, and dilution and anti-takeover measures. These
forward-looking statements represent Provident's judgment as of the date of this
report. Provident disclaims, however, any intent or obligation to update these
forward-looking statements.
The following represents only summaries of the documents referred to
under Item 7 hereof, and attached as exhibits hereto. Accordingly, this
information is qualified in its entirety by those documents. All defined terms
not otherwise defined herein are as defined in the Transaction Documents (as
defined herein), copies of which are filed as exhibits hereto.
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COMMON STOCK PRIVATE PLACEMENT
General
On December 6, 1999, HealthAxis.Com, Inc. ("HealthAxis" or the
"Company"), the Internet subsidiary of Provident, pursuant to a securities
purchase agreement dated as of December 3, 1999 (the "Securities Purchase
Agreement"), completed a $57.7 million private placement transaction of
3,846,003 shares of its common stock at $15.00 per share to accredited investors
(the "Offering"), including the purchase of 133,333 shares of common stock of
the Company by Provident, the parent of HealthAxis.
Also, as part of the Offering, the purchasers listed on Schedule I to
the Securities Purchase Agreement (the "Purchasers') and the Company executed a
Registration Rights Agreement. The Securities Purchase Agreement and
Registration Rights Agreement documents are hereinafter sometimes referred to as
the "Transaction Documents."
Securities Purchase Agreement
In addition to the terms previously summarized, the Securities Purchase
Agreement also includes warranties, representations, covenants and conditions of
closing of the parties which are typically included in agreements of this type.
The securities issued pursuant to this transaction are exempt from the
registration requirements of the Securities Exchange Act of 1933 (the
"Securities Act"), as provided under Rule 506 and under Section 4(2) of the
Securities Act.
Registration Rights Agreement
At any time after the earlier of: (i) 12 months following the
completion of the Offering, or (ii) six months after the completion of the
Company's initial public offering, holders of at least one half of the
securities sold in the Offering may require the Company to file a Form S-3
Registration Statement to cover all Registrable Securities (as defined) to be
made on a continuous basis pursuant to a "Shelf" registration statement under
Rule 415 of the Securities Act subject to the priority rights granted to certain
other shareholders of the Company. Subject to certain limitations, the
registration statement should remain effective until there are no more
registrable securities to be sold or the holders of such securities may allege
Rule 144(k) for resale.
If at any time the Company files a registration statement relating to
an offering of its equity securities, the Company is required to notify the
holders of Registrable Securities of the filing and will use reasonable efforts
to effect piggy-back registration of the Registrable Securities requested to be
registered by the holder, subject to certain existing piggy-back rights.
The Company is responsible for all fees and expenses related to the
Shelf registration statement, except for the holders' legal fees and
underwriting fees. The Purchasers are responsible for all fees and expenses
relating to an Underwritten Offering (as defined).
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BUSINESS COMBINATION WITH INSURDATA INCORPORATED
General
On December 6, 1999, HealthAxis, Insurdata Incorporated ("Insurdata")
and their respective parent corporations, Provident and UICI entered into an
Agreement and Plan of Merger (the "Merger Agreement") which sets forth the terms
and conditions under which Insurdata will be merged with and into HealthAxis
(the "Merger").
Merger Agreement
In accordance with the terms of the Merger Agreement, each outstanding
share of Insurdata common stock, no par value per share (the "Insurdata Common
Stock"), outstanding immediately prior to the effective date of the Merger (the
"Effective Date"), other than as otherwise provided in the Merger Agreement,
will be converted into the right to receive 1.33 shares of HealthAxis common
stock (the "HealthAxis Common Stock"). Upon consummation of the Merger, it is
currently contemplated that of a total of 42,392,381 shares of HealthAxis Common
Stock outstanding, UICI will receive 18,943,678 shares of HealthAxis Common
Stock, 2,439,885 shares of HealthAxis Common Stock will be held by the voting
trust (described herein) and other shareholders of Insurdata will receive
424,004 shares of HealthAxis Common Stock.
Each holder of Insurdata Common Stock who would otherwise be entitled
to receive a fraction of a share of HealthAxis Common Stock (after taking into
account all of the shareholder's certificates) will receive cash, in lieu
thereof, equal to an amount determined by multiplying such fraction by $15.00.
The Merger Agreement may be terminated by the mutual consent of
Insurdata and HealthAxis and by either HealthAxis or Insurdata in the event the
Merger is not consummated on or before January 31, 2000. In addition, either
party may terminate the Merger Agreement based upon the other party's failure to
perform or observe, in any material respect, its obligations under the Merger
Agreement or the breach of any representation or warranty. Finally, either party
may terminate the Agreement if at least a majority of the outstanding shares of
either HealthAxis common or preferred stock shall not have approved the Merger
and the Merger Agreement.
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The Merger Agreement also provides that each option to purchase shares
of Insurdata Common Stock under Insurdata's stock option plans which are
outstanding on the Effective Date, whether or not exercisable, shall be
converted into and become a right to purchase shares of HealthAxis Common Stock,
generally in accordance with the terms of the Insurdata stock option plans and
Insurdata option agreements pursuant to which such options were granted, except
that from and after the Effective Date, (i) the number of shares of HealthAxis
subject to each Insurdata option shall be equal to the number of shares of
Insurdata Common Stock subject to such option prior to the Effective Date
multiplied by the exchange ratio (with fractional shares rounded down to the
nearest share and cash being payable for any fraction of a share) and (ii) the
exercise price per share of HealthAxis Common Stock purchasable thereunder shall
be that specified in the Insurdata option divided by the exchange ratio (rounded
up to the nearest one hundredth).
The Merger is intended to constitute a reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended, and to be accounted for
as a purchase under generally accepted accounting principles.
Consummation of the Merger is subject to various conditions including
(i) receipt of the requisite approval of the Merger Agreement by the
shareholders of HealthAxis and Insurdata, (ii) a written waiver from each holder
of HealthAxis preferred stock waiving any preemptive right such holder may have
in connection with the Merger, (iii) receipt of all necessary governmental and
regulatory consents, (iv) compliance with the waiting period under pre-merger
notification statutes, (v) the execution of a shareholder' agreement,
registration rights agreement and voting trust agreement by the parties subject
to those agreements and (vi) satisfaction of certain other conditions.
Shareholders Agreement
In connection with the consummation of the Merger Agreement, Provident,
UICI, Michael Ashker, and HealthAxis intend to enter into a shareholders'
agreement (the "Shareholders' Agreement"). Under the terms of the Shareholders'
Agreement, the Board of Directors of HealthAxis shall consist of up to nine
members. UICI and Provident may each independently nominate three nominees to
the board and, the remaining three directors will be nominated by mutual
agreement of Provident and UICI. Each party is obligated to vote its shares in
favor of the directors nominated by the other party.
Subject to certain limitations, the Shareholders' Agreement also
provides that UICI and Provident both have the right to purchase its
proportionate number, or any greater or lesser number, of any additional
securities that HealthAxis may, from time to time, propose to sell and issue.
HealthAxis is required to provide UICI and Provident prior written notice of its
intention to issue such additional securities. Upon receipt of this notice, UICI
and Provident have twenty days to agree to purchase their proportional shares,
or any greater or lesser number, for the price and upon the terms specified in
the notice. If UICI and Provident fail to exercise their purchase rights,
HealthAxis has twenty days to complete the sale of the securities at a price not
less than the price specified in the notice.
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In addition to the preemptive rights set forth above, the Shareholders'
Agreement also provides that Michael Ashker, UICI and Provident have the right
of first refusal to purchase shares of HealthAxis should one of the other
parties to such agreement desire to transfer his or its HealthAxis securities.
The party desiring to transfer his or its securities ("Offeror") must first
furnish the other parties (individually, an "Electing Party" and collectively,
the "Electing Parties") with written notice, at least twenty days prior to the
proposed transfer setting forth the terms of the offer to sell the HealthAxis
Securities. The Electing Parties have ten days from the receipt of notice to
elect to purchase that number of securities which equals the product of the
total number of shares of common stock then beneficially owned by the Electing
Party on a fully diluted basis, and a fraction, the numerator of which shall be
the number of securities to be transferred and the denominator which shall be
the total number of shares of common stock then beneficially owned by the
Electing Party on a fully diluted basis. If an Electing Party fails to exercise
its right to purchase, or exercises its right to a portion smaller than it is
entitled, the Offeror has ten days to sell any remaining securities at the price
and on terms no less favorable than specified in the offer to the Electing
Parties.
Subject to certain conditions set forth in the Shareholders' Agreement,
the Shareholders' Agreement also provides that HealthAxis can cause UICI to
transfer up to 1,255,000 shares of its HealthAxis Common Stock to unaffiliated
third parties.
The Shareholders' Agreement also provides UICI with the right, in its
sole and absolute discretion, to approve: (i) the calculation of the amount and
amortization period of all goodwill and other intangibles created in connection
with the Merger, subject to compliance with generally accepted accounting
principles; and (ii) provided UICI owns at least 20% of the HealthAxis Common
Stock, the entering into of any merger or similar agreement between Provident
and HealthAxis. In a separate letter to the Company and Provident, dated
December 6, 1999, UICI indicated that it would vote in favor of a business
combination between Provident and HealthAxis on the terms set forth therein.
Voting Trust Agreement
The Merger Agreement also provides for a voting trust agreement (the
"Voting Trust Agreement") which requires the establishment of a trust to hold
shares of Insurdata common stock which are currently held of record by UICI, but
which UICI has granted options to purchase such shares to certain employees of
Insurdata pursuant to its Insurdata Founders' Program. These shares will be
converted into 2,439,885 shares of HealthAxis common stock in the Merger. The
initial trustees of this trust will be Michael Ashker, Alvin Clemens, Edward W.
LaBaron, Jr. and Henry Hager (the "Trustees"). All of the initial Trustees are
also directors of Provident. Messrs. Ashker and Clemens are also directors and
officers of HealthAxis. Pursuant to the terms of the Voting Trust Agreement, a
majority of the Trustees have the power to vote the shares held by the trust in
their discretion at all meetings of shareholders or pursuant to actions by
unanimous consent, the shares subject to the Voting Trust Agreement. The Voting
Trust Agreement terminates upon the earlier of the distribution of the shares
subject to such agreement or July 1, 2003.
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Transition Agreement
HealthAxis and Insurdata also entered into a transition agreement which
sets forth the terms of the relationships among the parties pending the
consummation of the Merger.
UICI Registration Rights Agreement
Upon consummation of the Merger, HealthAxis and UICI intend to enter
into a registration rights agreement which provides for the registration of
HealthAxis shares received by UICI in the Merger on such agreement terms
substantially similar to those contained in the Registration Rights Agreement
entered into between HealthAxis and the Purchasers in connection with the
Offering.
Business Combination Between Provided and HealthAxis
Provident also announced that it intends to move forward with its plan
to merge with HealthAxis following consummation of the Merger. HealthAxis
previously announced that discussions regarding a merger with Provident had been
put on hold pending the outcome of discussions with an undisclosed third party
regarding a potential business combination.
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Item 7. Financial Statements and Exhibits.
(a) Financial Statements of business acquired.
Not applicable.
(b) Proforma Financial Information.
Not applicable.
(c) Exhibits.
99.1. Securities Purchase Agreement between the Company and
the Purchasers dated as of December 3, 1999.
99.2. Registration Rights Agreement between the Company and
the Purchasers dated as of December 3, 1999.
99.3. Agreement and Plan of Merger between Provident,
HealthAxis, UICI and Insurdata Incorporated dated as
of December 6, 1999.
99.4. Form of Shareholders' Agreement to be entered into
between HealthAxis, Provident, UICI and Michael
Ashker upon consummation of the Merger.
99.5. Form of Voting Trust Agreement to be entered into
upon consummation of the Merger by UICI and Messrs.
Ashker, Clemens, LaBaron and Hager.
99.6. Transition Agreement dated December 6, 1999 between
HealthAxis and Insurdata Incorporated.
99.7. Press Release dated December 7, 1999 related to the
Merger.
99.8 Press Release dated December 7, 1999 related to the
Offering.
99.9 Press Release dated December 7, 1999 related to the
merger of Provident and HealthAxis.
99.10 Form of Registration Rights Agreement between
HealthAxis and UICI.
99.11 Letter Agreement dated December 6, 1999 between
UICI, HealthAxis and Provident.
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EXHIBIT INDEX
99.1. Securities Purchase Agreement between the Company and
the Purchasers dated as of December 3, 1999.
99.2. Registration Rights Agreement between the Company and
the Purchasers dated as of December 3, 1999.
99.3. Agreement and Plan of Merger between Provident,
HealthAxis, UICI and Insurdata Incorporated dated as
of December 6, 1999.
99.4. Form of Shareholders' Agreement to be entered into
between HealthAxis, Provident, UICI and Michael
Ashker upon consummation of the Merger.
99.5. Form of Voting Trust Agreement to be entered into
upon consummation of the Merger by UICI and Messrs.
Ashker, Clemens, LaBaron and Hager.
99.6. Transition Agreement dated December 6, 1999 between
HealthAxis and Insurdata Incorporated.
99.7. Press Release dated December 7, 1999 related to the
Merger.
99.8 Press Release dated December 7, 1999 related to the
Offering.
99.9 Press Release dated December 7, 1999 related to the
merger of Provident and HealthAxis.
99.10 Form of Registration Rights Agreement between
HealthAxis and UICI.
99.11 Letter Agreement dated December 6, 1999 between UICI,
HealthAxis and Provident.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PROVIDENT AMERICAN CORPORATION
Date: December 8, 1999 By: /s/ Michael Ashker
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Michael Ashker
President and Chief Executive Officer
Date: December 8, 1999 By: /s/ Francis L. Gillan III
---------------- --------------------------------------
Francis L. Gillan III
Chief Financial Officer and Treasurer
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================================================================================
SECURITIES PURCHASE AGREEMENT
Among
HEALTHAXIS.COM, INC.
and
THE PURCHASERS LISTED ON SCHEDULE I
Dated as of December 3, 1999
================================================================================
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated
as of December 3, 1999, among HealthAxis.com, Inc., a Pennsylvania corporation
(the "Company"), and the various purchasers identified and listed on Schedule I
hereto (each referred to herein as a "Purchaser" and, collectively, the
"Purchasers").
WHEREAS, the Company and the Purchasers are executing and
delivering this Agreement in reliance upon the exemption from securities
registration afforded by Rule 506 under Regulation D as promulgated by the
United States Securities and Exchange Commission (the "Commission") under
Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act");
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchasers, and the
Purchasers desire to acquire from the Company, that number of shares of the
Company's common stock, no par value per share (the "Common Stock"), as set
forth in Schedule I hereto (the "Shares"), at a price of $15.00 per share; and
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, the parties hereto are executing and delivering a Registration
Rights Agreement substantially in the form of Exhibit A attached hereto (the
"Registration Rights Agreement") pursuant to which the Company has agreed to
provide certain registration rights under the Securities Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.
NOW THEREFORE, in consideration of the promises and mutual
covenants and agreements hereinafter, the Company and the Purchasers hereby
agree as follows:
ARTICLE I.
PURCHASE AND SALE OF THE SHARES
1.1 Purchase and Sale. Subject to the terms and conditions set forth
herein, the Company shall issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, shall purchase from the Company on the Closing Date
(as defined below), that number of Shares as set forth for such Purchaser on
Schedule I.
1.2 The Closing. The closing of the purchase and sale of the Shares
(the "Closing") shall take place at the offices of Akin, Gump, Strauss, Hauer &
Feld, L.L.P., 590 Madison Avenue, New York, New York 10022, or by transmission
by facsimile and overnight courier, immediately following the execution hereof
or such later date or different location as the parties shall agree, but not
prior to the date that the conditions set forth in Section 4.1 have been
satisfied or waived by the appropriate party (the "Closing Date"). At the
Closing:
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(i) Each Purchaser shall deliver, as directed by the Company, its
portion of the purchase price as set forth next to its name on Schedule I in
United States dollars in immediately available funds to an account or accounts
designated in writing by the Company;
(ii) The Company shall deliver to each Purchaser, within three (3)
Business Days following the Closing Date, a stock certificate or certificates,
in definitive form, registered in the name of such Purchaser, representing the
number of Shares purchased by such Purchaser, as set forth on Schedule I hereto;
and
(iii) The parties shall execute and deliver each of the documents
referred to in Section 4.1 hereof.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.1 Representations, Warranties and Agreements of the Company. The
Company hereby makes the following representations and warranties to each of the
Purchasers:
a. Organization and Qualification. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, with the requisite corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted. Except as set forth on Schedule 2.1(a), the Company has no
subsidiaries (collectively, the "Subsidiaries"). Each of the Subsidiaries (which
for purposes of this Agreement means any entity in which the Company, directly
or indirectly, owns the majority of such entity's capital stock or holds an
equivalent equity or similar interest) is a corporation duly incorporated,
validly existing and in good standing, or subsisting, as the case may be, under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the full corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted. Each
of the Company and the Subsidiaries is duly qualified as a foreign corporation
to do business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, would not, individually or in
the aggregate, (x) adversely affect the legality, validity or enforceability of
any of this Agreement or the Transaction Documents (as defined in Section
2.1(b)) or any of the transactions contemplated hereby or thereby, (y) have or
result in a material adverse effect on the results of operations, assets,
prospects, or financial condition of the Company and its Subsidiaries, taken as
a whole or (z) adversely affect the Company's ability to perform fully its
obligations under any Transaction Document (any of (x), (y) or (z), being a
"Material Adverse Effect").
b. Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and the Registration Rights Agreement
(collectively, the "Transaction Documents"), and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and
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thereby have been duly authorized by all necessary corporate action and no
further action is required by the Company, its Board of Directors or its
stockholders. Each of the Transaction Documents has been duly executed by the
Company and when delivered in accordance with the terms hereof, assuming due
authorization, execution and delivery by the other parties thereto, will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws (including insurance related laws and regulations)
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application, except that
rights to indemnification and contribution may be limited by Federal or state
securities laws or public policy relating thereto.
c. Capitalization. As of the date hereof, the authorized capital
stock of the Company is as set forth in Schedule 2.1(c). All of such outstanding
shares of capital stock have been, or upon issuance will be, validly authorized
and issued, fully paid and nonassessable and were issued pursuant to valid
exemptions from the Securities Act. Except as disclosed in Schedule 2.1(c), (i)
no shares of the Company's capital stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by the
Company, (ii) there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, or giving any Person
(as defined below) any right to subscribe for or acquire, any shares of capital
stock of the Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries, (iii) there are no outstanding debt
securities of the Company or any of its Subsidiaries, (iv) there are no
outstanding securities of the Company or any of its Subsidiaries which contain
any redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries, (v) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the sale of the
Shares, (vi) the Company does not have any stock appreciation rights or "phantom
stock" plans or agreements or any similar plan or agreement and (vii) no Person
(as defined below) or group of related Persons beneficially owns (as determined
pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) or has the right to acquire by agreement with or
by obligation binding upon the Company beneficial ownership of in excess of 5%
of the Common Stock other than Provident American Corporation ("Provident"),
parent company of the Company, and UICI. "Person" means an individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
d. Authorization, Validity and Issuance of Shares. The Shares are
and will at all times hereafter continue to be duly authorized, validly issued,
fully paid and non-assessable, free and clear of all liens, encumbrances and
Company rights of first refusal, other than liens and encumbrances created by
the Purchasers (collectively, "Liens") and will not be subject to any preemptive
or similar rights, except for Liens or preemptive or similar rights which have
been waived. The issuance by the Company of the Shares is exempt from
registration under the Securities Act.
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e. No Conflicts. The execution, delivery and performance of each of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby do not and will not (i)
conflict with or violate any provision of the Company's Amended and Restated
Certificate of Incorporation, as amended and as in effect on the date hereof
(the "Certificate of Incorporation") and the Company's Bylaws, as in effect on
the date hereof (the "Bylaws") or other organizational documents of the Company
or any of the Subsidiaries, (ii) subject to obtaining the consents referred to
in Section 2.1(f), conflict with, or constitute a breach or a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture, patent, or instrument (evidencing a
Company or Subsidiary debt or otherwise) to which the Company or any Subsidiary
is a party or by which any property or asset of the Company or any Subsidiary is
bound or affected which, individually or in the aggregate, would be reasonably
expected to have a Material Adverse Effect, or (iii) result in a violation of
any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company or any
Subsidiary is subject (including Federal and state securities laws), or by which
any material property or asset of the Company or any Subsidiary is bound or
affected which, individually or in the aggregate, would be reasonably expected
to have a Material Adverse Effect.
f. Consents and Approvals. Except as specifically set forth on
Schedule 2.1(f), neither the Company nor any Subsidiary is required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority, regulatory or self regulatory agency, or other Person in
connection with the execution, delivery and performance by the Company of or the
Transaction Documents, other than (i) the filing of a registration statement
with the Commission, which shall be filed in accordance with the procedures set
forth in the Registration Rights Agreement and (ii) any filings, notices or
registrations under applicable state securities laws (together with the
consents, waivers, authorizations, orders, notices and filings referred to on
Schedule 2.1(f), the "Required Approvals").
g. Litigation; Proceedings. Except as specifically set forth on
Schedule 2.1(g), there is no action, suit, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company or any of its
Subsidiaries, threatened against or affecting the Company or any of its
Subsidiaries or any of their respective properties before or by any court,
governmental or administrative agency or regulatory authority (federal, state,
county, local or foreign) which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or (ii)
could reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect.
h. No Default or Violation. Except as set forth on Schedule 2.1(h),
neither the Company nor any Subsidiary (i) is in default under or in violation
of any indenture, loan or other credit agreement or instrument to which it is a
party or by which it or any of its properties or assets is bound, (ii) is in
default under or in violation of any other agreement to which it is a party or
by which its properties or assets are bound, the default or violation of which,
individually or in the aggregate, would be reasonably expected to have a
Material Adverse Effect, (iii) is in violation of any order of any court,
arbitrator or governmental body applicable to it or (iv) is in violation of any
statute, rule or regulation of any governmental authority to which it is
subject.
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i. Disclosure; Absence of Certain Changes. None of this Agreement,
the Schedules to this Agreement, the Registration Rights Agreement or any other
written or formally presented information, report, financial statement, exhibit,
schedule or document furnished by or on behalf of the Company in connection with
the negotiation of the transactions contemplated hereby contained, contains, or
will contain at the time it was or is so furnished any untrue statement of a
material fact or omitted, omits or will omit at such time to state any material
fact necessary in order to make the statements made herein and therein, in light
of the circumstances under which they were made, not misleading. The Company has
not taken any steps, and does not currently expect to take any steps, to seek
protection pursuant to any bankruptcy law nor does the Company or any of its
Subsidiaries have any knowledge or reason to believe that its creditors intend
to initiate involuntary bankruptcy proceedings.
j. Private Offering; Solicitation. The Company and all Persons
acting on its behalf have not (i) made, directly or indirectly, and will not
make, offers or sales of any securities or solicited any offers to buy any
security under circumstances that would require registration of the Shares under
the Securities Act, (ii) distributed any offering materials in connection with
the offering and sale of the Shares (iii) solicited any offer to buy or sell the
Shares by means of any form of general solicitation or advertising (as those
terms are used in Rule 502(c) of Regulation D under the Exchange Act) in a
manner which would require registration under the Securities Act. The offer,
sale and issuance of the Shares to the Purchasers will not be integrated with
any other offer, sale and issuance of the Company's securities (past, current,
or future) under the Securities Act or any regulations of any exchange or
automated quotation system on which any of the securities of the Company are
listed or designated. Subject to the accuracy and completeness of the
representations and warranties of the respective Purchasers contained in Section
2.2 hereof, the offer, sale and issuance by the Company to the Purchasers of the
Shares is exempt from the registration requirements of the Securities Act.
k. Financial Statements. The financial statements of the Company
provided to the Purchasers present fairly, in all material respects, the
financial condition of the Company as of the respective dates thereof, and the
results of operations, changes in stockholders' equity, and the cash flow of the
Company for the periods indicated therein, all in conformity with generally
accepted accounting principals in the United States ("GAAP"), applied
consistently throughout such periods. No financial statements of any person
other than the Company and its Subsidiaries are required by GAAP to be included
in the consolidated financial statements of the Company.
l. Investment Company. The Company is not, and is not controlled by
or under common control with an affiliate (an "Affiliate") of an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
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m. Broker's Fees. No fees or commissions or similar payments with
respect to the transactions contemplated by the Transaction Documents have been
paid or will be payable by the Company to any broker, financial advisor, finder,
investment banker, or bank, other than as set forth in Schedule 2.1(m). The
Purchasers shall have no obligation with respect to any fees or with respect to
any claims made by or on behalf of other Persons for fees of a type contemplated
in this Section 2.1(m) that may be due in connection with the transactions
contemplated by the Transaction Documents.
n. Tax Status; Firpta. Except as set forth on Schedule 2.1(n), the
Company and each of the Subsidiaries has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith (which are set forth on
Schedule 2.1(n) hereof), and has set aside on it books provisions reasonably
adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. There are no unpaid taxes in
any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any such
claim. The Company is not a "United States real property holding corporation"
within the meaning of Section 847(c)(2) of the Internal Revenue Code of 1986, as
amended.
o. Permits. The Company and each of its Subsidiaries possess all
certificates, authorizations, licenses, easements, consents, approvals, orders
and permits necessary to own, lease and operate their respective properties and
to conduct their respective businesses as currently conducted, free and clear of
any conflicts, defaults or violations thereunder, except where the failure to
possess such permits or the existence of any conflict, default or violation
would not, individually or in the aggregate, have a Material Adverse Effect
("Material Permits"), and, except as disclosed on Schedule 2.1 (o), there is no
proceeding pending, or, to the knowledge of the Company, threatened relating to
the revocation, modification, suspension or cancellation of any Material Permit.
p. Registration Rights; Rights of Participation. Except as
described on Schedule 2.1(p) hereto, (i) the Company has not granted or agreed
to grant to any Person any rights (including "piggy-back" registration rights)
to have any securities of the Company registered with the Commission or any
other governmental authority which has not been satisfied and (ii) no Person,
including, but not limited to, current or former stockholders of the Company,
underwriters, brokers or agents, has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by this Agreement or any Transaction Document.
q. Insurance. The Company and each of its Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged.
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r. Transactions With Affiliates. Except as set forth on Schedule
2.1(c), or Schedule 2.1(r), none of the officers, directors, or employees of the
Company is presently a party to any transaction with the Company or any of its
Subsidiaries (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner, other than transactions that would not require disclosure under Section
404 of Regulation S-K of the Securities Act and the Exchange Act (if the Company
were subject to such disclosure requirements).
s. Application to Takeover Protection. The Company and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination or other
similar anti-takeover provision under the Certificate of Incorporation, Bylaws
or the laws of the state of incorporation which is or could become applicable to
the Purchasers or the Transaction Documents in connection with the issuance of
the Shares. The issuance of the Shares will not trigger any poison pill
provisions of any of the Company's stockholders' rights or similar agreements.
t. Acknowledgement Regarding Purchasers' Purchase of Shares. The
Company acknowledges that the Purchasers are acting solely in the capacity of
arm's length purchasers with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that no Purchaser is
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any statement made by any Purchaser or any of their respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation and is merely incidental
to the Purchasers' purchase of the Shares. The Company further represents to
each Purchaser that the Company's decision to enter into this Agreement has been
based solely on the independent evaluation of the Company and its
representatives.
The Purchasers acknowledges and agrees that the Company make no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.1.
2.2 Representations and Warranties of the Purchasers. Each of the
Purchasers, severally and not jointly, hereby represents and warrants to the
Company as follows:
a. Organization; Authority. Such Purchaser is a corporation or a
limited duration company or a limited liability company or limited partnership
duly formed, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation with the requisite power and
authority, corporate or otherwise, or is an individual which possesses the
requisite legal capacity and the right, to enter into and to consummate the
transactions contemplated hereby and by the Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The purchase by such
Purchaser of the Shares has been duly authorized by all necessary action on the
part of such Purchaser. Each of this Agreement and the Registration Rights
Agreement has been duly executed and delivered by such Purchaser and constitutes
the valid and legally binding obligation of such Purchaser, enforceable against
such Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and to
general principles of equity.
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b. Investment Intent. Such Purchaser is acquiring the Shares for
its own account and not with a present view to or for distributing or reselling
such Shares or any part thereof or interest therein in violation of the
Securities Act; provided, however, that by making the representations herein,
such Purchaser does not agree to hold any Shares for any minimum or other
specific term and reserves the right to dispose of the Shares at any time in
accordance with or pursuant to a registration statement or an exemption under
the Securities Act.
c. Purchaser Status. At the time such Purchaser was offered the
Shares and at the Closing Date, (i) such Purchaser was and will be an
"accredited investor" as defined in Rule 501 under the Securities Act and (ii)
such Purchaser, either alone or together with its representatives, had and will
have such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the
prospective investment in the Shares.
d. Reliance. Such Purchaser understands and acknowledges that (i)
the Shares are being offered and sold to such Purchaser without registration
under the Securities Act in a private placement that is exempt from the
registration provisions of the Securities Act under Section 4(2) of the
Securities Act or Regulation D promulgated thereunder and (ii) the availability
of such exemption depends in part on, and the Company will rely upon the
accuracy and truthfulness of, the representations set forth in this Section 2.2
and such Purchaser hereby consents to such reliance.
e. Information. Such Purchaser and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Shares which
have been requested by such Purchaser or its advisors. Such Purchaser and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company and its representatives. Neither such inquiries nor any other due
diligence investigation conducted by Purchaser or any of its advisors or
representatives shall modify, amend or affect Purchaser's right to rely on the
Company's representations and warranties contained in Section 2.1 above or
representations and warranties of the Company contained in any other Transaction
Document. Such Purchaser understands that its investment in the Shares involves
a significant degree of risk.
f. Governmental Review. Such Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Shares.
g. Residency. Such Purchaser is a resident of the jurisdiction set
forth immediately below such Purchaser's name on Schedule II hereto.
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The Company acknowledges and agrees that the Purchasers make no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2. The Company
further acknowledges that the Purchasers represent, collectively, they are not
acting as a group pursuant to Rule 13-d of the Exchange Act.
ARTICLE III.
OTHER AGREEMENTS
3.1 Transfer Restrictions.
a. If any Purchaser should decide to dispose of the Shares held by
it, such Purchaser understands and agrees that it may do so only pursuant to an
effective registration statement under the Securities Act, to the Company or
pursuant to an available exemption from the registration requirements of the
Securities Act and in compliance with applicable blue sky and state securities
laws. In connection with any transfer of any Shares other than pursuant to an
effective registration statement or to the Company, the Company may require the
transferor thereof to provide to the Company a written opinion of counsel
experienced in the area of United States securities laws selected by the
transferor, the form and substance of which opinion shall be customary for
opinions of counsel in comparable transactions, to the effect that such transfer
does not require registration of such transferred securities under the
Securities Act and qualification under applicable blue sky and state securities
laws. Notwithstanding the foregoing, the Company hereby consents to and agrees
to affect any transfer by any Purchaser to an Affiliate of such Purchaser,
provided that the transferee certifies to the Company that it is an "accredited
investor" as defined in Rule 501(a) under the Securities Act. Any such
transferee shall also agree in writing to be bound by the terms of this
Agreement and shall have the rights of a Purchaser under this Agreement and the
Transaction Documents.
b. Each Purchaser agrees to the imprinting, so long as is required
by this Section 3.1(b), of the following legend on the Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
DEPARTMENT OR COMMISSION IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND APPLICABLE BLUE SKY OR STATE SECURITIES
LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
APPLICABLE BLUE SKY OR STATE SECURITIES LAWS OR PURSUANT TO
AVAILABLE EXEMPTIONS THEREFROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR ANY
APPLICABLE BLUE SKY OR STATE SECURITIES LAWS.
The Shares shall not contain the legend set forth above (or any
other legend) if (i) the sale of the Shares is pursuant to an effective
Registration Statement (as defined in the Registration Rights Agreement) under
the Securities Act, (ii) if in the written opinion of counsel to the Company
experienced in the area of United States securities laws such legend is not
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission) or
(iii) if such Shares may be sold pursuant to Rule 144 promulgated under the
Securities Act. The Company agrees that it will provide each Purchaser, upon
request, with a certificate or certificates representing the Shares, free from
such legend at such time as such legend is no longer required hereunder. If such
certificate or certificates had previously been issued with such a legend or any
other legend, the Company shall, upon request and delivery of such certificate
or certificates to the Company by such Purchaser, reissue to such Purchaser such
certificate or certificates free of any legend.
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3.2 Stop Transfer Instruction. Except as otherwise required by law, the
Company may not make any notation on its records or give instructions to any
transfer agent of the Company which enlarge the restrictions on transfer set
forth in Section 3.1.
3.3 Furnishing of Information. As long as any Purchaser owns the
Shares, if the Company is not required to file reports pursuant to Section 13(a)
or 15(d) of the Exchange Act, it will prepare and furnish to the Purchasers (i)
quarterly balance and income statements and (ii) annual audited financial
statements; provided, however, that if the quarterly balance and income
statements contain material non-public information regarding the Company or
Provident, the Company shall notify each Purchaser of such fact and shall only
provide such statements to any Purchaser upon written request by such Purchaser
(provided, that such Purchaser agrees not to engage in any trading activities
with respect to the capital stock of Provident until such financial information
is disclosed publicly). If at any time while any Purchaser owns the Shares the
Company is at any time required to register its Common Stock under Section 12(g)
of the Exchange Act or to file reports pursuant to Section 13, 14, or 15(d) of
the Exchange Act, then the Company will cause the Shares to continue at all
times to be registered under Section 12(g) of the Exchange Act, will timely file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to Section 13, 14 or 15(d) of the Exchange Act and shall promptly
furnish, but in no event later than two (2) business days after the filing
thereof with the Commission, the Purchasers with true and complete copies of all
such filings, and will not take any action or file any document (whether or not
permitted by the Exchange Act or the rules thereunder) to terminate or suspend
such reporting and filing obligations. The Company covenants that it will take
such further action as any holder of the Shares may reasonably request, all to
the extent required from time to time to enable such Person to sell Shares
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act. The
Company further covenants that it will deliver to the Purchasers copies of any
notices and other information made available or given to any other stockholders
of the Company which relates to the Company or its securities, contemporaneously
with the making available or giving thereof to such other stockholders.
3.4 Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Shares in a manner that would require the registration under the
Securities Act of the sale of such Shares to any Purchaser.
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3.5 Notice of Breaches.
a. The Company and each Purchaser shall give prompt written notice
to the other of any breach by it of any representation, warranty or other
agreement contained in this Agreement or in the Registration Rights Agreement,
as well as any events or occurrences arising after the date hereof and prior to
the Closing Date, which would reasonably be likely to cause any representation
or warranty or other agreement of such party, as the case may be, contained
herein to be incorrect or breached as of the Closing Date; provided such notice
will not constitute material non-public information. However, no disclosure by
either party pursuant to this Section 3.7 shall be deemed to cure any breach of
any representation, warranty or other agreement contained herein or in the
Transaction Documents.
b. Notwithstanding the generality of Section 3.7(a), the Company
shall promptly notify, provided such notification will not constitute material
non-public information, each Purchaser of any notice or claim (written or oral)
that it receives from any lender of the Company or any Subsidiary to the effect
that the consummation of the transactions contemplated hereby and by the
Registration Rights Agreement violates or would violate any written agreement or
understanding between such lender and the Company or any Subsidiary, and the
Company shall promptly furnish by facsimile to the Purchasers a copy of any
written statement in support of or relating to such claim or notice.
c. The default by any Purchaser of any of its obligations,
representations or warranties under this Agreement or the Transaction Documents
shall not be imputed to, and shall have no effect upon, any other Purchaser or
affect the Company's obligations under this Agreement or any Transaction
Document to any non-defaulting Purchaser.
3.6 Form D. The Company agrees to file a Form D with respect to the
Shares as required by Rule 506 under Regulation D and to provide a copy thereof
to each Purchaser promptly after such filing.
3.7 Use of Proceeds. The Company shall use the proceeds from the sale
of the Shares for working capital and other general corporate purposes,
including but not limited to expansion of its sales and marketing activities and
the further development of the Company's Internet services and technologies.
3.8 Press Release; Filing of Form 8-K. Subject to the provisions of
Section 6.10 hereof, prior to the opening of NASDAQ on December 7, 1999, the
Company shall issue a press release in form and substance acceptable to the
Purchasers. On or before the 10th Business Day following the Closing Date the
Company shall file a Form 8-K with the Commission describing the terms of the
transaction contemplated by the Transaction Documents in the form required by
the Exchange Act.
3.9 Ordinary Course Brokerage and Trading. Subject to compliance with
all applicable securities laws and NASDAQ regulations, no Purchaser shall be
prohibited from engaging in its ordinary course brokerage and trading activities
in respect of the capital stock of Provident; provided, however, that no
Purchaser shall engage in such activities until one (1) Business Day after the
Company files the Form 8-K pursuant to Section 3.8 hereof.
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3.10 Best Efforts. Each of the parties hereto shall use its best
efforts to satisfy each of the conditions to be satisfied by it as provided in
Article IV of this Agreement.
3.11 Corporate Existence. Until such time as all of the Purchasers
provide the Company with written notice that they do not beneficially own any
Shares, the Company shall maintain its corporate existence and shall not sell
all or substantially all of the Company's assets, except in the event of a
merger or consolidation or sale of all or substantially all of the Company's
assets, other than the proposed mergers with Insurdata Incorporated, Provident
or a subsidiary of Provident, where the surviving or successor entity in such
transaction (i) assumes the Company's obligations hereunder and under the
agreements and instruments entered into in connection herewith and (ii) is a
publicly traded corporation whose common stock is listed or quoted for trading
on the NASDAQ, the New York Stock Exchange or the American Stock Exchange.
Notwithstanding the foregoing, the Purchasers consent to the pending merger
between the Company and Insurdata Incorporated, which respect to which a
definitive agreement shall be entered into on December 6, 1999.
3.12 Transactions with Provident. The Company agrees that, in the event
of the merger of the Company with Provident or a Provident subsidiary and
simultaneously with the merger, the Company resulting from the merger shall
register with the Commission under the Securities Act, as amended, the
securities held by or to be issued to holders of the outstanding securities of
the Company (including all Common Stock) and securities issued shall be listed
on a national securities exchange or quoted on the NASDAQ Stock Market and be
freely tradable upon consummation of the merger, subject to the requirements of
applicable state and federal securities laws, including Rule 145 promulgated
under the Securities Act.
3.13 Reimbursement. In the event that any Purchaser, other than by
reason of its gross negligence or willful misconduct, becomes involved in any
capacity in any action, proceeding or investigation brought by or against any
person, including shareholders of the Company, in connection with or as a result
of (a) any misrepresentation or breach of any representation or warranty made by
the Company in this Agreement or the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Company contained in this
Agreement or the Transaction Documents or any other certificate, instrument or
document hereby or thereby, or (c) any cause of action, suit or claim brought or
made against such Purchaser and arising out of or resulting from the execution,
delivery, performance or enforcement of this Agreement or the Transaction
Documents or any other certificate, instrument or document contemplated hereby
or thereby, the Company will reimburse such Purchaser for its legal and other
actual out-of-pocket expenses (including the cost of any investigation and
preparation) incurred in connection therewith. The reimbursement obligations of
the Company under this paragraph shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions to
any affiliate of the Purchasers and partners, directors, agents, employees and
controlling persons (if any), as the case may be, of the Purchasers and any such
affiliate, and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, the Purchasers and
any such affiliate and any such Person. The Company also agrees that no
Purchaser or any Affiliates, partners, directors, agents, employees or
controlling persons of such Purchaser shall have any liability to the Company or
any Person asserting claims on behalf of or in right of the Company in
connection with or as a result of the consummation of this Agreement or any of
the Transaction Documents except to the extent that any losses, claims, damages,
liabilities or expenses incurred by the Company result from the gross negligence
or willful misconduct of such Purchaser, or from a breach of a representation,
warranty or covenant made herein by such Purchaser, in connection with the
transactions contemplated by this Agreement or the Registration Rights
Agreement, in which event such Purchaser, severally and not jointly, shall
reimburse the Company for its legal and other actual out-of-pocket expenses
(including the cost of any investigation and preparation) incurred in connection
therewith, up to the amount of the Purchase Price paid by such Purchaser. To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of its obligations hereunder which is permissible under applicable
law.
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3.14 Material Information. The Company covenants that any information
provided by the Company or Provident to the Purchasers and their agents or their
counsel which could be deemed to constitute material non-public information will
cease to be material non-public information (either through disclosure by the
Company or otherwise) on that date which is one (1) Business Day after the
Company file Form 8-K pursuant to Section 3.8 hereof.
3.15 Future Financings. As long as any Shares are outstanding, except
for (i) shares of Common Stock deemed to have been issued by the Company in
connection with any plan which has been approved by the Board of Directors of
the Company, pursuant to which the Company's securities may be issued to any
employee, officer, director or consultant of the Company; (ii) shares of Common
Stock issuable upon the exercise of any options or warrants outstanding on the
date hereof and listed in Schedule 2.1(c) hereto; or (iii) shares of Common
Stock issued in connection with the Company's merger transactions with Insurdata
Incorporated, Provident or a subsidiary of Provident, if the Company agrees to
issue shares of Common Stock or other securities convertible into or
exchangeable or exercisable for Common Stock (any of (i), (ii) or (iii), the
"New Security") at an effective price per share of Common Stock which is less or
may be less (including, without limitation, any security which is convertible
into or exchangeable or exercisable for Common Stock at a price which may change
with the market price of the Common Stock) than $15.00 per share (a "Future
Financing"), the Company shall provide to the Purchasers by 5:00 p.m. (New York
time) on or before the third (3rd) Business Day (as defined below) after the
decision to issue the New Security has been made, written notice of the Future
Financing containing in reasonable detail (i) the proposed terms of the Future
Financing, (ii) the amount of the proceeds that will be raised and (iii) the
Person with whom such Future Financing shall be effected, and attached to which
shall be a term sheet or similar document relating thereto (the "Future
Financing Notice"). Upon receiving the Future Financing Notice, each Purchaser
shall have the pro rata right (based on the principal amount of the Shares held
by such Purchaser relative to the aggregate principal amount of Shares purchased
hereunder) to purchase, on the same terms as the Future Financing, an amount of
New Securities having a purchase price which shall not exceed the aggregate
investment by such Purchaser hereunder. In the event a Purchaser desires to
exercise the right granted under this Section 3.15, such Purchaser must notify
the Company on or prior to the fifth (5th) Business Day after such Purchaser has
received the Future Financing Notice. In the event the terms and conditions of a
proposed Future Financing are amended in any respect after delivery of the
Future Financing Notice but prior to the closing of the proposed Future
Financing to which such Future Financing Notice relates, the Company shall
deliver a new notice to each Purchaser describing the amended terms and
conditions of the proposed Future Financing and each Purchaser thereafter shall
have an option during the five (5) Business Days period following delivery of
such new notice to purchase its pro rata share (based on the Purchaser's
percentage of the principal amount such Purchaser's investment hereunder) of the
New Securities being offered on the same terms as contemplated by such proposed
Future Financing, as amended. The foregoing sentence shall apply to successive
amendments to the terms and conditions of any proposed Future Financing. At the
closing for such Future Financing, the transactions contemplated by this Section
3.15 shall close, subject to the completion of mutually satisfactory
documentation, and the Company shall tender to each Purchaser certificates
representing the New Securities that it agreed to purchase and the Purchasers
shall make payment for the entire purchase price in immediately available funds
at the closing of such sale.
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ARTICLE IV.
CONDITIONS
4.1 Closing Conditions.
a. Conditions Precedent to the Obligation of the Company to Sell.
The obligation of the Company to sell the Shares hereunder is subject to the
satisfaction or waiver (with prior written notice to each Purchaser) by the
Company, at or before the Closing, of each of the following conditions:
(i) Accuracy of the Purchasers' Representations and Warranties.
The representations and warranties of each Purchaser in this Agreement shall be
true and correct in all material respects as of the date when made (except for
representations and warranties that speak as of a specific date) and as of the
Closing Date;
(ii) Performance by the Purchasers. Each Purchaser shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Purchaser at or prior to the Closing; and
(iii) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Transaction Documents.
b. Conditions Precedent to the Obligation of the Purchasers to
Purchase. The obligation of each Purchaser hereunder to acquire and pay for the
Shares is subject to the satisfaction or waiver (with prior written notice to
the Company and each other Purchaser) by such Purchaser, at or before the
Closing, of each of the following conditions:
(i) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company set forth in this Agreement
shall be true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date);
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<PAGE>
(ii) Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing;
(iii) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement and the Transaction Documents;
(iv) Required Approvals. All Required Approvals shall have been
obtained and copies thereof delivered to such Purchaser;
(v) Shares of Common Stock. The Company shall have duly
authorized the number of Shares required by this Agreement to be issued pursuant
to the terms hereof;
(vi) Resolutions. The Board of Directors of the Company shall
have adopted resolutions consistent with Section 2.1(b) and in a form reasonably
acceptable to each Purchaser (the "Resolutions").
c. Documents and Certificates. At the Closing, the Company shall
have delivered to the Purchasers the following in form and substance reasonably
satisfactory to the Purchasers:
(i) Opinion. An opinion of the Company's legal counsel in the
form attached hereto as Exhibit B dated as of the Closing Date;
(ii) Certificates. Share Certificates representing the principal
amount of Shares purchased by such Purchaser as set forth next to such
Purchaser's name on Schedule I, registered in the name of such Purchaser, each
in form satisfactory to the Purchaser and in conformity in all respects with the
requirements of the Pennsylvania Business Corporation Law, as amended;
(iii) Registration Rights. The Company shall have executed and
delivered the Registration Rights Agreement;
(iv) Officer's Certificate. An Officer's Certificate dated the
Closing Date and signed by an executive officer of the Company confirming the
accuracy of the Company's representations, warranties and covenants as of the
Closing Date and confirming the compliance by the Company with the conditions
precedent set forth in this Section 4.1 as of the Closing Date;
(v) Secretary's Certificate. A Secretary's Certificate dated the
Closing Date and signed by the Secretary or Assistant Secretary of the Company
certifying (A) that attached thereto is a true and complete copy of the
Certificate of Incorporation of the Company, as in effect on the Closing Date,
(B) that attached thereto is a true and complete copy of the by-laws of the
Company, as in effect on the Closing Date and (C) that attached thereto is a
true and complete copy of the Resolutions duly adopted by the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement and of the Transaction Documents, and that such Resolutions have not
been modified, rescinded or revoked;
15
<PAGE>
(vi) Certificates of Incorporation. The Company shall have
delivered to counsel to Brown Simpson a copy of a certificate evidencing the
incorporation and good standing of the Company and each Subsidiary, in such
corporation's state of incorporation issued by the Secretary of State of such
state of incorporation as of a date within thirty days of the Closing Date. The
Company shall have delivered to counsel to Brown Simpson a copy of its
Certificate of Incorporation as certified by the Secretary of State of the
Commonwealth of Pennsylvania within thirty days of the Closing Date;
(vii) Other Documents. The Company shall have delivered to each
Purchaser such other documents relating to the transactions contemplated by the
Transaction Documents as the Purchasers or its counsel may reasonably request.
ARTICLE V.
MISCELLANEOUS
5.1 Entire Agreement. This Agreement, together with the Exhibits
and Schedules hereto and the Transaction Documents contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters.
5.2 Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile, provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party (if received by 7:00 p.m. EST where such
notice is received) or the first business day following such delivery (if
received after 7:00 p.m. EST where such notice is received); or (iii) one
business day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company or to Provident:
c/o Provident American Corporation
2500 DeKalb Pike
Norristown, Pennsylvania 19401
Telephone: (610) 279-3561
Facsimile: (610) 279-4498
Attention: Michael Ashker
With a copy to:
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, Pennsylvania 19103
Telephone: (215) 569-5514
Facsimile: (215) 569-5555
Attention: Barry Genkin
16
<PAGE>
If to Brown Simpson Strategic Growth Fund, Ltd., Brown Simpson
Strategic Growth Fund, L.P., Matthew Brown, Evan Levine or Mitchell Kaye to:
152 West 57th Street, 40th Floor
New York, New York 10029
Telephone: (212) 247-8200
Facsimile: (212) 247-1329
Attention: Evan Levine
If to Brown Simpson - ORD Investments LLC to
c/o OTA Limited Partnership
1 Manhattanville Road
Purchase, New York 10577
Telephone: (914) 694-5800
Facsimile: (914) 694-6382
Attention: Vinny DiGeso
With a copy, in the case of Notice to Brown Simpson Strategic
Growth Fund, Ltd., Brown Simpson Strategic Growth Fund, L.P. or Brown Simpson -
ORD Investments LLC to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Telephone: (212) 872-1000
Facsimile: (212) 872-1002
Attention: James Kaye
If to James Simpson to:
c/o Brown Simpson Asset Management, LLC
514 High Street, Suite 5
Palo Alto, CA 94301
Telephone: (650) 324-5800
Facsimile: (650) 325-3622
17
<PAGE>
If to LB I Group Inc. or Steven Weinstein to:
c/o Lehman Brothers, Inc.
3 World Financial Center
New York, New York 10285
Telephone: (212) 526-6957
Facsimile: (212) 526-2199
Attention: Steve Weinstein
If to Royal Bank of Canada to:
c/o RBC Dominion Securities
One Liberty Plaza - 2nd Floor
165 Broadway
New York, New York 10006-1404
Facsimile (212) 858-7402
Attention: Vice President, Global Middle Office
and to: Roger Blissett
Telephone: (212) 858-7119
Facsimile: (212) 858-7468
If to Vauban Investissement SA to:
c/o Shoreline Advisory Group
1711 Pearl Street, 2nd Floor
Boulder, CO 80302
Telephone: (303) 938-0507
Facsimile: (303) 938-9842
Attention: Caleb Sevian
If to Seneca Capital L.P. or Seneca Capital International,
Ltd., to:
c/o Seneca Capital Advisors, LLC
537 Madison Avenue, 11th Floor
New York, New York 10022
Telephone: (212) 371-1300
Facsimile: (212) 758-6060
Attention: Mr. Doug Hirsch
18
<PAGE>
With a copy, in the case of Notice to Seneca Capital, L.P. or
Seneca Capital International. Ltd., to:
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022-3852
Telephone: (212) 715-9186
Facsimile: (212) 715-8000
Attention: Thomas T. Janover, Esq.
If to Good Family LLC to:
1211 Lake Road
Lake Forest, IL
Telephone: (847) 234-8663
Facsimile:
Attention: Daniel Good
If to The Raptor Global Portfolio Limited or Altar Rock Fund
L.P. to:
c/o Tudor Investment Corporation
40 Rowes Wharf, 2nd Floor
Boston, MA 02110
Telephone: (617) 772-4600
Facsimile: (617) 737-9280
Attention: William Flaherty
If to MBK Investment Partners to:
c/o M.R. Weiser & Co. LLP
135 West 50th Street, 12th Floor
New York, New York 10020-1299
Telephone: (212) 641-4700
Facsimile: (212) 641-6888
Attn: Sidney Margenbesser
If to Robert Capital Management to:
610 5th Avenue, 7th Floor
New York, New York 10020
Telephone: (212) 218-8870
Facsimile: (212) 218-8872
Attn: Stephen Robert
19
<PAGE>
If to Europa International Incorporated to:
c/o Knoll Capital Management, L.P.
200 Park Avenue, Suite 3900
New York, New York 10166
Telephone: (212) 808-7474
Facsimile: (212) 808-7475
Attn: Fred Knoll
If to Stephen M. Peck to:
1775 Broadway
New York, New York 10019
Telephone: (212) 424-0320
Facsimile: (212) 757-8501
If to Stephen McGrath to:
39 Talbot Court
Short Hills, N.J. 07079
Telephone: (973) 467-1804
Facsimile: (973) 467-5199
If to Peter Darling to:
c/o Deltec Securities (U.K.) Limited
Brettenham House
5 Lancaster Place
London, United Kingdom WC2E 7EN
Telephone: (011) 44-171-379-7227
Facsimile: (011) 44-171-379-7577
If to Fordham Follies L.L.C. to:
c/o Veronica Kelly
615 East 14th Street, Apt. 11G
New York, New York 10009
Telephone: (212) 614-8449
Each party shall provide written notice to the other party of any change in
address or facsimile number in accordance with the provisions hereof.
5.3 Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by both the Company and each of the Purchasers or, in the case of a waiver, by
the party against whom a waiver of any such provision is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter. The Company shall not
offer or pay any consideration to a Purchaser for consenting to such an
amendment or waiver unless the same consideration is offered to each Purchaser
and the same consideration is paid to each Purchaser which consents to such
amendment or waiver.
20
<PAGE>
5.4 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
5.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns
and, in the case of the Company, any entity succeeding to the Company by merger
or acquisition of all or substantially all the assets of the Company. Except as
provided in this Section 5.5, the Company may not assign this Agreement or any
rights or obligations hereunder without the prior written consent of each of the
Purchasers. The Purchasers may assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Company,
provided, that any assignees must make the representations and warranties set
forth in Section 2.2 and otherwise comply with the terms of this Agreement
otherwise applicable to its assignor. This provision shall not limit a
Purchaser's right to transfer securities in accordance with all of the terms of
this Agreement or the Transaction Documents.
5.6 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
5.7 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York
without regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the nonexclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
21
<PAGE>
5.8 Survival. The representations and warranties of the Company and the
Purchasers contained in Sections 2.1 and 2.2, the agreements and covenants set
forth in Section 3, and the reimbursement provisions set forth in Section 3.16,
shall survive the Closing and any sale of the Shares regardless of any
investigation made by or on behalf of the such Purchaser or by or on behalf of
the Company, except that, in the case of representations and warranties such
survival shall be limited to the period of six (6) years following the Closing
Date on which they were made or deemed to have been made (other than with
respect to any claim by a third party against the party to this Agreement who
seeks to assert a claim based on such representations and warranties). This
section shall have no effect on the survival of the indemnification provisions
of the Registration Rights Agreement.
5.9 Counterparts. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
5.10 Publicity. The Company and the Purchasers shall consult with each
other in issuing any press releases or otherwise making public statements with
respect to the transactions contemplated hereby and neither party shall issue
any such press release or otherwise make any such public statement without the
prior written consent of the other, which consent shall not be unreasonably
withheld or delayed, except that no prior consent shall be required if such
disclosure is required by law, in which such case the disclosing party shall
provide the other party with prior notice of such public statement. The Company
shall not publicly or otherwise disclose the names of any of the Purchasers
without each such Purchaser's prior written consent. The Purchasers and their
affiliated companies shall, without further cost, have the right to use in its
advertising, marketing or other similar materials, the Company's logo and
trademarks and all or parts of the Company's press releases that focus on the
Transaction forming the subject matter of this Agreement or which make reference
to the Transaction. The Purchasers understand that this grant by the Company
only waives objections that the Company might have to the use of such materials
by the Purchasers and in no way constitutes a representation by the Company that
references in such materials to the activities of third-parties have been
cleared or constitute a fair use.
5.11 Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
5.12 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchasers
will be entitled to specific performance of the obligations of the Company under
this Agreement or the Transaction Documents without the showing of economic loss
and without any bond or other security being required. Each of the Company and
the Purchasers (severally and not jointly) agree that monetary damages would not
be adequate compensation for any loss incurred by reason of any breach of its
obligations described in the foregoing sentence and hereby agree to waive in any
action for specific performance of any such obligation the defense that a remedy
at law would be adequate.
22
<PAGE>
5.13 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser hereunder is several and not joint with the
obligations of the other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement or out of the
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.
5.14 Payment Set Aside. To the extent that the Company makes a payment
or payments to the Purchasers hereunder or pursuant to the Transaction Documents
or the Purchasers enforce or exercise their rights hereunder or thereunder, and
such payment or payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Company, a trustee, receiver or any other Person
under any law (including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the extent of any
such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
5.15 Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
5.16 Fees and Expenses. Except as set forth in the Registration Rights
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement; provided, however, that the Company shall pay the
reasonable legal fees of Akin, Gump, Strauss, Hauer, & Feld, L.L.P. within
thirty (30) Business Days of the Closing in an amount not to exceed, without the
prior written consent of the Company, $20,000. The Company shall pay all stamp
and other taxes and duties levied in connection with the issuance of the Shares
pursuant hereto.
23
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.
HEALTHAXIS.COM, INC.
By: /s/ Michael Ashker
-------------------------------------------
Name: Michael Ashker
Title: President and Chief Executive Officer
<PAGE>
BROWN SIMPSON STRATEGIC
GROWTH FUND, LTD.
By: Brown Simpson Asset Management, LLC
By:____________________________________
Name:
Title:
BROWN SIMPSON STRATEGIC
GROWTH FUND, L.P.
By: Brown Simpson Capital, LLC
its general partner
By:____________________________________
Name:
Title:
BROWN SIMPSON - ORD INVESTMENTS LLC
By:____________________________________
Name:
Title:
<PAGE>
LB I GROUP INC.
By: /s/ Steven Berkenfeld
--------------------------
Name: Steven Berkenfeld
Title: Senior Vice President
<PAGE>
ROYAL BANK OF CANADA
By its Agent
RBC Dominion Securities Corporation
By: /s/ Mark A. Standish
-------------------------------
Name: Mark A. Standish
Title: Managing Director
By: /s/ Roger A. Blissett
--------------------------------
Name: Roger A. Blissett
Title: Vice President, Deputy General Counsel
<PAGE>
VAUBAN INVESTISSMENT SA
By:______________________________
Name:
Title:
<PAGE>
SENECA CAPITAL, L.P.
By: Seneca Capital Advisors, LLC, its
general partner
By: /s/ Doug Hirsch
-----------------------------------
Name: Doug Hirsch
Title: Managing Partner
SENECA CAPITAL INTERNATIONAL, LTD.
By: /s/ Doug Hirsch
-----------------------------------
Name: Doug Hirsch
Title: Managing Partner
<PAGE>
GOOD FAMILY LLC
By: /s/ Daniel J. Good
----------------------
Name: Daniel J. Good
Title: Manager
<PAGE>
EUROPA INTERNATIONAL INCORPORATED
By: Knoll Capital Management, L.P.
its investment manager
By:______________________________
Name:
Title:
<PAGE>
ROBERT CAPITAL MANAGEMENT, LLC
By:______________________________
Name:
Title:
<PAGE>
THE RAPTOR GLOBAL PORTOLIO LIMITED
By: Tudor Investment Corporation
By: /s/ William T. Flaherty
------------------------------
Name: William T. Flaherty
Title: Vice President
<PAGE>
ALTAR ROCK FUND L.P.
By: Tudor Investment Corporation
By: /s/ William T. Flaherty
------------------------------
Name: William T. Flaherty
Title: Vice President
<PAGE>
MBK INVESTMENT PARTNERS
By: /s/ William Kaye
--------------------------
Name: William Kaye
Title: Partner
<PAGE>
/s/ Steven Weinstein
-------------------------
Steven Weinstein
<PAGE>
-------------------------
Matthew C. Brown
<PAGE>
/s/ James R. Simpson
-------------------------
James R. Simpson
<PAGE>
--------------------------
Mitchell D. Kaye
<PAGE>
--------------------------
Evan M. Levine
<PAGE>
/s/ Stephen M. Peck
---------------------------
Stephen M. Peck
<PAGE>
/s/ Peter S. Darling
---------------------------
Peter S. Darling
<PAGE>
/s/ Stephen McGrath
---------------------------
Stephen McGrath
<PAGE>
Fordham Follies L.L.C.
By:________________________
Name:
Title:
<PAGE>
Schedule I
<TABLE>
<CAPTION>
- ------------------------------------------------ ---------------------------------- ---------------------------------
Number of Shares Purchase Price for
Name of Purchaser Acquired at Closing Acquired Shares
- ----------------- ------------------- ------------------
- ------------------------------------------------ ---------------------------------- ---------------------------------
<S> <C> <C>
Brown Simpson Strategic Growth Fund, Ltd. 333,333 $5,000,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
Brown Simpson Strategic Growth Fund, L.P. 466,667 $7,000,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
Brown Simpson - ORD Investments LLC 66,667 $1,000,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
LB I Group Inc. 766,667 $11,500,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
Royal Bank of Canada 800,000 $12,000,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
The Raptor Global Portfolio Limited 464,800 $6,972,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
Altar Rock Fund, L.P. 1,867 $28,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
Seneca Capital L.P. 104,820 $1,572,300
- ------------------------------------------------ ---------------------------------- ---------------------------------
Seneca Capital International, Ltd. 128,513 $1,927,700
- ------------------------------------------------ ---------------------------------- ---------------------------------
Europa International Incorporated 133,333 $2,000,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
Provident American Corporation 133,333 $2,000,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
Good Family LLC 133,333 $2,000,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
Vauban Investisement SA 66,667 $1,000,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
Stephen McGrath 66,667 $1,000,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
Robert Capital Management 46,667 $700,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
MBK Investment Partners 33,333 $500,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
Evan Levine 16,667 $250,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
James Simpson 16,667 $250,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
Mitchell Kaye 16,667 $250,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
Steven Weinstein 16,667 $250,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
Peter S. Darling 16,667 $250,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
Matthew Brown 6,667 $100,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
Stephen M. Peck 6,667 $100,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
Fordham Follies, L.L.C. 2,667 $40,000
- ------------------------------------------------ ---------------------------------- ---------------------------------
</TABLE>
<PAGE>
Schedule II
<TABLE>
<CAPTION>
Name of Purchaser Address
- ----------------- -------
<S> <C>
Brown Simpson Strategic Growth Fund, Ltd. 152 West 57th Street, 40th Floor
New York, New York 10019
Attn: Evan Levine
Fax: (212) 247-1329
Residence: Grand Cayman, Cayman Islands
Brown Simpson Strategic Growth Fund, L.P., 152 West 57th Street, 40th Floor
Evan Levine, Matthew Brown and Mitchell Kaye New York, New York 10019
Attn: Paul Gustus
Fax: (212) 247-1329
Residence: New York, New York
James Simpson c/o Brown Simpson Asset Management, LLC
514 High Street, Suite 5
Palo Alto, CA 94301
Fax: (650) 325-3622
Residence: California
Brown Simpson - ORD Investments LLC c/o OTA Limited Partnership
1 Manhattanville Road
Purchase, New York 10577
Attn: Vinny DiGeso
Fax: (914) 694-6342
Residence: New York
LB I Group Inc., Steven Weinstein c/o Lehman Brothers, Inc.
3 World Financial Center
New York, New York 10285
Attn: Steven Weinstein
Fax: (212) 526-2199
Residence: New York
Royal Bank of Canada c/o RBC Dominion Securities
One Liberty Plaza - 2nd Floor
165 Broadway
New York, New York 10006-1404
Attn: Vice President, Global Middle Office
Fax: (212) 858-7439
Residence: New York
and to: Roger Blissett
Fax: (212) 858-7468
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Vauban Investissment SA c/o Shoreline Advisory Group
1711 Pearl Street, 2nd Floor
Boulder, CO 80302
Attn: Caleb Sevian
Fax: (303) 938-9842
Residence: Netherlands Antilles
Seneca Capital L.P. c/o Seneca Capital Advisors, LLC
527 Madison Avenue, 11th Floor
New York, New York 10022
Attn: Mr. Doug Hirsch
Fax: (212) 758-6060
Residence: Delaware
Seneca Capital International, Ltd. c/o Seneca Capital Advisors, LLC
830 Third Avenue, 14th Floor
New York, New York 10022
Attn: Mr. Doug Hirsch
Fax: (212) 758-6060
Residence: Cayman Islands
Good Family LLC 1211 Lake Road
Lake Forest, IL
Attn: Daniel Good
Residence: Illinois
The Raptor Global Portfolio Limited, Altar Rock Fund L.P. c/o Tudor Investment Corporation
40 Rowes Wharf, 2nd Floor
Boston, MA 02110
Attn: William Flaherty
Fax: (617) 737-9280
Residence: Delaware
MBK Investment Partners c/o M.R. Weiser & Co. LLP
135 West 50th Street, 12th Floor
New York, New York 10020-1299
Attn: Sidney Margenbesser
Fax: (212) 641-6888
Residence: New York
Robert Capital Management 615 5th Avenue, 7th Floor
New York, New York
Attn: Stephen Robert
Fax: (212) 218-8872
Residence: New York
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Europa International Incorporated c/o Knoll Capital Management, L.P.
200 Park Avenue, Suite 3900
New York, New York 10166
Attn: Fred Knoll
Fax: (212) 808-7475
Residence: British Virgin Islands
Stephen M. Peck 1775 Broadway
New York, New York 10019
Residence: New York
Stephen McGrath 39 Talbot Court
Short Shills, N.J. 07079
Residence: New Jersey
Peter Darling c/o Deltec Securities (U.K.) Limited
Brettenham House
5 Lancaster Place
London, United Kingdom WC2E 7EN
Fax: (011) 44-171-379-7577
Fordham Follies L.L.C. c/o 615 East 14th Street, Apt. 11G
New York, New York 10009
Attn: Veronica Kelly
Residence: New York
Provident American Corporation 2500 DeKalb Pike
Norristown, Pennsylvania 19401
Attn: Michael Ashker
Fax: (610) 279-4498
Residence: Pennsylvania
</TABLE>
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made by and
among HealthAxis.com, Inc. (the "Company") and the Purchasers listed on Schedule
I thereto ("Purchasers").
RECITALS
A. The Purchasers desire to purchase from the Company and the Company
desires to issue and sell to the Purchasers the number of shares of the
Company's common stock (the "Common Stock") set forth across from each person's
name in Schedule I to the Securities Purchase Agreement dated December 3, 1999
(the "Securities Purchase Agreement"), all upon the terms set forth in the
Securities Purchase Agreement. Such offering of shares of Common Stock pursuant
to the Securities Purchase Agreement is referred to as (the "Offering").
B. To induce Purchasers to purchase Common Stock in the Offering, the
Company is willing under certain circumstances to register under the Securities
Act of 1933, as amended, and the rules and regulations thereunder (collectively,
the "Securities Act"), the Common Stock purchased by the Purchasers.
NOW THEREFORE, intending to be legally bound, the parties hereto agree
as follows:
1. Required Registrations.
(a) At any time after the earlier of: (i) twelve (12) months
following the completion of the sale of the Common Stock in the Offering, or
(ii) six months after the completion of the Company's initial public offering,
holders of at least one-half of the then outstanding shares of the Registrable
Securities may request, in writing, that the Company effect the registration of
Registrable Securities (as defined in Section 7 hereof) owned by such holders on
a form that may be used for the registration of Registrable Securities. If the
holders initiating the registration intend to distribute the Registrable
Securities by means of an underwriting, they shall so advise the Company in
their request. In the event such registration is underwritten, the right of
other holders to participate shall be conditioned on such holders' participation
in such underwriting. Upon receipt of any such request, the Company shall
promptly give written notice of such proposed registration to all holders of the
Registrable Securities and holders of Common Stock who have been granted
registration rights. Such holders shall have the right, by giving written notice
to the Company within 30 days after the Company provides its notice, to elect to
have included in such registration a number of their securities, including the
Registrable Securities, as such holders may request in such notice of election;
provided that if the underwriter (if any) managing the offering determines that,
because of marketing factors, all of the securities, including the Registrable
Securities, requested to be registered by all holders may not be included in the
offering, then subject to the priority rights, if any, of: holders of shares
subject to the Registration Rights Agreement dated November 13, 1998 (the "AOL
Shares") between the Company and America Online, Inc., (the "AOL Rights
Agreement"); holders of the shares issued to Health Plan Services, Inc. ("HPS")
subject to the Registration Rights Agreement (the "HPS Shares") between the
Company and HPS dated May 29, 1998 (the "HPS Registration Rights Agreement");
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holders of the Series C Preferred Stock; Provident American Corporation and its
subsidiaries subject to Registration Rights Agreements dated March 30, 1999 (the
"Provident Shares"), and other holders of registration rights granted by the
Company, the Company shall include in such registration: (i) first, the
securities of the holders of the AOL Shares requesting registration pursuant to
the terms of the AOL Rights Agreement to the extent entitled to registration
under the AOL Rights Agreement; (ii) second, the securities of the holders of
the HPS Shares unless the HPS Shares are eligible for resale pursuant to Rule
144 without regard to volume limitations; (iii) third, the securities of the
holders of the common stock issuable upon the conversion of the Series C
Preferred Stock, the securities of the holder of the common stock issuable upon
the conversion of the Series D Preferred Stock and the securities issuable upon
the exercise of the warrant granted to UICI, pro rata based on the number of
shares requested to be included; (iv) fourth, the securities of holders of the
Provident Shares; (v) fifth, the securities of holders of common stock issuable
upon the conversion of the Series A Preferred Stock; (vi) sixth, the securities
of the holders of Common Stock pursuant to the terms of the Registration Rights
Agreement, dated May 7, 1999 and May 11, 1999; (vii) seventh, the securities
issuable upon the exercise of warrants granted to ING Baring Furman Selz, LLC;
(viii) eighth, the securities issuable upon the exercise of warrants granted to
First Health Group Corp.; (ix) ninth, the securities issuable upon the exercise
of warrants granted to Aetna/US Healthcare; (x) tenth, the securities issuable
upon the exercise of warrants granted to Blue Cross and Blue Shield Association;
(xi) eleventh, the securities of the Purchasers or their successors or assigns
where such entities hold Registrable Securities; and (xii) twelfth, the other
securities requested to be included therein by the other holders of the Company
securities requested to be included in such registration, pro rata among the
holders of such securities on the basis of the number of shares owned by each
such holder. To the extent that all of the Registrable Securities requested to
be included in the underwritten offering cannot be included, holders of
Registrable Securities shall participate in such offering pro rata among such
Purchasers, based on the number of shares of Registrable Securities each holder
proposed to include. Thereupon, the Company shall, as expeditiously as possible,
use its best efforts to effect the registration (on a form that may be used for
the registration of the Registrable Securities) of all the Registrable
Securities which the Company has been requested to so register.
(b) The Company shall not be required to effect more than two
registrations pursuant to the first sentence of paragraph (a) above; provided,
however, in the event of a proration pursuant to the foregoing paragraph (a)
which results in Purchasers holding Registrable Securities having less than all
of the requested securities being included in a current registration, then, to
the extent of such unincluded Registrable Securities, the Purchasers shall
receive an additional demand registration right upon the expiration of any
blackout period, upon the request of the holders of 50% of the remaining
Registrable Securities, and the Company shall be obligated to file an additional
registration statement (which registration statement shall contain a current
prospectus) relating to the Registrable Securities; and (ii) the Company shall
use its best efforts to effect the registration of such Registrable Securities
as promptly as practicable thereafter. In addition to the foregoing, the Company
shall agree upon the first anniversary of the Company's becoming subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act to file a
registration statement on Form S-3 (if then available) covering the resale from
time to time of all of the remaining Registrable Securities.
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(c) The Registration Expenses (as defined in Section 4) shall be
paid by the Company with respect to all registrations effected pursuant to this
Section.
(d) The Company may delay the filing or effectiveness of any
registration statement for a period of up to 180 days after the date of a
request pursuant to this Section 1 if at the time of such request to register
Registrable Securities: (i) the Company is engaged or has fixed plans to engage
within 30 days of the time of the request in a firm commitment underwritten
public offering or (ii) the Company furnishes to the Purchaser or Purchasers
requesting registration a certificate signed by senior executive officer of the
Company stating that the Company is engaged in any other activity which, in the
good faith determination of the Company's Board of Directors, is a material
non-public event which would be adversely affected by the requested registration
to the material detriment of the Company, then the Company may at its option
direct that such request be delayed for a period not in excess of 120 days from
the effective date of such offering or the date of commencement of such other
material activity, as the case may be, provided, however, the Company may not
utilize the right set forth in this clause (ii) more than once in any 12-month
period.
2. Piggyback Registration.
(a) Each time that the Company proposes to register a public
offering solely of its authorized but unissued Common Stock or shares held in
Treasury ("Primary Shares") or other securities, other than pursuant to a
Registration Statement on Form S-4 or Form S-8 or similar or successor forms
(collectively, "Excluded Forms"), the Company shall promptly give written notice
of such proposed registration to all holders of the Registrable Securities,
which shall offer such holders the right to request inclusion of any Registrable
Securities in the proposed registration statement.
(b) Each holder of the Registrable Securities shall have twenty (20)
days or such longer period as shall be set forth in the notice from the receipt
of such notice to deliver to the Company a written request specifying the number
of shares of Common Stock such holder intends to sell and the holder's intended
plan of disposition.
(c) In the event that the proposed registration by the Company is,
in whole or in part, an underwritten public offering of securities of the
Company, any request under Section 2(b) may specify that the Registrable
Securities be included in the underwriting on the same terms and conditions as
the shares of Common Stock, if any, otherwise being sold through underwriters
under such registration.
(d) Upon receipt of a written request pursuant to Section 2(b), the
Company shall promptly use its best efforts to cause all such Registrable
Securities to be registered, to the extent required to permit sale or
disposition as set forth in the written request.
(e) Notwithstanding the foregoing, if the managing underwriter of an
underwritten public offering determines and advises in writing that the
inclusion of all Registrable Securities proposed to be included in the
underwritten public offering, together with the AOL Shares, the HPS Shares and
any other issued and outstanding shares of Common Stock proposed to be included
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therein by holders other than the holders of Registrable Securities (such other
shares hereinafter collectively referred to as the "Other Shares"), would
interfere with the successful marketing of the securities proposed to be
included in the underwritten public offering, then the number of such shares to
be included in such underwritten public offering shall be reduced, and shares
shall be excluded from such underwritten public offering in a number deemed
necessary by such managing underwriter. In the event an exclusion of shares is
necessary, shares shall be included in the following order: (i) first, the
Primary Shares; (ii) second, the AOL Shares requested to be included in the
registration pursuant to the terms of the AOL Rights Agreement to the extent
entitled to registration under the AOL Rights Agreement; (iii) third, HPS Shares
requested to be included pursuant to the terms of the HPS Registration Rights
Agreement unless the HPS Shares are eligible for resale pursuant to Rule 144
without regard to volume limitations; (iv) fourth, the securities issued upon
the conversion of the Series C Preferred Stock of holders requesting
registration, the securities issued upon the conversion of Series D Preferred
Stock of holders requesting registration, and the securities issued upon the
exercise of the warrants granted to UICI, pro rata based on the number of shares
requested to be included; (v) fifth, the securities of holders of the Provident
Shares requesting registration; (vi) sixth, the securities issued upon the
conversion of the Series A Preferred Stock of holders requesting registration;
(vii) seventh, the securities of the holders of Common Stock requesting
registration pursuant to the terms of the Registration Rights Agreements, dated
May 7, 1999 and May 11, 1999; (viii) eighth, the securities issued upon the
exercise of the warrants granted to ING Baring Furman Selz, LLC; (ix) ninth, the
securities issued upon the exercise of the warrants granted to First Health
Group Corp.; (x) tenth, the securities issued upon exercise of the warrants
granted to Aetna/US Healthcare; (xi) eleventh, the securities issued upon the
exercise of the warrants granted to Blue Cross and Blue Shield Association;
(xii) twelfth, the securities held by the Purchasers or their successors or
assigns requesting registration; (xiii) thirteenth, other shares. To the extent
all of the Registrable Securities requested to be included in the underwritten
public offering can not be included, holders of Registrable Securities shall
participate in such offering pro rata based on the number of shares of
Registrable Securities each holder proposes to include.
(f) all shares of Common Stock that are not included in the
underwritten public offering shall be withheld from the market by the holders
thereof for a period, not to exceed 180 days following an initial public
offering and 90 days for any offering thereafter, that the managing underwriter
reasonably determines as necessary in order to effect the underwritten public
offering. The holders of such shares shall execute such documentation as the
managing underwriter reasonably requests to evidence this lock-up.
3. Procedures. Whenever the holders of Registrable Securities have
requested that any Registrable Securities be registered pursuant to this
Agreement, the Company shall use its best efforts to effect the registration and
the sale of such Registrable Securities in accordance with the intended method
of disposition thereof; and pursuant thereto the Company shall as expeditiously
as possible:
(a) prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement on the appropriate form under the
Securities Act, which form shall be available for the sale of such Registrable
Securities in accordance with the intended method or methods of distribution
thereof, and use its commercially reasonable efforts to cause such registration
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statement to become effective (provided that before filing a registration
statement or prospectus or any amendments or supplements thereto, the Company
shall furnish to the counsel selected by the holders of a majority of the
Registrable Securities covered by such registration statement copies of all such
documents proposed to be filed, which documents shall be subject to the review
and comment of such counsel);
(b) notify each holder of Registrable Securities of the
effectiveness of each registration statement filed hereunder and prepare and
file with the Commission, such amendments, post-effective amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary or appropriate to keep such registration statement
effective for the period required for sale of the Registrable Securities,
(provided that in no event shall the Company be obligated to keep such
registration statement effective (i) if the Company is eligible to use the Form
S-3, at such time as there are no longer any Registrable Securities outstanding,
and (ii) if the Company is not eligible to register on Form S-3, until such time
as the Purchasers are eligible to sell all of the Registrable Securities
pursuant to Rule 144 (k)), cause such prospectus as so supplemented to be filed
as required under the Securities Act, and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement or supplement to the prospectus;
(c) if requested by the managing underwriter or underwriters or a
holder of Registrable Securities being sold in connection with an underwritten
offering, immediately incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters and the holders of a
majority in interest of the Registrable Securities being sold reasonably agree
should be included therein relating to the plan of distribution with respect to
such Registrable Securities, including, without limitation, information with
respect to the principal amount of Registrable Securities being sold to such
underwriters, the purchase price being paid therefor by such underwriters and
with respect to any other terms of the underwritten (or best efforts
underwritten) offering of the Registrable Securities to be sold in such
offering, and make all required filings of such Prospectus supplement or
post-effective amendment as soon as notified of the matters to be incorporated
in such Prospectus supplement or post-effective amendment;
(d) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(e) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions
where such registration or qualification is required as any seller reasonably
requests and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such seller (provided
that the Company shall not be required to (i) qualify generally to do business
in any jurisdiction where it would not otherwise be required to qualify but for
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this subparagraph (ii) subject itself to taxation in any such jurisdiction or
(iii) consent to general service of process in any such jurisdiction);
(f) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any event as a
result of which the prospectus included in such registration statement as then
in effect, contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, and, at the request of any such
seller, the Company shall promptly prepare a supplement or amendment to such
prospectus so that, thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not contain an untrue statement of a material
fact required to be stated therein or omit to state any fact necessary to make
the statements therein not misleading;
(g) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed or traded, and, if not so listed or traded, to be listed on the NASD
automated quotation system and, if listed on the NASD automated quotation
system, use commercially reasonable efforts to secure NASDAQ authorization for
such Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register as such with
respect to such Registrable Securities with the NASD;
(h) cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; enable such Registrable Securities to be in
such denominations and registered in such names as the selling holders or the
managing underwriters, if any, may request at least ten Business Days prior to
any sale of Registrable Securities; and provide a transfer agent and registrar
for all such Registrable Securities not later than the effective date of such
registration statement;
(i) enter into such customary agreements (including, if there is an
underwriter, underwriting agreements in customary form including, without
limitation, the requirement to obtain an opinion of counsel to the Company and a
"comfort letter" from the independent public accountants to the Company in the
usual and customary form for such an underwritten offering);
(j) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company that is customary, and cause
the Company's officers, directors, employees and independent accountants to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration statement;
(k) cooperate, and cause the Company's officers, directors,
employees and independent accountants to cooperate, with the selling holders of
Registrable Securities and the managing underwriters, if any, in the sale of the
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Registrable Securities and take any actions necessary to promote, facilitate or
effectuate such sale;
(l) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and make available to its security
holders, as soon as reasonably practicable, an earning statement covering the
period of at least twelve months, beginning with the first fiscal quarter
beginning after the effective date of the registration statement, which earning
statement shall satisfy the provisions of Section 11(a) of the Securities Act;
(m) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order; and
(n) otherwise use its best effects to take all other steps necessary
to effect the registration of the Registrable Securities.
4. Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees (including, if applicable, the fees and expenses of any
"qualified independent underwriter" and its counsel as may be required under the
rules and regulations of the NASD), fees and expenses of compliance with
securities or blue sky laws (including fees and disbursements of counsel for the
underwriters or selling holders in connection with blue sky qualifications and
determination of their eligibility for investment under applicable laws),
printing expenses, messenger, telephone and delivery expenses, fees and
disbursements of custodians, and fees and disbursements of counsel for the
Company and all independent certified public accountants (including the expenses
of any special audit and "cold comfort" letters required by or incident to such
performance), underwriters (excluding underwriters' discounts and commissions)
and other Persons retained by the Company (all such expenses being herein called
"Registration Expenses"), shall be borne by the Company and the Company shall,
in any event, pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit or quarterly review, the
expense of any liability insurance if such insurance coverage is obtained by the
Company and the expenses and fees for listing the securities to be registered on
each securities exchange on which similar securities issued by the Company are
then listed or on the NASD automated quotation system.
(b) Each holder of securities included in any registration hereunder
shall pay those expenses which are not Registration Expenses which are allocable
to the registration of such holder's securities so included (such as the fees
and disbursements of any counsel engaged by any Purchaser), and any such
expenses not so allocable, such as the underwriting discount and any selling
commissions shall be borne by all sellers of securities included in such
registration in proportion to the aggregate selling price of the securities to
be so registered.
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5. Indemnification and Contribution
(a) The Company agrees to indemnify and hold harmless each holder of
Registrable Securities which is included in a registration statement pursuant to
Section 1 herein, its officers and directors and each Person who controls such
holder (within the meaning of the Securities Act) against all losses, claims,
damages, liabilities and expenses, including without limitation attorneys' fees,
except as limited by Paragraph 5(c), which arise out of or are based upon: (i)
any untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or with respect to a prospectus, necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same; and (ii) any violation by the Company of the Securities Act, the Exchange
Act (as defined below), any applicable state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law. In connection with an underwritten offering, the Company shall
indemnify such underwriters, their officers and directors and each Person who
controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of the holders
of Registrable Securities.
(b) In connection with any registration statement in which a holder
of Registrable Securities is participating, each such holder shall furnish to
the Company in writing such information and affidavits as the Company and any
underwriter reasonably requests for use in connection with any such registration
statement or prospectus and shall indemnify the Company, its directors and
officers and each Person who controls the Company (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities and expenses,
including without limitation attorneys' fees, except as limited by Paragraph
5(c), resulting from any untrue or alleged untrue statement of material fact
contained in the registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in any information or affidavit so furnished
in writing by such holder.
(c) Any Person entitled to indemnification hereunder shall (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give prompt notice
shall not impair any Person's right to indemnification hereunder to the extent
such failure has not materially prejudiced the indemnifying party) and (ii)
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with respect to such
claim, permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party shall not be subject to any liability for any
settlement made by the indemnified party without its consent (but such consent
shall not be unreasonably withheld). An indemnifying party who is not entitled
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to, or elects not to, assume the defense of a claim shall not be obligated to
pay the fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) If the indemnification provided for in this Section 5 is
unavailable to an indemnified party under paragraphs (a) or (b) hereof in
respect to any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the Company and
the holder of Registrable Securities in connection with the statements or
omissions that resulted in such losses, claim, damages, liabilities or expenses.
The relative fault of the Company and the holder of Registrable Securities in
connection with the statements that resulted in such losses, claims, liabilities
or expenses shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of material facts or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the holder of the Registrable Securities and the parties relative intent,
knowledge, access to information and opportunity to correct such statement or
omission. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this Section 5(d). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to above shall
be deemed to include any legal or other fees or expenses reasonably incurred by
such indemnified party in connection with investigating or, except as provided
in Section 5(c), defending any such action or claim.
(e) Notwithstanding any other provision of this Section, the
liability of any holder of Registrable Securities for indemnification or
contribution under this Section shall be individual to each holder and shall not
exceed an amount equal to the number of shares sold by such holder of
Registrable Securities multiplied by the net amount per share which he receives
in such underwritten offering.
(f) The indemnification and contribution provided for under this
Agreement shall remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director or
controlling Person of such indemnified party and shall survive the transfer of
securities.
6. Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements; provided
that no holder of Registrable Securities included in any underwritten
registration shall be required to make any representations or warranties to the
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Company or the underwriters other than representations and warranties directly
regarding such holder and such holder's intended method of distribution.
7. Definitions.
"NASD" means the National Association of Securities Dealers.
"Person" means any individual, corporation, partnership, limited
liability company, trust, estate, association, cooperative, government or
governmental entity (or any branch, subdivision or agency thereof) or any other
entity.
"Registrable Securities" means (i) any of the shares of Common Stock
issued in the Offering; and (ii) any other securities that subsequently may be
issued or issuable with respect to such shares of Common Stock as a result of a
stock split or dividend or any sale, transfer, assignment or other transaction
involving such shares of the Company and any securities into which the shares of
Common Stock may thereafter be changed as a result of merger, consolidation,
recapitalization or other similar transaction. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when they
have been distributed to the public pursuant to a offering registered under the
Securities Act or eligible to be sold to the public pursuant to Rule 144(k)
under the Securities Act (or any such rule then in force) or, if held by an
affiliate of the Company, when all such securities of such person are eligible
for resale pursuant to Rule 144 and could be sold in one transaction in
accordance with the volume limitations contained in Rule 144(e)(1)(i). For
purposes of this Agreement, a Person shall be deemed to be a holder of
Registrable Securities whenever such Person has the right to acquire directly or
indirectly such Registrable Securities (upon conversion or exercise in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected.
"Securities Act" means the Securities Act of 1933, as amended.
8. Rule 144. From and after the time the Company's Common Stock is
registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), in order to permit each Purchaser to sell the
securities of the Company it holds from time to time pursuant to Rule 144
promulgated by the Commission or any successor to such rule or any other rule or
regulation of the Commission that may at any time permit each Purchaser to sell
its securities to the public without registration ("Resale Rules"), the Company
will:
(a) comply with all rules and regulations of the Commission
applicable in connection with use of the Resale Rules;
(b) make and keep adequate and current public information available,
as those terms are understood and defined in the Resale Rules, at all times;
(c) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act;
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(d) furnish annually to the Purchasers material containing the
information required by Rule 14a-3(b) under the Exchange Act;
(e) furnish to each Purchaser promptly upon request (i) a written
statement by the Company that it has complied with the reporting requirements of
the Resale Rules, the Securities Act and the Exchange Act, (ii) a copy of the
most recent annual or quarterly report of the Company and any other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested in availing the Purchasers of any rule or regulation of the
Commission which permits the selling of any shares of Common Stock holding the
Purchasers without registration; and
(f) take any action (including cooperating with the Purchasers to
cause the transfer agent to remove any restrictive legend on certificates
evidencing the shares of Common Stock held by the Purchasers) as shall be
reasonably requested by the Purchasers or which shall otherwise facilitate the
sale of shares of Common Stock held by the Purchasers from time to time by the
Purchasers pursuant to the Resale Rules.
9. Rule 144A Information. Until such time as the Company is subject to
Section 13 or 15(d) of the Exchange Act, the Company will make available, upon
request, to the Purchasers and prospective purchaser or transferee of
Registrable Securities designated by the Purchasers, the information required to
allow the resale or other transfer of Registrable Securities pursuant to Rule
144A promulgated by the Commission under the Securities Act to enable resales
and other transfers of the Registrable Securities to be made pursuant to such
Rule 144A.
10. Miscellaneous.
(a) No Inconsistent Agreements. The Company shall not hereafter
enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the holders of Registrable Securities in
this Agreement, or grant to any person any registration rights, ("New
Registration Rights") with respect to securities of the Company if such New
Registration Rights are, in the reasonable opinion of the Purchasers, superior
in any fashion to the registration rights granted to the Purchasers pursuant to
this Agreement, unless the holders of a majority of the Registrable Securities
then outstanding consent in writing to such Registration Rights or such other
inconsistent agreement, provided however this limitation shall not apply to any
registration rights currently outstanding or which the Company is legally
obligated to grant as of the date hereof.
(b) Amendments and Waivers. Except as otherwise provided herein,
the provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and holders of a majority of the Registrable
Securities.
(c) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of the Registrable Securities are also for the benefit of,
11
<PAGE>
and enforceable by, any subsequent holder of the Registrable Securities. A
person is deemed to be a holder of the Registrable Securities whenever such
person is the registered holder of the Registrable Securities. Upon the transfer
of any Registrable Securities, the transferring holder of the Registrable
Securities shall cause the transferee to execute and deliver to the Company a
counterpart of this Agreement.
(d) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(e) Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
(f) Descriptive Heading. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(g) Governing Law. The corporate law of Pennsylvania shall govern
all issues and questions concerning the relative rights of the Company and its
shareholders. All issues and questions concerning the construction, validity,
interpretation and enforcement of this Agreement shall be governed by, and
construed in accordance with, the laws of Pennsylvania, without giving effect to
any choice of law or conflict of law rules or provisions (whether of
Pennsylvania or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than Pennsylvania.
(h) Notices. Notices required or permitted to be given hereunder
shall be in writing and shall be deemed to be received when personally delivered
or sent by overnight courier or registered mail, return receipt requested,
addressed (i) if to the Company, at HealthAxis.com, Inc., 2500 DeKalb Pike,
Norristown, Pennsylvania 19404-0511, Attention: President and to Blank Rome
Comisky & McCauley LLP, 1 Logan Square, Philadelphia, Pennsylvania 19103, Attn:
Barry H. Genkin, Esquire; and (ii) if to any Purchaser, to the address set forth
on Schedule I hereto and to Akin, Gump, Strauss, Hauer & Feld, L.L.P., 590
Madison Avenue, New York, New York 10022, Attn: James Kaye, Esq. (or at such
other address as each party furnishes by notice given in accordance with this
Section 10).
12
<PAGE>
SIGNATURE PAGE TO HEALTHAXIS.COM, INC.
REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the undersigned has executed this Registration
Rights Agreement this sixth day of December, 1999.
HEALTHAXIS.COM, INC.
By: /s/ Michael Ashker
--------------------------------------------
Name: Michael Ashker
Title: President and Chief Executive Officer
PROVIDENT AMERICAN CORPORATION
By: /s/ Francis L. Gillan III
--------------------------------------------
Name: Francis L. Gillan III
Title: Chief Financial Officer and Treasurer
BROWN SIMPSON STRATEGIC GROWTH FUND, LTD.
By: Brown Simpson Asset Management, LLC
By: ____________________________________________
Name:
Title:
BROWN SIMPSON STRATEGIC GROWTH FUND, L.P.
By: Brown Simpson Capital, LLC,
its general partner
By: _____________________________________________
Name:
Title:
BROWN SIMPSON - ORD INVESTMENTS LC
By: ____________________________________________
Name:
Title:
LB I GROUP INC.
By: /s/ Steven Berkenfeld
--------------------------------------------
Name: Steven Berkenfeld
Title: Senior Vice President
ROYAL BANK OF CANADA
By: its Agent
RBC Dominion Securities
By: /s/ Mark A. Standish
Name: Mark A. Standish
Title: Managing Director
By: /s/ Roger A. Blissett
Name: Roger A. Blissett
Title: Vice President, Deputy General Counsel
<PAGE>
VAUBAN INVESTISSMENT SA
By: ____________________________________________
Name:
Title:
SENECA CAPITAL, L.P.
By: Seneca Capital Advisors, LLC, its
general partner
By: /s/ Doug Hirsch
--------------------------------------------
Name: Doug Hirsch
Title: Managing Partner
SENECA CAPITAL INTERNATIONAL, LTD.
By: /s/ Doug Hirsch
--------------------------------------------
Name: Doug Hirsch
Title: Managing Partner
GOOD FAMILY LLC
By: /s/ Daniel J. Good
--------------------------------------------
Name: Daniel J. Good
Title: Manager
EUROPA INTERNATIONAL INCORPORATED
By: Knoll Capital Management,
its investment manager
By: ____________________________________________
Name:
Title:
ROBERT CAPITAL MANAGEMENT, LLC
By: ____________________________________________
Name:
Title:
THE RAPTOR GLOBAL PORTOLIO LIMITED
By: Tudor Investment Corporation
By: /s/ William T. Flaherty
--------------------------------------------
Name: William T. Flaherty
Title: Vice President
ALTAR ROCK FUND L.P.
By: Tudor Investment Corporation
By: /s/ William T. Flaherty
--------------------------------------------
Name: William T. Flaherty
Title: Vice President
<PAGE>
MKB INVESTMENT PARTNERS
By: /s/ William Kaye
--------------------------------------------
Name: William Kaye
Title: Partner
/s/ Steven Weinstein
--------------------------------------------
Steven Weinstein
--------------------------------------------
Matthew C. Brown
/s/ James R. Simpson
--------------------------------------------
James R. Simpson
--------------------------------------------
Mitchell D. Kaye
--------------------------------------------
Evan M. Levine
/s/ Stephen M. Peck
--------------------------------------------
Stephen M. Peck
/s/ Peter S. Darling
--------------------------------------------
Peter S. Darling
/s/ Steven McGrath
--------------------------------------------
Steven McGrath
Fordham Follies L.L.C.
By: ____________________________________________
Name:
Title:
<PAGE>
SCHEDULE I
Purchasers: Amount of Registrable Securities
- ---------- --------------------------------
Provident American Corporation 133,333
2500 Dekalb Pike
Norristown, PA 19404
Attn: President
Fax: (610) 279-4498
Brown Simpson Strategic Growth Fund, L.P. 466,667
152 West 57th Street, 40th Floor
New York, New York 10029
Attn: Evan Levine
Fax: (212) 247-1329
Brown Simpson Strategic Growth Fund, Ltd. 333,333
152 West 57th Street, 40th Floor
New York, New York 10019
Attn: Paul Fustus
Fax: (212) 247-1329
Brown Simpson - ORD Investment LLC 66,667
c/o OTA Limited Partnership
1 Manhattanville Road
Purchase, New York 10577
Attn: Vinny DiGeso
Fax: (914) 694-6342
LBI Group Inc. 766,667
c/o Lehman Brothers, Inc.
3 World Financial Center
New York, New York 10285
Attn: Steve Weinstein
Fax: (212) 526-2198
Royal Bank of Canada 800,000
by its Agent
RBC Dominion Securities One Liberty Plaza - 2nd Floor
165 Broadway
New York, New York 10006-1404 U.S.A.
Attn: Vice President, Global Middle Office
Fax: (212) 858-7439
<PAGE>
Vauban Investissement SA 66,667
Vauban Investissement SA
Caracasbaaiweg 199
P.O. Box 6050
Curacao, Netherlands Antilles
Seneca Capital L.P. 104,820
c/o Seneca Capital Advisors, LLC
830 Third Avenue, 14th Floor
New York, New York 10022
Telephone: (212) 371-1300
Facsimile: (212) 758-6060
Attention: Mr. Doug Hirsch
Seneca Capital International, Ltd., to: 128,513
c/o Seneca Capital Advisors, LLC
830 Third Avenue, 14th Floor
New York, New York 10022
Telephone: (212) 371-1300
Facsimile: (212) 758-6060
Attention: Mr. Doug Hirsch
Good Family LLC 133,333
1211 Lake Road
Lake Forest, IL
Telephone:
Facsimile:
Attention: Dan Good
Europa International Incorporated 133,333
c/o Knoll Capital Management, L.P.
200 Park Avenue, Suite 3900
New York, New York 10166
Telephone: (212) 808-7474
Facsimile: (212) 808-7475
Attn: Fred Knoll
Robert Capital Management, LLC 46,667
610 5th Avenue, 7th Floor
New York, New York 10020
Telephone: (212) 218-8870
Facsimile: (212)
Attn: Steven Robert
<PAGE>
The Raptor Global Portfolio Limited 464,800
c/o Tudor Investment Corporation
40 Rowes Wharf, 2nd Floor
Boston, MA 02110
Telephone: (617) 772-4600
Facsimile: (617) 737-9280
Attention: William Flaherty
Altar Rock Fund L.P. 1,867
c/o Tudor Investment Corporation
40 Rowes Wharf, 2nd Floor
Boston, MA 02110
Telephone: (617) 772-4600
Facsimile: (617) 737-9280
Attention: William Flaherty
Steven Weinstein 16,667
c/o Lehman Brothers, Inc.
3 World Financial Center
New York, New York 10285
Telephone: (212) 526-6957
Facsimile: (212) 526-2199
Attention: Steve Weinstein
Matthew C. Brown 6,667
152 West 57th Street, 40th Floor
New York, New York 10029
Attn: Evan Levine
Fax: (212) 247-1329
James R. Simpson 16,667
152 West 57th Street, 40th Floor
New York, New York 10029
Attn: Evan Levine
Fax: (212) 247-1329
Mitchell D. Kaye 16,667
152 West 57th Street, 40th Floor
New York, New York 10029
Attn: Evan Levine
Fax: (212) 247-1329
<PAGE>
Evan M. Levine 16,667
152 West 57th Street, 40th Floor
New York, New York 10029
Attn: Evan Levine
Fax: (212) 247-1329
MKB Investments Partners 33,333
c/o M.R. Weiser & Co. LLP
135 West 50th Street, 12th Floor
New York, New York 10020-1299
Telephone: (212) 641-4700
Facsimile: (212) 641-6888
Attn: Sidney Margenbesser
Stephen M. Peck 6,667
1775 Broadway
New York, New York 10019
Telephone: (212) 424-0320
Facsimile: (212) 757-8501
Peter S. Darling 16,667
c/o Deltec Securities (U.K.) Limited
Brettenham House
5 Lancaster Place
London, United Kingdom WC2E 7EN
Telephone: (011) 44-171-379-7227
Facsimile: (011) 44-171-379-7577
Steven McGrath 66,667
39 Talbot Court
Short Hills, N.J. 07079
Telephone: (973) 467-1804
Facsimile: (973) 467-5199
Fordham Follies, L.L.C. 2,667
c/o Veronica Kelly
615 East 14th Street, Apt. 11G
New York, New York 10009
Telephone: (212) 614-8449
<PAGE>
AGREEMENT AND
PLAN OF MERGER
between
PROVIDENT AMERICAN CORPORATION,
HEALTHAXIS.COM, INC.,
UICI
and
INSURDATA INCORPORATED
dated as of December 6, 1999
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
ARTICLE I
<S> <C> <C>
THE MERGER...................................................2
1.1 The Merger......................................................................................2
1.2 Closing.........................................................................................2
1.3 Effective Time..................................................................................2
1.4 Effects of the Merger...........................................................................2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE MERGER PARTIES; MERGER CONSIDERATION;
EXCHANGE OF CERTIFICATES; OPTIONS........................................3
2.1 Effect of the Merger on Capital Stock...........................................................3
2.2 Dividends, Etc..................................................................................4
2.3 Stock Options...................................................................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES..........................................6
3.1 Representations and Warranties of Insurdata.....................................................6
3.2 Representations and Warranties of HealthAxis...................................................29
3.3 Representations and Warranties of UICI.........................................................49
3.4 Representations and Warranties of Provident....................................................51
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS..................................52
4.1 Covenants of Insurdata and HealthAxis..........................................................52
4.2 Actions of Parties.............................................................................56
ARTICLE V
ADDITIONAL AGREEMENTS.............................................56
5.1 Securities Offering............................................................................56
5.2 Contract and Regulatory Approvals..............................................................56
5.3 HSR Filings....................................................................................57
5.4 Access to Information; Confidentiality.........................................................57
5.5 Fees and Expenses..............................................................................58
5.6 Transition Agreement...........................................................................58
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
5.7 Indemnification................................................................................58
5.8 Reasonable Best Efforts........................................................................60
5.9 Public Announcements...........................................................................60
5.10 Cooperation....................................................................................60
5.11 Benefit Plans..................................................................................60
5.12 Tax-Free Reorganization........................................................................60
5.13 UICI Voting of Shares..........................................................................60
5.14 Provident Voting of Shares.....................................................................61
5.15 Tax Matters....................................................................................61
5.16 Technology Outsourcing Agreement...............................................................63
ARTICLE VI
CONDITIONS PRECEDENT..............................................64
6.1 Conditions to Each Party's Obligation to Effect the Merger.....................................64
6.2 Conditions to Obligations of HealthAxis and Provident..........................................65
6.3 Conditions to Obligation of Insurdata and UICI.................................................66
ARTICLE VII
TERMINATION AND AMENDMENT...........................................67
7.1 Termination....................................................................................67
7.2 Effect of Termination..........................................................................69
7.3 Amendment......................................................................................69
7.4 Extension; Waiver..............................................................................69
ARTICLE VIII
GENERAL PROVISIONS..............................................70
8.1 Nonsurvival of Representations, Warranties and Agreements......................................70
8.2 Notices........................................................................................70
8.3 Interpretation.................................................................................72
8.4 Counterparts...................................................................................72
8.5 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership............................72
8.6 Governing Law..................................................................................72
8.7 Assignment.....................................................................................72
8.8 Enforcement....................................................................................73
8.9 Severability...................................................................................73
8.10 No Presumption Against Drafter.................................................................73
Exhibits
- --------
Exhibit A --Amended and Restated Articles of Incorporation of HealthAxis
Exhibit B --Amended and Restated Bylaws of HealthAxis
Exhibit C --Transition Agreement
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Exhibit D --HealthAxis Shareholders' Agreement
Exhibit E --Material Terms of Technology Outsourcing Agreement
Exhibit F --Registration Rights Agreement
Exhibit G --Voting Trust Agreement
Schedules
- ---------
Schedule 1 -- Initial Directors of Surviving Corporation
Schedule 2 -- Initial Officers of Surviving Corporation
Schedule 3 -- HealthAxis Offering
Schedule 4 -- Provident Offering
</TABLE>
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of December 6, 1999 (the
"Agreement"), is made and entered into by and among Provident American
Corporation, a Pennsylvania corporation ("Provident"), HealthAxis.com, Inc., a
Pennsylvania corporation ("HealthAxis"), UICI, a Delaware corporation ("UICI"),
and Insurdata Incorporated, a Texas corporation and a wholly-owned subsidiary of
UICI ("Insurdata"). Provident, HealthAxis, UICI and Insurdata are, at times,
each referred to herein as a "Party" and collectively as the "Parties".
HealthAxis and Insurdata are, at times, each referred to herein as a "Merger
Party" and collectively as the "Merger Parties".
WHEREAS, the respective Boards of Directors of the Merger Parties have
determined that the merger of Insurdata with and into HealthAxis (the "Merger"),
upon the terms and subject to the conditions set forth in this Agreement, would
be fair to and in the best interests of their respective shareholders, and such
Boards of Directors have approved the Merger, pursuant to which each share of
common stock, no par value, of Insurdata (the "Insurdata Common Stock") issued
and outstanding immediately prior to the Effective Time (as defined in Section
1.3) will be converted into, subject to the terms hereof, the right to receive
the Merger Consideration (as defined in Section 2.1(b));
WHEREAS, the respective Boards of Directors of Provident and UICI have
approved the execution of this Agreement (including all agreements attached as
Exhibits to this Agreement) by each such Party, upon the terms and subject to
the conditions set forth herein, as being in the best interests of their
respective shareholders;
WHEREAS, Provident and UICI have determined that it is advisable and in
their respective best interests to pool the complimentary resources and
capabilities of Insurdata and HealthAxis and therefore propose to form a joint
venture to combine these capabilities and resources;
WHEREAS, the Parties desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger; and
WHEREAS, it is intended that the Merger constitute a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that this Agreement shall constitute a "plan of
reorganization" for purposes of the Code.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
Parties hereto, intending to be legally bound, hereby agree as follows:
1
<PAGE>
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Texas Business Corporation Act
("TBCA") and Pennsylvania Business Corporation Law ("PBCL"), Insurdata shall be
merged with and into HealthAxis, and the separate corporate existence of
Insurdata shall cease and HealthAxis shall continue as the surviving corporation
(HealthAxis is sometimes hereinafter referred to as the "Surviving
Corporation"). The name of the Surviving Corporation shall be HealthAxis.com,
Inc.
1.2 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1, and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the closing of the Merger (the "Closing") shall take place at 10:00
a.m., Chicago, Illinois time, on January 5, 2000 or, if later, the second
business day after satisfaction and/or waiver of all of the conditions set forth
in Article VI (the "Closing Date"), at the offices of Mayer, Brown & Platt, 190
South LaSalle Street, Chicago, Illinois 60603, unless another date, time or
place is agreed to in writing by the Parties hereto.
1.3 Effective Time. Subject to the provisions of this Agreement, the
Merger Parties hereto shall cause the Merger to be consummated by filing
articles of merger (the "Articles of Merger") with the Secretary of State of the
State of Texas, as provided in the TBCA, and the Department of State of the
Commonwealth of Pennsylvania, as provided in PBCL, as soon as practicable on or
after the Closing Date. The Merger shall become effective upon the acceptance
for record of such filings or at such time thereafter as is provided in the
Articles of Merger (the "Effective Time").
1.4 Effects of the Merger. The Merger shall have the effects as set
forth in the applicable provisions of the TBCA and PBCL and as provided in this
Agreement, including the matters set forth in this Section 1.4. Without limiting
the generality of the foregoing and subject thereto, at the Effective Time all
the property, rights, privileges, immunities, powers and franchises of
HealthAxis and Insurdata shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, and duties of HealthAxis and Insurdata shall become
the debts, liabilities, obligations and duties of the Surviving Corporation.
(a) The Amended and Restated Articles of Incorporation of
HealthAxis shall be further amended and restated at the Effective Time
to read in the form of Amended and Restated Articles of Incorporation
set forth in Exhibit A attached hereto and such further Amended and
Restated Articles of Incorporation shall be the Articles of
Incorporation of the Surviving Corporation until duly amended in
accordance with the terms thereof and the PBCL.
2
<PAGE>
(b) The Amended and Restated Bylaws of HealthAxis shall be further
amended and restated at the Effective Time to read in the form of the
Amended and Restated Bylaws set forth in Exhibit B attached hereto and
such further Amended and Restated Bylaws shall be the Bylaws of the
Surviving Corporation until thereafter amended as provided by
applicable law, the Surviving Corporation's Articles of Incorporation
or the Bylaws.
(c) The persons set forth on Schedule 1 of this Agreement shall be
the directors of the Surviving Corporation until their successors have
been duly elected or appointed and qualified or until their earlier
death, resignation or removal in accordance with the Surviving
Corporation's Articles of Incorporation and Bylaws.
(d) The persons set forth on Schedule 2 of this Agreement shall be
the officers of the Surviving Corporation holding the offices set forth
opposite their names until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Articles of
Incorporation and Bylaws.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE MERGER PARTIES; MERGER CONSIDERATION;
EXCHANGE OF CERTIFICATES; OPTIONS
2.1 Effect of the Merger on Capital Stock. At the Effective Time, by
virtue of the Merger and without any further action on the part of the holders
of any shares of Insurdata Common Stock or the holders of any shares of common
stock, no par value per share, of HealthAxis ("HealthAxis Common Stock"):
(a) Capital Stock of HealthAxis. Each share of HealthAxis Common
Stock, and each share of HealthAxis Preferred Stock (as defined in
Section 3.2(b)), issued and outstanding immediately prior to the
Effective Time shall not be converted or otherwise affected by the
Merger and shall remain outstanding after the Merger.
(b) Capital Stock of Insurdata. Subject to Section 2.2, at the
Effective Time each issued and outstanding share of Insurdata Common
Stock shall be converted into (as adjusted pursuant to this Article II)
the right to receive 1.33 (the "Exchange Ratio") share of the
HealthAxis Common Stock (the "Merger Consideration") upon surrender of
the stock certificates representing the Insurdata Common Stock pursuant
to this Article II. No fractional shares of HealthAxis shall be issued
as a result of the Merger. In lieu of the issuance of fractional
shares, cash adjustments will be paid to the former holders of
Insurdata Common Stock in respect of any fraction of a shares of
HealthAxis which
3
<PAGE>
would otherwise be issuable under this Agreement. Such cash adjustment
shall be equal to an amount determined by multiplying such fraction by
$15.00.
(c) Cancellation and Retirement of Insurdata Common Stock. As a
result of the Merger and without any action on the part of the holders
thereof, at the Effective Time, all shares of Insurdata Common Stock
shall cease to be outstanding and shall be canceled and retired and
shall cease to exist, and each holder of such shares of Insurdata
Common Stock shall thereafter cease to have any rights with respect to
such shares of Insurdata Common Stock, except the right to receive,
without interest, the Merger Consideration, plus cash in lieu of
fractional shares, if any, in accordance with Section 2.1(b) upon the
surrender of a certificate representing such shares of Insurdata Common
Stock (an "Insurdata Certificate").
(d) No Further Ownership Rights in Insurdata. From and after the
Effective Time, each holder of an Insurdata Certificate immediately
prior to the Effective Time shall, upon surrender of such Insurdata
Certificate for cancellation to the Exchange Agent (as defined herein),
together with the Letter of Transmittal, duly executed, and such other
documents as the Surviving Corporation or the Exchange Agent shall
reasonably request, be entitled to receive in exchange therefor a
certificate from HealthAxis, as the Surviving Corporation, representing
that number of shares of HealthAxis Common Stock (a "HealthAxis
Certificate"), plus cash in lieu of fractional shares, if any, which
such holder has the right to receive pursuant to this Article II (in
each case less the amount of any required withholding taxes), and the
Insurdata Certificate so surrendered shall forthwith be canceled. Until
surrendered as contemplated by this Section 2.1(d), each Insurdata
Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration, plus cash
in lieu of fractional shares, if any, with respect to the shares of
Insurdata Common Stock formerly represented thereby. If any HealthAxis
Certificate to be issued in the Merger is to be issued in a name other
than that in which the certificate in exchange therefor is registered,
it shall be a condition of such issuance that the person requesting
such issuance shall pay any transfer or other tax required by reason of
the issuance of HealthAxis Certificates in a name other than that of
the registered holder of the certificate surrendered, or shall
establish to the satisfaction of the Surviving Corporation or its agent
that such tax has been paid or is not applicable.
2.2 Dividends, Etc.
(a) Dividends on HealthAxis Common Stock. Notwithstanding any other
provisions of this Agreement, no dividends or other distributions
declared after the Effective Time on HealthAxis Common Stock shall be
paid with respect to any shares of Insurdata Common Stock represented
by an Insurdata Certificate, until such Insurdata Certificate is
surrendered for exchange as provided herein. Subject to the effect of
applicable laws, following surrender of any such Insurdata Certificate,
there shall be paid
4
<PAGE>
to the holder of HealthAxis Certificates issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of
dividends or other distributions, if any, with a record date after the
Effective Time theretofore payable with respect to such whole shares of
HealthAxis Common Stock and not paid, less the amount of any
withholding taxes that may be required thereon, and (ii) at the
appropriate payment date, the amount of dividends or other
distributions, if any, with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable
with respect to such whole shares of HealthAxis Common Stock, less the
amount of any withholding taxes that may be required thereon.
(b) No Transfers; Closing of Stock Transfer Book. At or after the
Effective Time, there shall be no transfer on the stock transfer books
of Insurdata of the shares of Insurdata Common Stock that were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates representing any such shares are presented
to the Surviving Corporation, they shall be canceled and exchanged for
the Merger Consideration, plus cash in lieu of fractional shares, if
any, deliverable in respect thereof pursuant to this Agreement.
(c) Lost, Stolen or Destroyed Certificates. In the event that any
Insurdata Certificate shall have been lost, stolen or destroyed upon
the making of an affidavit of that fact by the person claiming such
Insurdata Certificate to be lost, stolen or destroyed and, if required
by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to
such Insurdata Certificate, the Exchange Agent shall issue in exchange
for such lost, stolen or destroyed Insurdata Certificate the Merger
Consideration, plus cash in lieu of fractional shares, if any, and
unpaid dividends and distributions on shares of HealthAxis Common
Stock, if any, as provided in this Section 2.2(c), deliverable in
respect thereof pursuant to this Agreement.
(d) Change in HealthAxis Common Stock.
(i) In the event of any change in HealthAxis Common Stock
between the date of this Agreement and the Effective Time by reason of
any stock split, stock dividend, subdivision, reclassification,
combination, exchange of HealthAxis Common Stock or the like, the
Merger Consideration and other terms set forth in this Agreement shall
be appropriately adjusted.
(ii) The pricing terms set forth herein are based on the
information disclosed in Section 3.2(b) hereof. If the number of such
shares and share equivalents outstanding is greater than the foregoing,
the Merger Consideration and other terms set forth in this Agreement
shall be appropriately adjusted.
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2.3 Stock Options. At the Effective Time, each stock option (all
options issued pursuant to the Insurdata Stock Option Plans are referred to
herein, collectively, as the "Insurdata Options" and, individually, as an
"Insurdata Option") issued and outstanding under the Insurdata Incorporated 1999
Stock Option Plan, and any other plan or program maintained by Insurdata under
which Options have been granted, as listed on Section 3.1(b) of the Insurdata
Disclosure Schedule (the "Insurdata Stock Option Plans") shall be converted into
an option to purchase shares of HealthAxis Common Stock, as provided below.
Following the Effective Time, each such Insurdata Option shall be exercisable
upon the same terms and conditions as then are applicable to such Insurdata
Option, except that (i) each such Insurdata Option shall be exercisable for that
number of shares (rounding down to the nearest whole share, with cash being
payable for any fraction of a share) of HealthAxis Common Stock equal to the
product of (x) the number of shares of Insurdata Common Stock for which such
Insurdata Option was exercisable immediately prior to the Effective Time and (y)
the Exchange Ratio and (ii) the exercise price of such Insurdata Option shall be
equal to the quotient (rounded up to the nearest one hundredth) obtained by
dividing the exercise price per share of such Insurdata Option by the Exchange
Ratio. Following the Effective Time, any restriction on the exercise of any
Insurdata Option shall continue in full force and effect and the term,
exercisability, vesting schedule and other provisions of such Insurdata Option
(except as set forth in this Section 2.3) shall remain unchanged. From and after
the date of this Agreement, no additional options to purchase shares of
Insurdata Common Stock shall be granted under the Insurdata Stock Option Plans
or otherwise. Except as otherwise agreed to by the Parties, no person shall have
any right under any stock option plan (or any option granted thereunder) or
other plan, program or arrangement of Insurdata with respect to, including any
right to acquire, equity securities of Insurdata following the Effective Time.
At or as soon as practicable after the Effective Time, HealthAxis, as the
Surviving Corporation, shall issue to each holder of an Insurdata Option that is
converted into an option to purchase shares of HealthAxis Common Stock a
statement that accurately reflects the number of shares of HealthAxis Common
Stock for which the Insurdata Option is exercisable and the exercise price of
the Insurdata Option as contemplated by this Section 2.3. HealthAxis shall take
all corporate actions necessary to reserve for issuance such number of shares of
HealthAxis Common Stock as will be necessary to satisfy exercises in full of all
Surviving Corporation Insurdata Options after the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Insurdata. Except as disclosed in
the disclosure memorandum delivered by Insurdata (the "Insurdata Disclosure
Memorandum") at or prior to the date of this Agreement (it being understood that
each section of the Insurdata Disclosure Memorandum shall list all items
applicable to such section, although the inadvertent omission of an item from
one section shall not be deemed to be a breach of this Agreement if such item
and an explanation of the nature of such item is clearly disclosed in another
section of
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the Insurdata Disclosure Memorandum), Insurdata represents and warrants to
HealthAxis and Provident as follows:
(a) Organization, Standing and Power. Insurdata is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Texas, has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as
now being conducted and is duly qualified or licensed to do business as
a foreign corporation and in good standing to conduct business in each
jurisdiction in which the business it is conducting, or the operation,
ownership or leasing of its properties, makes such qualification or
license necessary, other than such jurisdictions where the failure so
to qualify or become so licensed would not individually or in the
aggregate have a Material Adverse Effect on Insurdata. Insurdata has
heretofore made available to HealthAxis complete and correct copies of
its Articles of Incorporation and Bylaws, both as currently in effect
as of the date of this Agreement. As used in this Agreement, a
"Material Adverse Effect" shall mean, with respect to any specified
Party to this Agreement, any event, change, condition, fact or effect
which has or could reasonably be expected to have a material adverse
effect on (i) the business, results of operations, or financial
condition of such Party and its Subsidiaries taken as a whole or (ii)
the ability of such Party to consummate the transactions contemplated
by this Agreement. As used in this Agreement, the word "Subsidiary,"
with respect to any Party to this Agreement, means any corporation,
partnership, joint venture or other organization, whether incorporated
or unincorporated, of which: (i) such Party or any other Subsidiary of
such Party is a general partner; (ii) voting power to elect a majority
of the Board of Directors or others performing similar functions with
respect to such corporation, partnership, joint venture, limited
liability company or other organization is held by such Party or by any
one or more of its Subsidiaries, or by such Party and any one or more
of its Subsidiaries; or (iii) at least 10% of the equity, other
securities or other interests is, directly or indirectly, owned or
controlled by such Party or by any one or more of its Subsidiaries or
by such Party and any one or more of its Subsidiaries. For purposes of
this Agreement, the term "knowledge" when used with respect to a Party
means that neither such Party, nor, if such Party is not an individual,
any of its officers or general partners, have any actual knowledge,
implied knowledge or belief that the statement made is incorrect. For
this purpose, "implied knowledge" means all information available in
the books, records and files of the Party and all information that any
of the officers or senior managers of the Party should have known in
the course of operating and managing the business and affairs of the
Party.
(b) Capital Structure. As of the date of this Agreement, the
authorized capital stock of Insurdata consists of 50,000,000 shares of
Insurdata Common Stock. As of the date of this Agreement: (i)
16,396,667 shares of Insurdata Common Stock were issued and
outstanding; and (ii) no shares of Insurdata Common Stock were held in
treasury. All outstanding shares of Insurdata Common Stock are validly
issued, fully paid and
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nonassessable and are not subject to preemptive or other similar
rights. As of the date of this Agreement, (i) 321,000 shares of
Insurdata Common Stock are subject to issuance pursuant to the exercise
of Insurdata Options (of which 18,750 shares of Insurdata Common Stock
are subject to vested options and of which 25,000 have been committed
for grant to an employee scheduled to commence employment on December
15, 1999) and (ii) 2,179,000 shares of Insurdata Common Stock are
reserved for future grants of options pursuant to Insurdata Option
Plans. Section 3.1(b) of the Insurdata Disclosure Memorandum sets forth
the following information with respect to each Insurdata Option
outstanding as of the date hereof: (i) the particular plan pursuant to
which such Insurdata Option was granted; (ii) the name of the optionee;
(iii) the number of shares of Insurdata Common Stock subject to such
Insurdata Option; (iv) the exercise price of such Insurdata Option; (v)
the date on which such Insurdata Option was granted; and (vi) the date
on which such Insurdata Option Expires. Insurdata has delivered to
HealthAxis accurate and complete copies of the Insurdata Stock Option
Plans and the stock option agreements evidencing all Insurdata Options
granted under the Insurdata Stock Option Plans. Set forth in Section
3.1(b) of the Insurdata Disclosure Memorandum is a true and complete
list of the following: (i) each grant of shares of Insurdata Common
Stock to employees which are subject to any risk of forfeiture
("Restricted Share Grants") and a total thereof, and (ii) any
obligation of Insurdata to issue shares of Insurdata Common Stock as a
result of the transactions contemplated hereby ("Change in Control
Share Grants") and a total thereof. There are no bonds, debentures,
notes or other indebtedness of Insurdata, or assets of any other
entities convertible into, or exchangeable for, securities of Insurdata
except as provided in this Section 3.1(b) or Section 3.1(b) of the
Insurdata Disclosure Memorandum. Except as set forth in this Section
3.1(b) or in Section 3.1(b) of the Insurdata Disclosure Memorandum,
there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to
which Insurdata or any Insurdata Subsidiary is a party or by which such
entity is bound, obligating Insurdata or any Insurdata Subsidiary to
issue, deliver or sell, or cause to be issued, delivered, or sold,
additional shares of capital stock, securities or other ownership
interests of Insurdata or any Insurdata Subsidiary or obligating
Insurdata or any Insurdata Subsidiary to issue, grant, extend or enter
into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking or obligating Insurdata or any
Insurdata Subsidiary to repurchase, redeem or otherwise acquire any
outstanding shares of capital stock, securities or other ownership
interests of Insurdata or any Insurdata Subsidiary. Except as set forth
in Section 3.1(b) of the Insurdata Disclosure Memorandum, there are no
commitments, agreements, arrangements or undertakings of any kind to
which Insurdata or any Insurdata Subsidiary is party, or by which such
entity is bound, obligating Insurdata or any Insurdata Subsidiary to
make any equity or similar investment in, or capital contribution to,
any Person.
(c) Subsidiaries; Investments. Section 3.1(c) of the Insurdata
Disclosure Memorandum sets forth for Insurdata and each Subsidiary of
Insurdata, its exact legal
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name, the jurisdiction of its incorporation or organization, its
federal employer identification number, its address, telephone number
and facsimile number, its directors and officers, and all fictitious,
assumed or other names of any type that are registered or used by it or
under which it has done business at any time since such company's date
of incorporation. Except as set forth in Section 3.1(c) of the
Insurdata Disclosure Memorandum, each Subsidiary is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has the power and
authority and all necessary government approvals to own, lease and
operate its properties and to carry on its business as now being
conducted. Each Subsidiary of Insurdata is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary.
Insurdata has heretofore made available to HealthAxis complete and
correct copies of the articles of incorporation (or other
organizational documents) and bylaws (each as amended) of each of its
Subsidiaries. Section 3.1(c) of the Insurdata Disclosure Memorandum
sets forth, as to each Subsidiary of Insurdata, its authorized capital
stock and the number of issued and outstanding shares of capital stock
(or similar information with respect to any Subsidiary not organized as
a corporate entity) and each owner thereof. All outstanding shares of
the capital stock of the Subsidiaries of Insurdata are validly issued,
fully paid and nonassessable and are not subject to preemptive or other
similar rights. Except as set forth on Section 3.1(c) of the Insurdata
Disclosure Memorandum, Insurdata is the sole record and beneficial
owner of all of the shares of capital stock or other ownership
interests of each Insurdata Subsidiary.
(d) Authority; No Violations; Consents and Approvals.
(i) Insurdata has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Insurdata.
This Agreement has been duly executed and delivered by Insurdata and,
assuming that this Agreement constitutes the valid and binding
agreement of HealthAxis, Provident and UICI, constitutes a valid and
binding obligation of the Insurdata enforceable in accordance with its
terms and conditions except that the enforcement hereof may be limited
by (A) applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally, (B) general principles of
equity (regardless of whether enforceability is considered in a
proceeding at law or in equity) and (C) any ruling or action of any
Governmental Entity as set forth in Section 3.1(d)(iii).
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(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Insurdata will
not conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration (including pursuant
to any put right) of any obligation or the loss of a material benefit
under, or the creation of a Lien (as defined in Section 3.1(s)) on
assets or property, or right of first refusal with respect to any asset
or property or change any other rights, benefits, liabilities or
obligations (any such conflict, violation, default, right of
termination, cancellation or acceleration, loss, creation or right of
first refusal, or change, a "Violation"), pursuant to, (A) any
provision of the Articles of Incorporation or Bylaws of Insurdata or
the comparable documents of any of its Subsidiaries or (B) except as to
which requisite waivers or consents have been obtained as specifically
identified in Section 3.1(d) of the Insurdata Disclosure Memorandum and
assuming the consents, approvals, authorizations or permits and filings
or notifications referred to in paragraph (iii) of this Section 3.1(d)
are duly and timely obtained or made, any loan or credit agreement,
note, mortgage, deed of trust, indenture, lease, or any other
agreement, obligation, instrument, concession or license or any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Insurdata, or any of its properties or assets, except, in
the case of clause (B), for such Violations which would not
individually or in the aggregate have a Material Adverse Effect on
Insurdata.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental
Entity"), is required by or with respect to Insurdata or any of its
Subsidiaries in connection with the execution and delivery of this
Agreement by Insurdata or the consummation by Insurdata of the
transactions contemplated hereby, except for: (A) the filing of a
pre-merger notification and report form under the Hart- Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the
expiration or termination of the applicable waiting period thereunder;
(B) the filing of the Articles of Merger with the Secretary of State of
the State of Texas and the Department of State of the Commonwealth of
Pennsylvania; (C) such filings as may be required by applicable federal
or state securities laws, and (D) where the failure to obtain, give or
make any consent, approval, order, or authorization of, or
registration, declaration or filing with, notice to, or permit from a
Government Entity would not have a Material Adverse Effect on
Insurdata.
(e) Government Filings. Insurdata has made available to HealthAxis
a true and complete copy of each report or schedule filed by Insurdata
with any Governmental Entity.
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(f) Information Supplied. None of the information supplied or to be
supplied by Insurdata to HealthAxis and Provident contains or will
contain any untrue statement of a material fact or omits or will omit
to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The books of account and
other financial records of Insurdata and its Subsidiaries have been
maintained in form and substance adequate for preparing audited
financial statements in accordance with generally accepted accounting
principles ("GAAP").
(g) Compliance with Applicable Laws.
(i) Except as disclosed in Section 3.1(g) of the Insurdata
Disclosure Memorandum, the business of Insurdata and each of its
Subsidiaries is being conducted in compliance in all material respects
with all applicable laws, including, without limitation, all insurance
laws, ordinances, rules and regulations, decrees and orders of any
Governmental Entity, and all notices, reports, documents and other
information required to be filed thereunder within the last three years
were properly filed and were in compliance in all material respects
with such laws.
(ii) Insurdata and each of its Subsidiaries owns or validly
holds all licenses, franchises, permits, approvals, authorizations,
exemptions, classifications, registrations, rights and similar
documents ("Licenses") which are necessary for it to own, lease or
operate its properties and assets and to conduct its business as now
conducted, except for such Licenses the failure to hold which would not
individually or in the aggregate have a Material Adverse Effect on
Insurdata. The business of Insurdata and each of its Subsidiaries has
been and is being conducted in compliance in all material respects with
all such Licenses. All such Licenses are in full force and effect, and
there is no proceeding or investigation pending or, to the knowledge of
Insurdata, threatened which would reasonably be expected to lead to the
revocation, amendment, failure to renew, limitation, suspension or
restriction of any such License.
(h) Absence of Certain Changes or Events. Since September 30, 1999,
there has not been, occurred, or arisen any change, any event
(including without limitation any damage, destruction, or loss whether
or not covered by insurance), condition, or state of facts of any
character with respect to the business or financial condition of
Insurdata or any of its Subsidiaries, except (i) as disclosed in
Section 3.1(h) of the Insurdata Disclosure Memorandum, and (ii) for
events in the ordinary course of business consistent with past practice
that would not, individually or in the aggregate, result in a Material
Adverse Effect on Insurdata.
(i) Financial Statements; No Material Undisclosed Liabilities. The
consolidated financial statements of Insurdata for the year ended
December 31, 1998 and
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for the nine months ended September 30, 1999 have been prepared in
accordance with GAAP applied on a consistent basis during the periods
involved (except as indicated in the notes thereto) and, except as set
forth on Schedule 3.1(i) of the Insurdata Disclosure Memorandum, fairly
present, in accordance with the applicable requirements of GAAP, the
consolidated financial position of its subsidiaries, as of the dates
thereof and the consolidated results of operations and cash flows for
the periods then ended (subject, in the case of unaudited statement, to
normal year-end audit adjustments). Insurdata has no subsidiaries which
are not consolidated for accounting purposes. Except as reflected in
Section 3.1(i) of the Insurdata Disclosure Memorandum, since September
30, 1999, neither Insurdata nor any of its Subsidiaries has incurred
any liabilities, absolute, accrued, contingent or otherwise, whether
due or to become due (and there is no basis for such liabilities)
except: (i) liabilities arising in the ordinary course of business
consistent with past practice, which individually or in the aggregate
would not have a Material Adverse Effect on Insurdata; or (ii) other
liabilities which, individually or in the aggregate, together with
those liabilities referenced in subparagraph (i), would not have a
Material Adverse Effect on Insurdata.
(j) Litigation. Except as set forth in Section 3.1(j) of the
Insurdata Disclosure Memorandum (A) there is no suit, action,
investigation, arbitration or proceeding pending or, to the knowledge
of Insurdata, threatened against or affecting Insurdata or any of its
Subsidiaries, at law or in equity, before any person and (B) there is
no writ judgment, decree, injunction, rule or similar order of any
Governmental Entity or arbitrator outstanding against Insurdata or any
of its Subsidiaries.
(k) Taxes. Except as set forth in Section 3.1(k) of the Insurdata
Disclosure Memorandum:
(i) Insurdata and each of its Subsidiaries has (x) duly and
timely filed (or there have been filed on their behalf) with the
appropriate taxing authorities all Tax Returns required to be filed by
them, and all such Tax Returns are true, correct and complete in all
material respects and (y) timely paid or there have been paid on their
behalf all Taxes shown to be due on such Returns.
(ii) Each of Insurdata and its Subsidiaries has properly
accrued on its respective financial statements all Taxes due for which
Insurdata or its Subsidiaries may be liable, whether or not shown on
any Tax Return as being due (including by reason of being a member of
an affiliated group or as a transferee of the assets of, or successor
to, any corporation, person, association, partnership, joint venture or
other entity). Each of Insurdata and its Subsidiaries has established
(and until the Closing Date shall continue to establish and maintain)
on its books and records reserves that are adequate for the payment of
all Taxes not yet due and payable.
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(iii) Each of Insurdata and its Subsidiaries has complied in
all material respects with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes, including Taxes
required to have been withheld in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder, or
other third party and sales, gross receipts and use taxes, and has,
within the time and manner prescribed by law, withheld and paid over to
the proper governmental authorities all amounts required to be withheld
and paid over under all applicable laws, or such amounts are held in
separate bank accounts for such purpose.
(iv) There are no Liens for Taxes upon the assets or properties
of Insurdata or any of its Subsidiaries except for statutory liens for
current Taxes not yet due.
(v) Neither Insurdata nor any of its Subsidiaries has requested
any extension of time nor has any such extension been requested on its
behalf within which to file any Tax Return in respect of any taxable
year which has not since been filed.
(vi) Based upon Insurdata's knowledge, no federal, state, local
or foreign audits or other administrative proceedings or court
proceedings ("Audits") exist with regard to any Taxes or Tax Returns of
Insurdata or any of its Subsidiaries and there has not been received
any written notice that such an Audit is pending or threatened with
respect to any Taxes due from or with respect to Insurdata or any of
its Subsidiaries or any Tax Return filed by or with respect to
Insurdata or any of its Subsidiaries. No material issues have been
raised in any examination by any taxing authority with respect to the
businesses and operations or Insurdata or its Subsidiaries which (i)
reasonably could be expected to result in an adjustment to the
liability for Taxes for such period examined or (ii), by application of
similar principles, reasonably could be expected to result in an
adjustment to the liability for Taxes for any other period not so
examined.
(vii) None of Insurdata and its Subsidiaries is a party to any
Tax allocation or sharing agreement. None of Insurdata and its
Subsidiaries (A) has been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group the common
parent of which was UICI) or (B) has any liability for the Taxes of any
other party (other than any of Insurdata and its Subsidiaries) under
Treasury Regulation Section 1.1502-6 (or any provision of state, local
or foreign law), as a transferee or successor, by contract or
otherwise.
For purposes of this Agreement, (i) "Taxes" (including, with
correlative meaning, the term "Tax") shall mean all taxes, charges,
fees, levies, penalties or other assessments imposed by any federal,
state, local or foreign taxing authority, including, but not limited
to, income, gross receipts, excise, property, sales, transfer,
franchise, payroll, withholding, social security and other taxes, and
shall include any interest, penalties or
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additions attributable thereto and (ii) "Tax Return" shall mean any
return, report, information return or other document (including any
related or supporting information) required to be prepared with respect
to Taxes.
(l) Pension And Benefit Plans; ERISA.
(i) Section 3.1(l)(i) of the Insurdata Disclosure Memorandum
sets forth a complete list of all (A) "employee benefit plans" as
defined in sections 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"); and (B) all retirement or deferred
compensation plans, incentive compensation plans, stock plans,
unemployment compensation plan, vacation pay, severance pay, bonus or
benefit arrangement, insurance or hospitalization program or any other
fringe benefit arrangements for any current or former employee,
director, consultant or agent, whether pursuant to contract,
arrangement, custom or informal understanding, which does not
constitute an employee benefit plan as defined in section 3(3) of
ERISA, and (C) any employment agreement or consulting agreement, which
Insurdata, or any of its Subsidiaries or any trade or business, whether
or not incorporated, that together with Insurdata or any of its
Subsidiaries would be deemed a "single employer" within the meaning of
Section 4001(b) of ERISA (an "Insurdata ERISA Affiliate"), maintains,
is a party to, participates in or with respect to which has any
liability or contingent liability (such plans and arrangements referred
to as the "Insurdata Benefit Plans").
(ii) With respect to each Insurdata Benefit Plan, a complete
and correct copy of each of the following documents (if applicable) has
been provided or made available to HealthAxis: (A) the most recent plan
and related trust documents, and all amendments thereto; (B) the most
recent summary plan description, and all related summaries of material
modifications thereto; (C) the most recent Form 5500 (including
schedules and attachments); (D) the most recent IRS determination
letter or request therefor; and (E) the most recent actuarial reports
(including for purposes of Financial Accounting Standards Board report
no. 87, 106 and 112), if any; and there have been no material changes
in the financial condition in the respective plans from that stated in
the annual reports and actuarial reports supplied. In the case of any
Insurdata Benefit Plan which is not in written form, HealthAxis has
been supplied with an accurate description of such Insurdata Benefit
Plan as in effect on the date hereof.
(iii) Except as set forth in Section 3.1(l)(iii) of the
Insurdata Disclosure Memorandum, Insurdata Benefit Plans and their
related trusts intended to qualify under Sections 401(a) and 501(a) of
the Code, respectively, have received favorable determination letters
from the Internal Revenue Service which cover all applicable law for
which the remedial amendment period (within the meaning of Section
401(b) of the Code and applicable regulations) has expired; neither
Insurdata nor any of its respective Insurdata ERISA Affiliates is aware
of any event or circumstance that could reasonably
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be expected to result in the failure of such Insurdata Benefit Plan or
its related trust to be so qualified; and no event has occurred which
will or could give rise to disqualification of any such plan under such
sections or to a tax under section 511 of the Code.
(iv) Except as set forth in Section 3.1(l)(iv) of the Insurdata
Disclosure Memorandum, the Insurdata Benefit Plans have been maintained
and administered in all respects in accordance with their terms and
applicable laws, and no event has occurred which will or could cause
any such Insurdata Benefit Plan to fail to comply with such
requirements and no notice has been issued by any governmental
authority questioning or challenging such compliance.
(v) Except as disclosed in Section 3.1(l)(v) of the Insurdata
Disclosure Memorandum, there are no pending or, to the knowledge of
Insurdata, threatened actions, claims or proceedings against or
relating to any Insurdata Benefit Plan other than routine benefit
claims by persons entitled to benefits thereunder. There are no
investigations or audits of or relating to any Insurdata Benefit Plan.
Insurdata has no knowledge of any facts which could form the basis of
any such investigation or audit.
(vi) Except as disclosed in Section 3.1(l)(vi) of the Insurdata
Disclosure Memorandum and as otherwise provided in Section 2.3, neither
the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will (A) result in any payment
becoming due to any employee (current, former or retired) of Insurdata,
(B) increase any benefits under any Insurdata Benefit Plan, or (C)
result in the acceleration of the time of payment of, vesting of or
other rights with respect to any such benefits.
(vii) Insurdata has no knowledge of any oral or written
statement made by or on behalf of Insurdata or an Insurdata ERISA
Affiliate regarding any Insurdata Benefit Plan that was not in
accordance with such Benefit Plan.
(viii) Actuarially adequate accruals for all obligations under
the Insurdata Benefit Plans are reflected in the financial statements
of Insurdata and such obligations include a pro rata amount of the
contributions which would otherwise have been made in accordance with
past practices and applicable law for the plan years which include the
Closing Date.
(ix) Except as described in section 3.1(l)(ix) of the Insurdata
Disclosure Memorandum, there have been no acts or omissions by
Insurdata which have given rise to or may give rise to fines,
penalties, taxes or related charges under section 502 of ERISA or
Chapters 43, 47 or 68 of the Code for which Insurdata or any Insurdata
ERISA Affiliate may be liable.
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(x) Except as described in section 3.1(l)(x) of the Insurdata
Disclosure Memorandum, none of the payments payable under the Insurdata
Benefit Plans as a result of the Merger would, in the aggregate,
constitute excess parachute payments (as defined in section 280G of the
Code (without regard to subsection (b)(4) thereof)).
(xi) No Insurdata Benefit Plan is subject to Title IV of ERISA.
(xii) None of Insurdata nor any Insurdata ERISA Affiliate
contributes to, has contributed to, or has any liability or contingent
liability with respect to a multiemployer plan (as defined in section
3(37) of ERISA).
(xiii) There has been no act or omission that would impair the
ability of Insurdata and the Insurdata ERISA Affiliates (or any
successor thereto) to unilaterally amend or terminate any Insurdata
Benefit Plan.
(xiv) Except as described in Section 3.1(1)(xiv) of the
Insurdata Disclosure Memorandum, there are no self-insured Benefit
Plans. With respect to each self-insured Benefit Plan, Insurdata and/or
its Subsidiaries maintains a reserve of no less than twenty-five
percent (25%) of the aggregate claims paid with respect to the most
recently completed plan year.
(xv) Except as set forth in Section 3.1(1)(xv) of the Insurdata
Disclosure Memorandum, each Insurdata Benefit Plan is fully funded to
the extent that a benefit has accrued thereunder or that an account
balance is maintained on behalf of an Employee notwithstanding whether,
under the terms of such Plan or as permitted by applicable law, such
Plan is not required to be funded. Except as set forth in Section
3.1(1)(xv) of the Insurdata Disclosure Memorandum, each Insurdata
Benefit Plan is fully funded to the extent that a benefit has accrued
thereunder or that an account balance is maintained on behalf of an
Employee notwithstanding whether, under the terms of such Plan or as
permitted by applicable law, such Plan is not required to be funded.
(m) Labor Matters.
(i) Except as set forth in Section 3.1(m) of the Insurdata
Disclosure Memorandum, (A) neither Insurdata nor any of its
Subsidiaries is a party to any labor or collective bargaining agreement
and no employees of Insurdata or any of its Subsidiaries are
represented by any labor organization; (B) within the preceding three
years, there have been no representation or certification proceedings,
or petitions seeking a representation proceeding, pending or, to the
knowledge of Insurdata, threatened in writing to be brought or filed
with the National Labor Relations Board or any other labor relations
tribunal or authority; and (C) within the preceding three years, to the
knowledge of Insurdata, there have been no organizing activities
involving Insurdata or any of its
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Subsidiaries with respect to any group of employees of Insurdata or any
of its Subsidiaries.
(ii) There are no strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances or other material labor
disputes pending or threatened in writing against or involving
Insurdata or any of its Subsidiaries. There are no unfair labor
practice charges, grievances or complaints pending or, to the knowledge
of Insurdata, threatened in writing by or on behalf of any employee or
group of employees of Insurdata or any of its Subsidiaries. Each of
Insurdata and its Subsidiaries' relations with its employees are
currently on a good and normal basis.
(iii) Insurdata and each of its Subsidiaries is in compliance
with all laws, regulations and orders relating to the employment of
labor, including all such laws, regulations and orders relating to
wages, hours, Worker Adjustment Retraining and Notification Act of
1988, as amended ("WARN Act"), collective bargaining, discrimination,
civil rights, safety and health, workers' compensation and the
collection and payment of withholding and/or social security taxes
and any similar tax, except where non compliance would not individually
or in the aggregate adversely affect Insurdata and its Subsidiaries
taken as a whole in any material respect.
(iv) Except as set forth in Section 3.1(m) of the Insurdata
Disclosure Memorandum and except for any limitation of general
application which may be imposed under applicable employment laws,
Insurdata and each of the Insurdata Subsidiaries has the right to
terminate the employment of each of its employees at will and to
terminate the engagement of any of its independent contractors without
payment to such employee or independent contractor other than for
services rendered through termination and without incurring any penalty
or liability other than for severance pay in accordance with any
severance pay policy of Insurdata or an Insurdata Subsidiary disclosed
to HealthAxis.
(v) Except as set forth in Section 3.1(m) of the Insurdata
Disclosure Memorandum, since January 1, 1998, no employee of Insurdata
or its Subsidiaries having an annual salary of $100,000 or more has
indicated an intention to terminate or has terminated his or her
employment with such company.
(n) Environmental Matters.
(i) For purposes of this Agreement:
(A) "Environmental Law" means any applicable law regulating
or prohibiting Releases of Hazardous Materials into any
part of the natural environment, or pertaining to the
protection of natural resources, the environment, and
public
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and employee health and safety from Hazardous Materials
including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act
("CERCLA") (42 U.S.C. ss. 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. ss. 1801 et
seq.), the Resource Conservation and Recovery Act (42
U.S.C. ss. 6901 et seq.), the Clean Water Act (33
U.S.C. ss. 1251 et seq.), the Clean Air Act (33 U.S.C.
ss. 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. ss. 7401 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. ss. 136 et
seq.), and the Occupational Safety and Health Act (29
U.S.C. ss. 651 et seq.) ("OSHA") (to the extent OSHA
regulates occupational exposure to Hazardous Materials)
and the regulations promulgated pursuant thereto, and
any such applicable state or local statutes, and the
regulations promulgated pursuant thereto, as such laws
have been and may be amended or supplemented through
the Closing Date;
(B) "Hazardous Material" means any substance, material or
waste which is regulated as hazardous or toxic by any
public or governmental authority in the jurisdictions
in which the Merger Party or its Subsidiaries conducts
business, or the United States, including, without
limitation, any material or substance which is defined
as a "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste" or
"restricted hazardous waste," "contaminant," "toxic
waste" or "toxic substance" under any provision of
Environmental Law and shall also include, without
limitation, petroleum, petroleum products, asbestos,
polychlorinated biphenyls and radioactive materials;
(C) "Release" means any release, spill, effluence,
emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching, or migration
of Hazardous Material into the environment; and
(D) "Remedial Action" means all actions, including, without
limitation, those involving any capital expenditures,
required by a governmental entity or required under any
Environmental Law, or voluntarily undertaken to (w)
clean
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up, remove, treat, or in any other way mitigate the
adverse effects of any Hazardous Materials Released in
the environment; (x) prevent the Release or threat of
Release, or minimize the further Release of any
Hazardous Material so it does not endanger or threaten
to endanger the public health or welfare or the
environment; (y) perform preremedial studies and
investigations or postremedial monitoring and care
pertaining or relating to a Release or threat of
Release; or (z) bring the Merger Party into compliance
with any Environmental Law.
(ii) Except as set forth in Section 3.1(n) of the Insurdata
Disclosure Memorandum:
(A) The operations of Insurdata and each of its
Subsidiaries have been and, as of the Closing Date,
will be, in compliance with all Environmental Laws,
except for such noncompliance which would not
individually or in the aggregate have a Material
Adverse Effect on Insurdata;
(B) Neither Insurdata nor any of its Subsidiaries is
subject to any outstanding orders from, or agreements
with, any Governmental Entity or other person
respecting (x) Environmental Laws, (y) Remedial Action
or (z) any Release or threatened Release of a Hazardous
Material;
(C) Neither Insurdata nor any of its Subsidiaries has
received any written communication alleging, with
respect to any such party, the violation of or
potential liability under any Environmental Law;
(D) No judicial or administrative proceedings or
governmental investigations are pending or, to the
knowledge of Insurdata, threatened against Insurdata or
any of its Subsidiaries alleging the violation of or
seeking to impose liability pursuant to any
Environmental Law; and
(E) No environmental approvals, clearances or consents are
required under applicable law from any governmental
entity or authority in order to consummate the
transactions contemplated herein.
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(iii) This Section 3.1(n) sets forth the sole representations
and warranties of Insurdata with respect to Environmental Laws.
(o) Property and Assets.
(i) Section 3.1(o)(i) of the Insurdata Disclosure Memorandum
sets forth all of the real property owned in fee by Insurdata and its
Subsidiaries. Insurdata or its Subsidiaries have good and marketable
title to each parcel of real property owned by them free and clear of
all Liens, except as otherwise set forth in Section 3.1(o)(i) of the
Insurdata Disclosure Memorandum.
(ii) Each lease, sublease or other agreement (collectively, the
"Real Property Leases") under which Insurdata or any of its
Subsidiaries uses or occupies or has the right to use or occupy, now or
in the future, any real property is valid, binding and in full force
and effect, all rent and other sums and charges payable by Insurdata or
any of its Subsidiaries as a tenant thereunder are current, and no
termination event or condition or uncured default of a material nature
on the part of Insurdata or any of its Subsidiaries or, to Insurdata's
knowledge, the landlord, exists under any Real Property Lease.
Insurdata and its Subsidiaries have a good and valid leasehold interest
in each parcel of real property leased by them free and clear of all
Liens, except as otherwise set forth in Section 3.1(o)(ii) of the
Insurdata Disclosure Memorandum. All real property used or occupied by
Insurdata or any Insurdata Subsidiary is structurally sound and in good
condition, normal wear and tear excepted, and is sufficient for its
current uses and the operations and business of Insurdata and its
Subsidiaries as presently conducted.
(iii) Except as set forth in Section 3.1(o)(iii) of the
Insurdata Disclosure Memorandum, Insurdata and its Subsidiaries own
good and indefeasible title to, or have a valid leasehold interest in
or a valid right under contract to use, all tangible personal property
that is used in the conduct of their business, free and clear of any
Liens, except for any mechanics or similar statutory liens arising in
the ordinary course of business. All such tangible personal property is
in good operating condition and repair (normal wear and tear excepted)
and is suitable for its current uses and the operations and business of
Insurdata and its Subsidiaries as presently conducted.
(p) Intellectual Property.
(i) Section 3.1(p) of the Insurdata Disclosure Memorandum sets
forth, for the Intellectual Property owned by Insurdata or any of its
Subsidiaries, a complete and accurate list of all U.S. and foreign (a)
Patents and Patent Applications; (b) Trademarks; (c) Copyright
registrations and mask work, Copyright and mask work applications, and
material unregistered Copyrights. Section 3.1(p) of the Insurdata
Disclosure Memorandum lists all Software (other than readily available
commercial software
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programs) which are owned, licensed, leased, by Insurdata or any of its
Subsidiaries, and identifies which Software is owned, licensed, or
leased, as the case may be, and, for all Insurdata Software, provides a
product description of the Insurdata Software, the language in which it
was written and the types of hardware platforms on which it runs.
(ii) Section 3.1(p) of the Insurdata Disclosure Memorandum sets
forth a complete and accurate list of all agreements, enforceable
understandings and enforceable commitments (whether oral or written,
and whether between Insurdata or any of its Subsidiaries and third
parties or inter-corporate) to which Insurdata or any of its
Subsidiaries is a party or otherwise bound, (i) granting or obtaining
any right to use or practice any rights under any Intellectual
Property, or (ii) restricting Insurdata's or any of its Subsidiaries'
rights to use any Intellectual Property, including license agreements,
development agreements, distribution agreements, settlement agreements,
consent to use agreements, and covenants not to sue (collectively, the
"License Agreements"). The License Agreements are valid and binding
obligations of all parties thereto, enforceable in accordance with
their terms, and there exists no event or condition which will result
in a violation or breach of, or constitute (with or without due notice
of lapse of time or both) a default by any party under any such License
Agreement. Neither Insurdata nor any of its Subsidiaries has licensed
or sublicensed its rights in any Intellectual Property other than
pursuant to the License Agreements and there are no exclusive License
Agreements for Insurdata Software or other Intellectual Property owned
by Insurdata and its Subsidiaries. No royalties, honoraria or other
fees are payable by Insurdata or any of its Subsidiaries to any third
parties for the use of or right to use any Intellectual Property
except, pursuant to the License Agreements.
(iii) Except as set forth on Section 3.1(p) of the Insurdata
Disclosure Memorandum:
(A) Insurdata or one of its Subsidiaries owns, or has a
valid right to use, free and clear of all Liens, all of
the Intellectual Property necessary to permit the
operation of Insurdata and its Subsidiaries as
presently conducted and as proposed to be conducted.
Insurdata or one of its Subsidiaries is listed in the
records of the appropriate United States, state, or
foreign registry as the sole current owner of record
for each application and registration listed on Section
3.1(p) of the Insurdata Disclosure Memorandum.
(B) All of such Insurdata Software and other Intellectual
Property were created as a work for hire (as defined
under U.S. copyright law) for Insurdata or its
Subsidiaries. To the extent that any author or
developer of any Insurdata
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Software or other Intellectual Property was not a
regular full-time salaried employee of Insurdata or its
Subsidiaries at the time such person contributed to
such Insurdata Software or other Intellectual Property,
such author or developer has executed agreements
assigning to Insurdata or its Subsidiaries all of such
Insurdata Software and Intellectual Property developed
by such author or developer.
(C) The Intellectual Property owned by Insurdata or any of
its Subsidiaries and, to the knowledge of Insurdata and
its Subsidiaries, any Intellectual Property used by
Insurdata or any of its Subsidiaries, is subsisting, in
full force and effect, and has not been canceled,
expired, or abandoned, and is valid and enforceable.
(D) There is no pending or, to the knowledge of Insurdata
and its Subsidiaries, threatened claim, suit,
arbitration or other adversarial proceeding before any
court, agency, arbitral tribunal, or registration
authority in any jurisdiction (i) involving the
Intellectual Property owned by Insurdata or any of its
Subsidiaries, or to the knowledge of Insurdata and its
Subsidiaries, the Intellectual Property licensed to
Insurdata or any of its Subsidiaries or (ii) alleging
that the activities or the conduct of Insurdata's or
any of its Subsidiaries' business does nor will
infringe upon, violate or constitute the unauthorized
use of the intellectual property rights of any third
party or challenging the ownership, use, validity,
enforceability or registrability of any Intellectual
Property by Insurdata or any of its Subsidiaries. There
are no settlements, forebearances to use, consents,
judgments, or orders or similar obligations other than
the License Agreements which (a) restrict Insurdata's
or any of its Subsidiaries' rights to use any
Intellectual property, (b) restrict Insurdata's or any
Subsidiaries' business in order to accommodate a third
party's intellectual property rights or (c) permit
third parties to use any Intellectual Property owned or
controlled by Insurdata or any of its Subsidiaries.
(E) No other Software, other than ordinary upgrades to the
Insurdata Software, is used to operate the business of
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Insurdata and its Subsidiaries as presently conducted.
To the best knowledge of Insurdata, no rights of any
third party are necessary to market, license, sell,
modify, update, and/or create derivative works for the
Insurdata Software listed at Section 3.1(p) of the
Insurdata Disclosure Memorandum as presently and
contemplated to be marketed, licensed, sold, modified,
updated and/or created by Insurdata.
(F) Insurdata and its Subsidiaries maintains
machine-readable master-reproducible copies of the
object and executable code, master reproducible copies
of the source code listings, technical documentation
and user manuals for the most current releases or
versions thereof and for all earlier releases or
versions of the Insurdata Software currently being
supported by Insurdata and its Subsidiaries; in each
case, the machine-readable copy of the object and
executable code substantially conforms to the
corresponding source code listing from which it was
compiled; the Insurdata Software is written in the
language as set forth Section 3.1(p) of the Insurdata
Disclosure Memorandum, for use on the hardware set
forth at Section 3.1(p) of the Insurdata Disclosure
Memorandum with standard operating systems; the
Insurdata Software can be maintained and modified by
reasonably competent programmers familiar with such
language, hardware and operating systems; in each case,
each component of the Insurdata Software that creates,
accepts, displays, stores, retrieves, accesses,
recognizes, distinguishes, compares, sorts,
manipulates, processes, calculates or otherwise uses
dates or date-related data will do so accurately,
without operating defects, using dates in the twentieth
and twenty- first centuries, and will not be adversely
affected by the advent of the year 2000, the advent of
any leap year, the advent of the twenty-first century,
or the transition from the twentieth century through
the year 2000 and into the twenty-first century
(collectively, "Y2K Compliant"), provided that all
hardware and operating system software in connection
with which the Insurdata Software is used perform in
such a manner; with respect to the hardware and third
party application and operating software with which the
Insurdata Software is used, Insurdata and its
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Subsidiaries have received written assurances from the
hardware manufacturers and third party software
licensors that this hardware and software is Y2K
Compliant and such hardware and software have
successfully completed Y2K Compliance testing
administered by or on behalf of Insurdata and its
Subsidiaries, to the knowledge of Insurdata and its
Subsidiaries the Insurdata Software does not contain
any unauthorized code such as a virus, Trojan horse,
worm, or other software routine designed to permit
unauthorized access to disable, erase or otherwise harm
the Insurdata Software, hardware or data automatically,
with the passage of time, or under the control of a
person other than the Merger Parties. The twenty-first
century will be deemed to commence on January 1, 2001.
(G) Insurdata and its Subsidiaries have taken reasonable
precautions to test for and prevent unauthorized codes
such as viruses, Trojan horses, worms, or other
software routines designed to permit unauthorized
access to disable, erase or otherwise harm the
Insurdata Software with the passage of time, or under
the control of a person other than Insurdata or its
Subsidiaries. No export control licenses are necessary
for the Insurdata Software in order to permit the
operation of the business of Insurdata and its
Subsidiaries as presently conducted.
(H) The conduct of Insurdata's and its Subsidiaries'
business as currently conducted or planned to be
conducted does not infringe upon (either directly or
indirectly such as through contributory infringement or
inducement to infringe) any intellectual property
rights owned or controlled by any third party. To the
knowledge of Insurdata and its Subsidiaries, no third
party is misappropriating, infringing, or violating any
Intellectual Property owned or used by Insurdata or any
of its Subsidiaries and no such claims, suits,
arbitrations or other adversarial proceedings have been
brought against any third party by Insurdata or any of
its Subsidiaries which remain unresolved.
(I) Insurdata and each of its Subsidiaries take reasonable
measures to protect the confidentiality of and all
proprietary rights in its Trade Secrets, including
requiring
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its employees and other parties having access thereto
to execute written non-disclosure agreements. To the
knowledge of Insurdata and its Subsidiaries, no Trade
Secret has been disclosed or authorized to be disclosed
to any third party other than pursuant to a
non-disclosure agreement. To the knowledge of Insurdata
and its Subsidiaries, no party to any non-disclosure
agreement relating to its Trade Secrets is in breach or
default thereof.
(J) No current or former partner, director, officer, or
employee of Insurdata or any of its Subsidiaries (or
any of their respective predecessors in interest) will,
after giving effect to the transactions contemplated
herein, own or retain any rights in or to (including,
but not limited to, the right to royalty payments) any
of the Intellectual Property owned, marketed, used or
under development by Insurdata and its Subsidiaries.
(iv) The consummation of the transactions contemplated hereby
will not result in the loss or impairment of Insurdata's or any of its
Subsidiaries' rights to own or use any of the Intellectual Property,
nor will it require the consent of any governmental authority or third
party in respect of any such Intellectual Property.
(v) The following definition shall be applicable to this
Agreement:
"HealthAxis Software" means all Software owned by HealthAxis.
"Insurdata Software" means all Software owned by Insurdata.
"Intellectual Property" shall mean trademarks, names, corporate names,
proprietary name, brand name, product service marks, trade names,
Internet domain names, designs, logos, slogans, and general intangibles
of like nature, together with all goodwill, registrations and
applications related to the foregoing (collectively, "Trademarks");
patents and industrial design registrations or applications, including
any continuations, divisionals, continuations-in-part, renewals,
reissues, and applications for any of the foregoing (collectively
"Patents and Patent Applications"); copyrights (including any
registrations and applications for any of the foregoing) and including
but not limited to the Web Site and Web Site Content (collectively,
"Copyrights"); Software, "mask works" (as defined under 17 USC ss. 901)
and any registrations and applications for "mask works"; technology,
trade secrets and other confidential information, know-how, proprietary
processes, formulae, algorithms, models, and methodologies
(collectively, "Trade Secrets"); rights under statutory or common laws
of publicity and privacy relating to the
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use of the names, likenesses, voices, signatures and biographical
information of real persons; in each case whether or not perfected,
whether active or inactive, in use, under development or design, and in
each case used in or necessary for the conduct of a Party's and each of
its Subsidiaries' business as currently conducted or contemplated to be
conducted.
"Software" means any and all computer programs (including operating
systems and applications systems html code, CGI code, java applets and
other software used to create and maintain Web sites) whether or not
operational, including, but not limited to, implementations in computer
programs of algorithms, processes, formulae, interfaces, navigational
devices, menu structures or arrangements, icons, operational
instructions, scripts, commands, syntax, screen design, reports design
and other designs, concepts, and visual expressions, technical manuals,
user manuals and other documentation therefor, whether in
machine-readable form, programming language or any other language or
symbols, and whether stored, encoded, recorded or written on disk,
tape, film, memory device, paper or other media of any nature.
"Web Site" shall mean the Web site currently found at the following
URL, http://www.insurdata.com or http://www.healthaxis.com, as
applicable, and all other Web sites and any successors thereto owned or
created by or on behalf of Insurdata or HealthAxis and their
Subsidiaries.
"Web Site Content" shall mean all text, photos, graphics, audio, video
and other information or content, material, without limitation, in all
forms and formats (collectively, "Content"), available for access on
the Web Site but excluding the Content of any Web sites linked to the
Web Site, whether by agreement or otherwise, and any Content supplied
by insurance carriers for inclusion on the HealthAxis Web Site.
(q) Material Contracts. Section 3.1(q) of the Insurdata Disclosure
Memorandum contains a true and complete list of each of the following
written or oral contracts, agreements, instruments, orders,
arrangements, commitments or understandings ("Contracts") in effect as
of the date of this Agreement (true and complete copies of any written
Contract or summaries in writing describing any oral Contract of which
have been made available to HealthAxis) to which Insurdata or any of
its Subsidiaries is a party or by which any of their respective assets
or properties is or may be bound (each of which is an "Insurdata
Material Contract"):
(i) all employment, agency (other than insurance agency),
consultation, or representation Contracts or other Contracts of any
type (including without limitation loans or advances) with any present
officer, director, Key Employee (as defined below), agent (other than
an insurance agent), consultant, or other similar representative of
Insurdata or any of its Subsidiaries (or former officer, director, Key
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Employee, agent (other than an insurance agent), consultant or similar
representative of Insurdata or any of its Subsidiaries if there exists
any present or future liability with respect to such Contract);
(ii) all Contracts relating to the borrowing of money by
Insurdata, relating to the deferred purchase price for property or
services, or relating to the direct or indirect guarantee by Insurdata
or any of its Subsidiaries of any liability;
(iii) all Contracts pursuant to which Insurdata or any of its
Subsidiaries has agreed to indemnify or hold harmless any person or
entity (other than indemnifications or hold harmless covenants in the
ordinary course of business and consistent with past practice);
(iv) all leases or subleases of real property used in the
business, operations, or affairs of Insurdata or any of its
Subsidiaries;
(v) all Contracts under which any rights in and/or ownership of
any material software products, technology or other intangible property
of Insurdata or its Subsidiaries was acquired; and
(vi) any other Contract requiring the payment of at least
$250,000 or which cannot be terminated upon 60 days or less notice.
Each Contract disclosed or required to be disclosed in Section 3.1(q)
of the Insurdata Disclosure Memorandum is in full force and effect and
constitutes a legal, valid and binding obligation of Insurdata or any
of its Subsidiaries to the extent any such entity is a party thereto
and, to the knowledge of Insurdata, each other party thereto. Neither
Insurdata nor any of its Subsidiaries has received from any other party
to such Contract any written notice of termination or intention to
terminate or not to honor the terms of such Contract, or to the
knowledge of Insurdata, any oral notice of termination or intention to
terminate or not to honor the terms of such Contract. Except as set
forth in Section 3.1(q) of the Insurdata Disclosure Memorandum, neither
Insurdata nor any of its Subsidiaries nor, to the knowledge of
Insurdata, any other party to such Contract is in violation or breach
of or default under any such Contract (or with or without notice or
lapse of time or both, would be in violation or breach of or default
under any such Contract), which violations, breach or default would
individually or in the aggregate have a Material Adverse Effect on
Insurdata As used in this Agreement "Key Employee" shall mean employees
of a Party, having a salary of $100,000 or more per year.
(r) Related Party Transactions. Except as set forth in Section
3.1(r) of the Insurdata Disclosure Memorandum, no director, officer,
Key Employee, "affiliate" or "associate" (as such terms are defined in
Rule 12b-2 under the Exchange Act, each a
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"Related Party") of Insurdata (i) has borrowed any monies from or has
outstanding any indebtedness, liabilities or other similar obligations
to Insurdata or any of its Subsidiaries; (ii) owns any direct or
indirect interest of any kind in, or is a director, officer, employee,
partner, affiliate or associate of, or consultant or lender to, or
borrower from, or has the right to participate in the management,
operations or profits of, any person or entity which is (A) a
competitor, supplier, customer, distributor, lessor, tenant, creditor
or debtor of Insurdata or any of its Subsidiaries, (B) engaged in a
business related to the business of Insurdata or any of its
Subsidiaries, or (C) participating in any transaction to which
Insurdata or any of its Subsidiaries is a party; or (iii) is otherwise
a party to any contract, arrangement or understanding with Insurdata or
any of its Subsidiaries.
(s) Liens. Except as set forth in Section 3.1(s) of the Insurdata
Disclosure Memorandum, neither Insurdata nor any of its Subsidiaries
has granted, created, or suffered to exist with respect to any of its
assets, any mortgage, pledge, charge, hypothecation, collateral
assignment, lien (statutory or otherwise), encumbrance or security
agreement of any kind or nature whatsoever (collectively, the "Liens").
(t) Operations; Insurance. Section 3.1(t) of the Insurdata
Disclosure Memorandum contains a true and complete list and description
of all liability, property, workers compensation, directors and
officers liability, and other similar insurance policies or agreements
that insure the business, operations, or affairs of Insurdata and its
Subsidiaries or affect or relate to the ownership, use, or operations
of any of the assets or properties of Insurdata and its Subsidiaries.
Excluding insurance policies that have expired and been replaced in the
ordinary course of business, no insurance policy has been canceled
within the last year except as disclosed in Section 3.1(t) of the
Insurdata Disclosure Memorandum, and, to the knowledge of Insurdata or
its Subsidiaries, no threat has been made to cancel any insurance
policy of any of Insurdata or its Subsidiaries during such period and,
to Insurdata's knowledge, there is no basis for any such cancellation.
Except as set forth in Section 3.1(t) of the Insurdata Disclosure
Memorandum, there are no claims that are pending under any of the
insurance policies described in Section 3.1(t) of the Insurdata
Disclosure Memorandum.
(u) Board Recommendation and Shareholder Approval. The Board of
Directors of Insurdata has, at a meeting duly called and held, or by
the unanimous written consent in lieu of a formal meeting (i)
determined that this Agreement and the transactions contemplated hereby
are fair to and in the best interests of the shareholders of Insurdata
and has approved the same, (ii) resolved to recommend, subject to the
fiduciary duties of the Board of Directors, that the shareholders of
Insurdata approve this Agreement and the transactions contemplated
herein, and (iii) resolved to call a special meeting of the
shareholders of Insurdata to approve the Merger. The Board of Directors
of Insurdata has taken all action necessary to exempt the transactions
contemplated by this Agreement from (i) the operation of any "fair
price," moratorium," "control share
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acquisition," "business combination" or any other anti-takeover statute
or similar statute enacted under the state or federal laws of the
United States or similar statute or regulation (a "Takeover Statute")
and (ii) any restrictions or limitations set forth in the Articles of
Incorporation or By-Laws of Insurdata, other than approval by the
requisite shareholders of Insurdata.
(v) Vote Required. The affirmative vote of the holders of at least
two-thirds of the outstanding shares of Insurdata Common Stock is the
only vote of the holders of any class or series of Insurdata's capital
stock necessary (under applicable law or otherwise) to approve the
Merger and the transactions contemplated hereby.
(w) No Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of
Insurdata or any of its Subsidiaries.
(x) Questionable Payments. To the knowledge of Insurdata, no
current or former director, officer, representative, agent or employee
of Insurdata or any of its Subsidiaries (when acting in such capacity
or otherwise on behalf of Insurdata or any of its Subsidiaries) (i) has
used or is using corporate funds for any illegal contributions, gifts,
entertainment or other unlawful expenses relating to political
activity; (ii) has used or is using any corporate funds for any direct
or indirect unlawful payments to any foreign or domestic government
officials or employees; (iii) has violated or is violating any
provision of the Foreign Corrupt Practices Act of 1977, (iv) has
established or maintained, or is maintaining, any unlawful or
unrecorded fund of corporate monies or other properties, (v) has made
any false or fictitious entries on the books and records of Insurdata
or any of its Subsidiaries, (vi) has made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment of any nature
using corporate funds or otherwise on behalf of Insurdata or any of its
Subsidiaries; or (vii) made any material gift of assets or services
that is not deductible for federal income tax purposes using corporate
funds or otherwise on behalf of Insurdata or any of its Subsidiaries.
3.2 Representations and Warranties of HealthAxis. Except as disclosed
in the disclosure memorandum delivered by HealthAxis (the "HealthAxis Disclosure
Memorandum") at or prior to the date of this Agreement (it being understood that
each section of the HealthAxis Disclosure Memorandum shall list all items
applicable to such section, although the inadvertent omission of an item from
one section shall not be a breach of this Agreement if such item and an
explanation of the nature of such item is clearly disclosed in another section
of the HealthAxis Disclosure Memorandum), HealthAxis represents and warrants to
Insurdata and UICI as follows:
(a) Organization, Standing and Power. HealthAxis is a corporation
duly organized, validly existing and in good standing under the laws of
the Commonwealth of
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Pennsylvania, has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now
being conducted and is duly qualified or licensed to do business as a
foreign corporation and in good standing to conduct business in each
jurisdiction in which the business it is conducting, or the operation,
ownership or leasing of its properties, makes such qualification or
license necessary, other than such jurisdictions where the failure so
to qualify or become so licensed would not, individually or in the
aggregate, have a Material Adverse Effect on HealthAxis. HealthAxis has
heretofore made available to Insurdata complete and correct copies of
its Articles of Incorporation, as currently in effect as of the date of
this Agreement, and its Bylaws, as currently in effect as of the date
of this Agreement.
(b) Capital Structure. As of the date of this Agreement, the
authorized capital stock of HealthAxis consists of 40,000,000 shares of
HealthAxis Common Stock and 5,500,000 shares of preferred stock. As of
the date of this Agreement, there were (i) 16,738,811 shares of
HealthAxis Common Stock issued and outstanding and (ii) 3,031,191
shares of preferred stock, par value $1.00 per share, issued and
outstanding of which (i) 545,916 outstanding shares have been
designated as Series A Convertible Preferred Stock (convertible into
545,916 shares of Common Stock); (ii) 625,529 outstanding shares have
been designated as Series B Convertible Preferred Stock (convertible
into 625,529 shares of Common Stock); (iii) 1,526,412 outstanding
shares have been designated as Series C Convertible Preferred Stock
(convertible into 1,526,412 shares of Common Stock); and (iv) 333,334
outstanding shares have been designated as Series D Convertible
Preferred Stock (convertible into 333,334 shares of Common Stock)
(collectively, the Series A Convertible Preferred Stock, Series B
Convertible Preferred Stock, Series C Convertible Preferred Stock and
Series D Convertible Preferred Stock is referred to herein as the
"HealthAxis Preferred Stock"). No shares of HealthAxis Common Stock or
HealthAxis Preferred Stock are held in treasury. All outstanding shares
of HealthAxis Common Stock and HealthAxis Preferred Stock are validly
issued, fully paid and nonassessable and are not subject to preemptive
or similar rights. As of the date of this Agreement, 3,117,096 shares
of HealthAxis Common Stock are subject to issuance pursuant to the
exercise of stock options (all options issued pursuant the HealthAxis
Employee Stock Option Plans (defined below) are referred to herein
collectively, as the "HealthAxis Options" and individually as a
"HealthAxis Option") issued and outstanding under the HealthAxis
Employee Stock Option Plan (the "HealthAxis Stock Option Plans") (of
which 1,482,206 shares of HealthAxis Common Stock are subject to vested
options), and 1,050,500 shares of HealthAxis Common Stock are subject
to issuance pursuant to the exercise of outstanding warrants and 75,000
shares of HealthAxis Series D Preferred Stock are subject to issuance
pursuant to the exercise of outstanding warrants. Section 3.2(b) of the
HealthAxis Disclosure Memorandum sets forth the following information
with respect to each HealthAxis Option outstanding as of the date
hereof: (i) the particular plan pursuant to which such HealthAxis
Option was granted; (ii) the name of the optionee; (iii) the number of
shares of HealthAxis Common
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Stock subject to such HealthAxis Option; (iv) the exercise price of
such HealthAxis Option; (v) the date on which such HealthAxis Option
was granted; and (vi) the date on which such HealthAxis Option expires.
HealthAxis has delivered to Insurdata accurate and complete copies of
the HealthAxis Stock Option Plans and the stock option agreements
evidencing all HealthAxis Options granted under the HealthAxis Stock
Option Plans. Set forth in Section 3.2(b) of the HealthAxis Disclosure
Memorandum is a true and complete list of the following: (i) Restricted
Share Grants of shares of HealthAxis Common Stock and a total thereof,
and (ii) any Change in Control Share Grants of HealthAxis to issue
shares of HealthAxis Common Stock as a result of the transactions
contemplated hereby and a total thereof. There are no bonds,
debentures, notes or other indebtedness of HealthAxis, or assets of any
other entities convertible into, or exchangeable for, securities of
HealthAxis except as provided in this Section 3.2(b) or Section 3.2(b)
of the HealthAxis Disclosure Memorandum. Except as set forth in this
Section 3.2(b) or in Section 3.2(b) of the HealthAxis Disclosure
Memorandum, there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of
any kind to which HealthAxis or any HealthAxis Subsidiary is a party or
by which such entity is bound, obligating HealthAxis or any HealthAxis
Subsidiary to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock, securities or other
ownership interests of HealthAxis or any HealthAxis Subsidiary or
obligating HealthAxis or any HealthAxis Subsidiary to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking or obligating
HealthAxis or any HealthAxis Subsidiary to repurchase, redeem or
otherwise acquire any outstanding shares of capital stock, securities
or other ownership interests of HealthAxis or any HealthAxis
Subsidiary. Except as set forth in Section 3.2(b) of the HealthAxis
Disclosure Memorandum, there are no commitments, agreements,
arrangements or undertakings of any kind to which HealthAxis or any
HealthAxis Subsidiary is party, or by which such entity is bound,
obligating HealthAxis or any HealthAxis Subsidiary to make any equity
or similar investment in, or capital contribution to, any Person.
Except as set forth in Section 3.2(b) of the HealthAxis Disclosure
Memorandum, the execution, delivery and performance by HealthAxis of
this Agreement and the transactions contemplated hereby will not result
in the acceleration of any HealthAxis Option and HealthAxis will not
take any action to cause any such acceleration.
(c) Subsidiaries; Investments. Section 3.2(c) of the HealthAxis
Disclosure Memorandum sets forth for HealthAxis and each Subsidiary of
HealthAxis, its exact legal name, the jurisdiction of its incorporation
or organization, its federal employer identification number, its
address, telephone number and facsimile number, its directors and
officers, and all fictitious, assumed or other names of any type that
are registered or used by it or under which it has done business at any
time since such company's date of incorporation. Each Subsidiary is an
entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has
the
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power and authority and all necessary government approvals to own,
lease and operate its properties and to carry on its business as now
being conducted. Each Subsidiary of HealthAxis is duly qualified or
licensed and in good standing to do business in each jurisdiction in
which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing
necessary. HealthAxis has heretofore made available to Insurdata
complete and correct copies of the articles of incorporation (or other
organizational documents) and bylaws (each as amended) of each of its
Subsidiaries. Section 3.2(c) of the HealthAxis Disclosure Memorandum
sets forth, as to each Subsidiary of HealthAxis, its authorized capital
stock and the number of issued and outstanding shares of capital stock
(or similar information with respect to any Subsidiary not organized as
a corporate entity) and each owner thereof. All outstanding shares of
the capital stock of the Subsidiaries of HealthAxis are validly issued,
fully paid and nonassessable and are not subject to preemptive or other
similar rights. Except as set forth on Section 3.2(c) of the HealthAxis
Disclosure Memorandum, HealthAxis is the sole record and beneficial
owner of all of the shares of capital stock or other ownership
interests of each HealthAxis Subsidiary.
(d) Authority; No Violations; Consents and Approvals.
(i) HealthAxis has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of HealthAxis.
This Agreement has been duly executed and delivered by HealthAxis and
assuming that this Agreement constitutes the valid and binding
agreement of Insurdata, UICI and Provident, constitutes a valid and
binding obligation of HealthAxis enforceable in accordance with its
terms and conditions except that the enforcement hereof may be limited
by (A) applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally, (B) general principles of
equity (regardless of whether enforceability is considered in a
proceeding at law or in equity) and (C) any ruling or action of any
Governmental Entity as set forth in Section 3.2(d)(iii).
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by HealthAxis will
not result in any Violation pursuant to (A) any provision of the
Articles of Incorporation or Bylaws of HealthAxis or the comparable
documents of any of its Subsidiaries or (B) except as to which
requisite waivers or consents have been obtained as specifically
identified in Section 3.2(d) of the HealthAxis Disclosure Memorandum
and assuming the consents, approvals, authorizations or permits and
filings or notifications referred to in paragraph (iii) of this Section
3.2(d) are duly and timely obtained or made, any loan or credit
agreement, note, mortgage, deed of trust, indenture, lease, or any
other agreement,
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obligation, instrument, concession or license or any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
HealthAxis, or any of its properties or assets, except, in the case of
clause (B), for such Violations which would not, individually or in the
aggregate, adversely affect HealthAxis and its Subsidiaries.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from a
Governmental Entity is required by or with respect to HealthAxis or any
of its Subsidiaries in connection with the execution and delivery of
this Agreement by HealthAxis or the consummation by HealthAxis or
Insurdata of the transactions contemplated hereby, except for: (A) the
filing of a pre- merger notification and report form under the HSR Act,
and the expiration or termination of the applicable waiting period
thereunder; (B) the filing of the Articles of Merger with the Secretary
of State of the State of Texas and the Department of State of the
Commonwealth of Pennsylvania; (C) such filings as may be required by
applicable federal or state securities laws; and (D) where failure to
obtain consent, give or make any approval, order, or authorization of,
or registration, declaration or filing with notice to, or permit from a
Governmental Entity would not have a Material Adverse Effect on
HealthAxis.
(e) Government Filings. HealthAxis has made available to Insurdata
a true and complete copy of each report or schedule filed by HealthAxis
with any Governmental Entity.
(f) Information Supplied. None of the information supplied or to be
supplied by HealthAxis and Provident to Insurdata and UICI contains or
will contain any untrue statement of a material fact or omits or will
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading. The books of account and
other financial records of HealthAxis and its Subsidiaries have been
maintained in form and substance adequate for preparing audited
financial statements in accordance with GAAP.
(g) Compliance with Applicable Laws.
(i) Except as disclosed in Section 3.2(g) of the HealthAxis
Disclosure Memorandum, the business of HealthAxis and each of its
Subsidiaries is being conducted in compliance in all material respects
with all applicable laws, including, without limitation, all insurance
laws, ordinances, rules and regulations, decrees and orders of any
Governmental Entity, and all notices, reports, documents and other
information required to be filed thereunder within the last three years
were properly filed and were in compliance in all material respects
with such laws.
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(ii) HealthAxis and each of its Subsidiaries owns or validly
holds all Licenses which are necessary for it to own, lease or operate
its properties and assets and to conduct its business as now conducted,
except for such Licenses the failure to hold which would not
individually or in the aggregate have a Material Adverse Effect on
HealthAxis. The business of HealthAxis and each of its Subsidiaries has
been and is being conducted in compliance in all material respects with
all such Licenses. All such Licenses are in full force and effect, and
there is no proceeding or investigation pending or, to the knowledge of
HealthAxis, threatened which would reasonably be expected to lead to
the revocation, amendment, failure to renew, limitation, suspension or
restriction of any such License.
(h) Absence of Certain Changes or Events. Since September 30, 1999,
there has not been, occurred, or arisen any change, any event
(including without limitation any damage, destruction, or loss whether
or not covered by insurance), condition, or state of facts of any
character with respect to the business or financial condition of
HealthAxis or any of its Subsidiaries, except (i) as disclosed in
Section 3.2(h) of the HealthAxis Disclosure Memorandum and (ii) for
events in the ordinary course of business consistent with past practice
that would not, individually or in the aggregate, result in a Material
Adverse Effect on HealthAxis.
(i) Financial Statements; No Material Undisclosed Liabilities. The
consolidated financial statements of HealthAxis dated at September 30,
1999 have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present, in accordance with the applicable
requirements of GAAP, the consolidated financial position of its
Subsidiaries, as of the dates thereof and the consolidated results of
operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
HealthAxis has no Subsidiaries which are not consolidated for
accounting purposes. Since September 30, 1999, neither HealthAxis nor
any of its Subsidiaries has incurred any liabilities, except: (i)
liabilities arising in the ordinary course of business consistent with
past practice, which individually or in the aggregate would not have a
Material Adverse Effect on HealthAxis; (ii) as specifically and
individually reflected in Section 3.2(i) of the HealthAxis Disclosure
Memorandum; or (iii) other liabilities, which, individually or in the
aggregate, together with those liabilities referenced in subparagraphs
(i) and (ii), would not have a Material Adverse Effect on HealthAxis.
(j) Litigation. Except as set forth on Section 3.2(j) of the
HealthAxis Disclosure Memorandum, (A) there is no suit, action,
investigation, arbitration or proceeding pending or, to the knowledge
of HealthAxis, threatened against or affecting HealthAxis or any of its
Subsidiaries, at law or in equity, before any person and (B) there
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is no writ judgment, decree, injunction, rule or similar order of any
Governmental Entity or arbitrator outstanding against HealthAxis or any
of its Subsidiaries.
(k) Taxes. Except as set forth in Section 3.2(k) of the HealthAxis
Disclosure Memorandum:
(i) HealthAxis and each of its Subsidiaries has (x) duly and
timely filed (or there have been filed on their behalf) with the
appropriate taxing authorities all Tax Returns required to be filed by
them, and all such Tax Returns are true, correct and complete in all
material respects and (y) timely paid or there have been paid on their
behalf all Taxes shown to be due on such Returns.
(ii) Each of HealthAxis and its Subsidiaries has properly
accrued on its respective financial statements all Taxes due for which
HealthAxis or its Subsidiaries may be liable, whether or not shown on
any Tax Return as being due (including by reason of being a member of
an affiliated group or as a transferee of the assets of, or successor
to, any corporation, person, association, partnership, joint venture or
other entity). Each of HealthAxis and its Subsidiaries has established
(and until the Closing Date shall continue to establish and maintain)
on its books and records reserves that are adequate for the payment of
all Taxes not yet due and payable.
(iii) Each of HealthAxis and its Subsidiaries has complied in
all material respects with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes, including Taxes
required to have been withheld in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder, or
other third party and sales, gross receipts and use taxes, and has,
within the time and manner prescribed by law, withheld and paid over to
the proper governmental authorities all amounts required to be withheld
and paid over under all applicable laws, or such amount are held in
separate bank accounts for such purpose.
(iv) There are no Liens for Taxes upon the assets or properties
of HealthAxis or any of its Subsidiaries except for statutory liens for
current Taxes not yet due.
(v) Neither HealthAxis nor any of its Subsidiaries has
requested any extension of time within which to file any Tax Return in
respect of any taxable year which has not since been filed.
(vi) Based upon HealthAxis' knowledge, Audits exist with regard
to any Taxes or Tax Returns of HealthAxis or any of its Subsidiaries
and there has not been received any written notice that such an Audit
is pending or threatened with respect to any Taxes due from or with
respect to HealthAxis or any of its Subsidiaries or any Tax
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Return filed by or with respect to HealthAxis or any of its
Subsidiaries No material issues have been raised in any examination by
any taxing authority with respect to the businesses and operations or
HealthAxis or its Subsidiaries which (i) reasonably could be expected
to result in an adjustment to the liability for Taxes for such period
examined or (ii), by application of similar principles, reasonably
could be expected to result in an adjustment to the liability for Taxes
for any other period not so examined.
(vii) None of HealthAxis and its Subsidiaries is a party to any
Tax allocation or sharing agreement. None of HealthAxis and its
Subsidiaries (A) has been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group the common
parent of which was Provident) or (B) has any liability for the Taxes
of any other party (other than any of HealthAxis and its Subsidiaries)
under Treasury Regulation Section 1.1502-6 (or any provision of state,
local or foreign law), as a transferee or successor, by contract or
otherwise.
(l) Pension And Benefit Plans; ERISA.
(i) Section 3.2(l)(i) of the HealthAxis Disclosure Memorandum
sets forth a complete list of all (A) "employee benefit plans" as
defined in sections 3(3) of the ERISA; and (B) all retirement or
deferred compensation plans, incentive compensation plans, stock plans,
unemployment compensation plan, vacation pay, severance pay, bonus or
benefit arrangement, insurance or hospitalization program or any other
fringe benefit arrangements for any current or former employee,
director, consultant or agent, whether pursuant to contract,
arrangement, custom or informal understanding, which does not
constitute an employee benefit plan as defined in section 3(3) of
ERISA, and (C) any employment agreement or consulting agreement, which
HealthAxis, or any of its Subsidiaries or any trade or business,
whether or not incorporated, that together with HealthAxis or any of
its Subsidiaries would be deemed a "single employer" within the meaning
of Section 4001(b) of ERISA (an "HealthAxis ERISA Affiliate"),
maintains, is a party to, participates in or with respect to which has
any liability or contingent liability (such plans and arrangements
referred to as the "HealthAxis Benefit Plans").
(ii) With respect to each HealthAxis Benefit Plan, a complete
and correct copy of each of the following documents (if applicable) has
been provided or made available to HealthAxis: (A) the most recent plan
and related trust documents, and all amendments thereto; (B) the most
recent summary plan description, and all related summaries of material
modifications thereto; (C) the most recent Form 5500 (including
schedules and attachments); (D) the most recent IRS determination
letter or request therefor; and (E) the most recent actuarial reports
(including for purposes of Financial Accounting Standards Board report
no. 87, 106 and 112), if any; and there have been no material changes
in the financial condition in the respective plans from that stated in
the annual reports and actuarial reports supplied. In the case of any
HealthAxis Employee
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Benefit Plan which is not in written form, Insurdata has been supplied
with an accurate description of such HealthAxis Benefit Plan as in
effect on the date hereof.
(iii) Except as set forth in Section 3.2(l)(iii) of the
HealthAxis Disclosure Memorandum, HealthAxis Benefit Plans and their
related trusts intended to qualify under Sections 401(a) and 501(a) of
the Code, respectively, have received favorable determination letters
from the Internal Revenue Service which cover all applicable law for
which the remedial amendment period (within the meaning of Section
401(b) of the Code and applicable regulations) has expired; neither
HealthAxis nor any of its respective HealthAxis ERISA Affiliates is
aware of any event or circumstance that could reasonably be expected to
result in the failure of such HealthAxis Benefit Plan or its related
trust to be so qualified; and no event has occurred which will or could
give rise to disqualification of any such plan under such sections or
to a tax under section 511 of the Code.
(iv) Except as set forth in Section 3.2(l)(iv) of the
HealthAxis Disclosure Memorandum, the HealthAxis Benefit Plans have
been maintained and administered in all respects in accordance with
their terms and applicable laws, and no event has occurred which will
or could cause any such HealthAxis Benefit Plan to fail to comply with
such requirements and no notice has been issued by any governmental
authority questioning or challenging such compliance.
(v) Except as disclosed in Section 3.2(l)(v) of the HealthAxis
Disclosure Memorandum, there are no pending or, to the knowledge of
HealthAxis, threatened actions, claims or proceedings against or
relating to any HealthAxis Benefit Plan other than routine benefit
claims by persons entitled to benefits thereunder. There are no
investigations or audits of or relating to any HealthAxis Benefit Plan.
HealthAxis has no knowledge of any facts which could form the basis of
any such investigation or audit.
(vi) Except as disclosed in Section 3.2(l)(vi) of the
HealthAxis Disclosure Memorandum and as otherwise provided in Section
2.3, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (A) result in
any payment becoming due to any employee (current, former or retired)
of HealthAxis, (B) increase any benefits under any HealthAxis Benefit
Plan, or (C) result in the acceleration of the time of payment of,
vesting of or other rights with respect to any such benefits.
(vii) HealthAxis has no knowledge of any oral or written
statement made by or on behalf of HealthAxis or a HealthAxis ERISA
Affiliate regarding any HealthAxis Benefit Plan that was not in
accordance with such Benefit Plan.
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(viii) Actuarially adequate accruals for all obligations under
the HealthAxis Benefit Plans are reflected in the financial statements
of HealthAxis and such obligations include a pro rata amount of the
contributions which would otherwise have been made in accordance with
past practices and applicable law for the plan years which include the
Closing Date.
(ix) Except as described in Section 3.2(l)(ix) of the
HealthAxis Disclosure Memorandum, there have been no acts or omissions
by HealthAxis which have given rise to or may give rise to fines,
penalties, taxes or related charges under section 502 of ERISA or
Chapters 43, 47 or 68 of the Code for which HealthAxis or any
HealthAxis ERISA Affiliate may be liable.
(x) Except as described in section 3.2(l)(x) of the HealthAxis
Disclosure Memorandum, none of the payments payable under the
HealthAxis Benefit Plans would as a result of the Merger, in the
aggregate, constitute excess parachute payments (as defined in section
280G of the Code (without regard to subsection (b)(4) thereof)).
(xi) No HealthAxis Benefit Plan is subject to Title IV of
ERISA.
(xii) None of HealthAxis nor any HealthAxis ERISA Affiliate
contributes to, has contributed to, or has any liability or contingent
liability with respect to a multiemployer plan (as defined in section
3(37) of ERISA).
(xiii) There has been no act or omission that would impair the
ability of Insurdata and the HealthAxis ERISA Affiliates (or any
successor thereto) to unilaterally amend or terminate any HealthAxis
Benefit Plan.
(xiv) Except as described in Section 3.2(l)(xiv) of the
HealthAxis Disclosure Memorandum, there are no self-insured HealthAxis
Benefit Plans. Except as described in Section 3.2(l)(xiv) of the
HealthAxis Disclosure Letter, with respect to each self-insured
HealthAxis Benefit Plan, HealthAxis and/or its Subsidiaries maintains a
reserve of no less than twenty-five percent (25%) of the aggregate
claims paid with respect to the most recently completed plan year.
(xv) Except as set forth in Section 3.2(1)(xv) of the
HealthAxis Disclosure Memorandum, each HealthAxis Benefit Plan is fully
funded to the extent that a benefit has accrued thereunder or that an
account balance is maintained on behalf of an Employee notwithstanding
whether, under the terms of such Plan or as permitted by applicable
law, such Plan is not required to be funded. Except as set forth in
Section 3.2(1)(xv) of the HealthAxis Disclosure Memorandum, each
HealthAxis Benefit Plan is fully funded to the extent that a benefit
has accrued thereunder or that an account balance
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is maintained on behalf of an Employee notwithstanding whether, under
the terms of such Plan or as permitted by applicable law, such Plan is
not required to be funded.
(m) Labor Matters.
(i) Except as set forth in Section 3.2(m) of the HealthAxis
Disclosure Memorandum, (A) neither HealthAxis nor any of its
Subsidiaries is a party to any labor or collective bargaining agreement
and no employees of HealthAxis or any of its Subsidiaries are
represented by any labor organization; (B) within the preceding three
years, there have been no representation or certification proceedings,
or petitions seeking a representation proceeding, pending or, to the
knowledge of HealthAxis, threatened in writing to be brought or filed
with the National Labor Relations Board or any other labor relations
tribunal or authority; and (C) within the preceding three years, to the
knowledge of HealthAxis, there have been no organizing activities
involving HealthAxis or any of its Subsidiaries with respect to any
group of employees of HealthAxis or any of its Subsidiaries.
(ii) There are no strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances or other material labor
disputes pending or threatened in writing against or involving
HealthAxis or any of its Subsidiaries. There are no unfair labor
practice charges, grievances or complaints pending or, to the knowledge
of HealthAxis, threatened in writing by or on behalf of any employee or
group of employees of HealthAxis or any of its Subsidiaries. Each of
HealthAxis and its Subsidiaries relations with its employees are
currently on a good and normal basis.
(iii) HealthAxis and each of its Subsidiaries is in compliance
with all laws, regulations and orders relating to the employment of
labor, including all such laws, regulations and orders relating to
wages, hours, WARN Act, collective bargaining, discrimination, civil
rights, safety and health, workers' compensation and the collection and
payment of withholding and/or social security taxes and any similar
tax, except where non compliance would not individually or in the
aggregate adversely affect HealthAxis and its Subsidiaries taken as a
whole in any material respect.
(n) Environmental Matters.
(i) Except as set forth in Section 3.2(n) of the HealthAxis
Disclosure Memorandum:
(A) The operations of HealthAxis and each of its
Subsidiaries have been and, as of the Closing Date,
will be, in compliance with all Environmental Laws,
except for such noncompliance which would not
individually or in the
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aggregate have a Material Adverse Effect on HealthAxis
and its Subsidiaries;
(B) Neither HealthAxis nor any of its Subsidiaries is
subject to any outstanding orders from, or agreements
with, any Governmental Entity or other person
respecting (x) Environmental Laws, (y) Remedial Action
or (z) any Release or threatened Release of a Hazardous
Material;
(C) Neither HealthAxis nor any of its Subsidiaries has
received any written communication alleging, with
respect to any such party, the violation of or
potential liability under any Environmental Law;
(D) No judicial or administrative proceedings or
governmental investigations are pending or, to the
knowledge of HealthAxis, threatened against HealthAxis
or any of its Subsidiaries alleging the violation of or
seeking to impose liability pursuant to any
Environmental Law; and
(E) No environmental approvals, clearances or consents are
required under applicable law from any governmental
entity or authority in order to consummate the
transactions contemplated herein.
(ii) This Section 3.2(n) sets forth the sole representations
and warranties of HealthAxis with respect to Environmental Laws.
(o) Property and Assets.
(i) Section 3.2(o)(i) of the HealthAxis Disclosure Memorandum
sets forth all of the real property owned in fee by HealthAxis and its
Subsidiaries. HealthAxis or its Subsidiaries have good and marketable
title to each parcel of real property owned by them free and clear of
all Liens, except as otherwise set forth in Section 3.2(o)(i) of the
HealthAxis Disclosure Memorandum.
(ii) Each of the Real Property Leases under which HealthAxis or
any of its Subsidiaries uses or occupies or has the right to use or
occupy, now or in the future, any real property is valid, binding and
in full force and effect, all rent and other sums and charges payable
by HealthAxis or any of its Subsidiaries as a tenant thereunder are
current, and no termination event or condition or uncured default of a
material nature on the part of HealthAxis or any of its Subsidiaries
or, to HealthAxis' knowledge, the
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landlord, exists under any Real Property Lease. HealthAxis and its
Subsidiaries have a good and valid leasehold interest in each parcel of
real property leased by them free and clear of all Liens, except as
otherwise set forth in Section 3.2(o)(ii) of the HealthAxis Disclosure
Memorandum. Except as set forth in Section 3.2(o)(ii) of the HealthAxis
Disclosure Memorandum, all real property used or occupied by HealthAxis
or any HealthAxis Subsidiary is structurally sound and in good
condition, normal wear and tear excepted, and is sufficient for its
current uses and the operations and business of HealthAxis and its
Subsidiaries as presently conducted.
(iii) Except as set forth in Section 3.2(o)(iii) of the
HealthAxis Disclosure Memorandum, HealthAxis and its Subsidiaries own
good and indefeasible title to, or have a valid leasehold interest in
or a valid right under contract to use, all tangible personal property
that is used in the conduct of their business, free and clear of any
Liens, except for any mechanics or similar statutory liens arising in
the ordinary course of business. All such tangible personal property is
in good operating condition and repair (normal wear and tear excepted)
and is suitable for its current uses and the operations and business of
HealthAxis and its Subsidiaries as presently conducted.
(p) Intellectual Property.
(i) Section 3.2(p) of the HealthAxis Disclosure Memorandum sets
forth, for the Intellectual Property owned by HealthAxis or any of its
Subsidiaries, a complete and accurate list of all U.S. and foreign (a)
Patents and Patent Applications; (b) Trademarks; (c) Copyright
registrations and mask work, Copyright and mask work applications, and
material unregistered Copyrights. Section 3.2(p) of the HealthAxis
Disclosure Memorandum lists all Software (other than readily available
commercial software programs) which are owned, licensed, leased, by
HealthAxis or any of its Subsidiaries, and identifies which Software is
owned, licensed, or leased, as the case may be, and, for all HealthAxis
Software, provides a product description of the HealthAxis Software,
the language in which it was written and the types of hardware
platforms on which it runs.
(ii) Section 3.2(p) of the HealthAxis Disclosure Memorandum
sets forth a complete and accurate list of all agreements, enforceable
understandings and enforceable commitments (whether oral or written,
and whether between HealthAxis or any of its Subsidiaries and third
parties or inter-corporate) to which HealthAxis or any of its
Subsidiaries is a party or otherwise bound, (i) granting or obtaining
any right to use or practice any rights under any Intellectual
Property, or (ii) restricting HealthAxis' or any of its Subsidiaries'
rights to use any Intellectual Property, including License Agreements.
The License Agreements are valid and binding obligations of all parties
thereto, enforceable in accordance with their terms, and there exists
no event or condition which will result in a violation or breach of, or
constitute (with or without due notice of lapse of
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time or both) a default by any party under any such License Agreement.
Neither HealthAxis nor any of its Subsidiaries has licensed or
sublicensed its rights in any Intellectual Property other than pursuant
to the License Agreements and there are no exclusive License Agreements
for HealthAxis Software or other Intellectual Property owned by
HealthAxis and its Subsidiaries. No royalties, honoraria or other fees
are payable by HealthAxis or any of its Subsidiaries to any third
parties for the use of or right to use any Intellectual Property
except, pursuant to the License Agreements.
(iii) Except as set forth on Section 3.2(p) of the HealthAxis
Disclosure Memorandum:
(A) HealthAxis or one of its Subsidiaries owns, or has a
valid right to use, free and clear of all Liens, all of
the Intellectual Property necessary to permit the
operation of HealthAxis and its Subsidiaries as
presently conducted and as proposed to be conducted.
HealthAxis or one of its Subsidiaries is listed in the
records of the appropriate United States, state, or
foreign registry as the sole current owner of record
for each application and registration listed on Section
3.2(p) of the HealthAxis Disclosure Memorandum.
(B) All of such HealthAxis Software and other Intellectual
Property were created as a work for hire (as defined
under U.S. copyright law) for HealthAxis or its
Subsidiaries. To the extent that any author or
developer of any HealthAxis Software or other
Intellectual Property was not a regular full-time
salaried employee of HealthAxis or its Subsidiaries at
the time such person contributed to such HealthAxis
Software or other Intellectual Property, such author or
developer has executed agreements assigning to
HealthAxis or its Subsidiaries all of such HealthAxis
Software and Intellectual Property developed by such
author or developer.
(C) The Intellectual Property owned by HealthAxis or any of
its Subsidiaries and, to the knowledge of HealthAxis
and its Subsidiaries, any Intellectual Property used by
HealthAxis or any of its Subsidiaries, is subsisting,
in full force and effect, and has not been canceled,
expired, or abandoned, and is valid and enforceable.
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(D) There is no pending or, to the knowledge of HealthAxis
and its Subsidiaries, threatened claim, suit,
arbitration or other adversarial proceeding before any
court, agency, arbitral tribunal, or registration
authority in any jurisdiction (i) involving the
Intellectual Property owned by HealthAxis or any of its
Subsidiaries, or to the knowledge of HealthAxis and its
Subsidiaries, the Intellectual Property licensed to
HealthAxis or any of its Subsidiaries or (ii) alleging
that the activities or the conduct of HealthAxis' or
any of its Subsidiaries' business does nor will
infringe upon, violate or constitute the unauthorized
use of the intellectual property rights of any third
party or challenging the ownership, use, validity,
enforceability or registrability of any Intellectual
Property by HealthAxis or any of its Subsidiaries.
There are no settlements, forebearances to use,
consents, judgments, or orders or similar obligations
other than the License Agreements which (a) restrict
HealthAxis' or any of its Subsidiaries' rights to use
any Intellectual property, (b) restrict HealthAxis' or
any Subsidiaries' business in order to accommodate a
third party's intellectual property rights or (c)
permit third parties to use any Intellectual Property
owned or controlled by HealthAxis or any of its
Subsidiaries.
(E) No other Software, other than ordinary upgrades to the
HealthAxis Software, is used to operate the business of
HealthAxis and its Subsidiaries as presently conducted.
To the best knowledge of HealthAxis, no rights of any
third party are necessary to market, license, sell,
modify, update, and/or create derivative works for the
HealthAxis Software listed at Section 3.2(p) of the
HealthAxis Disclosure Memorandum as presently and
contemplated to be marketed, licensed, sold, modified,
updated and/or created by HealthAxis.
(F) HealthAxis and its Subsidiaries maintains
machine-readable master-reproducible copies of the
object and executable code, master reproducible copies
of the source code listings, technical documentation
and user manuals for the most current releases or
versions of the HealthAxis Software and for all earlier
releases or versions thereof currently being supported
by HealthAxis and its
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Subsidiaries; in each case, the machine-readable copy
of the object and executable code substantially
conforms to the corresponding source code listing from
which it was compiled; the HealthAxis Software is
written in the language as set forth Section 3.2(p) of
the HealthAxis Disclosure Memorandum, for use on the
hardware set forth at Section 3.2(p) of the HealthAxis
Disclosure Memorandum with standard operating systems;
the HealthAxis Software can be maintained and modified
by reasonably competent programmers familiar with such
language, hardware and operating systems; in each case,
each component of the HealthAxis Software that creates,
accepts, displays, stores, retrieves, accesses,
recognizes, distinguishes, compares, sorts,
manipulates, processes, calculates or otherwise uses
dates or date-related data will do so accurately,
without operating defects, using dates in the twentieth
and twenty-first centuries, and will not be adversely
affected by the advent of the year 2000, the advent of
any leap year, the advent of the twenty-first century,
or the transition from the twentieth century through
the year 2000 and into the twenty-first century,
provided that all hardware and operating software in
connection with which the HealthAxis Software is used
perform in such a manner; with respect to the hardware
and third party application and operating software with
which the HealthAxis Software is used, HealthAxis and
its Subsidiaries have received written assurances from
the hardware manufacturers and third party software
licensors that this hardware and software is Y2K
Compliant and such hardware and software have
successfully completed Y2K Compliance testing
administered by or on behalf of HealthAxis and its
Subsidiaries, to the knowledge of HealthAxis and its
Subsidiaries the HealthAxis Software does not contain
any unauthorized code such as a virus, Trojan horse,
worm, or other software routine designed to permit
unauthorized access to disable, erase or otherwise harm
the HealthAxis Software, hardware or data
automatically, with the passage of time, or under the
control of a person other than the Merger Parties. The
twenty-first century will be deemed to commence on
January 1, 2001.
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(G) HealthAxis and its Subsidiaries have taken reasonable
precautions to test for and prevent unauthorized codes
such as viruses, Trojan horses, worms, or other
software routines designed to permit unauthorized
access to disable, erase or otherwise harm the
HealthAxis Software with the passage of time, or under
the control of a person other than HealthAxis or its
Subsidiaries. No export control licenses are necessary
for the HealthAxis Software in order to permit the
operation of the business of HealthAxis and its
Subsidiaries as presently conducted.
(H) The conduct of HealthAxis' and its Subsidiaries'
business as currently conducted or planned to be
conducted does not infringe upon (either directly or
indirectly such as through contributory infringement or
inducement to infringe) any intellectual property
rights owned or controlled by any third party. To the
knowledge of HealthAxis and its Subsidiaries, no third
party is misappropriating, infringing, or violating any
Intellectual Property owned or used by HealthAxis or
any of its Subsidiaries and no such claims, suits,
arbitrations or other adversarial proceedings have been
brought against any third party by HealthAxis or any of
its Subsidiaries which remain unresolved.
(I) HealthAxis and each of its Subsidiaries take reasonable
measures to protect the confidentiality of and all
proprietary rights in its Trade Secrets, including
requiring its employees and other parties having access
thereto to execute written non-disclosure agreements.
To the knowledge of HealthAxis and its Subsidiaries, no
Trade Secret has been disclosed or authorized to be
disclosed to any third party other than pursuant to a
non-disclosure agreement. To the knowledge of
HealthAxis and its Subsidiaries, no party to any
non-disclosure agreement relating to its Trade Secrets
is in breach or default thereof.
(J) No current or former partner, director, officer, or
employee of HealthAxis or any of its Subsidiaries (or
any of their respective predecessors in interest) will,
after giving effect to the transactions contemplated
herein, own or retain any rights in or to (including,
but not limited to, the right to royalty payments) any
of the Intellectual Property owned,
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marketed, used or under development by HealthAxis and
its Subsidiaries.
(iv) The consummation of the transactions contemplated hereby
will not result in the loss or impairment of HealthAxis' or any of its
Subsidiaries' rights to own or use any of the Intellectual Property,
nor will it require the consent of any governmental authority or third
party in respect of any such Intellectual Property.
(q) Material Contracts. Section 3.2(q) of the HealthAxis Disclosure
Memorandum contains a true and complete list of each of the following
written or oral Contracts in effect as of the date of this Agreement
(true and complete copies of any written Contract or summaries in
writing describing any oral Contract of which have been made available
to Insurdata) to which HealthAxis or any of its Subsidiaries is a party
or by which any of their respective assets or properties is or may be
bound (each of which is a "HealthAxis Material Contract"):
(i) all employment, agency (other than insurance agency),
consultation, or representation Contracts or other Contracts of any
type (including without limitation loans or advances) with any present
officer, director, Key Employee (as defined below), agent (other than
an insurance agent), consultant, or other similar representative of
HealthAxis or any of its Subsidiaries (or former officer, director, Key
Employee, agent (other than an insurance agent), consultant or similar
representative of HealthAxis or any of its Subsidiaries if there exists
any present or future liability with respect to such Contract);
(ii) all Contracts relating to the borrowing of money by
HealthAxis, relating to the deferred purchase price for property or
services, or relating to the direct or indirect guarantee by HealthAxis
or any of its Subsidiaries of any liability;
(iii) all Contracts pursuant to which HealthAxis or any of its
Subsidiaries has agreed to indemnify or hold harmless any person or
entity (other than indemnifications or hold harmless covenants in the
ordinary course of business and consistent with past practice);
(iv) all leases or subleases of real property used in the
business, operations, or affairs of HealthAxis or any of its
Subsidiaries;
(v) all Contracts under which any rights in and/or ownership of
any material software products, technology or other intangible property
of HealthAxis or its Subsidiaries was acquired; and
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(vi) any other Contract requiring the payment of at least
$250,000 or which cannot be terminated upon 60 days or less notice.
Each Contract disclosed or required to be disclosed in Section 3.2(q) of the
HealthAxis Disclosure Memorandum is in full force and effect and constitutes a
legal, valid and binding obligation of HealthAxis or any of its Subsidiaries to
the extent any such entity is a party thereto and, to the knowledge of
HealthAxis, each other party thereto. Neither HealthAxis nor any of its
Subsidiaries has received from any other party to such Contract any written
notice of termination or intention to terminate or not to honor the terms of
such Contract, or to the knowledge of HealthAxis, any oral notice of termination
or intention to terminate or not to honor the terms of such Contract. Except as
set forth in Section 3.2(q) of the HealthAxis Disclosure Memorandum, neither
HealthAxis nor any of its Subsidiaries nor, to the knowledge of HealthAxis, any
other party to such Contract is in violation or breach of or default under any
such Contract (or with or without notice or lapse of time or both, would be in
violation or breach of or default under any such Contract), which violations,
breach or default would individually or in the aggregate have a Material Adverse
Effect on HealthAxis.
(r) Related Party Transactions. Except as set forth in Section
3.2(r) of the HealthAxis Disclosure Memorandum, no Related Party of
HealthAxis (i) has borrowed any monies from or has outstanding any
indebtedness, liabilities or other similar obligations to HealthAxis or
any of its Subsidiaries; (ii) owns any direct or indirect interest of
any kind in, or is a director, officer, employee, partner, affiliate or
associate of, or consultant or lender to, or borrower from, or has the
right to participate in the management, operations or profits of, any
person or entity which is (A) a competitor, supplier, customer,
distributor, lessor, tenant, creditor or debtor of HealthAxis or any of
its Subsidiaries, (B) engaged in a business related to the business of
HealthAxis or any of its Subsidiaries, or (C) participating in any
transaction to which HealthAxis or any of its Subsidiaries is a party;
or (iii) is otherwise a party to any contract, arrangement or
understanding with HealthAxis or any of its Subsidiaries.
(s) Liens. Except as set forth in Section 3.2(s) of the HealthAxis
Disclosure Memorandum, neither HealthAxis nor any of its Subsidiaries
has granted, created, or suffered to exist with respect to any of its
assets, any Liens.
(t) Operations; Insurance. Section 3.2(t) of the HealthAxis
Disclosure Memorandum contains a true and complete list and description
of all liability, property, workers compensation, directors and
officers liability, and other similar insurance policies or agreements
that insure the business, operations, or affairs of HealthAxis and its
Subsidiaries or affect or relate to the ownership, use, or operations
of any of the assets or properties of HealthAxis and its Subsidiaries.
Excluding insurance policies that have expired and been replaced in the
ordinary course of business, no insurance policy has been canceled
within the last year except as disclosed in Section 3.2(t) of the
HealthAxis
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Disclosure Memorandum, and, to the knowledge of HealthAxis or its
Subsidiaries, no threat has been made to cancel any insurance policy of
any of HealthAxis or its Subsidiaries during such period and, to
HealthAxis's knowledge, there is no basis for any such cancellation.
Except as set forth in Section 3.2(t) of the HealthAxis Disclosure
Memorandum, there are no claims that are pending under any of the
insurance policies described in Section 3.2(t)of the HealthAxis
Disclosure Memorandum.
(u) Board Recommendation. The Board of Directors of HealthAxis, at
a meeting duly called and held or by unanimous written consent, has by
the requisite vote of directors determined that this Agreement and the
transactions contemplated hereby (including any amendment to the
Articles of Incorporation or Bylaws of HealthAxis and the authorization
of any increase in the number of shares of HealthAxis Common Stock
authorized to be issued and any class of HealthAxis Preferred Stock)
are fair to and in the best interests of the shareholders of HealthAxis
be and has approved the same, and resolved to recommend that the
shareholders of HealthAxis approve this Agreement and the transactions
contemplated herein. The Board of Directors of HealthAxis has taken all
action necessary to exempt the transactions contemplated by this
Agreement from (i) the operation of any "fair price," "moratorium,"
"control share acquisition," "business combination" or any other
Takeover Statute and (ii) any restrictions or limitations set forth in
the Articles of Incorporation or Bylaws of HealthAxis, other than
approval by the requisite shareholders of HealthAxis.
(v) Vote Required. The affirmative vote of the holders of a
majority of HealthAxis Common Stock and of a majority of each class of
HealthAxis Preferred Stock are the only votes of the holders of any
class or series of HealthAxis' capital stock necessary under applicable
law or otherwise, to approve the Merger and the other transactions
contemplated hereby on the part of HealthAxis.
(w) No Brokers. Except for BancBoston Robertson Stephens (whose fee
shall not exceed the amount set forth on Section 3.2(w) of the
HealthAxis Disclosure Memorandum), no broker, investment banker,
financial advisor or other person is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of HealthAxis or any of its
Subsidiaries.
(x) Questionable Payments. To the knowledge of HealthAxis, no
current or former director, officer, representative, agent or employee
of HealthAxis or any of its Subsidiaries (when acting in such capacity
or otherwise on behalf of HealthAxis or any of its Subsidiaries) (i)
has used or is using corporate funds for any illegal contributions,
gifts, entertainment or other unlawful expenses relating to political
activity; (ii) has used or is using any corporate funds for any direct
or indirect unlawful payments to any foreign or domestic government
officials or employees; (iii) has violated or is violating
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any provision of the Foreign Corrupt Practices Act of 1977, (iv) has
established or maintained, or is maintaining, any unlawful or
unrecorded fund of corporate monies or other properties, (v) has made
any false or fictitious entries on the books and records of HealthAxis
or any of its Subsidiaries, (vi) has made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment of any nature
using corporate funds or otherwise on behalf of HealthAxis or any of
its Subsidiaries; or (vii) made any material gift of assets or services
that is not deductible for federal income tax purposes using corporate
funds or otherwise on behalf of HealthAxis or any of its Subsidiaries.
(y) Offerings. The disclosure documents, if any, and all other
information, in writing or otherwise, provided to prospective
purchasers in the offering by HealthAxis of its securities on the terms
and conditions set forth on Schedule 3 hereto (the "HealthAxis
Offering") and the offering by HealthAxis of its securities on the
terms and conditions set forth on Schedule 4 hereto (the "Provident
Offering"), the proceeds of which are being funded prior to or
contemporaneously with the execution and delivery of this Agreement,
does not and will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The offering
and sale of the securities in the HealthAxis Offering and the Provident
Offering will not be required to be registered under Section 5 of the
Securities Act of 1933, as amended, or under applicable state
securities laws and otherwise has been and will be made in compliance
with all applicable federal and state securities laws.
3.3 Representations and Warranties of UICI. UICI represents and
warrants to HealthAxis and Provident as follows:
(a) Organization, Standing and Power. UICI is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as
now being conducted and is duly qualified or licensed to do business as
a foreign corporation and in good standing to conduct business in each
jurisdiction in which the business it is conducting, or the operation,
ownership or leasing of its properties, makes such qualification or
license necessary, other than such jurisdictions where the failure so
to qualify or become so licensed would not individually or in the
aggregate have a Material Adverse Effect on UICI. UICI is the record
and beneficial owner of a majority of the issued and outstanding shares
of capital stock of Insurdata.
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(b) Authority; No Violations; Consents and Approvals.
(i) UICI has all requisite corporate power and authority to
enter into this Agreement (including the agreements attached as
Exhibits to this Agreement to which it is a party) and to consummate
the transactions contemplated hereby. The execution and delivery of
this Agreement (including the agreements attached as Exhibits to this
Agreement to which it is a party) and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of UICI and, assuming that this
Agreement constitutes the valid and binding agreement of HealthAxis and
Provident, constitutes a valid and binding obligation of UICI
enforceable in accordance with its terms and conditions except that the
enforcement hereof may be limited by (A) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (B) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity) and
(C) any ruling or action of any Governmental Entity as set forth in
this Article III.
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by UICI will not
conflict with, or result in any Violation pursuant to, (A) any
provision of the Articles of Incorporation or Bylaws of UICI or the
comparable documents of any of its Subsidiaries (other than Insurdata)
or (B) any loan or credit agreement, note, mortgage, deed of trust,
indenture, lease, or any other agreement, obligation, instrument,
concession or license or any judgment, order, decree, statue, law,
ordinance, rule or regulation applicable to UICI, or any of its
properties or assets, except, in the case of clause (B), for such
Violations which would not, individually or in the aggregate,
materially and adversely affect the ability of UICI to consummate the
transactions contemplated hereby.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
Governmental Entity is required by or with respect to UICI or any of
its Subsidiaries (other than Insurdata) in connection with the
execution and delivery of this Agreement by UICI or the consummation by
UICI of the transactions contemplated hereby, except for: (A) the
filing of a pre-merger notification and report form under the HSR Act,
and the expiration or termination of the applicable waiting period
thereunder; (B) the filing of the Articles of Merger with the Secretary
of State of the State of Texas and the Department of State of the
Commonwealth of Pennsylvania; (C) such filings as may be required by
applicable federal or state securities laws; and (D) where the failure
to obtain, give or make consent, approval, order, or authorization of,
or registration, declaration or filing with, notice to, or permit from
a Government Entity would not materially and adversely affect the
ability of the Parties to consummate the transactions contemplated
hereby.
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(c) Insurdata Tax Representations. To the best knowledge of UICI,
the representations of Insurdata in Section 3.1(k) are correct and
complete.
3.4 Representations and Warranties of Provident. Provident represents
and warrants to Insurdata and UICI as follows:
(a) Organization, Standing and Power. Provident is a corporation
duly organized, validly existing and in good standing under the laws of
the Commonwealth of Pennsylvania, has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted and is duly qualified or licensed to do
business as a foreign corporation and in good standing to conduct
business in each jurisdiction in which the business it is conducting,
or the operation, ownership or leasing of its properties, makes such
qualification or license necessary, other than such jurisdictions where
the failure so to qualify or become so licensed would not individually
or in the aggregate have a Material Adverse Effect on Provident.
Provident is the record and beneficial owner of a majority of the
issued and outstanding shares of HealthAxis Common Stock.
(b) Authority; No Violations; Consents and Approvals.
(i) Provident has all requisite corporate power and authority
to enter into this Agreement (including the agreements attached as
Exhibits to this Agreement to which it is a party) and to consummate
the transactions contemplated hereby. The execution and delivery of
this Agreement (including the agreements attached as Exhibits to this
Agreement to which it is a party) and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Provident (including the
receipt of an opinion of HealthAxis's financial advisor to the effect
that the consideration to be paid in the Merger is fair from a
financial point of view) and, assuming that this Agreement constitutes
the valid and binding agreement of HealthAxis and Provident,
constitutes a valid and binding obligation of Provident enforceable in
accordance with its terms and conditions except that the enforcement
hereof may be limited by (A) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
now or hereafter in effect relating to creditors' rights generally and
(B) general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity) and (C) any ruling
or action of any Governmental Entity as set forth in this Article III.
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Provident will
not conflict with, or result in any Violation pursuant to, (A) any
provision of the Articles of Incorporation or Bylaws of Provident or
the comparable documents of any of its
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Subsidiaries (other than HealthAxis) or (B) any loan or credit
agreement, note, mortgage, deed of trust, indenture, lease, or any
other agreement, obligation, instrument, concession or license or any
judgment, order, decree, statue, law, ordinance, rule or regulation
applicable to Provident, or any of its properties or assets, except, in
the case of clause (B), for such Violations which would not
individually or in the aggregate materially and adversely affect the
ability of Provident to consummate the transactions contemplated
hereby.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
Governmental Entity is required by or with respect to Provident or any
of its Subsidiaries (other than HealthAxis) in connection with the
execution and delivery of this Agreement by Provident or the
consummation by Provident of the transactions contemplated hereby,
except for: (A) the filing of a pre-merger notification and report form
under the HSR Act, and the expiration or termination of the applicable
waiting period thereunder; (B) the filing of the Articles of Merger
with the Secretary of State of the State of Texas and the Department of
State of the Commonwealth of Pennsylvania; (C) such filings as may be
required under applicable federal or state securities laws; and (D)
where the failure to obtain consent, approval, order, or authorization
of, or registration, declaration or filing with, notice to, or permit
from a Government Entity would not materially and adversely affect the
ability of the Parties to consummate the transactions contemplated
hereby.
(c) HealthAxis Tax Representations. To the best knowledge of
Provident, the representations of HealthAxis in Section 3.2(k) are
correct and complete.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of Insurdata and HealthAxis. During the period from the
date of this Agreement and continuing until the earlier of (i) the Effective
Time or (ii) the termination of this Agreement pursuant to Article VII, both
Insurdata and HealthAxis agree (and have caused their respective Subsidiaries to
agree) as follows (except to the extent that HealthAxis or Insurdata, as the
case may be, shall consent in writing, which consent shall not be unreasonably
withheld or delayed):
(a) Ordinary Course. Each Merger Party will (and will cause each of
its Subsidiaries to) conduct its business only in the ordinary course
and consistent with past practices. Without limiting the generality of
the foregoing and except as expressly provided herein:
(i) Each Merger Party will use (and will cause each of its
Subsidiaries to use) reasonable best efforts to (A) maintain in full
force and effect all Material
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Contracts, except those which expire in accordance with their terms and
(B) maintain all Licenses, qualifications, and authorizations of the
Merger Parties to do business in each jurisdiction in which it is so
licensed, qualified, or authorized, except in the case of (A) and (B)
above where it is determined in good faith by the Board of Directors of
the Merger Party that the maintenance of any such Material Contract or
License, qualification or authorization is no longer necessary or
advisable for the conduct of business of such Merger Party as presently
conducted or as proposed to be conducted after the Effective Time,
after consultation with the other Merger Party.
(ii) Each Merger Party will (and will cause each of its
Subsidiaries to) in all material respects (A) maintain all its assets
and properties in good working order and condition (ordinary wear and
tear excepted), and (B) continue all current marketing and selling
activities relating to its business, operations and affairs, except
where it is determined in good faith by the Board of Directors that
such assets, properties or marketing or selling activities are no
longer necessary or advisable for the conduct of business of such
Merger Party as presently conducted or as proposed to be conducted
after the Effective Time, after consultation with the other Merger
Party.
(iii) Each Merger Party will (and will cause each of its
Subsidiaries to) maintain its books and records in the usual manner and
consistent with past practice and will not permit a material change in
any underwriting, investment, actuarial, financial reporting, tax, or
accounting practice or policy or in any assumption underlying such a
practice or policy, or in any method of calculating any bad debt,
contingency, insurance, or other reserve for financial reporting
purposes or for other accounting purposes (including any practice,
policy, assumption, or method relating to or affecting the
determination of its insurance in force, premium or investment income,
reserves or other similar amounts, or operating ratios with respect to
expenses, losses or lapses).
(iv) Each Merger Party will (and will cause each of its
Subsidiaries to) (A) prepare properly and to file duly and validly all
Tax Returns required to be filed prior to the Closing Date with the
appropriate taxing authority, (B) pay duly and fully all Taxes which
are due with respect to the periods covered by such Tax Returns or
otherwise levied or assessed upon such entity or any of its assets or
properties, and to withhold or collect and pay to the proper taxing
authorities all Taxes that such entity is required to so withhold or
collect and pay, unless such taxes are being contested in good faith
and (C) provide the other Merger Party with copies of all federal
income tax returns and all material state income tax returns as soon as
practicable after the preparation, but prior to the filing, thereof.
Each Merger Party agrees not to make or permit to be made (and will
prohibit its Subsidiaries from making) without the written consent of
the other Merger Party any tax election or settle or compromise any
income tax liability that may reasonably be expected to be material to
the Merger Parties and their respective Subsidiaries taken as a whole.
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(v) Insurdata will (and will cause each of its Subsidiaries to)
use its reasonable best efforts to maintain in full force and effect
substantially the same levels of insurance coverage as is afforded
under the insurance coverage described in Section 3.1(t) of the
Insurdata Disclosure Memorandum and HealthAxis will (and will cause
each of its Subsidiaries to) use its reasonable best efforts to
maintain in full force and effect substantially the same levels of
insurance coverage as is afforded under the insurance coverage
described in Section 3.2(t) of the HealthAxis Disclosure Memorandum.
(vi) Each Merger Party will (and will cause each of its
Subsidiaries to) continue to comply in all material respects with all
laws applicable to its business, operations or affairs.
(vii) Each Merger Party shall not (and shall cause each of its
Subsidiaries to not): (A) except in the ordinary course of business
consistent with past practice or as may be required pursuant to any
agreement entered into prior to the date hereof, grant any increases in
the compensation of any of its directors, officers or Key Employees;
(B) pay or agree to pay any pension, retirement allowance or other
employee benefit not required to be paid prior to the Effective Time by
any of the existing Benefit Plans as in effect on the date hereof to
any such director, officer or employee, whether past or present; (C)
enter into any new, or amend, modify or grant any consent or waiver
with respect to any existing, employment, retention or severance or
termination agreement with any director, officer or employee; or (D)
become obligated under any new benefit plan, which was not in existence
on the date hereof, or amend any such plan or arrangement in existence
on the date hereof if such amendment would have the effect of enhancing
any benefits thereunder.
(viii) Each Merger Party shall not (and shall cause each of
their respective Subsidiaries to not) assume or incur (which shall not
be deemed to include entering into credit agreements, lines of credit
or similar arrangements until borrowings are made under such
arrangements) any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights
to acquire any debt securities of the Merger Parties or any of their
respective Subsidiaries or guarantee any debt securities of others or
enter into any lease (whether such lease is an operating or capital
lease) or create any Liens on the property of the Merger Parties or any
of their respective Subsidiaries in connection with any indebtedness
thereof, or enter into any "keep well" or other agreement or
arrangement to maintain the financial condition of another person.
(ix) Each Merger Party shall not (and shall cause each of its
respective Subsidiaries to not) pay, discharge, settle or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the
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payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice. Neither Merger Party shall effect (and
shall prohibit each of their respective Subsidiaries from effecting)
any settlements of any legal proceedings without the prior written
consent (such consent not to be unreasonably withheld) of the other
Merger Party.
(x) Except for any transactions contemplated by this Agreement,
neither Merger Party shall, nor shall either Merger Party permit any
Subsidiary to, enter into any agreement or arrangement with any Related
Party, other than wholly owned Subsidiaries.
(xi) Each Merger Party will (and shall cause each of its
respective Subsidiaries to), (i) conduct its business in a diligent
manner, (ii) not make any material changes in its business practices
and (iii) use its reasonable best efforts to preserve its business
organization intact, keeping available the services of its current
officers, employees, agents and representatives, and maintaining the
goodwill of its customers, suppliers and other persons with which it
has business relations.
(b) Dividends; Changes in Stock. Neither of the Merger Parties nor
any of their respective Subsidiaries shall (i) declare or pay any
dividends on or make other distributions in respect of any of its
capital stock, (ii) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of
its capital stock, or (iii) repurchase or otherwise acquire any shares
of its capital stock, except as required by the terms of any employee
benefit plan as in effect on the date of this Agreement.
(c) Issuance of Securities. Neither of the Merger Parties nor any
of their respective Subsidiaries shall (i) except in the ordinary
course of business consistent with past practices pursuant to its
respective Stock Option Plans, grant any options, warrants or rights,
to purchase shares of its capital stock, (ii) amend the terms of or
reprice any warrant or option currently outstanding or amend the terms
of the stock option plans currently in existence, or (iii) except as
expressly provided in this Agreement, issue, deliver or sell, or pledge
or otherwise encumber any shares of its capital stock, or authorize or
propose to issue, deliver or sell, any shares of its capital stock or
any securities convertible into, or any rights, warrants or options to
acquire, any such shares or convertible securities, or agree to do any
of the foregoing, other than the issuance of shares and capital stock
upon the exercise of options or warrants that are outstanding on the
date of this Agreement.
(d) No Acquisitions; No Subsidiaries. Neither Merger Party nor any
Subsidiary of such Merger Party shall merge or consolidate with, or
acquire any equity interest in, any corporation, partnership,
association or other business organization, or enter into an agreement
with respect thereto. Neither Merger Party nor any Subsidiary of
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such Merger Party shall (i) acquire or agree to acquire any assets of
any corporation, partnership, association or other business
organization or division thereof, except for the purchase of inventory
and supplies in the ordinary course of business, (ii) begin to engage
in any new type of business or (iii) create any Subsidiary.
(e) No Dispositions. Other than dispositions set forth in Section
4.1(e) of the applicable Disclosure Memorandum of a Merger Party and
dispositions in the ordinary course of business consistent with past
practice which are not material, individually or in the aggregate, to
such party, neither Merger Party nor any Subsidiary of such Merger
Party shall sell, lease (whether such lease is an operating or capital
lease), encumber or otherwise dispose of, or agree to sell, lease,
encumber or otherwise dispose of, any of its properties.
(f) Maintenance of Existence; No Dissolution, Etc. Except as
otherwise permitted or contemplated by this Agreement, each Merger
Party shall (and shall cause each of its respective Subsidiaries to)
maintain its existence and good standing in their respective
jurisdictions of incorporation or organization and neither Merger Party
nor any of their respective Subsidiaries shall authorize, recommend,
propose or announce an intention to adopt a plan of complete or partial
liquidation or dissolution of such entity.
4.2 Actions of Parties. Except as contemplated or permitted by this
Agreement, no Party shall authorize, take or agree or commit to (and shall cause
each of its respective Subsidiaries to take or commit or agree to) take any
action that is reasonably likely to result in any of the representations or
warranties hereunder being untrue in any material respect or in any of the
covenants hereunder or any of the conditions to the Merger not being satisfied
in all material respects.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Securities Offering. Prior to or contemporaneously with the
execution and delivery of this Agreement, HealthAxis shall have completed the
HealthAxis Offering and the Provident Offering, all upon the terms and
conditions set forth on Schedule 3 and Schedule 4 to this Agreement,
respectively.
5.2 Contract and Regulatory Approvals. The Parties will use (and will
cause each of their respective Subsidiaries to use) their reasonable best
efforts to obtain as promptly as practicable (a) all approvals and consents
required of any person or entity under all Contracts to which any Party or any
of its Subsidiaries is a party to consummate the transactions contemplated
hereby, and (b) all approvals, authorizations, and clearances of Governmental
Entities required of any Party and each of its Subsidiaries to consummate the
transactions contemplated hereby. The Parties will, and will cause each of its
Subsidiaries to, (i) provide such
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other information and communications to such Governmental Entities as any other
Party or such authorities may reasonably request, and (ii) cooperate with any
Party in obtaining, as promptly as practicable, all approvals, authorizations,
and clearances of governmental or regulatory authorities and other persons or
entities required of any other Party to consummate the transactions contemplated
hereby. Without limiting the generality of the foregoing, the Parties shall use
their reasonable best efforts to take or cause to be taken all actions
necessary, proper or advisable to obtain any consent, waiver, approval or
authorization relating to any federal, state or local statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other
laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization, lessening of competition or
restraint of trade and includes the HSR Act that is required for consummation of
the transactions contemplated by this Agreement; provided, however, that the
foregoing shall not obligate any Party to agree to take any action which would
have a Material Adverse Effect on the expected benefits to such Party of the
transactions contemplated hereby.
5.3 HSR Filings. The Parties will (a) take all actions necessary to
make the filings required of it or its affiliates under the HSR Act with respect
to the transactions contemplated by this Agreement, (b) comply with any request
for additional information received by any other Party or its affiliates from
the Federal Trade Commission or Antitrust Division of the Department of Justice
pursuant to the HSR Act, (c) cooperate with any other Party in connection with
such Party's filings under the HSR Act, and (d) request early termination of the
applicable waiting period.
5.4 Access to Information; Confidentiality.
(a) Upon reasonable notice, each Merger Party shall (and shall
cause each of their respective Subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of each other
Party, reasonable access to the personnel, facilities and assets of
such Merger Party and to all existing books, records, tax returns, work
papers and other documents and information relating to such Merger
Party and provide to the other Merger Party with such copies of the
existing books, records, tax returns, work papers and other documents
and information relating to such Merger Party, and with such additional
financial, operating and other data and information regarding such
Merger Party as may be reasonably requested.
(b) The Parties and their respective representatives will hold all
non-public information obtained from any other Party in connection with
the transactions contemplated hereby in confidence and will not, except
as required by law, without the prior written consent of the other
Parties, disclose such information other than for purposes of
evaluating the transactions contemplated hereby.
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5.5 Fees and Expenses. Except as otherwise provided in the Transition
Agreement (as defined in Section 5.6) and except with respect to claims for
damages incurred as a result of the breach of this Agreement, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, legal, accounting or other
advisory fees) shall be paid by the party incurring such expense.
5.6 Transition Agreement. Contemporaneously with the execution and
delivery of this Agreement, HealthAxis and Insurdata shall enter into the
Transition Agreement in the form attached hereto as Exhibit C.
5.7 Indemnification.
(a) From and after the Effective Time the Surviving Corporation
shall, indemnify, defend and hold harmless each person who is now, or
has been at any time prior to the date hereof or who becomes prior to
the Effective Time, an officer or director of Insurdata or who served
at the request of Insurdata as an officer or director of another entity
(the "Insurdata Indemnified Parties") against all losses, claims,
damages, costs, expenses (including attorneys' fees and expenses),
liabilities or judgments or amounts that are paid in settlement with
the approval of the indemnifying party (which approval shall not be
unreasonably withheld) of or in connection with any threatened or
actual claim, action, suit, proceeding or investigation based in whole
or in part on or arising in whole or in part out of the fact that such
person is or was a director or officer of Insurdata and pertaining to
any matter existing or occurring at or prior to the Effective Time and
whether asserted or claimed prior to, or at or after, the Effective
Time ("HealthAxis Indemnified Liabilities"), including all Indemnified
Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Agreement or the transactions
contemplated hereby, in each case to the full extent a corporation is
permitted under applicable law to indemnify its own directors or
officers as the case may be (and HealthAxis and the Surviving
Corporation, as the case may be, will pay expenses in advance of the
final disposition of any such action or proceeding to each Indemnified
Party to the full extent permitted by law). From and after the
Effective Time UICI shall indemnify, defend and hold harmless
HealthAxis (HealthAxis, together with the Insurdata Indemnified
Parties, being referred to herein as the "Indemnified Parties") against
all losses, claims, damages, costs, expenses (including attorneys' fees
and expenses), liabilities or judgments or amounts that are paid in
settlement with the approval of the indemnifying party (which approval
shall not be unreasonably withheld) of or in connection with any
threatened or actual claim, action, suit, proceeding or investigation,
whether asserted or claimed prior to, or at or after, the Effective
Time, based in whole or in part on or arising in whole or in part out
of (x) the matters identified in clauses (i) and (ii) of Section 3.1(l)
of the Insurdata Disclosure Memorandum, provided that the indemnity by
UICI in this clause (x) shall only apply to any such losses, claims,
damages, costs, expenses (including attorneys fees and expenses),
liabilities, judgments or amounts
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which in the aggregate exceed $50,000 and (y) the matter identified in
clause (i) of Section 3.1(j) of the Insurdata Disclosure Memorandum,
provided that the indemnity by UICI in this clause (y) shall only apply
to any losses, claims, damages, costs, expenses (including attorneys
fees and expenses), liabilities, judgments or amounts which in the
aggregate exceed $100,000 (clauses (x) and (y) collectively being the
"UICI Indemnified Liabilities" and, together with the HealthAxis
Indemnified Liabilities, the "Indemnified Liabilities"). Without
limiting the foregoing, in the event any such claim, action, suit,
proceeding or investigation is brought against any Indemnified Parties
(whether arising before or after the Effective Time), then upon notice
of such claim, action, suit, proceeding or investigation given to the
indemnifying party as hereinafter provided the Indemnified Parties
shall permit the indemnifying party (at its expense) to assume the
defense with respect to any such claim, action, suit or proceeding;
provided, however, that counsel for the indemnifying party who shall
conduct such defense shall be reasonably satisfactory to the
Indemnified Parties and the Indemnified Parties may participate in such
defense at Indemnified Parties expense. Any Indemnified Party wishing
to claim indemnification under this Section 5.7, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify the
indemnifying party (but the failure so to notify shall not relieve a
party from any liability which it may have under this Section 5.7
except to the extent such failure prejudices such party). In the event
that the indemnifying party does not promptly assume the defense of any
matter as above provided, or counsel for the Indemnified Parties
reasonably believes and advises the Indemnified Parties in writing that
there are issues that raise conflicts of interest between the
indemnifying party and the Indemnified Parties or among the Indemnified
Parties, each group of Indemnified Parties who are not subject to such
conflicts may retain counsel satisfactory to such group, and the
indemnifying party shall pay all reasonable fees and expenses of such
counsel for each such group of Indemnified Parties promptly as
statements therefore are received; provided, however, that the
indemnifying party shall not be liable for any settlement effected
without its prior written consent (which consent shall not be
unreasonably withheld); and provided, further, however, that the
indemnifying party shall not be responsible for the fees and expenses
of more than one counsel for each group of Indemnified Parties without
such conflicts. In any event, the indemnifying party and the
Indemnified Parties shall cooperate in the defense of any action or
claim. The indemnifying party agrees that the foregoing rights to
indemnification, including provisions relating to advances of expenses
incurred in defense of any action or suit, existing in favor of the
Indemnified Parties with respect to matters occurring through the
Effective Time, shall survive the Merger and shall continue in full
force and effect for a period of not less than six years from the
Effective Time; provided, however, that all rights to indemnification
in respect of any Indemnified Liabilities asserted or made within such
period shall continue until the disposition of such Indemnified
Liabilities. Furthermore, the provisions with respect to
indemnification set forth in the Articles of Incorporation or Bylaws of
the Surviving Corporation shall not be amended for a period of six
years following the Effective Time if such amendment would
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materially and adversely affect the rights thereunder of individuals
who at any time prior to the Effective Time were directors or officers
of Insurdata in respect of actions or omissions occurring at or prior
to the Effective Time.
(b) The provisions of this Section 5.7 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his
heirs and his personal representatives and shall be binding on all
successors and assigns of the indemnifying party.
5.8 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, except as otherwise expressly contemplated hereby, each of the
Parties hereto agrees to use all reasonable best efforts to take, or cause to be
taken, all action and to do, or cause to be done as promptly as practicable, all
things necessary, proper or advisable, under applicable laws and regulations or
otherwise, to consummate and make effective the Merger and the other
transactions contemplated by this Agreement, subject, as applicable, to
shareholder approval.
5.9 Public Announcements. The Parties hereto will consult with each
other regarding the form and content of any press release or public announcement
pertaining to the Merger and shall not issue any such press release or make any
such public announcement prior to such consultation, except as may be required
by applicable law, court process or obligations pursuant to any listing
agreement with any national securities exchange, in which case the Party
proposing to issue such press release or make such public announcement shall use
reasonable efforts to consult in good faith with the other Party as to the form
and content of any such disclosure before issuing any such press release or
making any such public announcement.
5.10 Cooperation. From the date hereof until the Effective Time, the
Parties agree to work together to coordinate all aspects of transition planning
and the integration of Insurdata and its Subsidiaries with the businesses of
HealthAxis and its Subsidiaries from and after the Effective Time.
5.11 Benefit Plans. For employees of Insurdata as of the Effective Time
who continue to be employed by the Surviving Corporation after the Effective
Time, HealthAxis shall cause the Surviving Corporation to provide employee
benefits which are substantially comparable in the aggregate to the benefits
provided under the Insurdata Employee Benefit Plans until the first anniversary
of the Effective Time.
5.12 Tax-Free Reorganization. Each of the Parties shall use its best
efforts to cause the Merger to be treated as a reorganization within the meaning
of Section 368(a) of the Code. The Parties shall not permit any of their
respective affiliates to take any action which would cause the Merger to fail to
qualify as a reorganization within the meaning of Section 368(a) of the Code.
5.13 UICI Voting of Shares. UICI agrees to vote all of the Insurdata
Common Stock owned by it in favor of the Merger and to execute and deliver, or
cause to be delivered, such
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additional or further consents as HealthAxis may reasonably request to effect
the approvals on behalf of Insurdata. UICI agrees to vote all shares of
HealthAxis capital stock owned by it and to cause any affiliate of UICI to vote
all shares of HealthAxis capital stock owned by such affiliate in favor of all
proposals submitted to shareholders of HealthAxis in connection with the Merger
and the transactions contemplated by this Agreement, including any amendment to
the Articles of Incorporation or Bylaws of HealthAxis and the authorization of
any increase in the number of shares of HealthAxis Common Stock authorized to be
issued and any class of HealthAxis Preferred Stock.
5.14 Provident Voting of Shares. Provident agrees to vote all of the
HealthAxis Common Stock and HealthAxis Preferred Stock owned by it and to cause
any affiliate of Provident to vote all shares of HealthAxis capital stock owned
by such affiliate in favor of the Merger and all proposals submitted to the
shareholders of HealthAxis in connection with the Merger and the transactions
contemplated by this Agreement, including any amendment to the Articles of
Incorporation or Bylaws of HealthAxis and the authorization of any increase in
the number of shares of HealthAxis Common Stock authorized to be issued and any
class of HealthAxis Preferred Stock and to execute and deliver, or cause to be
delivered, such additional or further consents as Insurdata may reasonably
request to effect the approvals on behalf of HealthAxis.
5.15 Tax Matters.
(a) As soon as practicable after the Closing Date, UICI will
prepare and file all appropriate Tax Returns for the operations of
Insurdata for all tax periods ending on or before the Closing Date,
including, for those jurisdictions and tax authorities that permit or
require a short period Tax Return, for the period ending on the Closing
Date. The books and records of UICI and Insurdata will be kept, and the
Federal, state and other income Tax Returns of the "affiliated group"
(as defined in Section 1504(a) of the Code) of which UICI and Insurdata
is a member will be filed, so as to accurately reflect the operations
of Insurdata through the end of the Closing Date. Such Insurdata Tax
Returns will be prepared in a manner consistent with past accounting
methods, elections, conventions and practices. The Surviving
Corporation and Provident each shall have the right to review any such
Tax Returns prepared on Insurdata's behalf at least 15 days prior to
the filing of any such Tax Return. The Surviving Corporation shall pay
and hold UICI harmless from its share of the affiliated group tax
liability, if any, as determined in accordance with paragraph (h)
hereunder.
(b) As soon as practicable after the Closing Date, Provident will
prepare and file all appropriate Tax Returns to the extent permitted by
law for the operations of HealthAxis for all periods ending on or
before the Closing Date, including, for those jurisdictions and tax
authorities that permit or require a short period Tax Return, for the
period ending on the Closing Date. The books and records of Provident
and HealthAxis
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will be kept, and the Federal, state and other income Tax Returns of
HealthAxis or of the "affiliated group" (as defined in Section 1504(a)
of the Code), if any, of which Provident and HealthAxis is a member
will be filed, so as to accurately reflect the operations of HealthAxis
through the end of the Closing Date. Such HealthAxis Tax Returns will
be prepared in a manner consistent with past accounting methods,
elections, conventions and practices. The Surviving Corporation and
UICI shall each have the right to review any such Tax Returns prepared
on HealthAxis's behalf at least 15 days prior to the filing of any such
Tax Return. The Surviving Corporation shall pay and hold Provident
harmless from its share of the affiliated group tax liability, if any,
as determined in accordance with paragraph (h) hereunder.
(c) The Surviving Corporation shall prepare and file all
appropriate Tax Returns for the operations of the Surviving Corporation
for all periods ending after the Closing Date.
(d) Each of UICI and Provident (hereafter an "Indemnitor") will
indemnify and hold the Surviving Corporation harmless from any tax
liability of the Surviving Corporation arising under Treasury
Regulations ss. 1.1502-6 or any similar provision under state law that
is attributable to the Surviving Corporation having been a part of an
affiliated or unitary group of which the relevant Indemnitor was a
party, other than Taxes attributable to the operations of HealthAxis or
Insurdata, as the case may be.
(e) The Surviving Corporation will pay or cause to be paid all
Taxes (including any interest or penalties thereon) for the tax periods
described in paragraph (c) above, and will indemnify and hold each of
UICI and Provident harmless therefrom on an actual after-tax basis as
determined by the independent certified accounting firm that regularly
prepares the Tax Returns of the Surviving Corporation or such successor
firm as the Parties may appoint.
(f) Each of UICI, Provident and the Surviving Corporation will
cooperate fully with each other in connection with (i) the preparation
and filing of any Federal, state or local Tax Returns that include the
business and operations of the Insurdata and HealthAxis for all tax
periods ending on or before the Closing Date, and (ii) any audit
examination by any government taxing authority of the returns referred
to in clause (i). Such cooperation shall include, without limitation,
the furnishing or making available of records, books of account or
other materials of either Insurdata or HealthAxis, as applicable, that
are necessary or helpful for the defense against assertions of any
taxing authority as to any Tax Returns that include operations of the
Surviving Corporation.
(g) An Indemnitor shall promptly notify the Surviving Corporation
of any proposed adjustment of any item on any Tax Return of the
affiliated group for any tax period ending on or before the Closing
Date, if such proposed adjustment may affect the
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tax liability of the Surviving Corporation. If an affiliated group tax
liability is adjusted for any taxable year as a result of an amended
return, a claim for refund or audit by the Internal Revenue Service or
other appropriate taxing authority, a redetermination of the tax
liability of Insurdata or HealthAxis, as the case may be, shall be made
in accordance with paragraph (h) hereunder. The Surviving Corporation
agrees to indemnify and hold harmless UICI or Provident, as the case
may be, from the amount of any such adjustment attributable to the
operations of the Surviving Corporation. Such Indemnitor shall advise
the Surviving Corporation of the status of any conferences, meetings
and proceedings with tax authorities or appearances before any court
pertaining to such adjustment or adjustments, and shall advise the
Surviving Corporation of the outcome of such proceedings. However,
nothing herein shall entitle Surviving Corporation to interfere with
the relevant Indemnitor's right to make any judgments or to take any
actions it deems appropriate in connection with the disposition of any
such proposed adjustments.
(h) The tax liability of the Surviving Corporation for purposes of
determining any affiliated group tax liability, if any, attributable to
the operations of Insurdata or HealthAxis, as the case may be, for
periods ending on or prior to the Closing Date shall be determined on
the separate return basis as set forth in Code Section 1552(a)(2) and
Treasury Regulations Section 1.1552-1(a)(2). Payment of any such
amounts, including the amount of any adjusting payment determined
hereunder as a result of the filing of any amended return or any audit
adjustment, due to Provident, UICI or the Surviving Corporation, as the
case may be, shall be made the later of (i) the date that is ten (10)
days before the date such payments must be made to the taxing authority
or (ii) the date that is ten (10) days after the date on which
Provident, UICI or the Surviving Corporation, as the case may be,
received notice of such obligation. Payment of any amount to the
Surviving Corporation resulting from a claim for refund or amended
return shall be made within ten (10) days after such refund amount is
received by Provident or UICI, as the case may be.
5.16 Technology Outsourcing Agreement. As soon as reasonably
practicable after the date hereof, but in any event prior to the Effective Time,
UICI and its affiliates shall have entered into a Technology Outsourcing
Agreement with Insurdata, pursuant to which Insurdata shall agree to provide to
UICI and its affiliates technology support services, data processing services
and such other software and hardware based services necessary and sufficient to
support the operations of UICI and its affiliates and having the material terms
set forth in Exhibit E hereto.
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ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each Party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) Shareholder Approvals. The Merger shall have been approved and
adopted by (i) the affirmative vote or written consent of the holders
of a majority of the outstanding shares of HealthAxis Common Stock and
by the holders of a majority of the outstanding shares of each class of
HealthAxis Preferred Stock and entitled to vote thereon as well as a
written waiver from each holder of HealthAxis Preferred Stock waiving
any preemptive right such holder may have in connection with the Merger
and the right of UICI to purchase additional shares of HealthAxis
capital stock pursuant to the terms of the Shareholders Agreement and
(ii) of the affirmative vote or written consent of at least two-thirds
of the outstanding shares of Insurdata Common Stock..
(b) Governmental and Regulatory Consents. All actions, consents,
approvals, filings and notices listed in Section 3.1(d) of the
Insurdata Disclosure Memorandum and Section 3.2(d) of the HealthAxis
Disclosure Memorandum shall have been taken, made or obtained, except
for such actions, consents or approvals the failure of which to obtain
would not have a Material Adverse Effect on the Surviving Corporation
or materially and adversely affect the consummation of the Merger;
provided, however, that such consents or approvals shall be in full
force and effect at the Effective Time and shall not obligate any Party
to agree to take any action which would have a Material Adverse Effect
on the expected benefits to such Party of the transactions contemplated
hereby.
(c) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated
or shall have expired, and no restrictive order or other requirements
shall have been placed on any Party or the Surviving Corporation in
connection therewith.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect; provided,
however, that prior to invoking this condition, each Party shall use
reasonable best efforts to have any such decree, ruling, injunction or
order vacated.
(e) No Other Proceeding. There shall not be pending any action,
suit or proceeding before any court of competent jurisdiction or any
Governmental Entity in which there is a reasonable probability of an
outcome that would have a Material Adverse Effect on the Surviving
Corporation (i) challenging or seeking to restrain or prohibit the
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consummation of the Merger; or (ii) which would affect adversely the
right of Surviving Corporation to own its assets or operate its
business.
(f) Shareholders Agreement. Each of the parties to the HealthAxis
Shareholders Agreement shall have executed and delivered to HealthAxis
and to each other the Shareholders Agreement substantially in the form
attached hereto as Exhibit D.
(g) Registration Rights Agreement. HealthAxis shall have executed
and delivered to UICI the Registration Rights Agreement substantially
in the form attached hereto as Exhibit F.
(h) Voting Trust Agreement. The Voting Trust Agreement, in the form
attached hereto as Exhibit G, shall have been executed and delivered by
UICI and the Voting Trustees thereunder and UICI shall have transferred
to such Voting Trustees the 1,834,500 shares of Insurdata Common Stock
held by UICI which are subject to options granted by UICI to employees
of Insurdata under the Insurdata Founders Stock Option Program.
6.2 Conditions to Obligations of HealthAxis and Provident. The
obligations of HealthAxis and Provident to effect the Merger are further subject
to the satisfaction or waiver of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Insurdata and UICI set forth in this Agreement shall be
true and correct (without regard to any materiality qualifiers
contained therein) in each case as of the date of this Agreement and
(except to the extent such representations and warranties speak as of a
particular date) as of the Closing as though made on and as of the
Closing, except where the failure of one or more representations or
warranties to be true and correct, individually or in the aggregate,
would not result in a Material Adverse Effect on Insurdata or
materially and adversely affect the consummation of the Merger.
HealthAxis shall have received with respect to Insurdata a certificate
signed on behalf of Insurdata as of the Closing Date by the chief
executive officer and the chief financial officer of Insurdata
reaffirming the matters set forth in this paragraph and shall have
received with respect to UICI a certificate signed on behalf of UICI as
of the Closing Date by the chief executive officer and the chief
financial officer of UICI reaffirming the matters set forth in this
paragraph.
(b) Performance of Obligation of Insurdata and UICI. Insurdata and
UICI shall have performed and complied with, in all material respects,
all agreements and covenants required to be performed and complied with
by Insurdata and UICI under this Agreement at or prior to the Closing
Date.
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(c) No Material Adverse Change. There shall not have occurred or
arisen after September 30, 1999 and prior to the Effective Time any
change, event (including without limitation any damage, destruction or
loss, whether or not covered by insurance), condition (financial or
otherwise), or state of facts with respect to Insurdata or any of its
Subsidiaries which would constitute a Material Adverse Effect on
Insurdata.
(d) Federal Tax Opinion. HealthAxis and Provident shall have
received an opinion of Blank Rome Comisky & McCauley LLP (or another
nationally recognized law firm) to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and that each of Insurdata and
HealthAxis will be a party to that reorganization within the meaning of
Section 368(b) of the Code. In rendering such opinion, counsel may rely
upon customary representations of Insurdata and HealthAxis reasonably
satisfactory to such counsel.
6.3 Conditions to Obligation of Insurdata and UICI. The obligation of
Insurdata and UICI to effect the Merger is further subject to the satisfaction
or waiver of the following conditions:
(a) Representations and Warranties. The representations and
warranties of HealthAxis and Provident set forth in this Agreement
shall be true and correct (without regard to any materiality qualifiers
contained therein), in each case as of the date of this Agreement and
(except to the extent such representations and warranties speak as of a
particular date) as of the Closing Date as though made on and as of the
Closing Date, except where the failure of one or more representations
or warranties to be true and correct, individually or in the aggregate,
would not result in a Material Adverse Effect on HealthAxis or
materially and adversely affect the consummation of the Merger.
Insurdata shall have received with respect to HealthAxis certificates
signed on behalf of HealthAxis as of the Closing Date by the chief
executive officer and chief financial officer of HealthAxis reaffirming
the matters set forth in this paragraph and shall have received with
respect to Provident a certificate signed on behalf of Provident as of
the Closing Date by the chief executive officer and the chief financial
officer of Provident reaffirming the matters set forth in this
paragraph.
(b) Performance of Obligations of HealthAxis and Provident.
HealthAxis and Provident shall have performed and complied with, in all
material respects, all agreements and covenants required to be
performed and complied with by HealthAxis and Provident under this
Agreement at or prior to the Closing Date.
(c) No Material Adverse Change. There shall not have occurred or
arisen after September 30, 1999 and prior to the Effective Time any
change, event (including without limitation any damage, destruction or
loss, whether or not covered by insurance),
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condition (financial or otherwise), or state of facts with respect to
HealthAxis or any of its Subsidiaries which would constitute a Material
Adverse Effect on HealthAxis.
(d) Federal Tax Opinion. Insurdata and UICI shall have received an
opinion of Mayer, Brown & Platt (or another nationally recognized law
firm) to the effect that the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a)
of the Code and that each of Insurdata and HealthAxis will be a party
to that reorganization within the meaning of Section 368(b) of the
Code. In rendering such opinion, counsel may rely upon customary
representations of Insurdata and HealthAxis reasonably satisfactory to
such counsel.
(e) Securities Offering. The HealthAxis Offering and the Provident
Offering shall have closed in accordance with the terms and conditions
set forth on Schedule 3 and Schedule 4, respectively.
(f) HealthAxis Balance Sheet. HealthAxis shall have unrestricted
cash on its balance sheet (after giving effect to the receipt of
proceeds from the HealthAxis Offering and including $2.0 million of
proceeds from the Provident Offering) of not less than the sum of (i)
$1.0 million plus (ii) the proceeds of the HealthAxis Offering, net of
offering costs and expenses not in excess of 5% of the total gross
proceeds of the HealthAxis Offering, less (iii) the fee payable to
BancBoston Robertson Stephens as provided in Section 3.2(w) of this
Agreement. For purposes of the foregoing, the term "unrestricted cash"
shall mean the balance of the cash account as shown on the balance
sheet of HealthAxis, prepared in accordance with GAAP on a basis
consistently applied, as at the Closing Date and certified by the Chief
Financial Officer of HealthAxis.
(g) Charter and Bylaws. The Amended and Restated Articles of
Incorporation and Amended and Restated Bylaws of HealthAxis in the form
attached hereto as Exhibit A and Exhibit B, respectively, shall become
the Amended and Restated Articles of Incorporation and Amended and
Restated Bylaws of the Surviving Corporation at the Effective Time.
(h) Dissenters' Rights. No holder of shares of HealthAxis Common
Stock or Insurdata Common Stock shall have perfected appraisal rights
under the TBCA or the PBCL.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
shareholders of the Merger Parties:
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(a) by mutual written consent of the Parties;
(b) by any Party if any permanent injunction or other order of a
court or other competent authority preventing the consummation of the
Merger shall have become final and non-appealable;
(c) by any Party, if the Merger shall not have been consummated on
or before January 31, 2000; provided that the right to terminate this
Agreement under this Section 7.1(c) shall not be available to any Party
whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Merger to occur on or
before such date; provided, further, notwithstanding this Section
7.1(c), the provisions of Section 5.6 shall govern all issues of
liability with respect to HealthAxis;
(d) by either Merger Party if at the duly held meeting of the
shareholders of HealthAxis (including any adjournment thereof) held for
the purpose of voting on the Merger, this Agreement and the
consummation of the transactions contemplated hereby, the holders of at
least a majority of the outstanding shares of HealthAxis Common Stock
shall not have approved the Merger or if the holders of at least a
majority of each class of HealthAxis Preferred Stock shall not have
approved the Merger, this Agreement and the consummation of the
transactions contemplated hereby;
(e) by HealthAxis, upon a breach of any representation or warranty
of Insurdata or UICI, or in the event Insurdata or UICI fails to comply
in any respect with any of its covenants and agreements, or if any
representation or warranty of Insurdata or UICI shall be or become
untrue, in each case, where such breach, failure to so comply or
untruth (either individually or in the aggregate with all other such
breaches, failures to comply or untruths) would cause one or more of
the conditions set forth in Sections 6.1 or 6.2 to be incapable of
being satisfied as of the occurrence thereof, provided, however, that
(i) if such breach, failure to comply or untruth is curable by
Insurdata or UICI, then HealthAxis may not terminate this Agreement
under this Section 7.1(e) with respect to such breach, failure or
untruth prior to or during the 30-day period commencing upon delivery
by HealthAxis of written notice to Insurdata and UICI of such breach or
inaccuracy, or after such 30-day period if during such period such
breach, failure or untruth is cured and (ii) the right to terminate
this Agreement under this Section 7.1(e) shall not be available to
HealthAxis if HealthAxis shall have committed a material uncured breach
of this Agreement; or
(f) by Insurdata, upon a breach of any representation or warranty
of HealthAxis or Provident, or in the event HealthAxis or Provident
fails to comply in any respect with any of its covenants or agreements,
or if any representation or warranty of HealthAxis or Provident shall
be or become untrue, in each case, where such breach,
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failure to so comply or untruth (either individually or in the
aggregate with all other such breaches, failures to comply or untruths)
would cause one or more of the conditions set forth in Sections 6.1 or
6.3 to be incapable of being satisfied as of the occurrence thereof,
provided, however, that (i) if such breach, failure to comply or
untruth is curable by HealthAxis or Provident, then Insurdata may not
terminate this Agreement under this Section 7.1(f) with respect to such
breach, failure or untruth prior to or during the 30-day period
commencing upon delivery by Insurdata of written notice to HealthAxis
and Provident or such breach or inaccuracy, or after such 30-day period
if during such period such breach, failure or untruth is cured and (ii)
the right to terminate this Agreement under this Section 7.1(f) shall
not be available to Insurdata if Insurdata shall have committed a
material uncured breach of this Agreement.
7.2 Effect of Termination. If this Agreement is validly terminated by
any Party pursuant to Section 7.1, this Agreement will forthwith become null and
void and there will be no liability or obligation on the part of any Party (or
any of their respective Subsidiaries or affiliates), except (i) that the
provisions of Section 5.1, 5.4(b), Section 5.5, Section 5.9 and this Section 7.2
will continue to apply following any such termination, and (ii) that nothing
contained herein shall relieve any Party hereto from liability for willful
breach of its representations, warranties, covenants or agreements contained in
this Agreement.
7.3 Amendment. Subject to applicable law, this Agreement may be
amended, modified or supplemented only by written agreement of the Parties at
any time prior to the Effective Time of the Merger with respect to any of the
terms contained herein; provided, however, after this Agreement is approved by
the Merger Party's shareholders, no such amendment or modification shall (a)
change the amount or change the form of consideration to be delivered to the
holders of shares of Insurdata Common Stock or (b) change the amounts payable in
respect of the Insurdata Options.
7.4 Extension; Waiver. At any time prior to the Effective Time, the
Parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed: (a) extend the time for the
performance of any of the obligations or other acts of the other Parties hereto;
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto; and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a Party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such Party. The failure of
any party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
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ARTICLE VIII
GENERAL PROVISIONS
8.1 Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time; provided, however, that Article II, Sections 5.1, 5.4(b), 5.5, 5.6 and 5.9
shall survive the Effective Time.
8.2 Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received upon receipt. Any such notice or
communication shall be provided to the following address or telecopy number, or
to such other address or addresses as such person may subsequently designate by
notice given hereunder:
(a) if to Provident:
Provident American Corporation
2500 DeKalb Pike
Norristown, Pennsylvania 19404
Attention: Alvin H. Clemens
Telephone: (610) 279-2500
Facsimile: (610) 279-0410
with a copy to:
Butera Beausang Cohen & Brennan
630 Freedom Business Center
King of Prussia, Pennsylvania 19406
Attention: Michael F. Beausang
Telephone: (610) 265-0800
Facsimile: (610) 265-7205
(b) if to HealthAxis:
HealthAxis.com, Inc.
2500 DeKalb Pike
East Norriton, Pennsylvania 19401
Attention: Michael Ashker, President and CEO
Telephone: (610) 279-3500
Facsimile: (610) 279-4498
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with a copy to:
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, Pennsylvania 19103
Attention: Barry H. Genkin
Telephone: (215) 569-5500
Facsimile: (215) 988-6910
(c) if to UICI:
UICI
4001 McEwen Boulevard, Suite 200
Dallas, Texas 75244
Attention: Gregory T. Mutz
Telephone: (972) 392-6700
Facsimile: (972) 392-6717
with a copy to:
Mayer, Brown & Platt
190 S. LaSalle Street
Chicago, Illinois 60603
Attention: Edward J. Schneidman
Telephone: (312) 701-7348
Facsimile: (312) 701-7711
(d) If to Insurdata:
Insurdata Incorporated
5215 N. O'Connor Blvd., Suite 800
Irving, Texas 75039
Attention: Dennis B. Maloney
Telephone: (972) 443-5000
Facsimile: (972) 556-0572
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with a copy to:
Mayer, Brown & Platt
190 S. LaSalle Street
Chicago, Illinois 60603
Attention: Edward J. Schneidman
Telephone: (312) 701-7348
Facsimile: (312) 701-7711
8.3 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents, glossary of defined terms and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the word "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The phrase
"made available" in this Agreement shall mean that the information referred to
has been made available if requested by the Party to whom such information is to
be made available.
8.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the Parties and delivered to the other Parties, it being understood that all
Parties need not sign the same counterpart.
8.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (and any other documents and instruments referred to
herein) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the Parties with respect to the
subject matter hereof and, except as provided in Article II and Sections 5.4 and
5.6, is not intended to confer upon any person other than the Parties hereto any
rights or remedies hereunder.
8.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Pennsylvania, without giving effect to
the principles of conflicts of law thereof.
8.7 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the Parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
Parties, such consent not to be unreasonably withheld and any such assignment
that is not consented to shall be null and void. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
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8.8 Enforcement. The Parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of applicable
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
8.9 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
8.10 No Presumption Against Drafter. Each of the Parties has jointly
participated in the negotiation and drafting of this Agreement. In the event of
any ambiguity or a question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by each of the Parties and no
presumptions or burdens of proof shall arise favoring any Party by virtue of the
authorship of any of the provisions of this Agreement.
[The remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
PROVIDENT AMERICAN CORPORATION
By: /s/ Alvin H. Clemens
---------------------------------------
Name: Alvin H. Clemens
Title: Chairman and Chief Executive Officer
HEALTHAXIS.COM, INC.
By: /s/ Michael Ashker
---------------------------------------
Name: Michael Ashker
Title: President
UICI
By: /s/ Gregory T. Mutz
---------------------------------------
Name: Gregory T. Mutz
Title: President
INSURDATA INCORPORATED
By: /s/ Dennis B. Maloney
---------------------------------------
Name: Dennis B. Maloney
Title: President
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Schedule 1
Directors
- ---------
Michael Ashker
Alvin H. Clemens
Henry G. Hagar
Ronald L. Jensen
Edward W. LeBaron, Jr.
Gregory T. Mutz
Dennis B. Maloney
Sch. 1-1
<PAGE>
Schedule 2
Officers
- --------
Alvin H. Clemens - Chairman of the Board
Michael Ashker - Chief Executive Officer and President
Dennis B. Maloney - Chief Operating Officer
Anthony Verdi - Chief Financial Officer and Treasurer
John Wall - Chief Technology Officer
Andrew Felder - Executive Vice President-Strategy and Corporate Development
Scott Rubschnuk - Senior Vice President-Marketing
David D. MacDonald - Senior Vice President-Software Solutions
Michael Hankinson - Secretary
Sch. 2-1
<PAGE>
Schedule 3
HealthAxis Offering
The "HealthAxis Offering" shall mean the issuance by HealthAxis of
shares of HealthAxis Common Stock at a price of $15.00 per share in a private
offering, not required to be registered under the Securities Act of 1933, as
amended, or under applicable state securities laws, which offering generates at
least $55.0 million of gross cash proceeds to HealthAxis. The offering costs and
expenses in connection with the HealthAxis Offering shall not exceed 5.0% of the
total gross proceeds.
Sch. 3-1
<PAGE>
Schedule 4
Provident Offering
The "Provident Offering" shall mean the issuance by HealthAxis to
Provident of 133,333 shares of HealthAxis Common Stock at a price of $15.00 per
share in a private offering, not required to be registered under the Securities
Act of 1933, as amended, or under applicable state securities laws.
Sch. 4-1
<PAGE>
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (this "Agreement"), dated as of January
___, 2000, is by and among HealthAxis.com Inc., a Pennsylvania corporation (the
"Company"), and the Persons (as defined herein) set forth on the signature pages
hereto.
RECITALS
WHEREAS, Provident American Corporation, a Pennsylvania corporation
("Provident"), the Company, UICI, a Delaware corporation ("UICI"), and Insurdata
Incorporated, a Texas corporation ("Insurdata"), have entered into an Agreement
and Plan of Merger, dated as of December 6, 1999 (the "Merger Agreement");
WHEREAS, pursuant to the Merger Agreement, it is contemplated that
certain of the Holders (as hereinafter defined) will acquire shares of the
Company's common stock, no par value (the "Common Stock");
WHEREAS, it is a condition to the consummation of the transactions
contemplated by the Merger Agreement that the parties hereto enter into this
Agreement; and
WHEREAS, the Holders and the Company wish to record their understanding
regarding certain matters relating to the management of the Company and certain
other matters.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:
SECTION 1. Definitions. In addition to the capitalized terms defined
elsewhere in this Agreement, the following capitalized terms shall have the
following meanings when used in this Agreement:
"Affiliate" with respect to a Person, means a Person that
controls, is controlled by or is under common control with such Person. For
purposes of this definition, "control" when used with respect to any Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
"Beneficial Owner" means any Person deemed to be a "beneficial
owner" of a security as defined in Rule 13d-3 under the Exchange Act. The terms
"Beneficially Own" and "Beneficial Ownership" have correlative meanings.
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"Board" means the Board of Directors of the Company.
"Commission" means the Securities and Exchange Commission (or
any other governmental body succeeding to the functions of the Securities and
Exchange Commission).
"Common Stock" has the meaning ascribed to such term in the
Recitals.
"Electing Holder" has the meaning ascribed to such term in
Section 5(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Family Group" means, with respect to any Holder who is an
individual, such Holder's spouse and descendants (whether natural or adopted)
and any trust for the benefit of the Holder and/or such Holder's spouse and/or
descendants or any Person controlled (directly or indirectly) by any such
Person.
"Fully Diluted Basis" with respect to any security, means all
of the issued shares of such security and includes, without limitation, (i) all
of the outstanding shares of such security (except shares then held by or for
the account of the issuer or its wholly owned subsidiaries), (ii) any and all
shares of such security issuable upon conversion of securities convertible into
such security, whether or not convertible at such time, and (iii) any and all
shares of such security issuable upon exercise of other exercisable rights to
acquire such security, including options, warrants and participation rights,
whether or not exercisable at such time.
"Holder" means any holder of Securities who is a party to this
Agreement (or becomes a party hereto pursuant to Section 4(d) or Section 5(d))
or who is a successor or assign or subsequent holder as contemplated by Section
18.
"New Securities" means (i) any capital stock of the Company or
any other securities or other equity obligations of the Company issued after the
date hereof, including without limitation any capital or stock appreciation,
phantom stock or profit participation rights, whether now or hereafter
authorized or not, (ii) any rights, options or warrants issued after the date
hereof to purchase any such capital stock, securities, obligations or rights, or
to purchase any securities of any type whatsoever that are, or may become,
convertible into any such capital stock, securities, obligations or rights and
(iii) any securities of any type whatsoever issued after the date hereof that
are, or may become, convertible into any such capital stock, securities,
obligations or rights; provided, however, that "New Securities" shall not
include (A) securities to be offered to the public pursuant to a registration
statement declared effective by the Commission, (B) options issued to employees,
officers, directors and consultants of the Company and the issuance of capital
stock upon exercise of such options in accordance with their terms, (C) the
issuance of capital stock in connection with the exercise of an option or a
warrant outstanding on the date hereof and issued by either the Company or
Insurdata and the
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issuance of warrants (and the issuance of capital stock upon exercise thereof)
issued to strategic partners of the company in the ordinary course of business,
and (D) the issuance of Common Stock in connection with an acquisition, whether
by merger, purchase of assets, or by other reorganization, or upon conversion or
exercise of options, warrants or convertible securities issued in connection
with an acquisition.
"Nominee" has the meaning ascribed to such term in Section
2(a).
"Offer" has the meaning ascribed to such term in Section 5(a).
"Offered Securities" has the meaning ascribed to such term in
Section 5(a).
"Offeror" has the meaning ascribed to such term in Section
5(a).
"Participating Holder" has the meaning ascribed to such term
in Section 4(a).
"Permitted Transferee" has the meaning ascribed to such term
in Section 4(d).
"Person" means any individual, corporation, proprietorship,
firm, partnership, limited partnership, limited liability company, trust,
association or other entity.
"Sale Notice" has the meaning ascribed to such term in Section
4(b).
"Securities" means Common Stock or shares of capital stock or
other securities, directly or indirectly, exercisable for or convertible into
Common Stock; provided, however, that Securities shall not include any
securities which have been sold (i) pursuant to a registration statement
declared effective by the Commission or (ii) pursuant to Rule 144 promulgated by
the Commission under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Holder" has the meaning ascribed to such term in
Section 4(a).
"Transfer" means a sale, transfer, disposition, gift or other
conveyance of securities.
SECTION 2. Board of Directors; Management of the Company.
(a) The Holders and the Company agree that the Board shall consist of
up to nine (9) members, and the Holders shall have the right to nominate a
number of persons (each such person, a "Nominee") to serve as directors on the
Board as follows: (i) UICI shall be entitled to nominate three (3) Nominees
(Ronald L. Jensen, Gregory T. Mutz and Dennis B. Maloney being
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the initial UICI Nominees); (ii) Provident shall be entitled to nominate three
(3) Nominees (Michael Ashker, Alvin H. Clemens and Edward W. LaBaron, Jr. being
the initial Provident Nominees); and (iii) UICI and Provident shall together
agree mutually to nominate three (3) Nominees (with Henry Hager being one of the
initial Nominees agreed to by UICI and Provident). Each Holder agrees to take
all actions necessary so as to cause the Nominees to be elected to the Board
including, without limitation, the voting of its shares of stock of the Company,
the execution of written consents, the calling of special meetings, the removal
of directors, the filling of vacancies on the Board, and the waiving of notice
and the attending of meetings.
(b) No party shall nominate any person to the Board if: (i) such
individual is employed by, or has investment interests, directly or indirectly,
in, any material competitor of the Company (unless such investment constitutes
less than two percent (2%) of the equity ownership in a public company and at
the time of purchase has a fair market value of less than $50,000); (ii) such
individual is not reasonably experienced in business, financial, insurance or
e-commerce industry matters; (iii) such individual has been convicted of, or has
pled nolo contendere to, a felony; (iv) the election of such individual would
violate any law; or (v) any event required to be disclosed pursuant to Item
401(f) of Regulation S-K of the Exchange Act has occurred with respect to such
individual.
(c) A director elected pursuant to this Section 2 shall serve until (i)
his or her term expires as provided in the Company's articles of incorporation
and bylaws, (ii) he or she is removed pursuant to Section (2)(d) or (iii) the
party who nominated such director no longer has the right to nominate a
director, in which case the party so elected shall immediately resign and the
size of the Board shall be decreased accordingly.
(d) In the event of the death, disability, removal or resignation of
any director designated pursuant to this Section 2, the Holder that designated
such director shall notify the Company and the other Holders, within 30 days
after such death, disability, removal or resignation, of a successor director
who shall either (i) be appointed by the remaining directors then in office to
serve the unexpired term of such director or (ii) be elected by the shareholders
pursuant to the Company's bylaws. Each Holder agrees to take all actions
necessary to elect any such successor Nominee in the same manner as discussed in
Section 2(a).
(e) The Board may create committees to assist in governing the Company,
however, no executive committee may be formed without the consent of all of the
members of the Board that are Nominees of either UICI or of Provident.
(f) So long as this Section 2 remains in effect, the Board nomination
rights of a Holder hereunder shall supersede any rights a Holder may have to
nominate Board members under any other agreement. After such time as a Holder is
no longer entitled under this Section 2
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to nominate persons to serve on the Board, the rights of such Holder under any
such agreement to nominate Board members shall be reinstated.
(g) The rights of any Holder under this Section 2 shall continue in
effect unless and until such Holder Beneficially Owns less than 20% of the
Common Stock of the Company on a Fully Diluted Basis.
SECTION 3. Preemptive Rights.
(a) Until the Common Stock is registered under Section 12(b) or 12(g)
of the Exchange Act, subject to the rights of AOL set forth in the securities
purchase agreement dated November 13, 1999, each of UICI and Provident shall
have the right to purchase its proportionate number, or any greater or lesser
number, of any New Securities which the Company may, from time to time, propose
to sell and issue. For purposes of this Section 3, each such Holder's
"proportionate number" means the product obtained by multiplying the number of
New Securities proposed to be sold and issued by a fraction, the numerator of
which is the number of shares of Common Stock then Beneficially Owned by such
Holder on a Fully Diluted Basis and the denominator of which is the total number
of shares of Common Stock then outstanding on a Fully Diluted Basis. This
provision shall not permit any double counting as a result of preemptive rights
contained in any other agreement or security issued by the Company.
(b) If the Company proposes to sell and issue New Securities, the
Company shall promptly give each Holder written notice of its intention, which
notice shall describe the New Securities and the price and material terms upon
which the Company proposes to issue the same, and set forth the proportionate
number of New Securities which such Holder is entitled to purchase and the
purchase price therefor. Each Holder shall have twenty days from the date of
receipt of any notice to agree to purchase its proportionate number or any
greater or lesser number of such New Securities, for the price and upon the
terms specified in the notice by giving written notice to the Company within
twenty days after the receipt of notice from the Company and stating therein the
quantity of New Securities sought to be purchased.
(c) Subject to the rights of AOL set forth in the securities purchase
agreement dated November 13, 1999, if the Holders desire to purchase a greater
number of New Securities than set forth in the Company's notice, the Company
shall have the option to increase the total number of New Securities offered or
to allocate the New Securities among those Holders exercising their purchase
rights in proportion to the number of shares of Common Stock Beneficially Owned
by each such Holder on a Fully Diluted Basis; provided, however, that no Holder
shall be allocated more shares of New Securities than it indicated a desire to
purchase with any excess being allocated among the remaining Holders in
proportion to the number of shares of Common Stock Beneficially Owned by each on
a Fully Diluted Basis and with this process to be repeated until all the New
Securities have been allocated to the Holders exercising their purchase rights.
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(d) If the Holders fail to exercise their purchase rights within the
twenty day period with respect to all of the New Securities, the Company shall
have twenty days thereafter to sell the New Securities as to which the Holders'
rights were not exercised, at a price that is not less than the price specified
in the Company's notice. If the Company has not sold such New Securities within
such twenty day period, then the Company shall not thereafter issue or sell any
New Securities without again complying with this Section 3.
SECTION 4. Co-Sale Rights.
(a) Subject to the rights of America Online, Inc. ("AOL") set forth in
that certain Stockholders' Agreement, dated as of November 13, 1998, among the
Company, AOL, Provident, Provident Indemnity Life Insurance Company, Health Plan
Services, Inc. Michael Ashker and Alvin H. Clemens (the "AOL Agreement"), until
the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act,
in connection with a proposed Transfer of Common Stock by a Holder (a "Selling
Holder") to a Person other than a Permitted Transferee, each Holder shall have
the right, but not the obligation, to Transfer to the proposed purchaser(s) that
number of shares of Common Stock (or if such number is not an integral number,
the next integral number which is greater than such number) which shall be the
product of (i) the total number of shares of Common Stock then Beneficially
Owned by such Holder on a Fully Diluted Basis and (ii) a fraction, the numerator
of which shall be the number of shares of Common Stock to be Transferred by the
Selling Holder and the denominator of which shall be the total number of shares
of Common Stock then Beneficially Owned by all of the Holders on a Fully Diluted
Basis. The Common Stock to be Transferred hereunder shall be Transferred on the
same terms and conditions as those applicable to the Selling Holder specified in
the Sale Notice, including the time of Transfer, form of consideration and
per-share price. The failure of any Holder to exercise its rights under this
Section 4 shall result in such Holder's exclusion from the Transfer specified in
the Sale Notice. If any Holder desires to exercise its rights under this Section
4 (each, a "Participating Holder"), such Participating Holder shall give written
notice thereof to the Selling Holder no later than ten days after the date of
the Sale Notice. Each Participating Holder shall promptly take all steps
described in the Sale Notice to effectuate the Transfer of the Common Stock
covered thereby, including without limitation the furnishing of information
customarily provided in connection with such a Transfer and the execution of
such sales and other transfer documents with such representations, warranties,
agreements, covenants and indemnities as may be required. This provision shall
not permit a Holder to duplicate any rights such holder has as a result of
co-sale rights contained in any other agreement or security issued by the
Company.
(b) If a Selling Holder proposes to Transfer any Common Stock in any
transaction or series of related transactions pursuant to Section 4(a), then at
least twenty days prior to the proposed Transfer, such Selling Holder shall
notify the Company and each Holder of such proposed transactions, which notice
(the "Sale Notice") shall specify the principle terms of such transaction,
including the number of shares of Common Stock proposed to be Transferred, the
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price per share at which such Selling Holder intends to Transfer such Common
Stock and the identity of the proposed purchaser(s) as well as the other
material terms and conditions of the proposed Transfer.
(c) If the sum of (i) the Common Stock to be Transferred by the Selling
Holder and (ii) the Common Stock sought to be Transferred by Participating
Holders pursuant to Section 4(a) exceeds the number of shares of Common Stock
that the purchaser(s) described in the Sale Notice are willing to buy, the
Selling Holder shall adjust the number of shares of Common Stock to be
Transferred by each of the Selling Holder and each Participating Holder to
ensure that the ratio of the number of shares of Common Stock proposed to be
Transferred by each such Person to the number of shares of Common Stock
Beneficially Owned by such Person on a Fully Diluted Basis shall be equal for
each such Person, as near as may be possible.
(d) The restrictions set forth in this Section 4 shall not apply with
respect to any (i) (A) Transfer by a Holder to its heirs, devisees, Family Group
or Affiliates, (B) Transfer by UICI to any person to whom it has issued an
option to acquire any shares of Common Stock or (C) pledge of securities to a
lender to secure bona fide indebtedness or the transfer of such securities to
such lender pursuant to the terms of such pledge (each a "Permitted
Transferee"); provided, however, that each Permitted Transferee must agree to be
bound by all of the terms of this Agreement as a Holder, and (ii) Transfer by
Provident of securities issued by the Company upon conversion of securities
issued in the Provident Offering and the transferee of such securities shall not
be bound by the terms of this Agreement.
SECTION 5. Right of First Offer.
(a) Subject to the rights of AOL set forth in the AOL Agreement, until
the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act,
if any Holder (an "Offeror") desires to Transfer from time to time all or any
portion of its Securities (all or such portion hereinafter referred to as the
"Offered Securities"), the Offeror shall, at least twenty days prior to the
proposed Transfer, furnish to the Company and each Holder a written notice
setting forth an offer to sell the Offered Securities for a specific cash dollar
amount (the "Offer"). The other Holder(s) (each, an "Electing Holder") shall
have the right to elect, by providing written notice to the Offeror of its
election to purchase within ten days after the date of the Offer, to purchase
that number of Offered Securities (or if such number is not an integral number,
the next integral number which is greater than such number) which shall be the
product of (i) the total number of shares of Common Stock then Beneficially
Owned by such Electing Holder on a Fully Diluted Basis and (ii) a fraction, the
numerator of which shall be the number of Offered Securities to be Transferred
by the Offeror and the denominator of which shall be the total number of shares
of Common Stock then Beneficially Owned by the Holders on a Fully Diluted Basis.
This provision shall not permit a Holder to duplicate any rights such holder has
as a result of a right of first offer contained in any other agreement or
security issued by the Company.
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(b) If the Electing Holder(s) shall timely exercise their first right
to purchase all or any portion of the Offered Securities, the Offeror shall sell
all or such portion of the Offered Securities to such Electing Holder(s) who
shall pay the cash price specified in the Offer to the Offeror, and the parties
shall otherwise consummate such transaction no later than twenty days after the
Company's receipt of the Offer.
(c) If the Electing Holder(s) fails to exercise its/their first right
to purchase, or exercises its/their right only with respect to a portion of the
Offered Securities, the Offeror shall have ten days thereafter to sell any
remaining Offered Securities at the price and on terms no less favorable to the
Offeror than those specified in the Offer. If the Offeror does not consummate
the sale of such Offered Securities within such ten day period, then the Offeror
shall not thereafter Transfer any of its Securities without again complying with
this Section 5.
(d) The restrictions set forth in this Section 5 shall not apply with
respect to any (i) Transfer of Securities by a Holder to a Permitted Transferee;
provided, however, that each Permitted Transferee must agree to be bound by all
of the terms of this Agreement as a Holder, and (ii) Transfer by Provident of
securities issued by the Company upon conversion of securities issued in the
Provident Offering and the transferee of such securities shall not be bound by
the terms of this Agreement..
(e) The restrictions set forth in this Section 5 shall be subject to
the prior exercise by AOL of its rights set forth in the AOL Agreement.
SECTION 6. Legend. The Company shall stamp or imprint each certificate
or other instrument representing Securities held by a Holder bound by any terms
of this Agreement, throughout the term of this Agreement, with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
PROVISIONS, INCLUDING, AMONG OTHERS, RESTRICTIONS ON VOTING AND
TRANSFER, SET FORTH IN A SHAREHOLDERS' AGREEMENT DATED AS OF JANUARY
__, 2000, AS IT MAY BE AMENDED, MODIFIED, SUPPLEMENTED OR RESTATED FROM
TIME TO TIME, A COPY OF WHICH IS AVAILABLE AT THE PRINCIPAL OFFICE OF
THE COMPANY."
SECTION 7. Approval Rights. In addition to all other rights set forth
in this Agreement, UICI shall, in its sole and absolute discretion, have the
right to approve, alter or prevent (i) the calculation of the amount and the
amortization period of all goodwill and other intangibles recorded by the
Company in connection with the Merger, provided such calculation shall be
consistent with generally accepted accounting principles and approved by the
Company's independent auditors and (ii) the entering into by the Company of a
merger, consolidation, reorganization or similar transaction with Provident or
any Provident subsidiary,
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provided that the rights in this clause (ii) shall expire at such time as UICI
shall Beneficially Own less than 20% of the Common Stock of the Company on a
Fully Diluted Basis.
SECTION 8. Transfer Option.
(a) Transfer Option. Subject to the terms and conditions in this
Section 8, the Company shall have the right (the "Transfer Option") to cause
UICI to transfer to one or more third parties unaffiliated with UICI, up to
1,255,000 shares (representing 6% of UICI's Fully Diluted holdings in the
Company following the Merger) of Common Stock owned by UICI at a per share price
equal to the greater of (i) $21.00 and (ii) the Closing Price (as hereinafter
defined). The Transfer Option shall be exercisable one time only with respect to
all such shares of Common Stock and may be exercised at any time following the
completion of the Follow-On Equity Offering and ending on the first to occur of
the following events: (i) on the third anniversary of the date hereof; (ii) the
ninetieth (90th) day following the date on which the Closing Price (as
hereinafter defined) of shares of Common Stock shall have been at least $27.00
per for a period of sixty (60) consecutive trading days; and (iii) the ninetieth
(90th) day following the first date on which UICI Beneficially Owns less than
40% of the shares of Common Stock on a Fully Diluted Basis. For purposes hereof,
"Closing Price" shall mean the reported last sale price of a share of Common
Stock, on a given day, regular way, or, in case no such sale takes place on such
day, the average of the reported closing bid and asked prices regular way, in
each case on the New York Stock Exchange Composite Tape, or, if the security is
not listed or admitted to trading on such exchange, on the American Stock
Exchange Composite Tape, or, if the security is not listed or admitted to
trading on such exchange, the principal national securities exchange on which
the security is listed or admitted to trading, or, if the security is not listed
or admitted to trading on any national securities exchange, the closing sales
price, or, if there is no closing sales price, the average of the closing bid
and asked prices, in the over-the-counter market as reported by the National
Association of Securities Dealers Automated Quotation System, or, if not so
reported, as reported by the National Quotation Bureau, Incorporated, or any
successor thereof, or, if not so reported, the average of the closing bid and
asked prices as furnished by any member of the National Association of
Securities Dealers, Inc. selected from time to time by the Company for that
purpose or, if no such prices are furnished, the fair market value of the Common
Stock as determined in good faith by the board of directors of the Company,
which determination shall be based upon recent issuances or current offerings
pursuant to bona fide private offerings of the same class of security by the
Company; provided, however, that any determination of the "Closing Price" of any
security hereunder shall be based on the assumption that such security is freely
transferable without registration under the Securities Act.
(b) Exercise of Transfer Option. The Company may exercise its rights
under Section 8(a) by giving UICI written notice of its exercise of the Transfer
Option prior to the expiration of the Transfer Option. Such notice shall state
that the Company intends to cause UICI to transfer such shares to one or more
third parties unaffiliated with UICI. Upon the closing of the
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transactions contemplated by an exercise of the Transfer Option, UICI shall
surrender its shares of Common Stock, duly endorsed for transfer, to the Company
or the Persons purchasing such securities, in exchange for the net proceeds from
such transfer. The closing of the transactions upon the exercise of the Transfer
Option shall occur within ninety (90) days of the exercise thereof by the
Company.
(c) Transfer to Third Parties. Any exercise by the Company of its
Transfer Option in which the Company elects to cause UICI to transfer shares of
Common Stock to one or more Persons unaffiliated with UICI shall be governed by
the following terms:
(i) Private Placement. Prior to the time that the shares of
Common Stock are registered pursuant to Section 12(b) or 12(g) of the
Exchange Act, the Company will, upon any exercise of the Transfer
Option in accordance with this Section 8(c), as expeditiously as
possible:
(A) prepare a private placement memorandum, together
with such amendments and supplements thereto as may be
necessary to comply with the provisions of the Securities Act
with respect to the sale or other disposition of all shares of
Common Stock covered by such private placement memorandum;
(B) use its reasonable efforts to perfect exemptions
for the shares of Common Stock covered by such private
placement memorandum under all applicable rules and
regulations of the Commission and such other securities or
blue sky laws of such jurisdictions as UICI shall request, and
do any and all other acts and things reasonably requested by
UICI to permit UICI to consummate the sale or other
disposition in such jurisdictions of such shares, except that
the Company shall not for any such purpose be required to
qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified or to file therein
any general consent to service of process;
(C) enter into and perform its obligations under a
private placement agency agreement, in usual and customary
form, with a placement agent acceptable to UICI, including,
without limitation, to obtain an opinion of counsel to the
Company in the usual and customary form for such private
placement; and
(D) notify UICI, at any time when a private placement
memorandum is required to be delivered under the applicable
law, of the happening of any event of which it has knowledge
as a result of which the private placement memorandum, as then
in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in
the light of the circumstances then existing.
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(ii) Public Offering. After the time that the shares of Common
Stock are registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, the Company, upon the exercise of the Transfer Option in
accordance with this Section 8(c), may elect to cause the transfer of
shares in a private placement, in which case the provisions of Section
8(b)(i) shall apply, or may elect to cause the shares to be sold in a
public offering, in which case the Company shall as expeditiously as
possible:
(A) prepare and file with the Commission a
registration statement with respect to such shares of Common
Stock and use its reasonable efforts to cause such
registration statement to become effective and remain
effective for as long as shall be necessary to complete the
distribution of the shares of Common Stock so registered;
(B) prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to
comply with the provisions of the Securities Act with respect
to the sale or other disposition of all securities covered by
such registration statement;
(C) furnish to UICI and any underwriters such numbers
of copies of a summary prospectus or other prospectus,
including a preliminary prospectus or any amendment or
supplement to any prospectus, in conformity with the
requirements of the Securities Act, and such other documents,
as UICI or the underwriters may reasonably request in order to
facilitate the public sale or other disposition of the
securities covered by such registration statement;
(C) use its reasonable efforts to register and
qualify the Common Stock covered by such registration
statement under such other securities or blue sky laws of such
jurisdictions as UICI or the underwriters shall request, and
do any and all other acts and things reasonably requested by
UICI or the underwriters to assist them to consummate the
public sale or other disposition in such jurisdictions of the
Common Stock covered by the registration statement, except
that the Company shall not for any such purpose be required to
qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified or to file therein
any general consent to service of process;
(D) otherwise use its reasonable efforts to comply
with all applicable rules and regulations of the Commission,
and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the
period of at least twelve months, beginning with the first
fiscal quarter beginning after the effective date of the
registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act;
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(E) use its reasonable efforts to list such Common
Stock on any securities exchange or interdealer quotation
system on which any shares of the Company are then listed, if
the listing or quotation of such securities is then permitted
under the rules of such exchange or interdealer quotation
system;
(F) enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the
managing underwriter or underwriters selected by UICI of such
underwritten offering, including, without limitation, to
obtain an opinion of counsel to the Company and a "comfort
letter" from the independent public accountants to the Company
in the usual and customary form for such underwritten
offering;
(G) notify the Investors, at any time when a
prospectus relating thereto covered by such registration
statement is required to be delivered under the Securities
Act, of the happening of any event of which it has knowledge
as a result of which the prospectus included in such
registration statement, as then in effect, contains an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances then existing;
(H) make the Company's executive officers available
to participate in "road show" presentations for such periods
and in such places as the underwriters may reasonably request
and make the Company's executive officers available at the
Company's principal executive offices to discuss the affairs
of the Company at times that may be mutually and reasonably
agreed upon; and
(I) upon the request of UICI, take any and all other
actions which may be reasonably necessary to complete the
registration and thereafter to complete the distribution of
the Common Stock so registered.
(iii) Expenses. All expenses of any offering pursuant to a
Transfer Option under this Section 8 shall be borne by the Company,
except that UICI shall bear the cost of a reasonable customary
underwriting commission or discount, brokerage commission or placement
fee in the event of a successful offering.
SECTION 9. Termination. If any Holder shall be in default of its
obligations hereunder and any such default shall continue for a period of 30
days after any other Holder or the Company has given written notice thereof to
such defaulting Holder, then the rights (but not the obligations) under this
Agreement of such defaulting party shall terminate. This Agreement shall
terminate upon the written agreement of each of the parties hereto.
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SECTION 10. Beneficial Ownership. Each of the Holders Beneficially Own
that number of shares of Common Stock on a Fully Diluted Basis set forth
opposite their respective names on Exhibit A hereto. Each Holder shall promptly
hereafter notify the Company of any changes to its respective Beneficial
Ownership of Common Stock. The Company shall be entitled to rely upon the
amounts set forth in Exhibit A or such notices without incurring any liability
to any other party hereunder. Each Holder shall respond promptly to any request
made by the Company to provide or confirm such Holder's Beneficial Ownership of
Common Stock.
SECTION 11. Acknowledgments. Each of the parties hereto acknowledges
that the restrictions, prohibitions and other provisions hereof are reasonable,
fair and equitable in scope, terms and duration, are necessary to protect the
legitimate business interests of each of the other parties hereto, and are a
material inducement to such party to enter into the transactions contemplated by
this Agreement.
SECTION 12. Expenses. Except as otherwise specifically provided in
this Agreement, each party hereto shall bear its own costs and expenses with
respect to the transactions contemplated hereby.
SECTION 13. Remedies. Each of the parties to this Agreement shall be
entitled to enforce its rights under this Agreement specifically, to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in its favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of competent jurisdiction for specific performance or
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement. The remedies provided in this Agreement shall be
cumulative and shall not preclude the assertion or exercise of any other rights
or remedies available by law, in equity or otherwise.
SECTION 14. Notices. Any notice, request, instruction or other document
to be given hereunder shall be in writing and shall be deemed to have been given
(a) when received if given in person or by courier or a courier service, (b) on
the date of transmission if sent by facsimile or other wire transmission or (c)
three business days after being deposited in the U.S. mail, certified or
registered mail, postage prepaid, addressed as specified with respect to such
Holder in Exhibit A or to such other individual or address as a party hereto may
designate for itself by notice given as herein provided.
SECTION 15. Amendments and Waivers. The provisions of this Agreement
may be amended or waived only upon the written agreement of each of the parties
hereto; provided, however, that amendments to Sections 2, 3, 7 and 8 may be made
upon the written agreement of both UICI and Provident and no other party. Any
waiver, permit, consent or approval of any kind or character of any provision or
condition of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in writing. Any amendment or waiver
13
<PAGE>
effected in accordance with this Section 15 shall be binding upon the Company
and each Holder of Securities.
SECTION 16. Successors and Assigns. All covenants and agreements in
this Agreement by or on behalf of any of the parties hereto shall bind and inure
to the benefit of the respective successors and assigns of the parties hereto,
and each transferee of all or any portion of the Securities held by the parties
hereto, whether so expressed or not. Each Permitted Transferee of all or any
portion of the Securities held by any of the parties hereto shall execute and
deliver a written assumption agreement to the Company agreeing to be bound by
the provisions of this Agreement, in form and substance reasonably acceptable to
the Company. Notwithstanding the foregoing, except as specifically provided in
this Agreement, no assignment of any rights or obligations under this Agreement
may be made by any party.
SECTION 17. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, and the remainder of this
Agreement shall remain operative and in full force and effect. The parties shall
negotiate in good faith a replacement clause or provision as consistent with the
ineffective clause or provision as is practicable under law.
SECTION 18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 19. Entire Understanding. This Agreement (together with the
letter agreement of even date herewith between Provident, HealthAxis and UICI)
sets forth the entire agreement and understanding of the parties hereto with
respect to the matters set forth herein and supersedes any and all prior
agreements, arrangements and understandings among the parties.
SECTION 20. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed an original, and such counterparts together shall constitute one
instrument. Transmission by facsimile of an executed counterpart of this
Agreement shall constitute due and sufficient delivery of this Agreement.
SECTION 21. Interpretation. The headings preceding the Sections
included in this Agreement and the headings to Exhibits and Schedules attached
to this Agreement are for convenience only and shall not be deemed part of this
Agreement or be given any effect in interpreting this Agreement. The use of the
masculine, feminine or neuter gender herein shall not limit any provision of
this Agreement. The use of the terms "including" or "include" shall in all
14
<PAGE>
cases herein mean "including, without limitation" or "include, without
limitation", respectively. Underscored references to Sections or Schedules shall
refer to those portions of this Agreement.
SECTION 22. No Third Party Beneficiaries. This Agreement is solely for
the benefit of the parties hereto and no provision of this Agreement shall be
deemed to confer upon other third parties any remedy, claim, liability,
reimbursement, cause of action or other right.
SECTION 23. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 24. No Presumption Against Drafter. Each of the parties hereto
has jointly participated in the negotiation and drafting of this Agreement. In
the event of any ambiguity or a question of intent or interpretation arises,
this Agreement shall be construed as if drafted jointly by each of the parties
hereto and no presumptions or burdens of proof shall arise favoring any party by
virtue of the authorship of any of the provisions of this Agreement.
[Remainder of page intentionally left blank]
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
HEALTHAXIS.COM, INC.
By: __________________________________
Name:_________________________________
Title:________________________________
UICI
By: __________________________________
Name:_________________________________
Title:________________________________
PROVIDENT AMERICAN CORPORATION
By: __________________________________
Name:_________________________________
Title:________________________________
______________________________________
Michael Ashker
<PAGE>
EXHIBIT A
Common Stock on a Fully Diluted Basis
<TABLE>
<CAPTION>
Number of Shares Percentage of Shares of
Name and of Common Stock Common Stock Outstanding
Notice Address on a Fully Diluted Basis on a Fully Diluted Basis
-------------- ------------------------ ------------------------
<S> <C>
UICI
4001 McEwen Boulevard
Suite 200
Dallas, Texas 75244
Attention: Gregory T. Mutz
Telephone: (972) 392-6700
Facsimile: (972) 392-6717
With a copy to:
Mayer, Brown & Platt
190 S. LaSalle Street
Chicago, Illinois 60603
Attn: Edward J. Schneidman
Telephone: (312) 701-7348
Facsimile: (312) 701-7711
HealthAxis.com, Inc.
2500 DeKalb Pike
East Norriton, PA 19401
Attention: Michael Ashker, President
and CEO
Telephone: (610) 279-3500
Facsimile: (610) 279-4498
With a copy to:
Blank Rome Comisky & McCauley
LLP
One Logan Square
Philadelphia, PA 19103
Attention: Barry H. Genkin
Telephone: (215) 569-550
Facsimile: (215) 569-5555
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Percentage of Shares of
Name and of Common Stock Common Stock Outstanding
Notice Address on a Fully Diluted Basis on a Fully Diluted Basis
-------------- ------------------------ ------------------------
<S> <C>
Provident American Corporation
2500 DeKalb Pike
Norristown, Pennsylvania 19404
Attention: Alvin H. Clemens
Telephone: (610) 279-2500
Facsimile: (610) 279-0414
With a copy to:
Butera Beausang Cohen & Brennan
630 Freedom Business Center
King of Prussia, Pennsylvania 19406
Attention: Michael F. Beausang
Telephone: (610) 265-0800
Facsimile: (610) 265-7205
</TABLE>
<PAGE>
VOTING TRUST AGREEMENT
VOTING TRUST AGREEMENT, dated as of January __, 2000 (this
"Agreement"), among UICI, a Delaware corporation (the "UICI"), which is
concurrently herewith depositing shares of common stock, no par value (the
"Common Stock"), of Insurdata Incorporated, a Texas corporation and a subsidiary
of UICI ("Insurdata"), in the Voting Trust created hereunder, and the members
from time to time of the Board of Directors of HealthAxis.com, Inc., a
Pennsylvania corporation ("HealthAxis"), who are not nominees solely of UICI
pursuant to the Shareholders Agreement (the "Shareholders Agreement") to be
entered into in connection with the Merger (as defined below), who initially are
Michael Ashker, Alvin H. Clemens, Edward W. LaBaron, Jr. and Henry Hager as
Trustees (the "Trustees").
WHEREAS, UICI has sponsored the Insurdata Founder's Program (the
"Founder's Program") pursuant to which UICI has granted options to purchase
shares of Common Stock owned by UICI (the "Options") to certain employees of
Insurdata, and UICI has reserved an appropriate amount of such Common Stock to
be distributed upon the exercise of the Options;
WHEREAS, Insurdata and UICI have entered into that certain Agreement
and Plan of Merger, dated as of December 6, 1999, by and among Provident
American Corporation, a Pennsylvania corporation ("Provident"), HealthAxis, UICI
and Insurdata pursuant to which Insurdata will be merged with and into
HealthAxis (the "Merger") and each share of Common Stock will be exchanged for
1.33 shares of common stock, no par value, of HealthAxis (the "Merger
Consideration"); and
WHEREAS, the Trustees have consented to act as trustees under and in
accordance with the Voting Trust created hereunder.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Delivery of Stock to Trustees.
(a) Concurrently with the execution of this Agreement, UICI is
depositing with the Trustees a certificate or certificates representing
1,834,500 shares of Common Stock either endorsed to the Trustees or accompanied
by appropriate stock transfer powers duly executed in blank for the transfer
thereof to the Trustees. The Trustees shall cause the Common Stock represented
by such certificate to be registered in the names of the Trustees on the books
of Insurdata and shall cause such Common Stock to be exchanged for the Merger
Consideration and registered in the names of the Trustees on the books of
HealthAxis.
(b) The Merger Consideration into which such Common Stock will
be converted is referred to herein as the "Shares."
<PAGE>
(c) All certificates representing the Shares shall be
registered in the name of the Trustees and shall bear the following legend:
"This certificate has been issued pursuant to, and the shares of Common
Stock represented hereby are subject to, the terms of that certain
Voting Trust Agreement, dated January __, 2000, among UICI, a Delaware
corporation, and Michael Ashker, Alvin H. Clemens, Edward W. LaBaron,
Jr. and Henry Hager as Trustees."
A similar legend shall be placed in the stock ledger of HealthAxis with respect
to each certificate representing the Shares subject to this Agreement.
2. Creation of Voting Trust.
(a) There is hereby created a voting trust (the "Voting
Trust") in respect of all of the Shares; provided however, that the Voting Trust
shall be effective only upon the consummation of the Merger.
(b) The Voting Trust shall be known as the "Founder's Program
Voting Trust."
3. Voting and Other Rights.
(a) The Trustees shall have the full and unqualified right and
power in their discretion, until the Shares are no longer subject to the
provisions of this Agreement, (i) to vote the Shares either in person or by
proxy for every purpose for which the Shares may be voted according to
HealthAxis' Certificate of Incorporation and Bylaws and the Pennsylvania
Business Corporation Law of 1988, and/or to give written consent in lieu of
voting thereon to any corporate act of the Corporation, including, without
limitation, the election of directors by the holders of the Shares, any
amendment or amendments of HealthAxis' Certificate of Incorporation, the merger
or consolidation of HealthAxis into or with any other corporation or
corporations, the sale of all or substantially all of the assets of HealthAxis
and the liquidation or dissolution of HealthAxis, (ii) to waive notice of any
regular or special meeting of shareholders of HealthAxis, (iii) to call meetings
of shareholders and (iv) to exercise all shareholders' rights and powers in
respect of the Shares.
(b) The Trustees shall not take any action under this
Agreement unless the action to be taken has been concurred in by a majority of
the Trustees. When there are less than three Trustees, concurrence of all the
Trustees shall be required for any action by them. The Trustees may act at a
meeting (which may be by telephone or similar means of communication), or in
writing approved by at least the minimum number of Trustees that would be
necessary to authorize or take such action.
-2-
<PAGE>
(c) The Trustees in their discretion may appoint an agent or
agents to hold the certificates representing the Shares, to act as transfer
agent with respect to the certificates, to keep suitable transfer and other
records and otherwise to act as agent, subject to the direction of the Trustees.
4. Dividends, Etc. All dividends on and distributions in respect of any
of the Shares (including dividends, distributions or other payments made in
shares of voting stock or other securities of HealthAxis) shall, upon receipt by
the Trustees, be promptly paid over to UICI (less any income or other taxes
which may be required by law to be deducted); provided, that the Trustees may
direct HealthAxis to make payment of dividends and distributions directly to
UICI.
5. Transfers; Reversion.
(a) Subject to Sections 5(b) and 5(c) of this Agreement, UICI
shall not have any right to, and the Trustees shall not, sell, pledge or
otherwise dispose of the Shares, or any beneficial interest in any of the
Shares, so long as the Voting Trust is in existence in accordance with the terms
of Section 6 of this Agreement.
(b) Upon the exercise of any Option granted pursuant to the
Founder's Program, the Trustees shall cause to issued to the holders of such
Option a certificate for the Shares purchased pursuant to such Option; provided,
that the Trustees shall not be required to cause such certificate to be issued
unless they have received evidence from UICI reasonably satisfactory to them
that such Option was exercised in accordance with the provisions of the
Founder's Program.
(c) On the 61st day following the termination of employment
with HealthAxis or its successor of any Option holder, the Trustees shall cause
to be issued a certificate to UICI for the number of Shares corresponding to the
Options which expire in accordance with the provisions of the Founder's Program
upon the termination of such holder's employment; provided, that the Trustees
shall not be required to cause such certificate to be issued to UICI unless they
have received evidence from HealthAxis reasonably satisfactory to them that such
employment was terminated and from UICI that such Options have expired.
6. Termination.
(a) This Agreement shall terminate and be of no further force
and effect upon the earlier to occur of (i) such time as all of the Shares have
been distributed in accordance with the provisions of Section 5 of this
Agreement and (ii) July 1, 2003.
(b) Upon the termination of this Agreement or upon any
dissolution or total or partial liquidation of HealthAxis, whether voluntary or
involuntary, the Trustees shall direct that
-3-
<PAGE>
all Shares remaining in the Trust and all moneys, securities, rights or property
attributable to the Shares be distributed to UICI.
7. No Compensation. The Trustees shall not be entitled to any
compensation for services rendered as trustees in connection with their duties
under this Agreement.
8. Successor Trustee.
(a) A member of the Board of Directors (the "Board of
Directors") of HealthAxis who is not solely a nominee of UICI pursuant to the
Shareholders Agreement (an "Eligible Person") shall become a Trustee upon such
director's election to the Board of Directors.
(b) Any Trustee may resign at any time by mailing to
HealthAxis, the other Trustees and UICI a written resignation to take effect 20
days thereafter or upon the prior acceptance thereof. If any Trustee ceases to
be an Eligible Person for any reason, such event shall be deemed to be a
resignation of such Trustee hereunder effective immediately upon such event.
9. Amendments. This Agreement may be amended from time to time by a
written instrument executed by the UICI and a majority of the Trustees.
10. Exculpation and Indemnification. The Trustees hereby accept the
trust created hereby, but assume no responsibility for the management of
HealthAxis or for any action taken by any of them, by any person they have
elected as a director of HealthAxis, Insurdata or UICI or by HealthAxis pursuant
to any vote cast or consent given by the Trustees. The Trustees, whether or not
acting upon the advice of counsel, shall incur no liability because of any error
of law or fact, mistake of judgment or any matter or thing done or omitted under
this Agreement, except for their own individual malfeasance. The Trustees may in
their discretion consult with counsel, who may be counsel for HealthAxis, and
anything done or suffered in good faith by the Trustees in accordance with the
opinion of counsel shall be conclusive in favor of the Trustees against
HealthAxis, UICI, holders of Options and any other interested party. The
Trustees shall be indemnified by the HealthAxis against any liability or
expense, including legal expense, incurred them in carrying out their duties;
except that they shall not be indemnified for their own individual malfeasance.
11. Conflicts of Interest. Any Trustee may be a creditor or shareholder
of HealthAxis and may act as an officer or employee of HealthAxis and receive
compensation therefor. In addition, any Trustee and any firm of which he may be
a member or equity owner may contract with HealthAxis or buy or become
pecuniarily interested in any matter or transaction to which the corporation may
be a party or in which it may be in any way concerned, as fully as if he were
not the Trustee.
-4-
<PAGE>
12. Successors. This Agreement shall inure to the benefit of and be
binding upon the Trustees and UICI and its legal representatives, successors and
assigns.
13. Construction. The Trustees are authorized and empowered to construe
this Agreement, and their construction of the same in good faith shall be final,
conclusive and binding upon them, UICI and any other interested party.
14. Governing Law. This Agreement shall be construed in accordance with
the internal law (and not the law of conflicts) of the State of Pennsylvania.
15. Severability. In case any one or more of (a) the provisions
contained in this Voting Trust Agreement or (b) the deposits of shares of Common
Stock by UICI with the Trustees of the Voting Trust, should be invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions and deposits shall not in any way be affected or
impaired thereby.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
* * * * * * * * * * *
-5-
<PAGE>
IN WITNESS WHEREOF, the undersigned Shareholder and the Trustees have
executed this Voting Trust Agreement as of the date first above written.
TRUSTEES
__________________________________________
__________________________________________
__________________________________________
UICI
By: ______________________________________
Name:
Title:
Acknowledged and accepted:
HEALTHAXIS.COM, INC.
By: ______________________________________
Name:
Title:
-6-
<PAGE>
TRANSITION AGREEMENT
TRANSITION AGREEMENT, effective as of September 1, 1999 (this
"Agreement"), between Insurdata Incorporated, a Texas corporation ("Insurdata"),
and HealthAxis.com, Inc., a Pennsylvania corporation ("HealthAxis").
WHEREAS, Insurdata and HealthAxis contemplate entering into a Merger
Agreement, pursuant to which Insurdata and HealthAxis will combine to form a
single company; and
WHEREAS, Insurdata and HealthAxis intend that the terms of this
Agreement will govern the relationship between Insurdata and HealthAxis
commencing upon September 1, 1999 through the later of (x) the closing date of
the Merger or (y) thereafter in the event that the transactions contemplated by
the Merger Agreement shall fail to close on or before January 31, 2000 or at
such later date as may be agreed upon by the parties the Merger Agreement (the
"Transition Date") for any reason, including the inability of HealthAxis to
satisfy conditions to Insurdata's obligations to close.
NOW, THEREFORE, for good and adequate consideration the parties agree
as follows:
1. Terms of Agreement. The following terms govern the relationship
between Insurdata and HealthAxis created pursuant to this Agreement:
Pre-Closing Period: Period beginning on September 1, 1999 and
ending on the Transition Date.
Transition Period: Period beginning on the Transition Date and
ending on the latest date contemplated by
the succeeding paragraphs of this Agreement.
Scope and Duration of Services: Services to be provided by Insurdata will be
of four types:
o Carrier Integration Services, to consist
of Systems Integration Services performed
by Insurdata for HealthAxis in order to
get certain designated insurance carriers
up and operating on the HealthAxis
e-commerce platform. All Carrier
Integration Services that have been
initiated during the Pre-Closing Period
by Insurdata staff will be completed by
Insurdata. It is estimated that such
services can be completed within six
months following the Transition Date.
o Version 2.0 Small Group Development
Services, to consist of project
management and development services. All
Version 2.0 Small Group Development
Services that have been initiated during
the Pre-Closing Period by Insurdata staff
will be completed by Insurdata. It is
<PAGE>
estimated that such services can be
completed within twelve months following
the Transition Date. In addition,
following completion of the development
of Version 2.0 Small Group software,
Insurdata will provide training and
support services for a period of 3-4
months if needed, or such shorter time
period as may be designated by
HealthAxis. It is agreed and understood
that Insurdata will have no
responsibility to HealthAxis to assist
HealthAxis in the development of Version
2.0 Individual solutions.
o Platform Solutions, to consist of
Insurdata's proprietary solutions
encompassing Insur-Web, Insur-Enroll and
Virtual Print. These solutions are
expected to be deployed in the HealthAxis
delivery of Version 2.0 Small Group
solutions, as well as in carrier back-end
integration solutions.
o Infrastructure Outsourcing Services, to
consist of provisioning and operation of
the hardware and software products used
in the support of the HealthAxis
development and production environments.
Insurdata will continue to provide
operations services at standard external
billing rates for up to one year from the
Transition Date at HealthAxis' sole
discretion.
Pricing of Services: Services will be priced as follows:
o For Carrier Integration Services,
Insurdata will receive a professional fee
for all work performed during the
Pre-Closing Period and the Transition
Period at Insurdata's standard external
billing rates as outlined in Schedule A,
such fee to be invoiced and paid on a
monthly basis in cash.
o For Version 2.0 Small Group Development
Services, Insurdata will receive a
professional fee for all work performed
during the Pre-Closing Period and the
Transition Period (including any
post-development training) at Insurdata's
standard external billing rates, such fee
to be invoiced and paid on a monthly
basis in cash.
o For Platform Solutions, Insurdata will
retain ownership of Version 2.0 Small
Group software and Platform Software
(including Insurdata's Insur-Web, Insur
Enroll and Virtual Print software),
including all source code. HealthAxis
will retain all rights to the
<PAGE>
presentation layer software of the
overall Version 2.0 Small Group design,
and Insurdata will be granted a
non-exclusive, royalty free right to use
such software. In consideration of the
royalty from HealthAxis as provided
below, Insurdata will grant to HealthAxis
a perpetual, non-exclusive right to use,
solely in connection with the delivery of
services and not for re-sale, the Version
2.0 Small Group software and the Platform
Software (including Insurdata's
Insur-Web, Insur-Enroll and Virtual Print
software), including access to all
associated source code.
o For Infrastructure Outsourcing Services,
Insurdata will charge a professional fee
for all work performed during the
Pre-Closing Period and the Transition
Period at Insurdata's standard external
billing rates. Insurdata will receive a
10% margin on any hardware or third party
software acquired by HealthAxis from
Insurdata. In addition, Insurdata will
charge HealthAxis an allocable share of
space, data, telephony, transportation,
travel expense and environmental costs.
All such fees are to be invoiced and paid
on a monthly basis in cash.
o HealthAxis will pay all one-time costs
associated with the repatriation of any
and all of these services. HealthAxis
will also pay all travel and living
expenses associated with any and all of
the above services.
Rights of HealthAxis in Technology: Upon completion of Version 2.0 Small Group
Development Services and Platform
Development Services, Insurdata will grant
to HealthAxis a perpetual, non-exclusive
right to use, solely in connection with the
delivery of services and not for re-sale,
the Version 2.0 Small Group software and the
Platform Software (including the right to
use Insurdata's Insur-Web, Insur-Enroll and
Virtual Print software), including access to
all source code. In consideration of its
right to use, solely in connection with the
delivery of services and not for resale, the
Platform Software (including Insurdata's
Insur-Web, Insur-Enroll and Virtual Print
software), HealthAxis will agree that (a) it
will not charge for use of such software on
a per-transaction or other basis at a rate
less than the lowest rate currently quoted
by Insurdata for comparable transaction
volumes or other use, and (b) HealthAxis
will pay to Insurdata as a royalty 50% of
all revenues derived from any use (excluding
any revenues generated from the sale of
insurance or related products on the
<PAGE>
HealthAxis e-commerce platform) of the
Version 2.0 Small Group software or Platform
Software, whether earned on a
per-transaction, commission or other basis.
Upon turnover of source code, Insurdata will
provide training and transition professional
services at standard billing rates for a
period of up to six months from the date of
delivery. Without limiting the generality of
the foregoing,
o The license to be granted to HealthAxis
will be non-exclusive and
non-transferable by operation of law
(including without limitation by merger
or consolidation) or otherwise and
limited to use of the licensed software
only by HealthAxis in the course of
HealthAxis' operating its e-commerce and
technology health insurance company;
provided, however, that nothing hereunder
shall prevent a successor to HealthAxis
by reason of sale, merger or other change
in control from utilizing the Platform
Software in accordance with the terms
otherwise set forth herein with respect
to HealthAxis' installed base of users at
the time of such sale, merger or other
change in control.
o The Insurdata software (including without
limitation Insur-Web, Insur-Enroll and
Virtual Print) will remain the property
of Insurdata and title in and to the
Insurdata software shall remain at all
times with Insurdata.
o Without the prior written consent of
Insurdata, and without the payment of
such additional license fee by the
proposed transferee as Insurdata may
agree, HealthAxis may not sell, transfer,
loan or otherwise dispose of any licensed
software or the license to be granted
under the Transition Agreement.
o In no event may HealthAxis subject any
licensed software to any lien, security
interest or encumbrance of any kind.
o The license to be granted to HealthAxis
will cover only the versions and releases
as delivered to HealthAxis pursuant to
the Transition Agreement, and will not
include any rights to future revisions,
modifications, enhancements and upgrades
as may thereafter be made by Insurdata.
Audit Rights: Insurdata shall have reasonable and
customary rights to audit the books and
records of HealthAxis from time to time for
<PAGE>
purposes of (i) verifying the determination
of all royalties to be paid to Insurdata
measured in terms of revenues and/or
transactions and (ii) compliance with the
most favored nation pricing undertaking set
forth in the preceding paragraph.
Use of Information: HealthAxis shall view as Insurdata's
property any idea, data, program, technical,
business or other intangible information,
however conveyed, and any document, print,
tape, disk, tool, or other tangible
information-conveying or performance-aiding
article owned or controlled by Insurdata,
and provided to, or acquired by, HealthAxis.
HealthAxis shall keep such information
confidential and use it only as provided
under the Transition Agreement and obligate
its employees, subcontractors and others
working for it to do so, provided that the
foregoing shall not apply to information
previously known to HealthAxis free of
obligation, or made public through no fault
imputable to HealthAxis. Since unauthorized
use, transfer or disclosure of Insurdata's
confidential information will diminish the
value to Insurdata of its proprietary
interests, if HealthAxis breaches any of its
obligations under the Transition Agreement,
Insurdata shall be entitled to seek
equitable relief to protect its interests,
including, but not limited to, injunctive
relief, as well as money damages. The rights
and remedies of Insurdata are not exclusive
and are in addition to any other rights and
remedies provided by law.
Limitation of Liability: Insurdata shall not be liable under the
Transition Agreement for any indirect,
incidental or consequential damages
(including lost profits) sustained or
incurred in connection with this agreement
regardless of the form of action, whether in
contract, tort (including negligence),
strict liability or otherwise and whether or
not such damages are foreseeable or
unforeseeable. In addition, neither
Insurdata nor HealthAxis shall be liable for
exemplary or punitive damages in connection
with the Transition Agreement. Accordingly,
each party will agree to assume the risk of
insuring against or otherwise bearing the
risk of greater damages.
Warranties: The software and technology licensed and
services to be provided under the Transition
Agreement will be provided "as is" and
without warranty of any kind, and Insurdata
hereby disclaims all other warranties,
express, implied or statutory, including but
not limited to all warranties of
merchantability or fitness for a particular
use.
<PAGE>
Personnel: Each of Insurdata and HealthAxis will retain
the employees that were part of their
respective organizations prior to the
Transition Date. Employees hired during the
Pre-Closing Period will remain with
HealthAxis if they are based in Philadelphia
and with Insurdata if they are based in
Dallas. Insurdata and HealthAxis will agree
not to solicit for employment the employees
of the other. Insurdata and HealthAxis will
remain liable for benefits of their
employees.
Dispute Resolution: Insurdata and HealthAxis will agree to
submit all disputes under the Transition
Agreement to binding arbitration. In such
arbitration, each party will submit its
position with respect to the dispute to the
arbitrator, and the arbitrator, after
considering such factors as he deems
appropriate and reasonable, shall choose the
position of one of the parties, with the
non-prevailing party to be responsible for
all costs and expenses associated with such
arbitration proceedings.
2. Miscellaneous.
(a) Governing Law. This Agreement shall be construed in
accordance with and governed by the substantive laws of the State of
Pennsylvania, without giving effect to the principles of conflicts of law
thereof.
(b) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and may be amended only in a writing that is executed by Insurdata and
HealthAxis.
(c) Severability. Insofar as possible, each provision of this
Agreement shall be interpreted so as to render it valid and enforceable under
applicable law and severable from the remainder of this Agreement. A finding
that any such provision is invalid or unenforceable in any jurisdiction shall
not affect the validity or enforceability of any other provision or the validity
or enforceability of such provision under the laws of any other jurisdiction.
(d) Notice. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received (a) when so delivered personally, (b)
upon receipt of an appropriate electronic answerback or confirmation when so
delivered by telegraph or telecopy (to such number specified below or another
number or numbers as such person may subsequently designate by notice given
hereunder), or (c) five business days after the date of mailing to the following
address or to such other address or addresses as such person may subsequently
designate by notice give hereunder, if so delivered by mail:
<PAGE>
(i) if to Insurdata, to:
Insurdata Incorporated
5215 N. O'Connor Blvd. Suite 800
Irving ,Texas 75039
Attn: Dennis B. Maloney
Telephone: (972) 443-5000
Facsimile: (972) 556-0572
with a copy to:
Mayer, Brown & Platt
190 S. LaSalle Street
Chicago, Illinois 60603
Attn: Edward J. Schneidman
Telephone: (312) 782-0600
Facsimile: (312) 701-7711
(ii) if to Insurdata, to:
HealthAxis.com, Inc.
2500 Dekalb Pike
East Norriton, Pennsylvania 19401
Attn: Michael Ashker
Telephone: (610) 279-3500
Facsimile: (610) 279-4498
with a copy to:
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, Pennsylvania
Attn: Barry H. Genkin
Telephone: (215) 569-5500
Facsimile: (215) 988-6910
(e) Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed an original. It shall not be necessary in making proof of this
Agreement to produce or account for more than one counterpart.
(f) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
(g) Interpretation. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural, and pronouns stated in either the masculine, the
feminine or the neuter gender shall include the masculine, feminine and neuter.
<PAGE>
(h) Further Assurances. Insurdata and HealthAxis, by executing
this Agreement, agree that each party will take such actions and execute such
further documents as either party may reasonably request from time to time in
order to carry out the purposes of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed and delivered as of the date first set forth above.
INSURDATA INCORPORATED
By: /s/ Dennis B. Maloney
-----------------------
Name: Dennis B. Maloney
Title: President
HEALTHAXIS.COM, INC.
By: /s/ Michael Ashker
-----------------------
Name: Michael Ashker
Title: President
<PAGE>
Schedule A - Professional Services Rates
System Integration Daily Rates:
Development:
Programmer $380
Programmer Analyst $520
Sr. Programmer Analyst $640
Systems Analyst / Project Leader $740
Consultant / Project Manager $830
Sr. Consultant / Sr. Project Manager $930
Managing Consultant / Project Director $1030
Systems Development Manager $1030
Business:
Quality Assurance Analyst $380
Sr. Quality Assurance Analyst $440
Business Analyst $550
Sr. Business Analyst $620
Industry Specialist $690
Industry Consultant $890
Business Systems Manager $890
Technical:
Associate Systems Engineer $330
Systems Engineer $410
Sr. Systems Engineer $540
Technical Specialist $630
Sr. Technical Specialist $730
Technical Architect $800
Technical Services Manager $890
Director: $1070
<PAGE>
HealthAxis.com to Merge with Insurdata Incorporated
December 7, 1999
Page 1 of 1
[GRAPHIC OMITTED]
FOR IMMEDIATE RELEASE
- ---------------------
Contact:
Investor Contact: Media Contact:
Deidre Holt Doug Russell/Michele Meagher
HealthAxis.com Schwartz Communications, Inc.
610-275-3800 781-684-0770
[email protected] [email protected]
[email protected]
HealthAxis.com to Merge with Insurdata Incorporated,
Creating Internet's First e-Commerce Platform Integrating
Insurance Sales, Marketing, and Administration
Merger Will Provide Health Insurance Payors and Consumers with
Complete Portfolio of Web-Enabled Services
EAST NORRITON, PA and DALLAS, TX, December 7, 1999 - HealthAxis.com, a
subsidiary of Provident American Corporation (NASDAQ: PAMC) and the leading
online insurance marketer, and Insurdata Incorporated, a subsidiary of UICI
(NYSE: UCI) and one of the largest providers of healthcare administration
software solutions, today announced the signing of a definitive agreement to
merge the two companies.
The combined entity, which will retain the HealthAxis.com name, will be one of
the largest players in the Web-enabled health insurance space, with proforma
1999 estimated revenues of $42 million. The transaction is scheduled to close in
January of 2000, subject to satisfaction of various closing conditions,
including regulatory and shareholder approval. Under the terms of the
transaction, each company's shareholders will end up owning approximately 50
percent of the newly combined company, on a pre-funding basis.
Michael Ashker, chief executive officer of HealthAxis.com will remain CEO of the
combined entity. Dennis Maloney, chief executive officer of Insurdata, will
become chief operating officer of the new HealthAxis.com. The Board of Directors
will consist of seven members, three from UICI and four from Provident American.
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<PAGE>
HealthAxis.com to Merge with Insurdata Incorporated
December 7, 1999
Page 2 of 1
The company's headquarters will remain in the Philadelphia area with significant
operations in Dallas as well as eight other locations throughout the United
States and abroad. The combined company will employ over 350 IT professionals
with substantial health plan sales and administration experience.
Although the consumer and business-to-business services will be marketed
separately, all other corporate functions will be consolidated, including
technology, finance/accounting, human resources, legal, and sales.
HealthAxis.com will continue to market its online insurance retail marketplace
to individuals and small businesses through www.healthaxis.com--a fully-licensed
digital insurance agency representing leading carriers like Aetna/US Healthcare,
WellPoint Networks, Fortis Health and Aegon. The Web site offers product
information, plan quotes, online insurance purchases, and customer service. The
company's retail platform combines an efficient, low-cost distribution channel
with a superior insurance shopping experience. HealthAxis.com has exclusive
marketing agreements for the sale of health insurance with America Online,
Lycos, Snap.com, and CNet.
Insurdata's proprietary solutions group, to be renamed HealthAxis.com
Application Solutions Group, provides proprietary Web-enabled enrollment,
administration and claims processing applications to healthcare payors,
including insurance companies, third-party administrators and large self-funded
groups. These solutions enable clients to both reduce plan administration costs
and improve service to plan members. All of Insurdata's workflow and business
software applications are built around an Application Service Provider (ASP)
model.
The combined company will serve both consumers and payors with an integrated
Web-based platform. HealthAxis.com will now offer carriers a comprehensive suite
of Web-enabled software solutions for marketing, sales, and plan administration.
For consumers and small businesses, the company will offer an enhanced set of
products and services based on its ability to seamlessly connect carriers and
purchasers through its proprietary Web platform.
Michael Ashker, chief executive officer of HealthAxis.com said, "The Insurdata
merger is a milestone for HealthAxis.com and for the entire e-health industry.
With Insurdata's back-end software strength, HealthAxis.com advances to a
leadership position in the effort to establish the best-of-class online
insurance commerce platform. Our carrier partners will benefit from a powerful
suite of e-services that includes everything from Internet distribution to
electronic claims processing. Our strength across both
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<PAGE>
HealthAxis.com to Merge with Insurdata Incorporated
December 7, 1999
Page 3 of 1
the front and back-end of the value chain positions HealthAxis.com to both
capitalize on, and catalyze, the healthcare industry's transformation into a
Web-enabled industry. The transaction will allow HealthAxis.com to target not
just the $100 billion health insurance segment, but the entire $1.2 trillion
dollar healthcare economy."
Dennis Maloney, chief executive officer of Insurdata said, "This business
combination creates extraordinary synergies between our business-to-business
software solutions and HealthAxis.com's consumer services. HealthAxis.com's
access to capital and Internet marketing expertise will enable us to accelerate
our investment in sophisticated administration and distribution software
solutions. The merger positions the new company as a one-stop-shop featuring a
complete, end-to-end product portfolio of Web-enabled solutions for marketing,
distribution, customer service, claims processing and plan administration for
all customer types - individuals, small businesses and large groups. I can't
think of another company with a comparable package of solutions."
In a separate release issued today, HealthAxis.com announced a $57 million
equity investment from a group led by Brown Simpson Asset Management, LLC. This
investment will fund the growth of the combined HealthAxis.com/Insurdata entity.
In another release issued today, Provident American Corporation announced that
it will renew its merger plans with its HealthAxis.com subsidiary.
The company is scheduled to hold an online conference call this afternoon at
4:30 PM Eastern Time via Vcall.com, at which time senior management from the
combined entity will discuss the transaction. Investors should e-mail the
company to request a password at [email protected].
About HealthAxis.com
HealthAxis.com, Inc. is the leading provider of Internet solutions for
healthcare insurance marketing, sales, and plan administration. HealthAxis.com
is the only e-healthcare company servicing both the consumer and
business-to-business marketplaces with health plan solutions. The Company's
consumer Web site, www.healthaxis.com, is a fully transactional, online health
insurance agency targeting the individual and small group markets. The Company's
proprietary workflow and business application software, built around an
application service provider model, enables healthcare payors -- carriers, third
party administrators, and large, self-funded groups -- to more efficiently
capture, process, and share health plan data over the Internet. HealthAxis.com
is headquartered in suburban Philadelphia, with significant operations in
Dallas, as well as offices in eight other locations both domestic and abroad.
The company employs over 350 IT professionals.
-more-
<PAGE>
HealthAxis.com to Merge with Insurdata Incorporated
December 7, 1999
Page 4 of 1
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: Certain statements made which are not historical facts may be considered
forward-looking statements, including, without limitation, statements as to
trends, management's beliefs, expectations and opinions, which are based upon a
number of assumptions concerning future conditions that ultimately may prove to
be inaccurate. Such forward-looking statements are subject to risks and
uncertainties and may be affected by various factors which may cause actual
results to differ materially from those in the forward-looking statements. For
further information which could cause actual results to differ from the Company
's expectations, as well as other factors which could affect the Company 's and
Provident American's financial statements, please refer to Provident American's
reports filed with the Securities and Exchange Commission.
<PAGE>
HealthAxis.com Receives $57 Million Equity Investment
from Group Led by Brown Simpson Asset Management
December 7, 1999
Page 1 of 3
[GRAPHIC OMITTED]
FOR IMMEDIATE RELEASE
Contact:
Investor Contact: Media Contact:
Deidre Holt Doug Russell/Michele Meagher
HealthAxis.com Schwartz Communications, Inc.
610-275-3800 781-684-0770
[email protected] [email protected]
[email protected]
------------------------
HealthAxis.com Receives $57 Million Equity Investment from Group Led
by Brown Simpson Asset Management
Funds to Provide Growth Capital for HealthAxis.com
in the Wake of Its Merger with Insurdata Incorporated
EAST NORRITON, PA, December, 7, 1999 - HealthAxis.com, a subsidiary of Provident
American Corporation (NASDAQ: PAMC) and the leading provider of Internet
solutions for healthcare insurance marketing, sales and administration, today
announced that an investment group led by Brown Simpson Asset Management, LLC,
has invested $57 million into the company.
The Brown Simpson-led group includes the Royal Bank of Canada, LBI Group Inc.,
Tudor Investment Corporation, and other investors. Several of the funding
parties are previous investors in the private securities of either Provident
American or HealthAxis.com. The investment group in today's transaction will be
receiving 3,846,003 shares of HealthAxis.com common stock.
The private offering was placed by Donaldson, Lufkin and Jenrette Securities
Corporation. Thomas Weisel Partners LLC and Stephens Inc. acted as co-placement
agents.
The company intends to use the newly invested capital primarily to support an
aggressive marketing effort in both its consumer and business-to-business
product groups. HealthAxis.com, which also announced today, in a separate
release, its merger with Insurdata Incorporated, will form the only Internet
company providing healthcare insurance services to both consumers and payors,
such as insurance carriers, third party administrators, and self-funded groups.
With proforma 1999 estimated revenues of $42 million, HealthAxis.com is one of
the largest companies in the emerging e-health sector.
<PAGE>
HealthAxis.com Receives $57 Million Equity Investment
from Group Led by Brown Simpson Asset Management
December 7, 1999
Page 2 of 3
Jim Simpson, managing director of Brown Simpson Asset Management, said, "This
merger creates one of the most exciting companies in the e-health space. We
believe the combined company has an opportunity to be the dominant player in
providing Internet solutions for healthcare plan sales, marketing and
administration. We are excited to increase our commitment to this dynamic
company."
Michael Ashker, chief executive officer of HealthAxis.com said, "The decision by
existing stakeholders to increase their commitment to HealthAxis.com is a strong
endorsement of both our merger with Insurdata and the strategy of providing
healthcare insurance solutions for both consumers and payors. This investment
will enable us to expand our leadership both in consumer insurance sales and
connectivity services to industry."
About HealthAxis.com
HealthAxis.com, Inc. is the leading provider of Internet solutions for
healthcare insurance marketing, sales, and plan administration. HealthAxis.com
is the only e-healthcare company servicing both the consumer and
business-to-business marketplaces with health plan solutions. The Company's
consumer Web site, www.healthaxis.com, is a fully transactional, online health
insurance agency targeting the individual and small group markets. The Company's
proprietary workflow and business application software, built around an
application service provider model, enables healthcare payors -- carriers, third
party administrators, and large, self-funded groups --to more efficiently
capture, process, and share health plan data over the Internet. HealthAxis.com
is headquartered in suburban Philadelphia, with significant operations in
Dallas, as well as offices in eight other locations both domestic and abroad.
The company employs over 350 IT professionals.
<PAGE>
HealthAxis.com Receives $57 Million Equity Investment
from Group Led by Brown Simpson Asset Management
December 7, 1999
Page 2 of 3
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: Certain statements made which are not historical facts may be considered
forward-looking statements, including, without limitation, statements as to
trends, management's beliefs, expectations and opinions, which are based upon a
number of assumptions concerning future conditions that ultimately may prove to
be inaccurate. Such forward-looking statements are subject to risks and
uncertainties and may be affected by various factors which may cause actual
results to differ materially from those in the forward-looking statements. For
further information which could cause actual results to differ from the
Company's expectations as well as other factors which could affect the Company's
and Provident American's financial statements, please refer to Provident
American's reports filed with the Securities and Exchange Commission.
<PAGE>
Provident American Corporation to Renew Merger Plan with
HealthAxis.com Subsidiary
December 7, 1999
Page 1 of 2
[GRAPHIC OMITTED]
FOR IMMEDIATE RELEASE
Contact:
Investor Contact: Media Contact:
Deidre Holt Doug Russell/Michele Meagher
HealthAxis.com Schwartz Communications, Inc.
610-275-3800 781-684-0770
[email protected] [email protected]
[email protected]
Provident American Corporation to Renew Merger Plan with
HealthAxis.com Subsidiary
EAST NORRITON, PA, December 7, 1999 -- Provident American Corporation (NASDAQ:
PAMC) today announced that it plans to move forward with its original plan to
merge with its subsidiary, HealthAxis.com, Inc., the leading provider of
Internet solutions for healthcare insurance marketing, sales, and
administration. Concurrent with the merger, the company will apply to NASDAQ for
a new trading symbol. HealthAxis.com would become the surviving corporate
identity.
Michael Ashker, chief executive officer of Provident American Corporation and
HealthAxis.com, said, "HealthAxis.com's merger with Insurdata paves the way for
Provident to resume preparations for its own merger with HealthAxis.com.
Combining HealthAxis.com and Provident is the next logical step in increasing
shareholder value for owners of these two companies."
The two companies anticipate filing documents with the Securities and Exchange
Commission following the completion of the HealthAxis.com/Insurdata merger,
announced today in a separate release and scheduled to close in January 2000.
The HealthAxis.com/PAMC merger will be subject to the signing of a definitive
agreement, approval by both Boards of Directors, shareholders of both companies,
and regulatory and other approvals.
-more-
<PAGE>
Provident American Corporation to Renew Merger Plan with
HealthAxis.com Subsidiary
December 7, 1999
Page 2 of 2
About HealthAxis.com
HealthAxis.com, Inc. is the leading provider of Internet solutions for
healthcare insurance marketing, sales, and plan administration. HealthAxis.com
is the only e-healthcare company servicing both the consumer and
business-to-business marketplaces with health plan solutions. The Company's
consumer Web site, www.healthaxis.com, is a fully transactional, online health
insurance agency targeting the individual and small group markets. The Company's
proprietary workflow and business application software, built around an
application service provider model, enables healthcare payors --carriers, third
party administrators, and large, self-funded groups -- to more efficiently
capture, process, and share health plan data over the Internet. HealthAxis.com
is headquartered in suburban Philadelphia, with significant operations in
Dallas, as well as offices in eight other locations both domestic and abroad.
The Company employs over 350 IT professionals.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: Certain statements made which are not historical facts may be considered
forward-looking statements, including, without limitation, statements as to
trends, management's beliefs, expectations and opinions, which are based upon a
number of assumptions concerning future conditions that ultimately may prove to
be inaccurate. Such forward-looking statements are subject to risks and
uncertainties and may be affected by various factors which may cause actual
results to differ materially from those in the forward-looking statements. For
further information which could cause actual results to differ from the
Company's expectations as well as other factors which could affect the Company's
financial statements, please refer to the Company's reports filed with the
Securities and Exchange Commission.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made by and
among HealthAxis.com, Inc. (the "Company") and UICI ("Holder").
RECITALS
A. Pursuant to the Agreement and Plan of Merger between Provident
American Corporation, the Company, the Holder and Insurdata Incorporated
("Insurdata"), dated December 6, 1999 (the "Merger Agreement"), Insurdata will
be merged with and into the Company, with the Company as the surviving entity
(the "Merger"). Pursuant to the Merger, all shares of issued and outstanding
common stock of Insurdata will be converted into shares of HealthAxis common
stock. In connection with the Merger, the Company will issue 18,943,678 shares
of the Company's common stock, no par value, to Holder (the "Merger Shares").
Such offering of the Merger Shares is referred to as the "Offering."
B. To induce Holder to enter into the Merger Agreement, the Company is
willing under certain circumstances to register under the Securities Act of
1933, as amended, and the rules and regulations thereunder (collectively, the
"Securities Act"), the Merger Shares.
NOW THEREFORE, intending to be legally bound, the parties hereto agree
as follows:
1. Required Registrations.
(a) At any time after the earlier of: (i) twelve (12) months
following the issuance of the Merger Shares, or (ii) six months after the
completion of the Company's initial public offering, holders of at least 25% of
the then outstanding shares of the Merger Shares may request, in writing, that
the Company effect the registration of Registrable Securities (as defined in
Section 7 hereof) owned by such holders on a form that may be used for the
registration of Registrable Securities. If the holders initiating the
registration intend to distribute the Registrable Securities by means of an
underwriting, they shall so advise the Company in their request. In the event
such registration is underwritten, the right of other holders to participate
shall be conditioned on such holders' participation in such underwriting. Upon
receipt of any such request, the Company shall promptly give written notice of
such proposed registration to all holders of the Registrable Securities and
holders of common stock who have been granted registration rights. Such holders
shall have the right, by giving written notice to the Company within 30 days
after the Company provides its notice, to elect to have included in such
registration a number of their securities, including the Registrable Securities,
as such holders may request in such notice of election; provided that if the
underwriter (if any) managing the offering determines that, because of marketing
factors, all of the securities, including the Registrable Securities, requested
to be registered by all holders may not be included in the offering, then
subject to the priority rights, if any, of: holders of shares subject to the
Registration Rights Agreement dated November 13, 1998 (the "AOL Shares") between
the Company and America Online, Inc., (the "AOL Rights Agreement"); holders of
the shares issued to Health Plan Services, Inc. ("HPS") subject to the
Registration Rights Agreement (the "HPS Shares") between the Company and HPS
<PAGE>
dated May 29, 1998 (the "HPS Registration Rights Agreement"); holders of the
Series C Preferred Stock; Provident American Corporation and its subsidiaries
subject to Registration Rights Agreements dated March 30, 1999 (the "Provident
Shares"), and other holders of registration rights granted by the Company, the
Company shall include in such registration: (i) first, the securities of the
holders of the AOL Shares requesting registration pursuant to the terms of the
AOL Rights Agreement to the extent entitled to registration under the AOL Rights
Agreement; (ii) second, the securities of the holders of the HPS Shares unless
the HPS Shares are eligible for resale pursuant to Rule 144 without regard to
volume limitations; (iii) third, the securities of the holders of the common
stock issuable upon the conversion of the Series C Preferred Stock, the
securities of the holder of the common stock issuable upon the conversion of the
Series D Preferred Stock and the securities issuable upon the exercise of the
warrant granted to Holder, pro rata based on the number of shares requested to
be included; (iv) fourth, the securities of holders of the Provident Shares; (v)
fifth, the securities of holders of common stock issuable upon the conversion of
the Series A Preferred Stock; (vi) sixth, the securities of the holders of
Common Stock pursuant to the terms of the Registration Rights Agreements, dated
May 7, 1999 and May 11, 1999; (vii) seventh, the securities issuable upon the
exercise of warrants granted to ING Baring Furman Selz, LLC; (viii) eighth, the
securities issuable upon the exercise of warrants granted to First Health Group
Corp.; (ix) ninth, the securities issuable upon the exercise of warrants granted
to Aetna/US Healthcare; (x) tenth, the securities issuable upon the exercise of
warrants granted to Blue Cross and Blue Shield Association; (xi) eleventh, the
securities of the holders of common stock requesting registration pursuant to
the Registration Rights Agreement dated December 3, 1999; (xii) twelfth, the
securities of the Holder or its successors or assigns where such entities hold
Registrable Securities; and (xiii) thirteenth, the securities requested to be
included therein by the other holders of the Company securities requested to be
included in such registration, pro rata among the holders of such securities on
the basis of the number of shares owned by each such holder. Thereupon, the
Company shall, as expeditiously as possible, use its best efforts to effect the
registration (on a form that may be used for the registration of the Registrable
Securities) of all the Registrable Securities which the Company has been
requested to so register.
(b) The Company shall not be required to effect more than two
registrations pursuant to the first sentence of paragraph (a) above; provided,
however, in the event of a proration pursuant to the foregoing paragraph (a)
which results in Holder holding Registrable Securities having less than all of
the requested securities being included in a current registration, then, to the
extent of such unincluded Registrable Securities, the Holder shall receive an
additional demand registration right upon the expiration of any blackout period,
subject to any priority rights provided in paragraph (a), and the Company shall
be obligated to file an additional registration statement (which registration
statement shall contain a current prospectus) relating to the Registrable
Securities; and (ii) the Company shall use its best efforts to effect the
registration of such Registrable Securities as promptly as practicable
thereafter. In addition to the foregoing, the Company shall agree upon the first
anniversary of the Company's becoming subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act to file a registration statement on Form
S-3 (if then available) covering the resale from time to time of all of the
remaining Registrable Securities.
(c) The Registration Expenses (as defined in Section 4) shall
be paid by the Company with respect to all registrations effected pursuant to
this Section.
-2-
<PAGE>
(d) The Company may delay the filing or effectiveness of any
registration statement for a period of up to 180 days after the date of a
request pursuant to this Section 1 if at the time of such request to register
Registrable Securities: (i) the Company is engaged or has fixed plans to engage
within 30 days of the time of the request in a firm commitment underwritten
public offering or (ii) if the Company furnishes to the Holder requesting
registration a certificate signed by senior executive officer of the Company
stating that the Company is engaged in any other activity which, in the good
faith determination of the Company's Board of Directors, is a material
non-public event which would be adversely affected by the requested registration
to the material detriment of the Company, then the Company may at its option
direct that such request be delayed for a period not in excess of 90 days from
the effective date of such offering or the date of commencement of such other
material activity, as the case may be, provided, however, the Company may not
utilize the right set forth in this clause (ii) more than once in any 12-month
period.
2. Piggyback Registration.
(a) Each time that the Company proposes to register a public
offering solely of its authorized but unissued common stock or shares held in
Treasury ("Primary Shares") or other securities, other than pursuant to a
Registration Statement on Form S-4 or Form S-8 or similar or successor forms
(collectively, "Excluded Forms"), the Company shall promptly give written notice
of such proposed registration to all holders of the Merger Shares, which shall
offer such holders the right to request inclusion of the common stock in the
proposed registration statement.
(b) Each holder of the Merger Shares shall have twenty (20) days or
such longer period as shall be set forth in the notice from the receipt of such
notice to deliver to the Company a written request specifying the number of
shares of common stock such holder intends to sell and the holder's intended
plan of disposition.
(c) In the event that the proposed registration by the Company is,
in whole or in part, an underwritten public offering of securities of the
Company, any request under Section 2(b) may specify that the Merger Shares be
included in the underwriting on the same terms and conditions as the shares of
common stock, if any, otherwise being sold through underwriters under such
registration.
(d) Upon receipt of a written request pursuant to Section 2(b), the
Company shall promptly use its best efforts to cause all such Registrable
Securities to be registered, to the extent required to permit sale or
disposition as set forth in the written request.
(e) Notwithstanding the foregoing, if the managing underwriter of an
underwritten public offering determines and advises in writing that the
inclusion of all Registrable Securities proposed to be included in the
underwritten public offering, together with the AOL Shares, the HPS Shares and
any other issued and outstanding shares of common stock proposed to be included
therein by holders other than the holders of Registrable Securities (such other
shares hereinafter collectively referred to as the "Other Shares"), would
interfere with the successful marketing of the securities proposed to be
included in the underwritten public
-3-
<PAGE>
offering, then the number of such shares to be included in such underwritten
public offering shall be reduced, and shares shall be excluded from such
underwritten public offering in a number deemed necessary by such managing
underwriter. In the event an exclusion of shares is necessary, shares shall be
included in the following order: (i) first, the Primary Shares; (ii) second, the
AOL Shares requested to be included in the registration pursuant to the terms of
the AOL Rights Agreement to the extent entitled to registration under the AOL
Rights Agreement; (iii) third, HPS Shares requested to be included pursuant to
the terms of the HPS Registration Rights Agreement unless the HPS Shares are
eligible for resale pursuant to Rule 144 without regard to volume limitations;
(iv) fourth, the securities issued upon the conversion of the Series C Preferred
Stock of holders requesting registration, the securities issued upon the
conversion of Series D Preferred Stock of holders requesting registration, and
the securities issued upon the exercise of the warrants granted to Holder, pro
rata based on the number of shares requested to be included; (v) fifth, the
securities of holders of the Provident Shares requesting registration; (vi)
sixth, the securities issued upon the conversion of the Series A Preferred Stock
of holders requesting registration; (vii) seventh, the securities of the holders
of Common Stock requesting registration pursuant to the terms of the
Registration Rights Agreements, dated May 7, 1999 and May 11, 1999; (viii)
eighth, the securities issued upon the exercise of the warrants granted to ING
Baring Furman Selz, LLC; (ix) ninth, the securities issued upon the exercise of
the warrants granted to First Health Group Corp.; (x) tenth, the securities
issued upon exercise of the warrants granted to Aetna/US Healthcare; (xi)
eleventh, the securities issued upon the exercise of the warrants granted to
Blue Cross and Blue Shield Association; (xii) twelfth, the securities of holders
requesting registration pursuant to the terms of the Registration Rights
Agreement dated December 3, 1999; (xiii) thirteenth, the securities held by the
Holder or its successors or assigns requesting registration; (xiv) fourteenth,
Other Shares. To the extent all of the Registrable Securities requested to be
included in the underwritten public offering can not be included, holders of
Registrable Securities shall participate in such offering pro rata based on the
number of shares of Registrable Securities each holder proposes to include.
(f) all shares of common stock that are not included in the
underwritten public offering shall be withheld from the market by the holders
thereof for a period, not to exceed 180 following an initial public offering and
90 days for any offering thereafter, that the managing underwriter reasonably
determines as necessary in order to effect the underwritten public offering. The
holders of such shares shall execute such documentation as the managing
underwriter reasonably requests to evidence this lock-up.
3. Procedures. Whenever the holders of Registrable Securities have
requested that any Registrable Securities be registered pursuant to this
Agreement, the Company shall use its best efforts to effect the registration and
the sale of such Registrable Securities in accordance with the intended method
of disposition thereof; and pursuant thereto the Company shall as expeditiously
as possible:
(a) prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement on the appropriate form under the
Securities Act, which form shall be available for the sale of such Registrable
Securities in accordance with the intended method or methods of distribution
thereof, and use its commercially reasonable efforts to cause such registration
statement to become effective (provided that before filing a registration
statement or prospectus or any amendments or supplements thereto, the Company
shall furnish to the counsel selected by the holders of a majority of the
Registrable Securities covered by such registration statement copies of all such
documents proposed to be filed, which documents shall be subject to the review
and comment of such counsel);
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(b) notify each holder of Registrable Securities of the
effectiveness of each registration statement filed hereunder and prepare and
file with the Commission, such amendments, post-effective amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary or appropriate to keep such registration statement
effective for the period as there are Registrable Securities outstanding, cause
such prospectus as so supplemented to be filed as required under the Securities
Act, and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement or supplement to the
prospectus;
(c) if requested by the managing underwriter or underwriters or a
holder of Registrable Securities being sold in connection with an underwritten
offering, immediately incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters and the holders of a
majority in interest of the Registrable Securities being sold reasonably agree
should be included therein relating to the plan of distribution with respect to
such Registrable Securities, including, without limitation, information with
respect to the principal amount of Registrable Securities being sold to such
underwriters, the purchase price being paid therefor by such underwriters and
with respect to any other terms of the underwritten (or best efforts
underwritten) offering of the Registrable Securities to be sold in such
offering; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as notified of the matters to be incorporated
in such Prospectus supplement or post-effective amendment;
(d) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(e) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions
where such registration or qualification is required as any seller reasonably
requests and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such seller (provided
that the Company shall not be required to (i) qualify generally to do business
in any jurisdiction where it would not otherwise be required to qualify but for
this subparagraph (ii) subject itself to taxation in any such jurisdiction or
(iii) consent to general service of process in any such jurisdiction);
(f) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any event as a
result of which the prospectus included in such registration statement as then
in effect, contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading in the light of the
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circumstances under which they were made, and, at the request of any such
seller, the Company shall promptly prepare a supplement or amendment to such
prospectus so that, thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not contain an untrue statement of a material
fact required to be stated therein or omit to state any fact necessary to make
the statements therein not misleading;
(g) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed or traded, and, if not so listed or traded, to be listed on the NASD
automated quotation system and, if listed on the NASD automated quotation
system, use commercially reasonable efforts to secure NASDAQ authorization for
such Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register as such with
respect to such Registrable Securities with the NASD;
(h) cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the selling holders or the
managing underwriters, if any, may request at least ten Business Days prior to
any sale of Registrable Securities; provide a transfer agent and registrar for
all such Registrable Securities not later than the effective date of such
registration statement;
(i) enter into such customary agreements (including, if there is an
underwriter, underwriting agreements in customary form including, without
limitation, the requirement to obtain an opinion of counsel to the Company and a
"comfort letter" from the independent public accountants to the Company in the
usual and customary form for such an underwritten offering);
(j) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company that is customary, and cause
the Company's officers, directors, employees and independent accountants to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration statement;
(k) cooperate, and cause the Company's officers, directors,
employees and independent accountants to cooperate, with the selling holders of
Registrable Securities and the managing underwriters, if any, in the sale of the
Registrable Securities and take any actions necessary to promote, facilitate or
effectuate such sale;
(l) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and make available to its security
holders, as soon as reasonably practicable, an earning statement covering the
period of at least twelve months, beginning with the first fiscal quarter
beginning after the effective date of the registration statement, which earning
statement shall satisfy the provisions of Section 11(a) of the Securities Act;
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(m) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order; and
(n) otherwise use its best effects to take all other steps necessary
to effect the registration of the Registrable Securities.
4. Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees (including, if applicable, the fees and expenses of any
"qualified independent underwriter" and its counsel as may be required under the
rules and regulations of the NASD), fees and expenses of compliance with
securities or blue sky laws (including fees and disbursements of counsel for the
underwriters or selling holders in connection with blue sky qualifications and
determination of their eligibility for investment under applicable laws),
printing expenses, messenger, telephone and delivery expenses, fees and
disbursements of custodians, and fees and disbursements of counsel for the
Company and all independent certified public accountants (including the expenses
of any special audit and "cold comfort" letters required by or incident to such
performance), underwriters (excluding underwriters' discounts and commissions)
and other Persons retained by the Company (all such expenses being herein called
"Registration Expenses"), shall be borne by the Company and the Company shall,
in any event, pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit or quarterly review, the
expense of any liability insurance if such insurance coverage is obtained by the
Company and the expenses and fees for listing the securities to be registered on
each securities exchange on which similar securities issued by the Company are
then listed or on the NASD automated quotation system.
(b) Each holder of securities included in any registration hereunder
shall pay those expenses which are not Registration Expenses which are allocable
to the registration of such holder's securities so included (such as the fees
and disbursements of any counsel engaged by an Holder), and any such expenses
not so allocable, such as the underwriting discount and any selling commissions
shall be borne by all sellers of securities included in such registration in
proportion to the aggregate selling price of the securities to be so registered.
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<PAGE>
5. Indemnification and Contribution
(a) The Company agrees to indemnify and hold harmless each holder of
Registrable Securities which is included in a registration statement pursuant to
Section 1 herein, its officers and directors and each Person who controls such
holder (within the meaning of the Securities Act) against all losses, claims,
damages, liabilities and expenses which arise out of or are based upon: (i) any
untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or with respect to a prospectus, necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same; and (ii) any violation by the Company of the Securities Act, the Exchange
Act (as defined below), any applicable state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law. In connection with an underwritten offering, the Company shall
indemnify such underwriters, their officers and directors and each Person who
controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of the holders
of Registrable Securities.
(b) In connection with any registration statement in which a holder
of Registrable Securities is participating, each such holder shall furnish to
the Company in writing such information and affidavits as the Company and any
underwriter reasonably requests for use in connection with any such registration
statement or prospectus and shall indemnify the Company, its directors and
officers and each Person who controls the Company (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of material fact contained
in the registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
omission is contained in any information or affidavit so furnished in writing by
such holder.
(c) Any Person entitled to indemnification hereunder shall (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give prompt notice
shall not impair any Person's right to indemnification hereunder to the extent
such failure has not materially prejudiced the indemnifying party) and (ii)
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with respect to such
claim, permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party shall not be subject to any liability for any
settlement made by the indemnified party without its consent (but such consent
shall not be unreasonably withheld). An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim shall not be obligated to
pay the fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
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<PAGE>
(d) If the indemnification provided for in this Section 5 is
unavailable to an indemnified party under paragraphs (a) or (b) hereof in
respect to any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the Company and
the holder of Registrable Securities in connection with the statements or
omissions that resulted in such losses, claim, damages, liabilities or expenses.
The relative fault of the Company and the holder of Registrable Securities in
connection with the statements that resulted in such losses, claims, liabilities
or expenses shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of material facts or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the holder of the Registrable Securities and the parties relative intent,
knowledge, access to information and opportunity to correct such statement or
omission.
(e) Notwithstanding any other provision of this Section, the
liability of any holder of Registrable Securities for indemnification or
contribution under this Section shall be individual to each holder and shall not
exceed an amount equal to the number of shares sold by such holder of
Registrable Securities multiplied by the net amount per share which he receives
in such underwritten offering.
(f) The indemnification and contribution provided for under this
Agreement shall remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director or
controlling Person of such indemnified party and shall survive the transfer of
securities.
6. Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements; provided
that no holder of Registrable Securities included in any underwritten
registration shall be required to make any representations or warranties to the
Company or the underwriters other than representations and warranties directly
regarding such holder and such holder's intended method of distribution.
7. Definitions.
"NASD" means the National Association of Securities Dealers, Inc.
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"Person" means any individual, corporation, partnership, limited
liability company, trust, estate, association, cooperative, government or
governmental entity (or any branch, subdivision or agency thereof) or any other
entity.
"Registrable Securities" means (i) any of the Merger Shares; and
(ii) any other securities that subsequently may be issued or issuable with
respect to such shares as a result of a stock split or dividend or any sale,
transfer, assignment or other transaction involving such shares of the Company
and any securities into which the shares of common stock may thereafter be
changed as a result of merger, consolidation, recapitalization or other similar
transaction. As to any particular Registrable Securities, such securities shall
cease to be Registrable Securities when they have been distributed to the public
pursuant to a offering registered under the Securities Act or eligible to be
sold to the public pursuant to Rule 144(k) under the Securities Act (or any such
rule then in force) or, if held by an affiliate of the Company, when all such
securities of such person are eligible for resale pursuant to Rule 144 and could
be sold in one transaction in accordance with the volume limitations contained
in Rule 144(e)(1)(i). For purposes of this Agreement, a Person shall be deemed
to be a holder of Registrable Securities whenever such Person has the right to
acquire directly or indirectly such Registrable Securities (upon conversion or
exercise in connection with a transfer of securities or otherwise, but
disregarding any restrictions or limitations upon the exercise of such right),
whether or not such acquisition has actually been effected.
"Securities Act" means the Securities Act of 1933, as amended.
8. Rule 144. From and after the time the Company's common stock is
registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), in order to permit each Holder to sell the
securities of the Company it holds from time to time pursuant to Rule 144
promulgated by the Commission or any successor to such rule or any other rule or
regulation of the Commission that may at any time permit the Holder to sell its
securities to the public without registration ("Resale Rules"), the Company
will:
(a) comply with all rules and regulations of the Commission
applicable in connection with use of the Resale Rules;
(b) make and keep adequate and current public information available,
as those terms are understood and defined in the Resale Rules, at all times;
(c) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act;
(d) furnish annually to the Holder material containing the
information required by Rule 14a-3(b) under the Exchange Act;
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(e) furnish to the Holder promptly upon request (i) a written
statement by the Company that it has complied with the reporting requirements of
the Resale Rules, the Securities Act and the Exchange Act, (ii) a copy of the
most recent annual or quarterly report of the Company and any other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested in availing the Holder of any rule or regulation of the
Commission which permits the selling of any shares of common stock holding the
Holder without registration; and
(f) take any action (including cooperating with the Holder to cause
the transfer agent to remove any restrictive legend on certificates evidencing
the shares of common stock held by the Holder) as shall be reasonably requested
by the Holder or which shall otherwise facilitate the sale of shares of common
stock held by the Holder from time to time by the Holder pursuant to the Resale
Rules.
9. Rule 144A Information. Until such time as the Company is subject to
Section 13 or 15(d) of the Exchange Act, the Company will make available, upon
request, to the Holder and prospective purchaser or transferee of Registrable
Securities designated by the Holder, the information required to allow the
resale or other transfer of Registrable Securities pursuant to Rule 144A
promulgated by the Commission under the Securities Act to enable resales and
other transfers of the Registrable Securities to be made pursuant to such Rule
144A.
10. Miscellaneous.
(a) No Inconsistent Agreements. The Company shall not hereafter
enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the holders of Registrable Securities in
this Agreement.
(b) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and holders of a majority of the Registrable
Securities.
(c) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of the
Holder of the Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of the Registrable Securities. Upon the
transfer of any the Registrable Securities, the transferring holder of the
Registrable Securities shall cause the transferee to execute and deliver to the
Company a counterpart of this Agreement.
(d) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(e) Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
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<PAGE>
(f) Descriptive Heading. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(g) Governing Law. The corporate law of Pennsylvania shall govern
all issues and questions concerning the relative rights of the Company and its
shareholders. All issues and questions concerning the construction, validity,
interpretation and enforcement of this Agreement shall be governed by, and
construed in accordance with, the laws of Pennsylvania, without giving effect to
any choice of law or conflict of law rules or provisions (whether of
Pennsylvania or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than Pennsylvania.
(h) Notices. Notices required or permitted to be given hereunder
shall be in writing and shall be deemed to be received when personally delivered
or sent by overnight courier or registered mail, return receipt requested,
addressed (i) if to the Company, at HealthAxis.com, Inc., 2500 DeKalb Pike,
Norristown, Pennsylvania 19404-0511, Attention: President; and (ii) if to the
Holder, at UICI, 4001 McEwen Boulevard, Suite 200, Dallas, Texas 75244,
Attention: President (or at such other address as each party furnishes by notice
given in accordance with this Section 10).
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<PAGE>
SIGNATURE PAGE TO HEALTHAXIS.COM, INC.
REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the undersigned has executed this Registration
Rights Agreement this ________ day of _________________, 1999.
UICI
By: ___________________________________
Name: ________________________________
Title: _______________________________
HEALTHAXIS.COM, INC.
By: __________________________________
Name: Michael Ashker
Title: President and Chief Executive Officer
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<PAGE>
UICI
- --------------------------------------------------------------------------------
December 6, 1999
Provident American Corporation
2500 DeKalb Pike
Norristown, PA 19404-0511
Attention: Mr. Alvin Clemens
HealthAxis.com, Inc.
2500 DeKalb Pike
Norristown, PA 19404-0511
Attention: Mr. Michael Ashker
Dear Al and Michael:
We are obviously pleased that significant progress has been made on the
documentation governing our Insurdata - HealthAxis.com merger, and I have
instructed Glenn Reed and Mayer, Brown & Platt to move ahead as quickly as
humanly possible to finalize the documents so that we can announce the merger.
I write to confirm UICI's and Insurdata's support of completing an
"upstream" or "downstream" combination of HealthAxis.com, Inc. and Provident
American Corporation as soon as is practicable following the
Insurdata-HealthAxis merger. As we discussed yesterday, our support for the
merger is subject to satisfaction of three conditions, as more particularly
described below.
Section 9 of the current draft of the Shareholders' Agreement between
UICI and Provident American Corporation provides that UICI will have the right
in its sole and absolute discretion to approve a merger, consolidation,
reorganization or similar transaction involving HealthAxis and Provident
American Corporation or a subsidiary of Provident American Corporation. Be
advised that UICI will consent to such a merger, provided that the following
conditions are satisfied:
1. UICI reserves the right to assess and approve in its
reasonable discretion the mathematical calculation of the merger terms
(e.g., calculation of the merger exchange ratio and methodology
employed to calculate the merger exchange ratio).
2. UICI must have received an opinion of counsel or other
reasonable assurance that the merger, viewed alone and together with
the merger of HealthAxis and Insurdata, will be tax free to the
constituent corporations and UICI; and
<PAGE>
Provident American Corporation
HealthAxis.com, Inc.
December 6, 1999
Page 2
3. UICI reserves the right to make any and all reasonable and
appropriate due diligence inquiries it and its counsel deem advisable
with respect to any contingent claims or residual liabilities that may
reside at Provident American Corporation. In the event that UICI
determines that there may be an unacceptable level of risk associated
with such claims or liabilities, UICI may require that provision for
such claims, contingencies and/or residual liabilities be made either
(a) in the form of an appropriate reserve, escrow, holdback or similar
arrangement or (b) by means of an appropriate indemnity with respect to
such liabilities from a credit-worthy third party. In either event,
UICI will be willing to set an appropriate cap on such reserve, escrow,
holdback or indemnity and limit the time period during which such
reserve, escrow, holdback or indemnity will be in effect.
I hope this clarifies our position. Please feel free to contact me if
you have any questions concerning any of the above.
Very truly yours,
UICI
By: /s/ Gregory T. Mutz
----------------------------------------
Gregory T. Mutz
President
