EXHIBIT 5
Xxxxx X. Xxxxxxx
000 Xxxxxx Xxxxx
Xxxxxxxxx, XX 19085
September 9, 1999
Xx. Xxxxxxx Xxxxxx
President
Provident American Corporation
0000 XxXxxx Xxxx
Xxxxxxxxxx, XX 00000
Dear Xxxxxxx:
This letter is intended to constitute a legally binding letter of intent
expressing the good faith understanding between Xxxxx X. Xxxxxxx and Provident
American Corporation. The obligations herein are conditioned upon the completion
of the sale by Provident American Corporation (the "Company") of an aggregate of
up to $43,000,000 principal amount of 2% Convertible Debentures due September,
2002 (the "Debenture") at a closing to be held on or before September 15, 1999
(the "Transaction").
The parties expect to embody their understanding in a definitive agreement
to be executed by the parties. Until such a definitive agreement is negotiated
and executed, the following provisions shall apply and shall be binding between
the parties.
The Company agrees to pay Xx. Xxxxx X. Xxxxxxx a purchase price of $650,000
in consideration of Xx. Xxxxxxx selling the interests below and taking the
actions set forth as follows at the closing of the Transaction:
1. The assignment of the Company of all right, title and interest in and to
an Agreement to Grant Options to Purchase up to 3,300,000 shares of
Series A Preferred Stock which has been referred to as the "Reload
Options".
2. The agreement to convert 550,000 shares of Series A Preferred Stock into
Common Stock, $.10 par value, of the Company, and into no other class of
security of the company.
3. The assignment to the Company of all right, title, and interest in and
to that number of any option owned by Xx. Xxxxxxx which is equal to the
number of shares of Common Stock issuable upon the exercise of the
Warrant issued in the Transaction (but in no event to exceed options to
purchase 300,000 shares of Common Stock).
4. The amendment of the Option to Purchase 500,000 Preferred Shares of the
Company (which by reason of a stock dividend is now 550,000 shares), to
eliminate the right to convert the option shares into any class of
securities of the Company other than into shares of the Company's Common
Stock, $.10 par value (which will eliminate the right to convert into
the four (4) vote Class A common shares).
Very truly yours,
Xxxxx X. Xxxxxxx
Agreed and accepted this ____ day of September, 1999.
By: __________________________________________
Provident American Corporation
