EXECUTION COPY
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AGREEMENT AND PLAN OF REORGANIZATION
dated as of January 26, 2000
BETWEEN
PROVIDENT AMERICAN CORPORATION
XXXXXXXXXX.XXX, INC.
AND
HEALTHAXIS ACQUISITION CORP.
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AGREEMENT AND PLAN OF REORGANIZATION
Table of Contents
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SECTION 1: DEFINED TERMS.....................................................................................2
SECTION 2: THE MERGER........................................................................................5
SECTION 3: REPRESENTATIONS OF HEALTHAXIS.....................................................................5
3.1 Organization....................................................................................5
3.2 Effect of Agreement.............................................................................5
3.3 Capital Stock and Ownership.....................................................................6
3.4 Financial and Corporate Records.................................................................6
3.5 Assets..........................................................................................7
3.6 Obligations.....................................................................................7
3.7 Operations Since September 30, 1999.............................................................8
3.8 Tangible Property...............................................................................8
3.9 Software and Other Intangibles..................................................................8
3.10 Contracts.......................................................................................8
3.11 Employees and Independent Contractors...........................................................9
3.12 Employee Benefit Plans.........................................................................10
3.13 Carrier Partners and Internet Partners.........................................................11
3.14 Proceedings and Judgments......................................................................11
3.15 Insurance......................................................................................11
3.16 Questionable Payments..........................................................................12
3.17 Related Party Transactions.....................................................................12
3.18 Brokerage Fees.................................................................................12
3.19 Investment Company.............................................................................12
3.20 Full Disclosure................................................................................12
3.21 Compliance with Law............................................................................13
SECTION 4: REPRESENTATIONS OF PROVIDENT AND NEWCO...........................................................13
4.1 Organization...................................................................................13
4.2 Agreement......................................................................................13
4.3 Provident's Stock..............................................................................13
4.4 SEC Filings....................................................................................14
4.5 Form S-4 Registration Statement................................................................14
4.6 Absence of Changes.............................................................................14
4.7 Authorization for Provident Common Stock.......................................................15
4.8 Investment Matters.............................................................................15
4.9 Brokerage Fees.................................................................................15
4.10 Compliance with Law............................................................................15
4.11 Full Disclosure................................................................................15
4.12 Investment Company.............................................................................15
SECTION 5: CERTAIN OBLIGATIONS OF HEALTHAXIS PENDING CLOSING.................................................15
5.1 Conduct of Business............................................................................15
5.2 Consents.......................................................................................16
5.3 Advice of Changes..............................................................................16
5.4 Reasonable Best Efforts........................................................................16
SECTION 6: CERTAIN OBLIGATIONS OF PROVIDENT AND NEWCO PENDING CLOSING.......................................16
6.1 Conduct of Business............................................................................16
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6.2 Consents.......................................................................................17
6.3 SEC Reports....................................................................................17
6.4 Advice of Changes..............................................................................17
6.5 Reasonable Best Efforts........................................................................17
6.6 NASDAQ Listing.................................................................................18
6.7 Employee Benefits..............................................................................18
6.8 Name and Symbol Change.........................................................................18
SECTION 7: ADDITIONAL COVENANTS OF THE PARTIES...............................................................18
7.1 Shareholders' Meetings.........................................................................18
7.2 Registration Statement and Proxy Statement/Prospectus..........................................19
7.3 Blue Sky Permits...............................................................................19
7.4 Tax Free Reorganization........................................................................19
7.5 Full Disclosure................................................................................20
SECTION 8: CONDITIONS PRECEDENT TO HEALTHAXIS' CLOSING OBLIGATIONS..........................................20
8.1 Provident's and Newco's Representations........................................................20
8.2 Provident's and Newco's Performance............................................................20
8.3 Absence of Proceedings.........................................................................20
8.4 Approval of HealthAxis and Provident Shareholders..............................................20
8.5 Board Seats....................................................................................20
8.6 Adverse Changes................................................................................20
8.7 Registration Statement.........................................................................21
8.8 Listing of Provident Common Stock..............................................................21
8.9 Tax Opinion....................................................................................21
SECTION 9: CONDITIONS PRECEDENT TO PROVIDENT'S AND NEWCO'S CLOSING OBLIGATIONS..............................21
9.2 Approval of the HealthAxis and Provident Shareholders..........................................21
9.3 Dissenting and other HealthAxis Shareholders...................................................21
9.4 HealthAxis' Representations....................................................................21
9.5 HealthAxis' Performance........................................................................22
9.6 Absence of Proceedings.........................................................................22
9.7 Adverse Changes................................................................................22
SECTION 10: CLOSING.........................................................................................22
10.1 Closing........................................................................................22
10.2 HealthAxis' Obligations at Closing.............................................................22
10.3 Provident's and Newco's Obligations at Closing.................................................24
SECTION 11: CERTAIN OBLIGATIONS OF PROVIDENT AND THE SURVIVING CORPORATION AFTER
CLOSING..............................................................................25
11.1 Final Tax Returns..............................................................................25
11.2 Delivery of Certificates.......................................................................25
SECTION 12: OTHER PROVISIONS................................................................................25
12.1 Survival.......................................................................................25
12.2 Termination....................................................................................25
12.3 Publicity......................................................................................26
12.4 Fees and Expenses..............................................................................26
12.5 Notices........................................................................................26
12.6 Interpretation of Representations..............................................................26
12.7 Reliance by Provident and Newco................................................................26
12.8 Reliance by HealthAxis.........................................................................27
12.9 Entire Understanding...........................................................................27
12.10 Parties in Interest............................................................................27
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12.11 Waivers........................................................................................27
12.12 Severability...................................................................................27
12.13 Counterparts...................................................................................27
12.14 Section Headings...............................................................................27
12.15 References.....................................................................................27
12.16 Controlling Law................................................................................27
12.17 Jurisdiction and Process.......................................................................28
12.18 No Third-Party Beneficiaries...................................................................28
12.19 Nature of Transactions.........................................................................28
12.20 Bankruptcy Qualification.......................................................................28
12.21 Construction...................................................................................28
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AGREEMENT AND PLAN OF REORGANIZATION
PARTIES: XXXXXXXXXX.XXX, INC.
a Pennsylvania corporation ("HealthAxis")
0000 XxXxxx Xxxx
Xxxx Xxxxxxxx, XX 00000
PROVIDENT AMERICAN CORPORATION
a Pennsylvania corporation ("Provident")
0000 XxXxxx Xxxx
Xxxxxxxxxx, XX 00000
HEALTHAXIS ACQUISITION CORP.
a Pennsylvania corporation ("Newco")
0000 XxXxxx Xxxx
Xxxx Xxxxxxxx, XX 00000
DATE: As of January 26, 2000
BACKGROUND: HealthAxis, formerly known as Insurion, Inc., is a leading web-based
insurance retailer providing fully integrated, end-to-end, web-enabled solutions
for health insurance distribution and administration and a minority owned
subsidiary of Provident. The parties desire that HealthAxis be merged with and
into Newco (the "Merger") on the terms and subject to the conditions set forth
in this Agreement and Plan of Reorganization (the "Agreement") and the Agreement
and Plan of Merger dated as of this date and designated as Exhibit A hereto (the
"Plan"). The parties intend that the Merger: (i) qualify as a tax-free
reorganization within the meaning of Section 368 of the Code, and (ii) be
accounted for as a purchase for financial accounting purposes. It is intended
that as part of or prior to the Merger, Provident will change its name to
HealthAxis Inc. and its NASDAQ symbol to "HAXS".
The Board of Directors of HealthAxis has unanimously determined that
the Merger and the other transactions contemplated by this Agreement and the
Plan (collectively, the "Transactions") are in the best interests of HealthAxis
and its shareholders (as defined in Section 3.2 hereof). The respective Board of
Directors of Provident and Newco, a wholly owned subsidiary of Provident, have
determined that the Transactions are in the best interests of Provident and
Newco and their respective shareholders.
Concurrently with the execution of this Agreement, and as a condition
and inducement to Provident's willingness to enter into this Agreement, each
affiliate shareholder of HealthAxis identified in Schedule A is entering into an
Affiliate Letter attached hereto as Exhibit B.
Intending to be legally bound, in consideration of the foregoing and
the mutual agreements contained herein and subject to the satisfaction of the
terms and conditions set forth herein, the parties hereto agree as follows:
SECTION 1: DEFINED TERMS
Certain defined terms used in this Agreement and not specifically
defined in context are defined in this Section 1, as follows:
1.1 "Accounts Receivable" means (a) any right to payment for goods
sold, leased or licensed or for services rendered, whether or not it has been
earned by performance, whether billed or unbilled, and whether or not it is
evidenced by any Contract (as defined in Section 1.7); (b) any note receivable;
or (c) any other receivable or right to payment of any nature.
1.2 "Acquired Companies" means HealthAxis and its subsidiaries,
including but not limited to, XxxxxxXxxx.xxx Alabama, Inc., XxxxxxXxxx.xxx
Insurance Services, Inc., XxxxxxXxxx.xxx New Mexico, Inc., XxxxxxXxxx.xxx Texas,
Inc., XxxxxxXxxx.xxx Insurance Agency, Inc., Insurdata Imaging Services LLC and
Satellite Image Systems (Jamaica) Ltd.
1.3 "Asset" means any real, personal, mixed, tangible or intangible
property of any nature, including Cash Assets (as defined in Section 1.4),
prepayments, deposits, escrows, Accounts Receivable, Tangible Property (as
defined in Section 1.31), Real Property (as defined in Section 1.28), Software
(as defined in Section 1.30), Contract Rights (as defined in Section 1.8),
Intangibles (as defined in Section 1.17) and goodwill, and claims, causes of
action and other legal rights and remedies.
1.4 "Cash Asset" means any cash on hand, cash in bank or other
accounts, readily marketable securities, and other cash-equivalent liquid assets
of any nature.
1.5 "Code" means the Internal Revenue Code of 1986, as amended.
1.6 "Consent" means any consent, approval, order or authorization of,
or any declaration, filing or registration with, or any application, notice or
report to, or any waiver by, or any other action (whether similar or dissimilar
to any of the foregoing) of, by or with, any Person (as defined in Section
1.25), which is necessary in order to take a specified action or actions in a
specified manner and/or to achieve a specified result.
1.7 "Contract" means any written or oral contract, agreement,
instrument, order, arrangement, commitment or understanding of any nature,
including sales orders, purchase orders, leases, subleases, data processing
agreements, maintenance agreements, license agreements, sublicense agreements,
loan agreements, promissory notes, security agreements, pledge agreements,
deeds, mortgages, guaranties, indemnities, warranties, employment agreements,
consulting agreements, sales representative agreements, joint venture
agreements, buy-sell agreements, options or warrants.
1.8 "Contract Right" means any right, power or remedy of any nature
under any Contract, including rights to receive property or services or
otherwise derive benefits from the payment, satisfaction or performance of
another party's Obligations (as defined in Section 1.23), rights to demand that
another party accept property or services or take any other actions, and rights
to pursue or exercise remedies or options.
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1.9 "Employee Benefit Plan" means any employee benefit plan as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and any other plan, program, policy or arrangement for or
regarding bonuses, commissions, incentive compensation, severance, vacation,
deferred compensation, pensions, profit sharing, retirement, payroll savings,
stock options, stock purchases, stock awards, stock ownership, phantom stock,
stock appreciation rights, medical/dental expense payment or reimbursement,
disability income or protection, sick pay, group insurance, self insurance,
death benefits, employee welfare or fringe benefits of any nature; but not
including employment Contracts with individual employees.
1.10 "Encumbrance" means any lien, security interest, pledge, right of
first refusal, mortgage, easement, covenant, restriction, reservation,
conditional sale, prior assignment, or other encumbrance, claim, burden or
charge of any nature.
1.11 "Environmental Laws" means all applicable Laws (including consent
decrees and administrative orders) relating to pollution and the protection of
the environment, including those governing the use, generation, handling,
storage and disposal or cleanup of Hazardous Substances (as defined in Section
1.14), all as amended.
1.12 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.13 "GAAP" means generally accepted accounting principles under
current United States accounting rules and regulations, consistently applied.
1.14 "Hazardous Substances" means any substance, waste, contaminant,
pollutant or material that has been determined by Law or any United States
federal government authority, or any state or local government authority having
jurisdiction over any Real Property owned, leased or used by the Acquired
Companies, to be capable of posing a risk of injury or damage to health, safety,
property or the environment, including (a) all substances, wastes, contaminants,
pollutants and materials defined, designated or regulated as hazardous,
dangerous or toxic pursuant to any Law of any state in which any Real Property
owned, leased or used by the Acquired Companies, is located or any United States
Law, and (b) asbestos, polychlorinated biphenyls ("PCB's"), petroleum, petroleum
products and urea formaldehyde.
1.15 "including" means including but not limited to.
1.16 "Insurance Policy" means any public liability, product liability,
general liability, comprehensive, property damage, vehicle, life, hospital,
medical, dental, disability, worker's compensation, key man, fidelity bond,
theft, forgery, errors and omissions, directors' and officers' liability, or
other insurance policy of any nature.
1.17 "Intangible" means any name, corporate name, fictitious name,
trademark, trademark application, service xxxx, service xxxx application, trade
name, brand name, product name, slogan, trade secret, know-how, patent, patent
application, copyright, copyright application, design, logo, formula, invention,
product right, technology or other intangible asset of any nature, whether in
use, under development or design, or inactive.
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1.18 "Judgment" means any order, writ, injunction, citation, award,
decree or other judgment of any nature of any foreign, federal, state or local
court, governmental body, administrative agency, regulatory authority or
arbitration tribunal.
1.19 "to the knowledge of HealthAxis" means that none of the directors
or officers of any of the Acquired Companies have any actual knowledge, after
due inquiry, that the statement made is incorrect.
1.20 "Law" means any provision of any foreign, federal, state or local
law, statute, ordinance, charter, constitution, treaty, code, rule or regulation
(including those of self-regulatory organizations such as the NASD (as defined
in Section 1.22)).
1.21 "material adverse change" means, with respect to any Person (as
defined in Section 1.25), a material adverse change on the financial condition,
results of operations, business, assets or liabilities of such Person and its
subsidiaries, taken as a whole.
1.22 "NASD" means the National Association of Securities Dealers, Inc.
1.23 "Obligation" means any debt, liability or obligation of any
nature, whether secured, unsecured, recourse, nonrecourse, liquidated,
unliquidated, accrued, absolute, fixed, contingent, ascertained, unascertained,
known, unknown or otherwise.
1.24 "Permit" means any license, permit, approval, waiver, order,
authorization, right or privilege of any nature, granted, issued, approved or
allowed by any foreign, federal, state or local governmental body,
administrative agency or regulatory authority.
1.25 "Person" means any individual, sole proprietorship, joint venture,
partnership, corporation, limited liability company, partnership, association,
cooperative, trust, estate, governmental body, administrative agency, regulatory
authority or other entity of any nature.
1.26 "Proceeding" means any demand, claim, suit, action, litigation,
investigation, arbitration, administrative hearing or other proceeding of any
nature.
1.27 "Provident Common Stock" means shares of common stock, $.10 par
value per share, of Provident.
1.28 "Real Property" means any real estate, land, building,
condominium, town house, structure or other real property of any nature, all
shares of stock or other ownership interests in cooperative or condominium
associations or other forms of ownership interest through which interests in
real estate may be held, and all appurtenant and ancillary rights thereto,
including easements, covenants, water rights, sewer rights and utility rights.
1.29 "SEC" means the United States Securities and Exchange Commission.
1.30 "Software" means any computer program, operating system,
applications system, firmware or software of any nature, whether operational,
under development or inactive, including all object code, source code, technical
manuals, user manuals and other documentation therefor, whether in
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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.
1.31 "Tangible Property" means any furniture, fixtures, leasehold
improvements, vehicles, office equipment, computer equipment, other equipment,
machinery, tools, forms, supplies or other tangible personal property of any
nature.
1.32 "Tax" means (a) any foreign, federal, state or local income,
earnings, profits, gross receipts, franchise, capital stock, net worth, sales,
use, value added, occupancy, general property, real property, personal property,
intangible property, transfer, fuel, excise, payroll, withholding, unemployment
compensation, social security, retirement or other tax of any nature; (b) any
foreign, federal, state or local organization fee, qualification fee, annual
report fee, filing fee, occupation fee, assessment, sewer rent or other fee or
charge of any nature; or (c) any deficiency, interest or penalty imposed with
respect to any of the foregoing.
SECTION 2: THE MERGER
Subject to the terms and conditions of this Agreement and the Plan,
HealthAxis shall be merged with and into Newco with Newco being the surviving
corporation (the "Surviving Corporation") in accordance with the provisions of
this Agreement and the provisions of the Plan. The closing of the Merger and the
other Transactions shall take place on the Closing Date (as defined in Section
10.1) and shall be effective on the Effective Date (as defined in Section 10.1).
SECTION 3: REPRESENTATIONS OF HEALTHAXIS
HealthAxis represents and warrants to Provident and Newco as of the
date of this Agreement and the Closing Date, and covenants with Provident and
Newco, as set forth below in each provision of this Section 3.
3.1 Organization. Except as set forth on Schedule 3.1, each of the
Acquired Companies is a corporation duly organized and subsisting under the Laws
of the jurisdiction of its organization. HealthAxis possesses the full corporate
power and authority to enter into and perform this Agreement. Except as set
forth on Schedule 3.1, each of the Acquired Companies possesses the full
corporate power and authority to own its Assets and to conduct its business as
and where presently conducted. Each of the Acquired Companies is duly qualified
or registered to do business in each jurisdiction where the ownership or leasing
of properties or assets by it, or the operation of its business, requires such
qualification, except where the failure to qualify or register will not have a
material adverse effect on the business, financial condition or results of
operations of HealthAxis on a consolidated basis ("Material Adverse Effect").
Except as set forth on Schedule 3.1, HealthAxis has no subsidiaries. Accurate
and complete copies of articles or certificates of incorporation and bylaws, (or
similar organizational documents), each as amended to date, and all Contracts
relating to the acquisition of each of the Acquired Companies (or their
affiliates or predecessors) have been made available to Provident and Newco.
3.2 Effect of Agreement. Subject to the approval by shareholders of
HealthAxis (the "HealthAxis Shareholders") of the Merger, HealthAxis'
consummation of the Transactions has been duly authorized by all necessary
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corporate actions including its board of directors and does not constitute a
violation of or default under its articles of incorporation or bylaws (or
similar organizational documents). For HealthAxis, its execution, delivery and
performance of this Agreement, and its consummation of the Transactions, (a)
does not constitute a default or breach (immediately or after the giving of
notice, passage of time or both) under any material Contract to which it or any
of the Acquired Companies is a party or by which it or any of the Acquired
Companies is bound, (b) does not constitute a material violation of any Law or
Judgment that is applicable to it or any of the Acquired Companies, or to the
business or Assets of any of the Acquired Companies, or to the Transactions, (c)
does not accelerate or otherwise modify any material Obligation of any of the
Acquired Companies, (d) does not result in the creation of any material
Encumbrance upon, or give to any third party any interest in, any of the
business or Assets, or any of the capital stock of or interests in, any of the
Acquired Companies, and (e) except as stated on Schedule 3.2, does not require
the Consent of any Person. This Agreement constitutes the valid and legally
binding agreement of HealthAxis enforceable against it in accordance with its
terms. Except for the HealthAxis shareholder agreements with AOL dated November
13, 1998 and UICI dated January 7, 2000, the AOL Stock Purchase Agreement dated
November 13, 1998 and the Amended and Restated Carrier Partner Agreement, as
amended, with UICI dated March 30, 1999, there exists no right of first refusal
or other preemptive right with respect to any of the Acquired Companies or the
stock, business or Assets of any of the Acquired Companies.
3.3 Capital Stock and Ownership. As of the date of this Agreement, the
authorized capital stock of HealthAxis consists of: (i) 100,000,000 shares of
Common Stock, no par value per share ("HealthAxis Common Stock"), of which
42,394,881 shares are issued and outstanding; (ii) 20,000,000 shares of
Preferred Stock, par value $1.00 per share (the "HealthAxis Preferred Stock") of
which 3,031,191, shares are issued and outstanding. Series of Preferred Stock
have been designated as follows: Series A Convertible Preferred Stock, Series B
Convertible Preferred Stock, Series C Convertible Preferred Stock, and Series D
Convertible Preferred Stock (collectively, the "HealthAxis Convertible Preferred
Stock"). The HealthAxis Common Stock and the HealthAxis Convertible Preferred
Stock shall be referred to collectively, as the "HealthAxis Stock". All of the
issued and outstanding shares of capital stock of each of the Acquired Companies
have been duly authorized and validly issued, and are fully paid and
nonassessable, with no liability or preemptive rights attaching to the ownership
thereof. All issuances and grants of all outstanding options, warrants and all
offerings, sales and issuances by each of the Acquired Companies of any shares
of capital stock complied in all material respects with all applicable federal
and state securities Laws, all applicable state corporation Laws and all
requirements set forth in applicable Contracts. Except as provided on Schedule
3.3, there are no outstanding options, puts, calls, warrants, subscriptions,
stock appreciation rights, phantom stock, or other Contracts or Contract Rights
relating to the offering, sale, issuance, redemption or disposition of any
shares of capital stock, or other securities of, any of the Acquired Companies
(the "Options"). Schedule 3.3 sets forth with respect to each of the Options the
plan pursuant to which the Option was granted, the name of the Optionee, the
number of shares of common stock subject to the Option, the exercise price, the
date on which the Option was granted, and the date on which the Option expired.
Except as set forth herein, there are no bonds, debentures, notes, or other
indebtedness of the Acquired Companies.
3.4 Financial and Corporate Records. The books and records of each of
the Acquired Companies and Insurdata Incorporated ("Insurdata Inc.") are and
have been properly prepared and maintained in form and substance adequate for
preparing audited financial statements in accordance with GAAP, and such books
and records fairly and accurately reflect in all material respects all of the
Assets and Obligations of each of the Acquired Companies (including Insurdata
Inc.) and all Contracts and other transactions to which each of the Acquired
Companies (including Insurdata Inc.) is or was a party or by which each of the
Acquired Companies (including Insurdata Inc.) or the business or Assets of each
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of the Acquired Companies (including Insurdata Inc.) is or was affected.
Accurate and complete copies of the contents of the minute books and stock books
of each of the Acquired Companies (including Insurdata Inc.) have been made
available to Provident and Newco. Such minute books and stock books include (a)
minutes of all meetings of the HealthAxis Shareholders, board of directors and
any committees of the board of directors at which any material action was taken,
which minutes accurately record all material actions taken at such meetings, (b)
accurate and complete written statements of all actions taken by the HealthAxis
Shareholders, board of directors and any committees of the board of directors
without a meeting, and (c) accurate and complete records of the subscription,
issuance, transfer and cancellation of all shares of capital stock, and all
other securities since the date of incorporation or formation. Schedule 3.4
includes accurate and complete copies of unaudited pro-forma selected
consolidated financial information of each of HealthAxis and Insurdata (which
merged with and into HealthAxis on January 7, 2000) as of and for the nine
months ended September 30, 1999. These financial statements were prepared in
accordance with GAAP except as described on Schedule 3.4, and all adjustments
that are necessary for a fair presentation thereof (consisting only of normal
recurring adjustments) have been made. Except as set forth on Schedule 3.4, the
financial statements fairly present, in accordance with the applicable
requirements of GAAP, the consolidated financial position of HealthAxis and
Insurdata Inc. as of September 30, 1999.
3.5 Assets. Schedule 3.5 includes detailed lists of all Assets with a
current fair market value of not less than $100,000 of each of the Acquired
Companies which are reflected on the September 30, 1999 Balance Sheet, including
(a) Cash Assets, itemized by bank or other account, showing cost and market
value if different from cost; (b) Accounts Receivable, showing customer names,
individual invoice dates, individual invoice amounts and allowances for doubtful
accounts, or, in the case of earned but not billed receivables, customer names
and individual dates on which the receivables are billable; (c) other current
Assets, itemized by category and with appropriate explanation; (d) Tangible
Property, grouped as to type, showing cost, accumulated depreciation and net
book value; and (e) Software and Intangibles, showing cost or amount
capitalized, accumulated amortization and net book value. Each of the Acquired
Companies has good and valid title to all of its respective Assets which are
owned by it and has the right to transfer all rights, title and interest in such
Assets, free and clear of any Encumbrance, other than Encumbrances (a) for
taxes, assessments, levies, fees and other governmental and similar charges not
due and payable, mechanics' liens, or other "ordinary course" liens that do not
materially effect the value of the Assets; or (b) listed on Schedule 3. 5.
3.6 Obligations. Schedule 3.6 includes detailed lists of all material
Obligations of each of the Acquired Companies which are required by GAAP to be
reflected on the September 30, 1999 Balance Sheet, itemized by balance sheet
account, and with aggregate net balances equal to the balances on the September
30,1999 Balance Sheet, including (a) accounts payable, (b) accrued expenses and
reserves, itemized by category and with appropriate explanation, (c) deferred
revenues, itemized by customer and time periods, and (d) other current and
long-term liabilities. None of the Acquired Companies has any material
Obligations other than (i) Obligations reflected on the September 30, 1999
Balance Sheet, (ii) Obligations set forth in Schedule 3.8, (iii) Obligations
under Contracts of the type listed or not required to be listed on Schedule
3.13, provided that as of September 30, 1999, no such Obligation consisted of or
resulted from a default under or violation of any such Contract, (iv)
Obligations incurred since September 30, 1999, in the ordinary course,
consistent with past practices, and not in breach of any of the representations
and warranties made in Section 3.9, and (v) Obligations not required by GAAP to
be reflected on the September 30, 1999 Balance Sheet. Except as described on
Schedule 3.8, none of the Obligations of any of the Acquired Companies are
guaranteed by any Person.
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3.7 Operations Since September 30, 1999. Except as disclosed in the
Provident SEC Documents (as defined in Section 4.4), as set forth on Schedule
3.7 or in the ordinary course of their respective businesses consistent with its
past practices, from September 30, 1999 to the date of this Agreement none of
the Acquired Companies has (i) created or assumed any Encumbrance upon any of
its business or Assets, (ii) incurred any Obligation, (iii) made any loan or
advance to any Person; (iv) assumed, guaranteed or otherwise become liable for
any Obligation of any Person; (v) committed for any capital expenditure; (vi)
purchased, leased, sold, abandoned or otherwise acquired or disposed of any
business or Assets; (vii) waived any right or canceled any debt or claim; (viii)
assumed or entered into any Contract other than this Agreement; or (ix)
increased, or authorized an increase in, the compensation or benefits paid or
provided to any of their directors, officers, employees, salesmen, agents or
representatives.
3.8 Tangible Property. Each of the Acquired Companies has good and
valid title to all of its Tangible Property, free and clear of any Encumbrances
other than Encumbrances (a) for taxes, assessments, levies, fees and other
governmental and similar charges not due and payable, mechanics' liens, or other
"ordinary course" liens that do not materially effect the value of the Tangible
Property; or (b) set forth in the September 30, 1999 Balance Sheet or Schedule
3.8.
3.9 Software and Other Intangibles. Except for commercially available
Software, set forth on Schedule 3.9 is an accurate and complete list and
description of all Software and material Intangibles owned, marketed, licensed,
supported, maintained, used or under development by the Acquired Companies, and,
in the case of Software, a product description, the language in which it is
written and the type of hardware platform(s) on which it runs. Except as
explained on Schedule 3.9, each of the Acquired Companies has good and valid
title to, and has the full right to use, all of the Software and Intangibles
listed on Schedule 3.9, free and clear of any Encumbrance (except for use
restrictions contained in licensed commercially available Software). Except as
set forth in Schedule 3.9, all shrinkwrap and other commercially available
Software has been properly licensed and all related fees paid. To the knowledge
of HealthAxis, all application Software utilized in its business is year 2000
compliant. To the knowledge of HealthAxis, none of the Software or Intangibles
listed on Schedule 3.9, or their respective past or current uses, including the
preparation, distribution, marketing or licensing, has violated or infringed
upon, or is violating or infringing upon, any Software, technology, patent,
copyright, trade secret or other Intangible of any Person. To the knowledge of
HealthAxis, no Person is violating or infringing upon, or has violated or
infringed upon at any time, any of the Software or Intangibles listed on
Schedule 3.9. Except as set forth on Schedule 3.9, none of the Software or
Intangibles listed on Schedule 3.9 is owned by or registered in the name of any
current or former owner, shareholder, partner, director, executive, officer,
employee, salesman, agent, customer, representative or contractor of any of the
Acquired Companies or any of the HealthAxis Shareholders nor does any such
Person have any interest therein or right thereto, including the right to
royalty payments.
3.10 Contracts. Schedule 3.10 is an accurate and complete list of all
of the following types of Contracts which involve either future Obligations of
$100,000 or more to which any of the Acquired Companies is a party or by which
any of the Acquired Companies is bound, or is otherwise material to any of the
Acquired Companies (collectively, the "Specified Contracts"), grouped into the
following categories: (a) customer, client or alliance partner Contracts; (b)
Contracts for the purchase or lease of Real Property or otherwise concerning
Real Property owned or used by any of the Acquired Companies; (c) loan
agreements, mortgages, notes, guarantees and other financing Contracts; (d)
8
Contracts for the purchase, lease and/or maintenance of computer equipment and
other equipment, Contracts for the purchase, license, lease and/or maintenance
of Software under which any of the Acquired Companies is the purchaser,
licensee, lessee or user, and other supplier Contracts; (e) employment,
consulting and sales representative Contracts (excluding Contracts which
constitute Employee Benefit Plans listed on Schedule 3.12, and excluding oral
Contracts with employees for "at will" employment); (f) Contracts under which
any rights in and/or ownership of any Software product, technology or other
Intangible of any of the Acquired Companies, or any prior version thereof, or
any part of the customer base, business or Assets of any of the Acquired
Companies, or any shares or other ownership interests in any of the Acquired
Companies (or any of their predecessors) was acquired; and (g) other material
Contracts (excluding Contracts which constitute Insurance Policies listed on
Schedule 3.16 and excluding this Agreement and all other Contracts entered into
between any of the Acquired Companies and Provident, or among any of the
Acquired Companies, Provident and other parties in connection herewith). A
description of each oral Specified Contract is included on Schedule 3.10, and
copies of each written Specified Contract have been made available to Provident
and Newco. Except as set forth on Schedule 3.10, with respect to each of the
Specified Contracts, none of the Acquired Companies is in material default
thereunder nor would be in material default thereunder with the passage of time,
the giving of notice, or both. Except as set forth on Schedule 3.10, to the
knowledge of HealthAxis, none of the other parties to any Specified Contract is
in material default thereunder or would be in material default thereunder with
the passage of time, the giving of notice or both. Except as set forth on
Schedule 3.13, none of the Acquired Companies has given or received any notice
of default or notice of termination with respect to any Specified Contract, and
to the knowledge of HealthAxis each Specified Contract is in full force and
effect in accordance with its terms. Except as set forth on Schedule 3.13, there
are no currently outstanding proposals or offers submitted by any of the
Acquired Companies to any customer, prospect, supplier or other Person which, if
accepted, would result in a legally binding Contract of such company involving
an amount or commitment exceeding $100,000 in any single case or an aggregate
amount or commitment exceeding $500,000 in the aggregate.
3.11 Employees and Independent Contractors. Schedule 3.11 is a list of
all of the employees with annual compensation in excess of $100,000 of the
Acquired Companies and (a) their titles or responsibilities; (b) their social
security numbers; (c) their dates of hire; (d) their current salaries or wages
and all bonuses, commissions and incentives paid at any time during the past
twelve months; (e) their last compensation changes and the dates on which such
changes were made; (f) any specific bonus, commission or incentive plans or
agreements for or with them; and (g) any outstanding loans or advances made to
them. Schedule 3.11 is a list of all sales representatives and material
independent contractors engaged by the Acquired Companies and their payment
arrangements (if not set forth in a Contract listed or described on Schedule
3.10). Except as limited by any employment Contracts listed on Schedule 3.10 and
except for any limitations of general application which may be imposed under
applicable employment Laws, each of the Acquired Companies 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 liability
for severance pay and benefits in accordance with such company's disclosed
severance pay policy and benefits due terminated employees. Neither the
Transactions, nor the termination of the employment of any employees of any of
the Acquired Companies prior to or following the consummation of the
Transactions could result in any of the Acquired Companies making or being
required to make any "excess parachute payment" as that term is defined in
Section 280G of the Code. To the knowledge of HealthAxis, each of the Acquired
Companies is in compliance in all material respects with all Laws respecting
employment practices. None of the Acquired Companies has ever been a party to or
bound by any union, collective bargaining or similar Contract, nor is any such
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Contract currently in effect or being negotiated by or on behalf of any of the
Acquired Companies. Since January 1, 1998, none of the Acquired Companies has
experienced any labor problem that was or is material to it. Except as indicated
on Schedule 3.11, since January 1, 1999, to the knowledge of HealthAxis, no
employee of any of the Acquired Companies having an annual salary of $75,000 or
more has indicated an intention to terminate or has been terminated with respect
to his or her employment with such company.
3.12 Employee Benefit Plans. Schedule 3.12 sets forth an accurate and
complete list of all of HealthAxis' Employee Benefit Plans to which any Acquired
Company is bound (collectively referred to as "HealthAxis' Employee Benefit
Plans"). Except as set forth on Schedule 3.12, none of the Acquired Companies
has (a) established, maintained or contributed to (or has been obligated to
contribute to) any Employee Benefit Plans, (b) proposed any Employee Benefit
Plans which it plans to establish or maintain or to which it plans to
contribute, or (c) proposed any changes to any Employee Benefit Plans now in
effect. Accurate and complete copies of all of HealthAxis' Employee Benefit
Plans, a list of all employees affected or covered by HealthAxis' Employee
Benefit Plans, and all Obligations thereunder have been made available to
Provident. If permitted and/or required by applicable Law, the Acquired
Companies have properly submitted all of HealthAxis' Employee Benefit Plans in
good faith to meet the applicable requirements of ERISA and/or the Code to the
Internal Revenue Service (the "IRS") for its approval within the time prescribed
therefor under applicable federal regulations. Favorable letters of
determination of such tax-qualified status from the IRS are attached to Schedule
3.12. With respect to HealthAxis' Employee Benefit Plans, the Acquired Companies
will have made, on or before the Closing Date, all payments required to be made
by them on or before the Closing Date and will have accrued (in accordance with
GAAP) as of the Closing Date all payments due but not yet payable as of the
Closing Date, so there will not have been, nor will there be, any Accumulated
Funding Deficiencies (as defined in ERISA or the Code) or waivers of such
deficiencies. HealthAxis has made available to Provident an accurate and
complete copy of the most current Form 5500 and any other form or filing
required to be submitted to any governmental agency with regard to any of
HealthAxis' Employee Benefit Plans and the most current actuarial report, if
any, with regard to any of HealthAxis' Employee Benefit Plans. All of
HealthAxis' Employee Benefit Plans are, and have been, operated in full
compliance in all material respects with their provisions and with all
applicable Laws including ERISA and the Code and the regulations and rulings
thereunder. The Acquired Companies and all fiduciaries of HealthAxis' Employee
Benefit Plans have complied in all material respects with the provisions of
HealthAxis' Employee Benefit Plans and with all applicable Laws including ERISA
and the Code and the regulations and rulings thereunder. There have been no
Reportable Events (as defined in ERISA), no events described in Sections 4062,
4063 or 4064 of ERISA, and no termination or partial termination (including any
termination or partial termination attributable to the Transactions contemplated
by this Agreement) of any of HealthAxis' Employee Benefit Plans. There would be
no Obligation of any of the Acquired Companies under Title IV of ERISA if any of
HealthAxis' Employee Benefit Plans were terminated as of the Closing Date. As a
result of any action or inaction prior to Closing by any of the Acquired
Companies, none of the Acquired Companies has incurred, nor will incur, any
withdrawal liability, nor do any of the Acquired Companies have any contingent
withdrawal liability, under ERISA to any Multiemployer Plan (as defined in ERISA
or the Code). None of the Acquired Companies has incurred, or will incur, any
Obligation to the Pension Benefit Guaranty Corporation (or any successor
thereto). Neither the execution and delivery of this Agreement nor the
consummation of the Transactions will (x) result in any payment (including any
severance, unemployment compensation or golden parachute payment) becoming due
from any of the Acquired Companies under any of HealthAxis' Employee Benefit
Plans, (y) increase any benefits otherwise payable under any of HealthAxis'
Employee Benefit Plans, or (z) result in the acceleration of the time of payment
or vesting of any such benefits to any extent. There are no pending Proceedings
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that have been asserted or instituted against any of HealthAxis' Employee
Benefit Plans, the Assets of any of the trusts under such plans, the plan
sponsor, the plan administrator or any fiduciary of any such plan (other than
routine benefit claims), and, to the knowledge of HealthAxis, there are no facts
which could form the basis for any such Proceeding. There are no investigations
or audits of any of HealthAxis' Employee Benefit Plans, any trusts under such
plans, the plan sponsor, the plan administrator or any fiduciary of any such
plan that have been instituted or, to the knowledge of HealthAxis, threatened,
and, to the knowledge of HealthAxis, there are no facts which could form the
basis for any such investigation or audit. Except as disclosed in Schedule 3.12,
no event has occurred nor will occur which will result in any of the Acquired
Companies having an Obligation in connection with any Employee Benefit Plan
established, maintained, contributed to or to which there has been as obligation
to contribute (currently or previously) by it or by any other entity which,
together with any of the Acquired Companies, constitute elements of either (i) a
controlled group of corporations (within the meaning of Section 414(b) of the
Code), (ii) a group of trades or businesses under common control (within the
meaning of Sections 414(c) of the Code or 4001 of ERISA), (iii) an affiliated
service group (within the meaning of Section 414(m) of the Code), or (iv)
another arrangement covered by Section 414(o) of the Code.
3.13 Carrier Partners and Internet Partners. Except as set forth on
Schedule 3.13, since January 1, 1999, none of the carrier partners, internet
partners or material suppliers of the Acquired Companies has given notice or
otherwise indicated to such company that it will or intends to terminate or not
renew its Contract with such company before the scheduled expiration date or
otherwise terminate its relationship with such company. To the knowledge of
HealthAxis, the relationship of each of the Acquired Companies with such carrier
partners, internet partners or material suppliers is currently on a good and
normal basis and the Transactions will not adversely affect these relations.
3.14 Proceedings and Judgments. Except as disclosed on Schedule 3.14,
(a) no Proceeding is currently pending or, to the knowledge of HealthAxis,
threatened, nor has any Proceeding occurred at any time since January 1, 1998,
to which any of the Acquired Companies is or was a party, or by which any of the
Acquired Companies or any Assets or business of any of the Acquired Companies is
or was affected; (b) no Judgment is currently outstanding, nor has any Judgment
been outstanding at any time since January 1, 1998, against any of the Acquired
Companies, or by which any of the Acquired Companies or any Assets or business
of any of the Acquired Companies is or was affected; and (c) no material breach
of contract, breach of warranty, tort, negligence, infringement, product
liability, discrimination, wrongful discharge or other claim of any nature has
been asserted in any proceeding or, to the knowledge of HealthAxis, threatened
in writing by or against any of the Acquired Companies at any time since January
1, 1998, and, to the knowledge of HealthAxis, there is no basis for any such
claim.
3.15 Insurance. Schedule 3.15 is an accurate and complete list of all
Insurance Policies (excluding Insurance Policies that constitute HealthAxis'
Employee Benefit Plans described on Schedule 3.12) owned or maintained by any of
the Acquired Companies and/or any of their predecessors at any time since
January 1, 1998. Except as indicated on Schedule 3.15, all such Insurance
Policies are or were on an "occurrence" rather than a "claims made" basis. None
of the Acquired Companies has received notice of cancellation with respect to
any such current Insurance Policy, and, to the knowledge of HealthAxis, there is
no basis for the insurer thereunder to terminate any such current Insurance
Policy. Accurate and complete copies of all Insurance Policies described on
Schedule 3.15 have been made available to Provident. Each such Insurance Policy
is or was in full force and effect during the period(s) of coverage indicated on
Schedule 3.15. There are no claims that are pending under any of the Insurance
Policies described in this section.
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3.16 Questionable Payments. None of the Acquired Companies or, to the
knowledge of HealthAxis, any of the HealthAxis Shareholders, nor any current or
former partners, owners, HealthAxis Shareholders, members, directors,
executives, officers, representatives, agents or employees of any of the
Acquired Companies (when acting in such capacity or otherwise on behalf of any
of the Acquired Companies or any of their predecessors), (a) has used or is
using any corporate funds (i) for any illegal contributions, gifts,
entertainment or other unlawful expenses relating to political activity or, (ii)
to the knowledge of HealthAxis, in violation of customer policies and/or rules;
(b) has used or is using any corporate funds for any direct or indirect unlawful
payments to any foreign or domestic government officials or employees; (c) has
established or maintained, or is maintaining, any unlawful or unrecorded fund of
corporate monies or other properties; (d) has made at any time since January 1,
1998, any false or fictitious entries on the books and records of any of the
Acquired Companies; (e) has made any bribe, unlawful rebate, payoff, influence
payment, kickback or other unlawful payment of any nature using corporate funds
or otherwise on behalf of any of the Acquired Companies; or (f) made any
material favor or gift that is not deductible for federal income tax purposes
using corporate funds or otherwise on behalf of any of the Acquired Companies.
3.17 Related Party Transactions. To the knowledge of HealthAxis, except
as described on Schedule 3.17 and except for any Contracts listed on Schedule
3.13, there are no real estate leases, personal property leases, loans,
guarantees, Contracts, transactions, understandings or other arrangements of any
nature between or among any of the Acquired Companies and any current or former
partner, owner, shareholder, member, director, officer or controlling Person of
any of the Acquired Companies, other than Provident or its subsidiaries.
3.18 Brokerage Fees. Except as set forth on Schedule 3.18, no Person
acting on behalf of any of the Acquired Companies or any of the HealthAxis
Shareholders is or shall be entitled to any brokerage fee, finder's fee or
investment banking fee in connection with the Transactions.
3.19 Investment Company. HealthAxis is not an investment company within
the meaning of Section 368(a)(2)(F)(iii) and (iv) of the Code.
3.20 Full Disclosure. No representation or warranty made by HealthAxis
in this Agreement or pursuant hereto (a) contains any untrue statement of
material fact; or (b) omits to state any material fact that is necessary to make
the statements made, in light of the circumstances under which they are made,
not false or misleading in any respect. The copies of documents attached as
Schedules to this Agreement or otherwise delivered to Provident and Newco in
connection with the Transactions, are accurate and complete, and are not missing
any amendments, modifications, correspondence or other related papers which
would be material to Provident's or Newco's understanding thereof in any
respect.
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3.21 Compliance with Law. The operations of each of the Acquired
Companies, the conduct of the business of each of the Acquired Companies, as and
where such business has been or presently is conducted, and the ownership,
possession and use of the Assets of each of the Acquired Companies have complied
and currently do comply with all applicable Laws and the articles and bylaws of
each entity except where the failure to comply will not have a Material Adverse
Effect. Except as set forth on Schedule 3.21, each of the Acquired Companies has
obtained and holds all Permits required for the lawful operation of its business
or businesses as and where such business or businesses are presently conducted.
All Permits held by the Acquired Companies are listed on Schedule 3.21, and
copies of such Permits have been made available to Provident and Newco.
SECTION 4: REPRESENTATIONS OF PROVIDENT AND NEWCO
Provident and Newco, jointly and severally, represent and warrant to
HealthAxis and the HealthAxis Shareholders as of the date of this Agreement, and
covenant with HealthAxis and the HealthAxis Shareholders, as follows:
4.1 Organization. Provident and Newco are each a corporation that is
duly organized and subsisting under the Laws of the Commonwealth of
Pennsylvania. Provident and Newco each possess the full corporate power and
authority to own its Assets, conduct its business as and where such business is
presently conducted, and enter into this Agreement and the Plan. Newco is a
wholly owned subsidiary of Provident. Newco has not engaged in any activities
other than in connection with its organization and this Agreement and has no
liabilities.
4.2 Agreement. Each of Provident's and Newco's execution, delivery and
performance of this Agreement, and its consummation of the Transactions, (a)
subject to approval by Provident shareholders ("Provident Shareholders') of
Provident's issuances of the Provident Common Stock in the Merger as required by
the NASD and an amendment to its articles of incorporation to increase its
authorized shares, have been duly authorized by all necessary corporate actions
by their respective boards of directors, and Provident Shareholders; (b) do not
constitute a violation of or default under their respective charters or bylaws;
(c) do not constitute a default or breach (immediately or after the giving of
notice, passage of time or both) under any Contract to which Provident or Newco
is a party or by which Provident or Newco is bound; (d) do not constitute a
violation of any Law or Judgment that is applicable to it or to their respective
businesses or Assets, or to the Transactions; and (e) except as stated on
Schedule 4.2, do not require the Consent of any Person. This Agreement
constitutes the valid and legally binding agreement of each of Provident and
Newco, enforceable against each of them in accordance with its terms.
4.3 Provident's Stock. The authorized capital stock of Provident is
50,000,000 shares of Provident Common Stock, of which 12,944,393 shares were
issued and outstanding as of September 30, 1999, 20,000,000 shares of Class A
Common Stock par value $.10 per share, none of which are outstanding, and
20,000,000 shares of preferred stock, $1.00 par value per share, none of which
are outstanding. All of the issued and outstanding shares of capital stock of
Provident have been duly authorized and validly issued, and are fully paid and
nonassessable, with no liability or preemptive rights attaching to the ownership
thereof. All issuances and grants of all outstanding options, warrants and all
offerings, sales and issuances by Provident of any shares of capital stock
complied in all material respects with all applicable federal and state
securities Laws, all applicable state corporation Laws and all requirements set
forth in applicable Contracts. Except as provided on Schedule 4.3, there are no
13
outstanding options, puts, calls, warrants, subscriptions, stock appreciation
rights, phantom stock, or other Contracts or Contract Rights relating to the
offering, sale, issuance, redemption or disposition of any shares of capital
stock, or other securities of Provident.
4.4 SEC Filings. (a) Except as stated on Schedule 4.4, Provident has
timely filed all reports, proxy statements, forms and other documents required
to be filed with the SEC since January 1, 1996 and prior to the date of this
Agreement ("Provident SEC Documents"). As of their respective dates, Provident
SEC Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Provident SEC Documents. As of their respective
dates, the Provident SEC Documents (including all exhibits and schedules thereto
and documents incorporated by reference therein) did 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, in the light of the
circumstances under which they were made, not misleading.
(b) The consolidated financial statements of Provident
included in the Provident SEC Documents (i) have been prepared in conformity
with GAAP applied on a consistent basis during the periods involved (except as
may be indicated in the related notes and schedules thereto) and (ii) fairly
present in all material respects the consolidated financial position of
Provident and its consolidated subsidiaries as of the dates thereof, and the
results of its operations and its cash flows for the periods then ended
(subject, in the case of the unaudited statements, to normal year-end audit
adjustments, none of which was material and that, in the case of financial
statements included therein which reflect an acquisition accounted for as a
purchase, the financial statements for the period succeeding the acquisition are
presented on a different basis of accounting than the period prior to the
acquisition and are not directly comparable).
4.5 Form S-4 Registration Statement. The Form S-4 Registration
Statement and all amendments thereto will comply as to form in all material
respects with the provisions of the Securities Act and the rules and regulations
promulgated thereunder. Neither the Form S-4 Registration Statement, nor any
amendments thereof, will, on the date the Proxy Statement/Prospectus is first
mailed to Provident and HealthAxis Shareholders, at the time of the Provident
and/or HealthAxis Shareholders' meeting, at the Effective Date or at the time it
becomes effective, contain any untrue statement of a material fact or 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 were made,
not misleading, provided, however, that Provident makes no representation or
warranty with respect to any information furnished to it by HealthAxis or any of
HealthAxis' accountants, counsel or other authorized representatives in writing
specifically for inclusion in the Form S-4 Registration Statement. None of the
information with respect to Provident or any affiliate of Provident (other than
the Acquired Companies) that is set forth in the Proxy Statement/Prospectus
will, on the date that the Proxy Statement/Prospectus is first mailed to
Provident and HealthAxis Shareholders, at the time of the Provident and/or
HealthAxis Shareholder Meeting or at the Effective Date, 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.
4.6 Absence of Changes. Except as disclosed in the Provident SEC
Documents, since September 30, 1999, there has not been a material adverse
change as to Provident and its subsidiaries.
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4.7 Authorization for Provident Common Stock. Provident will take all
necessary action prior to the Closing Date to permit it to issue the number of
shares of Provident Common Stock required to be issued pursuant to this
Agreement and the Plan, including amending its Articles of Incorporation to
increase the number of authorized shares of common stock. All shares of
Provident Common Stock issued pursuant to this Agreement and the Plan will, when
issued, be validly issued, fully paid and nonassessable and no Person will have
any preemptive right of subscription or purchase in respect thereof. All shares
of Provident Common Stock will, when issued, be registered under the Securities
Act and the Exchange Act and registered or exempt from registration under any
applicable state securities laws and will, when issued, be listed for trading on
the NASDAQ National Market System, subject to official notice of issuance.
4.8 Investment Matters. Provident is acquiring the HealthAxis Stock for
its own account for investment purposes only and not with a view to, or for sale
in connection with, any resale or distribution thereof.
4.9 Brokerage Fees. Except as set forth in Schedule 4.9, no Person
acting on behalf of Provident is or shall be entitled to any brokerage fee,
finder's fee or investment banking fee in connection with the Transactions.
4.10 Compliance with Law. The operations of Provident, the conduct of
the businesses of Provident, as and where such businesses have been or presently
are conducted, and the ownership, possession and use of the assets of Provident
have complied and currently do comply in all material respects with all
applicable Laws. Provident is not subject to any consent decree of any Person.
4.11 Full Disclosure. No representation or warranty made by Provident
in this Agreement or pursuant hereto (a) contains any untrue statement of
material fact; or (b) omits to state any material fact that is necessary to make
the statements made, in light of the circumstances under which they are made,
not false or misleading in any respect. The copies of documents attached as
Schedules to this Agreement or otherwise delivered to HealthAxis by Provident in
connection with the Transactions, are accurate and complete, and are not missing
any amendments, modifications, correspondence or other related papers which
would be pertinent to HealthAxis' understanding thereof in any respect.
4.12 Investment Company. Provident is not currently and upon
consummation of the Merger, Provident will not be an investment company within
the meaning of the Investment Company Act of 1940, as amended.
SECTION 5: CERTAIN OBLIGATIONS OF HEALTHAXIS PENDING CLOSING
5.1 Conduct of Business. Between the date of this Agreement and the
Closing Date or termination of the Agreement, except with the prior written
consent of Provident:
(1) Each of the Acquired Companies shall, (i) conduct their respective
businesses in the ordinary course consistent with past practice, (ii) not make
any material change in their business practices, and (iii) use their reasonable
best efforts to preserve their business organization intact, keeping available
the services of their current officers, employees, salesmen, agents and
representatives, and maintaining the goodwill of their customers, suppliers and
other Persons having business relations with the Acquired Companies.
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(2) Each of the Acquired Companies shall, maintain their corporate
existence and subsistence in their respective jurisdictions of incorporation and
their good standing in each jurisdiction where they are currently qualified as a
foreign corporation. None of the Acquired Companies shall amend their articles
of incorporation or bylaws.
(3) None of the Acquired Companies shall, redeem, retire or purchase,
or create, grant or issue any options, warrants or other Contracts or Contract
Rights with respect to, any shares of HealthAxis Stock, or any other capital
stock or other securities of HealthAxis, or create, grant or issue any stock
options, stock appreciation rights, phantom shares or other similar rights,
except as may be consistent with past practices.
(4) Except with respect to the conversion and/or exercise of currently
outstanding warrants, stock options and/or Preferred Stock, HealthAxis shall not
sell, assign, give, pledge or grant or otherwise transfer, dispose of or
encumber any shares of the HealthAxis Stock (or securities convertible,
exercisable or exchangeable for capital stock of HealthAxis), or any other
capital stock or other securities of HealthAxis owned or held by it.
(5) The Acquired Companies shall not enter into any Contract that
commits it to take any action or omit to take any action that would be
inconsistent with any of the provisions of this Section 5.1 or any other
provisions of this Agreement or the Plan.
5.2 Consents. Between the date of this Agreement and the Closing Date,
each of the Acquired Companies shall in good faith use their reasonable best
efforts to obtain all Consents and approvals of all lenders, lessors, vendors,
customers and other Persons necessary to permit the Merger and the other
Transactions to be consummated without violating any loan agreement, lease or
other material Contract to which any of the Acquired Companies is a party or by
which any of the Acquired Companies is bound, and to give the notices and make
the filings described on Schedule 3.2.
5.3 Advice of Changes. Between the date of this Agreement and the
Closing Date, HealthAxis shall promptly advise Provident, in writing, of any
fact of which it obtains knowledge and that, if existing or known as of the date
of this Agreement, would have been required to be set forth or disclosed in or
pursuant to this Agreement (it being understood that such advice shall not be
deemed to modify the representations, warranties and covenants of HealthAxis
contained in this Agreement).
5.4 Reasonable Best Efforts. HealthAxis shall use its reasonable best
efforts to consummate the Merger and the other Transactions as of the earliest
practicable date. HealthAxis shall not take, or cause to be taken, or to the
best of its ability permit to be taken, any action that would impair the
prospect of completing the Merger and the other Transactions.
SECTION 6: CERTAIN OBLIGATIONS OF PROVIDENT AND NEWCO PENDING CLOSING
6.1 Conduct of Business. Between the date of this Agreement and the
Closing Date or termination of the Agreement, except with the prior written
consent of HealthAxis:
16
(1) Provident shall, (i) conduct its business in the ordinary
course consistent with past practice, (ii) not make any material change 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, salesmen, agents and representatives, and maintaining the
goodwill of its customers, suppliers and other Persons having business relations
with Provident.
(2) Provident and Newco shall maintain their corporate
existence and subsistence in their respective jurisdictions of incorporation and
their good standing in each jurisdiction where they are currently qualified as a
foreign corporation. Neither Provident nor Newco shall amend their articles of
incorporation or bylaws.
(3) Except in the ordinary course of its business consistent
with its past practices, Provident shall not redeem, retire or purchase, or
create, grant or issue any options, warrants or other Contracts or Contract
Rights with respect to, any shares of Provident Common Stock, or any other
capital stock or other securities of Provident, or create, grant or issue any
stock options, stock appreciation rights, phantom shares or other similar
rights, except as may be consistent with past practices.
(4) Except with respect to the conversion and/or exercise of
currently outstanding warrants, stock options and/or Preferred Stock, Provident
shall not sell, assign, give, pledge or grant or otherwise transfer, dispose of
or encumber any shares of the Provident Common Stock (or securities convertible,
exercisable or exchangeable for capital stock of Provident), or any other
capital stock or other securities of Provident owned or held by it.
(5) Neither Provident nor Newco shall enter into any Contract
that commits them to take any action or omit to take any action that would be
inconsistent with any of the provisions of this Section 6.1 of this Agreement or
the Plan.
6.2 Consents. Between the date of this Agreement and the Closing Date,
Provident and Newco shall in good faith use their reasonable best efforts to
obtain all Consents and approvals of all lenders, lessors, vendors, customers
and other Persons necessary to permit the Merger and the other Transactions to
be consummated without violating any loan agreement, lease or other material
Contract to which either Provident or Newco is a party or by which either
Provident or Newco is bound, and to give the notices and make the filings
described on Schedule 4.2.
6.3 SEC Reports. Between the date of this Agreement and the Closing
Date, Provident shall timely file all reports and other filings required to be
filed by it under the Exchange Act.
6.4 Advice of Changes. Between the date of this Agreement and the
Closing Date, Provident shall promptly advise HealthAxis, in writing, of any
fact of which it obtains knowledge and that, if existing or known as of the date
of this Agreement, would have been required to be set forth or disclosed
pursuant to a representation or warranty in this Agreement (it being understood
that such advice shall not be deemed to modify the representations, warranties
and covenants of Provident and/or Newco contained in this Agreement).
6.5 Reasonable Best Efforts. Provident and Newco shall use their
reasonable best efforts to consummate the Merger and the other Transactions as
of the earliest practicable date, and neither Provident nor Newco shall take, or
17
cause to be taken, or to the best of their ability permit to be taken, any
action that would impair the prospect of completing the Merger and the other
Transactions.
6.6 NASDAQ Listing. Provident shall use its best efforts to cause the
shares of Provident Common Stock constituting the Merger consideration to be
listed on the NASDAQ National Market System subject to notice of official
issuance thereof.
6.7 Employee Benefits. Following the Effective Date, Provident shall
cause Newco to provide benefits to such employees which are comparable to those
provided to similarly situated employees of Provident from time-to-time.
6.8 Name and Symbol Change. Subject to receipt of the necessary
consents, Provident shall use reasonable efforts to change its name to
HealthAxis Inc. and its symbol to "HAXS".
SECTION 7: ADDITIONAL COVENANTS OF THE PARTIES
7.1 Shareholders' Meetings. (a) Provident shall cause a meeting of its
shareholders (including any postponements or adjournments thereto) (the
"Provident Shareholders' Meeting") to be duly called and held as soon as
reasonably practicable, but in any event within 30 business days after the
mailing of the Proxy Statement/Prospectus (as hereinafter defined), for the
purpose of voting on the approval of the issuance of the shares of Provident
Common Stock to be issued in connection with the Merger; provided, however, that
notwithstanding anything to the contrary contained in this Agreement, Provident
may adjourn or postpone the Provident Shareholders' Meeting to the extent
necessary to ensure that any necessary supplement or amendment to the Proxy
Statement/Prospectus is provided to Provident's Shareholders in advance of a
vote on the issuance of Provident Common Stock in the Merger or, if as of the
time for which the Provident Shareholders' Meeting is originally scheduled (as
set forth in the Proxy Statement/Prospectus) there are insufficient shares of
Provident Common Stock represented (either in person or by proxy) to constitute
a quorum necessary to conduct the business of the Provident Shareholders'
Meeting. HealthAxis shall cause a meeting of its shareholders (including any
postponements or adjournments thereto) (the "HealthAxis Shareholders' Meeting")
(the Provident Shareholders' Meeting and the HealthAxis Shareholders' Meeting
shall collectively be referred to herein as, the "Shareholders' Meetings") to be
duly called and held as soon as reasonably practicable, but in any event within
30 business days after the mailing of the Proxy Statement/Prospectus (as
hereinafter defined), for the purpose of voting on the approval of the Merger.
(b) As promptly as practicable following the date of this
Agreement, Provident and HealthAxis shall prepare a joint proxy
statement/prospectus with respect to the Shareholders' Meetings (which proxy
statement/prospectus will constitute the prospectus of Provident to be included
in the Form S-4 Registration Statement to be filed by Provident pursuant to
Section 7.2 hereof and a proxy statement/prospectus on Schedule 14A) (such proxy
statement, together with any amendments thereof or supplements thereto, in each
case in the form or forms mailed to Provident's and HealthAxis' Shareholders, is
herein called the "Proxy Statement/Prospectus"). Provident will (i) as promptly
as practicable following the preparation of the Proxy Statement/Prospectus file
the Proxy Statement/Prospectus with the SEC, and use its reasonable best efforts
to have it cleared by the SEC and thereafter mail the Proxy Statement/Prospectus
to its shareholders; (ii) use its reasonable best efforts to obtain the
necessary approval by its shareholders of the issuance of the Provident Common
Stock in the Merger and the amendment of the Articles of Incorporation of
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Provident to increase the number of authorized shares of Common Stock and (iii)
otherwise comply with all legal requirements applicable to its respective
meeting. HealthAxis will (i) promptly after the Proxy Statement/Prospectus is
cleared by the SEC mail the Proxy Statement/Prospectus to its shareholders; (ii)
use its reasonable best efforts to obtain the necessary approvals by its
shareholders of the Merger and (iii) otherwise comply with all legal
requirements applicable to its respective meeting. Provident agrees to provide
HealthAxis with all comments or correspondence received from the SEC as to the
Proxy Statement/Prospectus and Provident and HealthAxis shall prepare responses
to any such comments or correspondence as required to have the Proxy
Statement/Prospectus cleared by the SEC. The Proxy Statement/Prospectus shall
include the recommendation of the Provident Board of Directors that their
respective shareholders approve the issuance of the Provident Common Stock in
the Merger. Provident shall send a Notification of the Merger to HealthAxis
Shareholders notifying them of the Effective Date.
(c) The Boards of Directors of each of Provident and
HealthAxis shall recommend approval of the issuance of Provident Common Stock in
the Merger and of the Merger, as the case may be, by their respective
shareholders and will agree to vote the shares that they hold in favor of the
Merger. Provident agrees to vote its shares of HealthAxis common and preferred
stock in favor of the Merger.
7.2 Registration Statement and Proxy Statement/Prospectus. Provident
will, as promptly as practicable following the date of this Agreement, prepare
and, following receipt of notification from the SEC that it has no further
comments on the Proxy Statement/Prospectus assuming Provident initially files a
proxy statement/propsectus on Schedule 14A, file with the SEC a registration
statement on Form S-4 (the "Form S-4 Registration Statement"), containing the
Proxy Statement/Prospectus, and the prospectus in connection with the Merger and
the other transactions contemplated hereby and the SEC as promptly as
practicable, HealthAxis will cooperate with Provident in the preparation and
filing of the Proxy Statement/Prospectus and will provide Provident with all
financial and other data concerning HealthAxis as is necessary in order for
Provident to prepare the Proxy Statement/Prospectus.
7.3 Blue Sky Permits. Provident shall use its reasonable efforts to
obtain, prior to the effective date of the Form S-4 Registration Statement, all
necessary state securities law or "blue sky" permits and approvals required to
ensure that the Provident Common Stock to be issued in the Merger will be
registered or qualified under such state securities Laws, and will pay all
expenses incident thereto; provided, however, that the foregoing shall not
require Provident to (i) submit generally to jurisdiction or require it to
qualify to do business in any jurisdiction where it is not presently required to
submit to jurisdiction or be qualified to do business; or (ii) file a general
consent to service of process in any jurisdiction.
7.4 Tax Free Reorganization. HealthAxis and Provident agree not to take
or cause to be taken any actions that would adversely affect the treatment of
the Merger as a reorganization within the meaning of Section 368(a) of the Code.
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7.5 Full Disclosure. None of the information supplied or to be supplied
by or on behalf of the Acquired Companies for inclusion or incorporation by
reference in the Proxy Statement/Prospectus to be filed with the SEC by
Provident in connection with the Provident and/or HealthAxis Shareholders'
Meeting to be held by Provident and/or HealthAxis relating to the Merger did or
will, at the time the information was or is supplied, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were or are made, not misleading. If
any such information becomes untrue in any material respect prior to the filing
of the Proxy Statement/Prospectus, the mailing of the Proxy Statement/Prospectus
to the Provident and HealthAxis Shareholders or the time of the Provident and/or
HealthAxis Shareholders' Meeting, HealthAxis will promptly notify Provident.
SECTION 8: CONDITIONS PRECEDENT TO HEALTHAXIS' CLOSING OBLIGATIONS
Each obligation of HealthAxis to be performed on the Closing Date shall
be subject to the satisfaction of each of the conditions stated in this Section
8, except to the extent that such satisfaction is waived by HealthAxis in
writing.
8.1 Provident's and Newco's Representations. There shall not have been
any material breach of any representation, warranty or certification made by
Provident and/or Newco in this Agreement or pursuant hereto.
8.2 Provident's and Newco's Performance. All of the terms and
conditions of this Agreement to be satisfied or performed by Provident and/or
Newco on or before the Closing Date (including, but not limited to, the
obligations set forth in Section 10.3) shall have been substantially satisfied
or performed.
8.3 Absence of Proceedings. No Proceeding shall have been instituted,
no Judgment shall have been issued, and no new Law shall have been enacted, on
or before the Closing Date, that seeks to or does prohibit or restrain, or that
seeks material damages as a result of, the consummation of the Merger or any of
the other Transactions.
8.4 Approval of HealthAxis and Provident Shareholders. The Merger and
the issuance of the shares of Provident Common Stock in the Merger shall have
been duly approved by the affirmative vote of the HealthAxis and Provident
Shareholders, as the case may be, in accordance with applicable Law. The
Provident Shareholders shall have approved the amendment to the Articles of
Incorporation of Provident to increase the number of authorized shares of common
stock.
8.5 Board Seats. The following individuals shall have been elected to
the Board of Directors of Provident effective as of the Effective Date of the
Merger: Xxxxxx X Xxxxxx, Xxxxxxx X. Xxxx and Xxxxxx X. Xxxxxxx.
8.6 Adverse Changes. There shall not have been any material adverse
change or material casualty loss affecting Provident or any of its subsidiaries.
or their respective businesses, Assets or financial condition, between the date
of this Agreement and the Closing Date, and there shall not have been any
material adverse change in the financial performance of Provident or its
subsidiaries between the date of this Agreement and the Closing Date.
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8.7 Registration Statement. The Form S-4 Registration Statement shall
have become effective in accordance with the provisions of the Securities Act,
and no order suspending such effectiveness shall have been issued and remain in
effect.
8.8 Listing of Provident Common Stock. The shares of Provident Common
Stock issuable in accordance with the Merger shall have been approved for
listing on the NASDAQ National Market System, subject to official notice of
issuance.
8.9 Tax Opinion. The parties shall have received an opinion of tax
counsel, in form and substance reasonably satisfactory to Provident and
HealthAxis, dated as of the Effective Date, substantially to the effect that on
the basis of facts, representations and assumptions set forth in such opinion
which are consistent with the state of facts then existing: (i) the Merger will
constitute a "reorganization" within the meaning of Section 368(a) of the Code
and each of Provident, HealthAxis and Newco will be a "party to a
reorganization" within the meaning of Section 368(b) of the Code. In rendering
such opinion, such firm may require and rely upon representations contained in
the tax representation letters delivered to it by Provident and HealthAxis, and
such other certificates from such other Persons as such firm may reasonably
require; and (ii) the consummation of the Merger will not adversely affect the
qualification of the merger between HealthAxis and Insurdata Inc., which
occurred on January 7, 2000, as a "reorganization" within the meaning of Section
368(a) of the Code. Such an opinion may contain such further assumptions and
qualifications as are customary in legal opinions concerning federal income
taxation.
SECTION 9: CONDITIONS PRECEDENT TO PROVIDENT'S AND NEWCO'S CLOSING OBLIGATIONS
Each obligation of Provident and Newco to be performed on the Closing
Date shall be subject to the satisfaction of each of the conditions stated in
this Section 9, except to the extent that such satisfaction is waived by
Provident in writing.
9.1 Upon consummation of the Merger, Provident, Newco, UICI, Xxxxxxx
Xxxxxx and Xxxxx X. Xxxxxxx shall enter into a shareholder agreement in the form
attached hereto as Exhibit B.
9.2 Approval of the HealthAxis and Provident Shareholders. The Merger
and the issuance of shares of Provident Common Stock in the Merger shall have
been duly approved by the affirmative vote of the Shareholders of HealthAxis and
Provident Shareholders, as the case may be, in accordance with applicable Law,
the Articles of Incorporation and Certificates of Designation.
9.3 Dissenting and other HealthAxis Shareholders. The aggregate number
of shares of HealthAxis Stock owned by those HealthAxis Shareholders (if any)
who shall have exercised (or given notice of their intent to exercise) the
rights of dissenting shareholders under the Pennsylvania Business Corporation
Law or any other applicable corporate law shall be less than ten percent (10%)
of the total number of outstanding shares of HealthAxis Stock.
9.4 HealthAxis' Representations. There shall not have been any material
breach of any representation, warranty or certification made by HealthAxis in
this Agreement or pursuant hereto, except where such material breach is a direct
result of the actions of Provident.
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9.5 HealthAxis' Performance. All of the terms and conditions of this
Agreement to be satisfied or performed by HealthAxis on or before the Closing
Date (including the Obligations set forth in Section 10.2) shall have been
substantially satisfied or performed.
9.6 Absence of Proceedings. No Proceeding shall have been instituted,
no Judgment shall have been issued, and no new Law shall have been enacted, on
or before the Closing Date, that seeks to or does prohibit or restrain, or that
seeks damages as a result of, the consummation of the Merger or any of the other
Transactions.
9.7 Adverse Changes. There shall not have been any material adverse
change or material casualty loss affecting the Acquired Companies, or their
respective businesses, Assets or financial condition, between the date of this
Agreement and the Closing Date, and there shall not have been any material
adverse change in the financial performance of any of the Acquired Companies
between the date of this Agreement and the Closing Date; provided however that
to the extent any such material adverse change or material casualty loss is
caused, directly or indirectly, by any action or inaction of Provident, such
change or loss shall not be deemed to be a material adverse change or material
casualty loss.
9.8 Between the date of this Agreement and the Closing Date, the net
worth of the Acquired Companies on a consolidated basis as determined in
accordance with GAAP, but excluding goodwill and all other intangible assets
acquired as a result of HealthAxis' acquisition of Insurdata, shall not be less
than $20.0 million. To the extent that the Closing Date has not occurred prior
to the quarterly dates set forth below, the net worth as of any previous
quarterly date of the Acquired Companies on a consolidated basis as determined
in accordance with GAAP, but excluding goodwill and other intangible assets
acquired as a result of HealthAxis' acquisition of Insurdata, shall not be less
than: $50.0 million on March 31, 2000; $35.0 million on June 30, 2000; and $20.0
million on September 30, 2000.
SECTION 10: CLOSING
10.1 Closing. The closing of the Merger and the other Transactions (the
"Closing") shall take place at a mutually agreeable time and place on a date
designated by Provident (the "Closing Date"), which shall be no later than the
second business day after the satisfaction or waiver of the conditions set forth
in Sections 8 and 9. Contemporaneously with the Closing, the parties hereto
shall cause the Plan and properly executed Articles of Merger conforming to the
requirements of the Pennsylvania Business Corporation Law (the "Articles of
Merger") to be filed with the proper officers of the Commonwealth of
Pennsylvania, and the parties shall take such further actions as may be required
by the Commonwealth of Pennsylvania, and any other applicable Law, in connection
with consummation of the Merger. The Merger shall take effect at the time such
filing is made with the Commonwealth of Pennsylvania or at such later time as
may be specified in the Articles of Merger (the "Effective Date").
10.2 HealthAxis' Obligations at Closing. At or prior to the Closing,
Provident and Newco shall have received the following:
(1) All instruments or documents necessary to change the names of the
individuals who have access to or are authorized to make withdrawals from or
dispositions of all bank accounts, other accounts, certificates of deposits,
marketable securities, other investments, safe deposit boxes, lock boxes and
22
safes of HealthAxis described on Schedule 3.4 and all keys and combinations to
all safe deposit boxes, lock boxes and safes of HealthAxis and other
depositories described on Schedule 3.4.
(2) A certificate, dated as of the Closing Date, in form and substance
satisfactory to Provident, signed by the President and Chief Financial Officer
of HealthAxis, certifying, that (i) all representations and warranties made by
HealthAxis in this Agreement are correct in all material respects as of the
Closing Date, as if made on and as of the Closing Date, except for changes
contemplated or permitted by this Agreement, (ii) all of the terms and
conditions of this Agreement to be satisfied or performed by HealthAxis on or
before the Closing Date have been substantially satisfied or performed, and
(iii) there has not been any material adverse change or material casualty loss
affecting any of the Acquired Companies, or their business, Assets or financial
condition, between the date of this Agreement and the Closing Date, and there
has not been any material adverse change in HealthAxis' financial performance
between the date of this Agreement and the Closing Date.
(3) Articles of Merger for the Commonwealth of Pennsylvania, in form
and substance, acceptable to the parties ("Articles of Merger"), dated as of the
Closing Date and duly executed by HealthAxis.
(4) The signed copies of all Consents listed on Schedule 3.2.
(5) All of the original minute books and stock books of the Acquired
Companies (including original stock certificates evidencing HealthAxis' 100%
ownership of each of the subsidiaries) and duly executed resignations, dated as
of the Effective Date, of all directors and officers of the Acquired Companies
other than as specified by Provident.
(6) Good standing certificates for HealthAxis, dated no earlier than
ten (10) days before the Closing Date, from the Commonwealth of Pennsylvania and
from each other jurisdiction in which it is qualified or registered to do
business as a foreign corporation and good standing certificate or equivalent
from each of the other Acquired Companies from their respective jurisdiction of
incorporation.
(7) A certificate of Secretary of HealthAxis as to the incumbency and
signatures of the officers of HealthAxis executing this Agreement.
(8) Copies of the resolutions duly adopted by the board of directors of
HealthAxis, authorizing HealthAxis to execute, deliver and perform this
Agreement and the Plan and to consummate the Transactions, certified by an
officer of HealthAxis as in full force and effect, without modification or
rescission, on and as of the Closing Date.
(9) A duly signed letter, from each affiliate of HealthAxis, in form,
attached hereto as Exhibit C, stating that such affiliate will not sell, assign,
give, pledge (except in connection with fully recourse bank loans) or otherwise
transfer, dispose of or reduce such affiliate's risk relating to any of such
affiliate's shares of capital stock or other securities of Provident without
compliance with the applicable federal and state securities laws.
(10) The legal opinion of tax counsel described in Section 8.9.
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(11) A legal opinion of Blank Rome Xxxxxxx & XxXxxxxx LLP, as to
various corporate and related matters in connection with the Transactions and
reasonably acceptable to Provident.
(12) Notice that all applicable waiting periods with respect to the
Transactions shall have expired under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended ("HSR Act"), and neither the Federal Trade
Commission nor the Antitrust Division of the Department of Justice shall have
(i) required any party to divest itself of any assets in order to consummate
such Transactions, or (ii) taken any actions to prohibit the consummation of
such Transactions.
(13) All other agreements, certificates, instruments, financial
statement certifications, opinions of counsel and documents reasonably requested
by Provident in order to fully consummate the Transactions and carry out the
purposes and intent of this Agreement and the Plan.
(14) Audited financial statements of each of HealthAxis and Insurdata
Inc. as of December 31, 1999.
10.3 Provident's and Newco's Obligations at Closing. At the Closing,
HealthAxis shall have received the following:
(1) The Articles of Merger duly executed by Newco.
(2) A certificate, dated as of the Closing Date, in form and substance
satisfactory to HealthAxis, signed by an officer of Provident, certifying that
(i) all representations and warranties made by Provident and/or Newco in this
Agreement are correct in all material respects as of the Closing Date, as if
made on and as of the Closing Date, except for changes contemplated or permitted
by this Agreement, (ii) all of the terms and conditions of this Agreement to be
satisfied or performed by Provident and/or Newco on or before the Closing Date
have been substantially satisfied or performed, and (iii) there has not been any
material adverse change or material casualty loss affecting Provident, or its
business, Assets or financial condition, between the date of this Agreement and
the Closing Date, and there has not been any material adverse change in
Provident's financial performance between the date of this Agreement and the
Closing Date.
(3) Good standing certificates for each of Provident and Newco, dated
no earlier than ten (10) days before the Closing Date, from the Commonwealth of
Pennsylvania.
(4) Copies of the resolutions duly adopted by the board of directors of
Provident and by the board of directors and the sole shareholder of Newco,
authorizing Provident and Newco, respectively, to execute, deliver and perform
this Agreement and the Plan and to consummate the Transactions, certified by an
officer of Provident or Newco, respectively, as in full force and effect,
without modification or rescission, on and as of the Closing Date.
(5) A certificate of Secretary of each of Provident and Newco as to the
incumbency and signatures of the officers of Provident and Newco executing this
Agreement.
(6) The signed copies of all Consents listed on Schedule 4.2.
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(7) The legal opinion of tax counsel described in Section 8.9.
(8) A legal opinion of Butera, Beausang, Xxxxx and Xxxxxxx,
Professional Corporation, as to various corporate and related matters in
connection with the Transactions and reasonably acceptable to HealthAxis.
(9) Notice that all applicable waiting periods with respect to the
Transactions shall have expired under the HSR Act, and neither the Federal Trade
Commission nor the Antitrust Division of the Department of Justice shall have
(i) required any party to divest itself of any assets in order to consummate
such Transactions, or (ii) taken any actions to prohibit the consummation of
such Transactions.
(10) All other agreements, certificates, instruments, opinions of
counsel and documents reasonably requested by HealthAxis in order to fully
consummate the Transactions and carry out the purposes and intent of this
Agreement and the Plan.
(11) Audited financial statements of Provident as of December 31, 1999.
SECTION 11: CERTAIN OBLIGATIONS OF PROVIDENT AND THE
SURVIVING CORPORATION AFTER CLOSING
11.1 Final Tax Returns. Newco shall timely prepare and file all
federal, state and other income tax returns required to be filed by HealthAxis
or its subsidiaries for the period from January 1, 2000 through the Closing
Date, and Provident shall fully cooperate with the Newco Corporation with
respect thereto.
11.2 Delivery of Certificates. As soon as practicable, Provident shall
deliver to the HealthAxis Shareholders certificates representing the shares of
Provident Common Stock to which the HealthAxis Shareholders are entitled in
accordance with Section 2 and the Plan.
SECTION 12: OTHER PROVISIONS
12.1 Survival. The covenants, agreements, representations and
warranties of the parties hereto contained in this Agreement shall not survive
the Closing; provided that the covenants and agreements that, by their terms,
are to have effect or be performed after the Closing Date shall survive in
accordance with their terms.
12.2 Termination. At any time before the Closing, whether or not the
Merger has been approved by HealthAxis' Shareholders or Provident's
Shareholders, this Agreement may be terminated and the Merger abandoned in
accordance with any of the following methods:
(1) By the mutual written consents of Provident and HealthAxis,
authorized by their respective boards of directors.
(2) By written notice from Provident to HealthAxis, or from HealthAxis
to Provident, if it becomes certain (for all practical purposes) that any of the
conditions to the closing obligations of the party giving such notice cannot be
25
satisfied on or before July 31, 2000, for a reason other than such party's
default, and such party is not willing to waive the satisfaction of such
condition.
(3) By written notice from Provident to HealthAxis, or from HealthAxis
to Provident, if the Closing does not occur on or before July 31, 2000 for any
reason other than a breach of this Agreement by the party giving such notice.
12.3 Publicity. Without the prior written consent of Provident,
HealthAxis shall not make any public announcement regarding the Transactions,
nor shall it in any public manner disseminate any information regarding
HealthAxis, Provident, the Merger or the other Transactions. Unless required by
Law or stock exchange regulation, in the opinion of Provident's counsel, neither
Provident nor Newco shall make any public announcement regarding the
Transactions without first consulting with HealthAxis. With respect to any
announcement that any of the parties is required by Law or stock exchange
regulation to issue, such party shall, to the extent possible under the
circumstances, review the necessity for the contents of the announcement with
the other party before issuing the announcement.
12.4 Fees and Expenses. Provident shall pay all of the fees and
expenses incurred by it and/or Newco and HealthAxis shall pay all of the fees
and expenses incurred by it in negotiating and preparing this Agreement and the
Plan (and all other contracts and documents executed in connection herewith or
therewith) and in consummating the Transactions.
12.5 Notices. All notices, consents or other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or one business day
after being sent by a nationally recognized overnight delivery service, postage
or delivery charges prepaid. Notices may also be given by prepaid facsimile and
shall be effective on the date transmitted if confirmed telephonically
immediately thereafter and within 48 hours thereafter by a signed original sent
in the manner provided in the preceding sentence. Notices to HealthAxis shall be
sent to HealthAxis' address stated on page one of this Agreement to the
attention of its president. Notices to Provident and/or Newco shall be sent to
Provident's address stated on page one of this Agreement to the attention of its
General Counsel, with a copy sent simultaneously to the same address to the
attention of its Chief Financial Officer. Any party may change its address for
notice and the address to which copies must be sent by giving notice of the new
addresses to the other parties in accordance with this Section 12.5, provided
that any such change of address notice shall not be effective unless and until
received.
12.6 Interpretation of Representations. Each representation and
warranty made in this Agreement or pursuant hereto is independent of all other
representations and warranties made by the same parties, whether or not covering
related or similar matters, and must be independently and separately satisfied.
Exceptions or qualifications to any such representation or warranty shall not be
construed as exceptions or qualifications to any other representation or
warranty.
12.7 Reliance by Provident and Newco. Notwithstanding the right of
Provident and Newco to investigate the businesses, Assets and financial
condition of the Acquired Companies, and notwithstanding any knowledge
determined or determinable by Provident and Newco as a result of such
investigation, Provident and Newco have the unqualified right to rely upon, and
have relied upon, each of the representations and warranties made by HealthAxis
in this Agreement or pursuant hereto.
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12.8 Reliance by HealthAxis. Notwithstanding the right of HealthAxis to
investigate the businesses, Assets and financial condition of Provident and
Newco, and notwithstanding any knowledge determined or determinable by
HealthAxis as a result of such investigation, HealthAxis has the unqualified
right to rely upon, and has relied upon, each of the representations and
warranties made by Provident and Newco in this Agreement or pursuant hereto.
12.9 Entire Understanding. This Agreement, together with the Exhibits
and Schedules hereto, and the Plan state the entire understanding among the
parties with respect to the subject matter hereof, and supersede all prior oral
and written communications and agreements, and all contemporaneous oral
communications and agreements, with respect to the subject matter hereof,
including without limitation all confidentiality letter agreements and letters
of intent previously entered into among some or all of the parties hereto. No
amendment or modification of this Agreement shall be effective unless in writing
and signed by the party against whom enforcement is sought.
12.10 Parties in Interest. This Agreement shall bind, benefit, and be
enforceable by and against HealthAxis, Provident and Newco and their respective
successors and assigns. No party shall in any manner assign any of its rights or
obligations under this Agreement without the express prior written consent of
the other parties.
12.11 Waivers. Except as otherwise expressly provided herein, no waiver
with respect to this Agreement shall be enforceable unless in writing and signed
by the party against whom enforcement is sought. Except as otherwise expressly
provided herein, no failure to exercise, delay in exercising, or single or
partial exercise of any right, power or remedy by any party, and no course of
dealing between or among any of the parties, shall constitute a waiver of, or
shall preclude any other or further exercise of, any right, power or remedy.
12.12 Severability. If any provision of this Agreement is construed to
be invalid, illegal or unenforceable, then the remaining provisions hereof shall
not be affected thereby and shall be enforceable without regard thereto.
12.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original
hereof, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one counterpart hereof.
12.14 Section Headings. Section and subsection headings in this
Agreement are for convenience of reference only, do not constitute a part of
this Agreement, and shall not affect its interpretation.
12.15 References. All words used in this Agreement shall be construed
to be of such number and gender as the context requires or permits.
12.16 Controlling Law. THIS AGREEMENT IS MADE UNDER, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED SOLELY THEREIN,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
27
12.17 Jurisdiction and Process. In any action between or among any of
the parties, whether arising out of this Agreement or otherwise, (a) each of the
parties irrevocably consents to the exclusive jurisdiction and venue of the
federal and state courts located in the Commonwealth of Pennsylvania, (b) if any
such action is commenced in a state court, then, subject to applicable law, no
party shall object to the removal of such action to any federal court located in
the Commonwealth of Pennsylvania, (c) each of the parties irrevocably waives the
right to trial by jury, and (d) each of the parties irrevocably consents to
service of process by first class certified mail, return receipt requested,
postage prepaid, to the address at which such party is to receive notice in
accordance with Section 12.5, and the prevailing parties shall be entitled to
recover their reasonable attorneys' fees and court costs from the other parties.
12.18 No Third-Party Beneficiaries. No provision of this Agreement or
the Plan is intended to or shall be construed to grant or confer any right to
enforce this Agreement or the Plan, or any remedy for breach of this Agreement
or the Plan, to or upon any Person other than the parties hereto, including, but
not limited to, any customer, prospect, supplier, employee, contractor,
salesman, agent or representative of any of the Acquired Companies.
12.19 Nature of Transactions. The parties intend that the Merger shall
constitute a purchase under GAAP and a tax-free reorganization under the
Internal Revenue Code of 1986, as amended.
12.20 Bankruptcy Qualification. Each representation or warranty made in
or pursuant to this Agreement regarding the enforceability of any contract shall
be qualified to the extent that such enforceability may be effected by
bankruptcy, insolvency and other similar laws or equitable principles (but not
those concerning fraudulent conveyance) generally affecting creditors' rights
and remedies.
12.21 Construction. The parties hereto agree that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not be applied in the construction or interpretation of
this Agreement or any agreements delivered in connection with the Transactions.
[Signatures Appear on Next Page]
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Witness the due execution and delivery hereof as of the date first
stated above.
XXXXXXXXXX.XXX, INC. PROVIDENT AMERICAN CORPORATION
By: /s/ Xxxxxxx Xxxxxx By: /s/ Xxxxx X. Xxxxxxx
------------------------ -------------------------------
Name: Name:
---------------------- -----------------------------
Title: Title:
---------------------- ----------------------------
HEALTHAXIS ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Name:
-----------------------------
Title:
----------------------------
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HealthAxis Affiliates
Schedule A
XXXXXXX XXXXXX
XXXXX X. XXXXXXX
XXXXX X. XXXXX
XXXXXX X. XxXXXXX, XX.
XXXXXXX X. XXXXX
XXXXXX X. XXXXXX
XXXXXXX X. XXXX
XXXXXX XXXXXX
XXXXXX X. XXXXXXX
XXXXXX DEL XXXXX
XXXXXXX XXXXXXXX
XXXXXXX X. XXXXXXXXX
UICI
1
Exhibit A
AGREEMENT AND PLAN OF MERGER
PARTIES: XXXXXXXXXX.XXX, INC.
a Pennsylvania corporation ("HealthAxis")
0000 XxXxxx Xxxx
Xxxx Xxxxxxxx, XX 00000
Provident American Corporation
a Pennsylvania corporation ("Provident")
0000 XxXxxx Xxxx
Xxxxxxxxxx, XX 00000
HEALTHAXIS ACQUISITION CORP.
a Pennsylvania corporation ("Newco")
0000 XxXxxx Xxxx
Xxxx Xxxxxxxx, XX 00000
DATE: As of January 26, 1999
BACKGROUND: Newco is a wholly owned subsidiary of Provident. HealthAxis,
Provident and Newco have entered into an Agreement and Plan of Reorganization,
dated as of this date (the "Reorganization Agreement"), that contemplates the
consolidation and merger of HealthAxis with and into Newco (the "Merger") in
accordance with the provisions of the Reorganization Agreement and the
provisions of this Agreement and Plan of Merger (this "Plan").
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and subject to the satisfaction of the terms and conditions set forth
herein and in the Reorganization Agreement, the parties hereto, intending to be
legally bound, agree as follows:
1. Merger. On the Effective Date (as defined below), HealthAxis shall be
merged with and into Newco in accordance with the provisions of this Plan and in
compliance with the Pennsylvania Business Corporation Law ("BCL" or the
"Corporation Laws"), and the Merger shall have the effect provided for in the
Corporation Laws. Newco (sometimes referred to as the "Surviving Corporation")
shall be the surviving corporation of the Merger and shall continue to exist and
to be governed by the laws of the Commonwealth of Pennsylvania. The corporate
existence and identity of Newco, with its purposes and powers, shall continue
unaffected and unimpaired by the Merger, and Newco shall remain a wholly owned
subsidiary of Provident after the Effective Date. On the Effective Date, Newco
shall succeed to and be fully vested with the corporate existence and identity
of HealthAxis, and the separate corporate existence and identity of HealthAxis
shall cease.
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2. Name. The name of the Surviving Corporation shall be XxxxxxXxxx.xxx,
Inc.
3. Charter. Immediately after the Merger, the Articles of Incorporation
of the Surviving Corporation shall be that of Newco immediately before the
Merger.
4. Bylaws. Immediately after the Merger, the Bylaws of the Surviving
Corporation shall be those of Newco immediately before the Merger.
5. Directors. Immediately after the Merger, the directors of the
Surviving Corporation shall be the following persons, who shall serve in
accordance with the Bylaws of the Surviving Corporation:
Xxxxxxx Xxxxxx
Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. XxXxxxx, Xx.
Xxxxxxx X. Xxxx
Xxxxxx X. Xxxxxxx
6. Officers. Immediately after the Merger, the officers of the
Surviving Corporation shall be the following persons, who shall serve in
accordance with the Bylaws of the Surviving Corporation:
Xxxxxxx Xxxxxx President and Chief Executive Officer
Xxxxx X. Xxxxxxx Chairman
Xxxxxxx X. Xxxxx Treasurer and Chief Financial Officer
Xxxxxx Xxxxxx Executive Vice President - Corporate Development
Xxxxxx X. Xxxxxxx Chief Operating Officer
Xxxxxx del Xxxxx Senior Vice President - Consumer Group
Xxxxxxx X. Xxxxxxxxx Secretary
7. Conversion into Provident Stock. Subject to the possible adjustment
described in Section 9 of this Plan, on the Effective Date, each share of common
stock, no par value per share, of HealthAxis ("HealthAxis Common Stock") issued
and outstanding immediately before the Effective Date (except for Dissenting
Shares, as defined in Section 14 of this Plan) shall, by virtue of the Merger
and without any action on the part of the holder thereof, be automatically
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converted into the right to receive 1.127 shares (the "Exchange Ratio") of
common stock of Provident, $0.10 par value per share ("Provident Stock").
Prior to the Effective Date, all outstanding shares of HealthAxis Series
A Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C
Convertible Preferred Stock and Series D Preferred Stock (collectively,
"HealthAxis Convertible Preferred Stock") shall have been converted into
HealthAxis Common Stock in accordance with their terms.
8. Cancellation. On the Effective Date, all outstanding shares of
HealthAxis Common Stock owned by Provident or Newco or any subsidiary thereof
shall, by virtue of the Merger and without any action on the part of the holders
thereof, no longer be outstanding and shall be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such shares of
HealthAxis Common Stock shall thereafter cease to have any rights with respect
to such shares of HealthAxis Common Stock and no consideration shall be
delivered in exchange therefor.
9. Possible Adjustment due to Recapitalization. Subject to the
conditions in the Agreement and Plan of Reorganization if, between the date of
the Reorganization Agreement and the Effective Date, there is a change in the
number of issued and outstanding shares of Provident Stock resulting from (i) a
stock split, reverse stock split, stock dividend, reclassification, exchange of
shares or similar recapitalization, or (ii) purchases or awards of stock, or
similar transactions under Provident's stock option, purchase and award plans,
then the number of shares of Provident Stock into which the respective shares of
HealthAxis Common Stock are converted, and any other applicable amounts set
forth in this Plan, shall be appropriately adjusted. Subject to the conditions
in the Agreement and Plan of Reorganization, the Exchange Ratio set forth in
Section 7 and such other amounts shall not be adjusted as a result of any other
changes in the number of issued and outstanding shares of Provident Stock, such
as changes resulting from acquisitions or offerings or changes resulting from
exercises of employee stock options under Provident's stock option, purchase and
award plans.
10. No Fractional Shares. No fractional shares of Provident Stock shall
be issued as a result of the Merger. In lieu of the issuance of fractional
shares, the number of shares of Provident Stock to be issued to each shareholder
of HealthAxis in accordance with this Plan shall be rounded down to the nearest
whole number of shares of Provident Stock and any such shareholder who would
otherwise be entitled to receive a fraction of a share of Provident Stock (after
aggregating all fractional shares of Provident Stock issuable to such
shareholder) shall, in lieu of such fraction of a share and, upon surrender of
such shareholder's certificate(s) representing shares of HealthAxis Common
Stock, be paid in cash the dollar amount (rounded to the nearest whole cent),
without interest, determined by multiplying such fraction by the closing sale
price of a share of Provident Stock as quoted on the Nasdaq National Market on
the Effective Date.
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11. Stock Options, Warrants and Other Rights. HealthAxis' 1998 Stock
Option Plan (the "Stock Plan") and all options to acquire shares of HealthAxis
Common Stock that are issued and outstanding under the Stock Plan immediately
before the Effective Date of which options to purchase 3,024,971 are outstanding
on the date hereof, 300,000 shares of Common Stock issuable upon the exercise of
warrants granted to AOL; 63,000 shares of Common Stock issuable upon the
exercise of the warrants granted to ING Baring Xxxxxx Xxxx LLC; up to 150,000
shares of Common Stock issuable upon the exercise of warrants granted to
Aetna/US HealthCare; 157,500 shares of Common Stock issuable upon the exercise
of warrants granted to UICI; up to 50,000 shares of Common Stock issuable upon
the exercise of the warrant granted to First Health; 75,000 shares of Series D
Preferred Stock which is subject to a proposed amendment to convert the Series D
Preferred Stock to Common Stock issuable upon the exercise of warrants granted
to Intel Corp.; up to 330,000 shares of Common Stock issuable upon the exercise
of warrants granted to Blue Cross/Blue Shield; and 426,930 shares of Common
Stock subject to options to be issued as a result of the conversion of options
granted pursuant to the Insurdata 1999 Stock Option Plan immediately before the
Effective Date (collectively, the "Options"), shall continue in effect, as an
option plan of Provident or as options, warrants or rights issued by Provident,
as the case may be, in accordance with the terms and conditions by which they
are governed immediately before the Effective Date, subject to the adjustments
set forth in the next sentence. On the Effective Date, each Option or Warrant
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be automatically adjusted to provide that (a) the number and type of
shares issuable upon exercise of such Option or Warrant shall be that number of
shares of Provident Stock (rounded down to the nearest whole number of shares)
equal to the number of shares of HealthAxis Common Stock issuable upon exercise
of such Option or Warrant immediately before the Effective Date, multiplied by
the Exchange Ratio, and (b) the exercise price per share of Provident Stock
under such Option or Warrant shall be that amount (rounded up to the nearest
whole cent) equal to the exercise price per share of HealthAxis Common Stock
under such Option immediately before the Effective Date, divided by the Exchange
Ratio.
12. HealthAxis Stock held by HealthAxis. On the Effective Date, any
shares of HealthAxis Common Stock and HealthAxis Convertible Preferred Stock
(collectively, "HealthAxis Stock") that are held by HealthAxis (as treasury
shares) immediately before the Effective Date shall, by virtue of the Merger and
without any action on the part of the holder thereof, be automatically canceled.
13. Exchange Procedures for HealthAxis Stock. Provident shall designate
its transfer agent to act as the "Exchange Agent" under this Plan. As soon as is
practicable after the Effective Date, Provident or the Exchange Agent shall mail
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or deliver, to each record holder of an outstanding certificate that immediately
before the Effective Date represented shares of HealthAxis Stock, instructions
for use in effecting the surrender of such certificate to the Exchange Agent.
Upon the surrender of such certificate to the Exchange Agent in accordance with
such instructions, the Exchange Agent shall exchange such certificate for a new
certificate representing such number of shares of Provident Stock into which the
shares of HealthAxis Stock represented by such certificate have been converted
in accordance with this Plan (and cash in lieu of any fractional share of
HealthAxis Stock), which shall be promptly delivered to the holder thereof (or
in accordance with instructions provided by the holder thereof). If applicable,
such certificates shall be accompanied by any distributions due with respect to
shares of Provident Stock that were paid to Provident's shareholders of record
as of a date between the Effective Date and the date of distribution of such
certificates. Until surrendered in accordance with the foregoing, each
outstanding certificate that immediately before the Effective Date represented
shares of HealthAxis Stock shall be deemed to evidence ownership of the number
of shares of Provident Stock into which the shares of HealthAxis Stock
represented by such certificate have been converted in accordance with this
Plan.
14. Dissenting Shares.
(a) Notwithstanding any other provisions of this Plan to the contrary,
shares of HealthAxis Stock which are outstanding immediately prior to the
Effective Date and which are held by shareholders of HealthAxis who shall have
not voted in favor of the Merger or consented thereto in writing and who shall
have demanded properly in writing appraisal for such shares (collectively, the
"Dissenting Shares") in accordance with Section 1571, et seq., of the BCL (each
a "Dissenting shareholder" and collectively, the "Dissenting shareholders")
shall not be converted into or represent the right to receive any Provident
Stock, such shareholders being entitled to receive payment of the appraised
value of such shares of Provident Stock held by them in accordance with the
provisions of such Section 1571, et seq., of the BCL, except that all Dissenting
Shares held by shareholders who shall have failed to perfect or shall have
effectively withdrawn or lost their rights to appraisal of such shares of
HealthAxis Stock in accordance with the provisions of Section 1571, et seq., of
the BCL shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Date, for the right to receive Provident Stock
in accordance with Section 7 hereof, without interest thereon.
(b) HealthAxis shall give Provident (i) prompt notice of any written
demands for payment or appraisal of any Dissenting Shares pursuant to Section
1571, et seq., of the BCL, attempted withdrawals of such demands, and any other
instruments served pursuant to the BCL and received by HealthAxis relating to
shareholders' rights to dissent and (ii) the opportunity to participate, at its
expense, in all negotiations and proceedings with respect to demands for payment
or appraisal under Section 1571, et seq., of the BCL. HealthAxis shall not,
5
without the prior written consent of Provident, voluntarily make any payment
with respect to any demands for payment or appraisals of the capital stock of
HealthAxis, offer to settle or settle any demands.
15. Effective Date. As used in this Plan, the "Effective Date" shall
mean the date upon which this Plan and a proper Articles of Merger for the
Merger have been duly signed and filed with the proper officials of the
Commonwealth of Pennsylvania.
16. Entire Understanding. This Plan, together with the Reorganization
Agreement (and the Exhibits and Schedules thereto) by and between Provident,
Newco and HealthAxis, states the entire understanding among the parties hereto
with respect to the subject matter hereof and supersedes all prior oral and
written communications and agreements, and all contemporaneous oral
communications and agreements, with respect to the subject matter hereof. No
amendment or modification of this Plan, and no waiver of any provision of this
Plan, shall be effective unless in writing and signed by the party against whom
enforcement is sought. HealthAxis may agree to any amendment or supplement to
this Plan, or a waiver of any provision of this Plan, either before or after the
approval of HealthAxis' shareholders is obtained (as contemplated by the
Reorganization Agreement) and without seeking further shareholder approval, so
long as such amendment, supplement or waiver does not result in a decrease in
the Exchange Ratio set forth in Section 7 of this Plan, or have a material
adverse effect on HealthAxis' shareholders. The obligations of the parties under
this Plan shall be subject to all of the terms and conditions of the
Reorganization Agreement. If the Reorganization Agreement is terminated in
accordance with its terms, then this Plan shall simultaneously terminate, and
the Merger shall be abandoned without further action by the parties hereto.
17. Parties in Interest. This Plan shall bind, benefit and be
enforceable by and against the parties hereto and their respective successors
and assigns. No party hereto shall in any manner assign any of its rights or
obligations under this Plan without the express prior written consent of the
other parties. Nothing in this Plan or the Reorganization Agreement is intended
to confer, or shall be deemed to confer, any rights or remedies upon any persons
other than the parties hereto and their respective shareholders and directors.
18. Severability. If any provision of this Plan is construed to be
invalid, illegal or unenforceable, then the remaining provisions hereof shall
not be affected thereby and shall be enforceable without regard thereto.
19. Counterparts. This Plan may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original
hereof, and it shall not be necessary in making proof of this Plan to produce or
account for more than one counterpart hereof.
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20. Section Headings. Section and subsection headings in this Plan are
for convenience of reference only, do not constitute a part of this Plan, and
shall not affect its interpretation.
21. References. All words used in this Plan shall be construed to be of
such number and gender as the context requires or permits.
[Signatures Appear on Next Page]
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IN TESTIMONY WHEREOF, each undersigned corporation has caused this
Agreement and Plan of Merger to be signed by a duly authorized officer as of the
date first stated above.
XXXXXXXXXX.XXX, INC.
By: /s/ Xxxxxxx Xxxxxx
-------------------
Name:
Title:
PROVIDENT AMERICAN CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
-----------------------
Name:
Title:
HEALTHAXIS ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------
Name:
Title:
Exhibit B
Shareholders' Agreement
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (this "Agreement"), dated as of ________,
2000, is by and among Provident American Corporation, a Pennsylvania corporation
(the "Company"), and the Persons (as defined herein) set forth on the signature
pages hereto.
RECITALS
WHEREAS, the Company, HealthAxis Acquisition Corp., a Pennsylvania
corporation ("Newco"), XxxxxxXxxx.xxx Inc., a Pennsylvania corporation
("HealthAxis"), and UICI, a Delaware corporation ("UICI"), have entered into an
Agreement and Plan of Merger, dated as of January 26, 2000 (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;
WHEREAS, in consideration of the execution and delivery of this
Agreement by the Company, UICI is agreeing to terminate that certain
Shareholders' Agreement dated as of January 7, 2000 by and among HealthAxis, the
Company, UICI and the other parties thereto; 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:
"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.
"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.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"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 who is a successor or assign or subsequent holder as contemplated
by Section 13.
"Nominee" has the meaning ascribed to such term in Section 2(a).
"Person" means any individual, corporation, proprietorship, firm,
partnership, limited partnership, limited liability company, trust, association
or other entity.
"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.
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 parties hereto 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
(Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxx and Xxxxxx X. Xxxxxxx being the initial UICI
Nominees); (ii) the Company (acting by the vote of a majority of the members of
the Board that are not nominated by UICI pursuant to clause (i) or agreed to by
UICI pursuant to clause (iii)) shall be entitled to nominate three (3) Nominees
(Xxxxxxx Xxxxxx, Xxxxx X. Xxxxxxx and Xxxxxx X. XxXxxxx, Xx. being the initial
Provident Nominees); and (iii) UICI and the Company (acting by the vote of a
majority of the members of the Board that are not nominated by UICI pursuant to
2
clause (i) or agreed to by UICI pursuant to clause (iii)) shall together agree
mutually to nominate three (3) Nominees (with Xxxxx Xxxxx being the initial
Nominee agreed to by UICI and the Company). The Company and 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 and causing the vote of all shares of stock of the Company Beneficially
Owned by such Holder, 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 party that designated
such director shall notify the Company and the other parties hereto, 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 of the Company and UICI
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 the Company.
(f) So long as this Section 2 remains in effect, the Board nomination
rights of UICI hereunder shall supersede any rights UICI may have to nominate
Board members under any other agreement. After such time as UICI is no longer
entitled under this Section 2 to nominate persons to serve on the Board, the
rights of UICI under any such agreement to nominate Board members shall be
reinstated.
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(g) The rights of UICI under this Section 2 shall continue in effect
unless and until UICI Beneficially Owns less than 20% of the Common Stock of the
Company on a Fully Diluted Basis.
SECTION 3. 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
_______________ 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 4. 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 the calculation of the amount and the
amortization period of all goodwill and other intangibles recorded by the
Company in connection with the merger of Insurdata Incorporated, a Delaware
corporation, with and into HealthAxis, provided such calculation shall be
consistent with generally accepted accounting principles and approved by the
Company's independent auditors.
SECTION 5. Transfer Option.
(a) Transfer Option. Subject to the terms and conditions in this
Section 5, the Company (acting by the vote of a majority of the members of the
Board that are not nominated by UICI pursuant to clause (i) of Section 2(a) or
agreed to by UICI pursuant to clause (iii) of Section 2(a)) shall have the right
(the "Transfer Option") to cause UICI to transfer to one or more third parties
unaffiliated with UICI, up to 1,414,385 shares of Common Stock owned by UICI at
a per share price equal to the greater of (i) $18.63 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 date hereof and ending on the first to occur of the following
events: (i) on January 7, 2003; (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 $23.96 per share 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
4
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 5(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 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. The Company may elect to cause the transfer of shares
pursuant to this Section 5(c) in a private placement, in which case the
provisions of Section 5(c)(i) shall apply, or may elect to cause the shares to
be sold in a public offering, in which case the provisions of Section 5(c)(ii)
shall apply.
(i) Private Placement. Upon any exercise of the Transfer
Option in accordance with this Section 8(c) as to which the Company has
elected to cause a transfer of shares in a private placement, the
Company shall, 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;
5
(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.
(ii) Public Offering. Upon the exercise of the Transfer Option
in accordance with this Section 5(c) as to which the Company has
elected to cause the shares to be sold in a public offering, 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;
6
(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;
(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 UICI, 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;
7
(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 5 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 6. 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.
SECTION 7. 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 8. 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 9. 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 10. 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
8
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 11. 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 12. 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 and 5 may be made upon
the written agreement of both UICI and the Company 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
effected in accordance with this Section 12 shall be binding upon the Company
and each Holder of Securities. Any determination by the Company pursuant to this
Section 12 shall be made by the Company acting by the vote of a majority of the
members of the Board that are not nominated by UICI pursuant to clause (i) of
Section 2(a) or agreed to by UICI pursuant to clause (iii) of Section 2(a).
SECTION 13. 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 14. 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.
9
SECTION 15. 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 16. Entire Understanding. This Agreement 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 17. 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 18. 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 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 19. 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 20. 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 21. 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]
10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
UICI
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
PROVIDENT AMERICAN CORPORATION
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
--------------------------------------
Xxxxxxx Xxxxxx
--------------------------------------
Xxxxx X. Xxxxxxx
EXHIBIT A
Common Stock on a Fully Diluted Basis
Number of Shares
of Common Stock Percentage of Shares of
Name and Beneficially Owned Common Stock Outstanding
Notice Address on a Fully Diluted Basis on a Fully Diluted Basis
-------------- ------------------------ ------------------------
Provident American Corporation
0000 XxXxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxxxx Xxxxx & Xxxxxxx
000 Xxxxxxx Xxxxxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
UICI
0000 XxXxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxx
Telephone: (000)000-0000
Facsimile: (000)000-0000
With a copy to:
Xxxxx, Xxxxx & Xxxxx
000 X. XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxxx
Telephone: (000)000-0000
Facsimile: (000) 000-0000
Number of Shares
of Common Stock Percentage of Shares of
Name and Beneficially Owned Common Stock Outstanding
Notice Address on a Fully Diluted Basis on a Fully Diluted Basis
-------------- ------------------------ ------------------------
Xxxxxxx Xxxxxx
c/o XxxxxxXxxx.xxx, Inc.
0000 XxXxxx Xxxx
Xxxx Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxxxxx
c/o XxxxxxXxxx.xxx, Inc.
0000 XxXxxx Xxxx
Xxxx Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxxx X. Xxxxxxx
c/o HealthAxis Inc.
0000 XxXxxx Xxxx
Xxxx Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxxxx Xxxxx & Xxxxxxx
000 Xxxxxxx Xxxxxxxx Xxxxxx
Xxxx xx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Exhibit C
January 26, 2000
Provident American Corporation
0000 XxXxxx Xxxx
Xxxxxxxxxx, XX 00000
Gentlemen:
This letter is being furnished in accordance with Section 9.1 of the
Agreement and Plan of Reorganization dated January 26, 2000 ("Reorganization
Agreement") by and among XxxxxxXxxx.xxx, Inc., a Pennsylvania corporation
("HealthAxis"), Provident American Corporation, a Pennsylvania corporation
("Provident") and HealthAxis Acquisition Corp., a Pennsylvania corporation
("Newco"), and related Agreement and Plan of Merger dated January 26, 2000
("Merger Agreement") by and among HealthAxis, Provident and Newco, pursuant to
which (i) HealthAxis will be merged with and into Newco with Newco surviving the
merger as a wholly-owned subsidiary of Provident (the "Merger"), and (ii) the
shareholders of HealthAxis will receive for each share of common stock, no par
value per share, of HealthAxis ("HealthAxis Common Stock") issued and
outstanding immediately before the Effective Date shares of common stock of
Provident, $0.10 par value per share ("Provident Stock"), in accordance with the
Merger Agreement. Any shares of Provident Stock that I receive, directly or
indirectly, pursuant to the Merger are referred to herein as the "New Shares".
Capitalized terms used in this letter have the meaning ascribed to them in the
Reorganization Agreement and the Merger Agreement unless otherwise stated
herein.
In connection therewith, and intending to be legally bound, I hereby
represent, warrant, covenant and agree as follows:
1. I own beneficially or of record, in the capacities indicated, the
number of shares of HealthAxis Stock set forth on Appendix A attached hereto
(the "Existing Shares"). Any shares of HealthAxis Stock that I acquire, directly
or indirectly, after the date hereof shall be deemed Existing Shares for the
purposes of this Agreement.
2. I have been advised that I may be deemed to be an "affiliate" of
HealthAxis, as that term is defined for purposes of Rule 145 of the Rules and
Regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act").
3. I shall not make any sale, transfer or other disposition of the
Provident Stock in violation of the Act or the Rules and Regulations.
1
4. I have read carefully this letter and discussed applicable
limitations upon my ability to sell, transfer or otherwise dispose of the New
Shares to the extent I believed necessary with my counsel or counsel for
HealthAxis.
5. I have been advised that the issuance of the New Shares to me
pursuant to the Merger will be registered with the Commission under the Act on a
Registration Statement on Form S-4. However, I have also been advised that,
since at the time the Merger will be submitted for a vote of the stockholders of
HealthAxis and Provident, I may be deemed to have been an affiliate of
HealthAxis and that any subsequent distribution by me of the New Shares has not
been registered under the Act, I may not sell, transfer or otherwise dispose of
the New Shares issued to me in the Merger unless (i) such sale, transfer or
other disposition has been registered under the Act, (ii) such sale, transfer or
other disposition is made in conformity with the volume and other limitations of
Rule 145 promulgated by the Commission under the Act or (iii) in the opinion of
counsel reasonably acceptable to Provident, such sale, transfer or other
disposition is otherwise exempt from registration under the Act.
6. I understand that Provident may give stop transfer instructions to
its transfer agent with respect to the New Shares and that Provident reserves
the right to place on the certificates for the New Shares issued to me, or any
substitutions therefor, a legend stating in substance:
"The securities represented by this certificate have been
issued in a transaction to which Rule 145 promulgated under
the Securities Act of 1933 applies and may only be sold or
otherwise transferred in compliance with the requirements of
Rule 145 or pursuant to a registration statement under said
Act or an exemption from such registration."
7. Execution of this letter should not be considered an admission that
I am an affiliate of HealthAxis as described in paragraph 2 of this letter, nor
as a waiver of any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter.
8. This Agreement shall be binding on me, my heirs and my personal
representatives and shall be enforceable by Provident and its respective
successors and assigns. This Agreement may not be amended, supplemented, or
waived or terminated except by a written instrument executed by me and
Provident. THIS AGREEMENT IS MADE UNDER, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED SOLELY THEREIN, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
9. I hereby irrevocably consent to the exclusive jurisdiction and venue
of the federal and state courts in Philadelphia, Pennsylvania and irrevocably
consent to service of process by first class mail, return receipt requested,
postage pre-paid, to my address set forth below. The prevailing party in any
action shall be entitled to recover reasonable legal fees and costs from the
other party.
10. If any provision of this Agreement is construed to be invalid,
illegal or unenforceable as to any party or generally, then that provision shall
be enforceable by the other parties and the remaining provisions hereof shall
not be affected thereby and shall be enforceable without regard thereto.
2
11. I have carefully read this letter, the Reorganization Agreement,
and the Merger Agreement, and, to the extent I felt necessary, discussed with my
counsel or counsel for Provident the requirements of this letter and its impact
upon my ability to acquire or dispose of, as the case may be, the New Shares or
shares of Provident Stock or HealthAxis Stock or securities convertible into
such shares.
Very truly yours,
----------------------------------
(Signature)
----------------------------------
Print Name
----------------------------------
Xxxxxx Xxxxxxx
----------------------------------
Xxxx, Xxxxx and Zip Code
3
APPENDIX A
Number and Type of HealthAxis Stock Name or Capacity in which Owned
Owned Beneficially or of Record Beneficially or of Record
----------------------------------- -------------------------------
