OPTION/WARRANT NO.:
STOCK OPTION/WARRANT AGREEMENT
THIS STOCK OPTION/WARRANT AGREEMENT ("Agreement") dated as of the 1st
day of January, 1996, between PROVIDENT AMERICAN CORPORATION, a Pennsylvania
corporation ("PAMCO") and XXXXXXX X. FIELD, an individual ("Field").
BACKGROUND
A. PAMCO's wholly-owned life insurance subsidiary, Provident Indemnity
Life Insurance Company ("PILIC"), and Field have entered into a marketing and
consulting agreement with respect to the marketing of certain life and health
insurance programs/products of PILIC by Field (the "Marketing Agreement").
B. In connection with the Marketing Agreement, PAMCO has agreed to
issue options to Field on an annual basis to purchase shares of PAMCO common
stock, $.10 par value per share (the "PAMCO Stock"), based upon the amount of
annualized health insurance premiums realized by PILIC as a result of the sale
of its products "THE PROVIDENT SOLUTION" and "HEALTHQUEST" ("Annualized
Premium").
NOW THEREFORE, in consideration of the mutual covenants herein
contained, and intending to be legally bound hereby, the parties agree as
follows:
1. Grant of the Option. Subject to the terms and conditions set
forth in this Agreement and any adjustment required pursuant to Paragraph 5
hereof, PAMCO grants to Field an option (the "Option") to purchase shares of
PAMCO Stock (the "Option Shares") at a price equal to the Market Price of the
PAMCO Stock as of the applicable date, as follows:
a. For the one-year period commencing on January 1, 1996 and
ending on December 31, 1996, provided that PILIC has realized at least $35
million of Annualized Premium (as defined herein), PAMCO agrees to grant to
Field as of December 31, 1996 an Option to purchase 100,000 shares of PAMCO
Stock at the Market Price on January 1, 1996, subject to adjustment as provided
in Paragraph 5 hereof. However, in the event that PILIC has not realized at
least $35 million of Annualized Premium which is in force on December 31, 1996,
no Options shall be issued for the year 1996.
b. For the one-year period commencing on January 1, 1997 and
ending on December 31, 1997, provided that PILIC has realized at least $45
million of new Annualized Premium (as defined herein), PAMCO agrees to grant to
Field as of December 31, 1997 an Option to purchase 100,000 shares of PAMCO
Stock at the Market Price on January 1, 1997, subject to adjustment as provided
in Paragraph 5 hereof. However, in the event that PILIC has not realized at
least $45 million of new Annualized Premium which is in force on December 31,
1997, no Options shall be issued for the year 1997.
c. For the one-year period commencing on January 1, 1998 and
ending on December 31, 1998, provided that PILIC has realized at least $50
million of new Annualized Premium (as defined herein), PAMCO agrees to grant to
Field as of December 31, 1998 an Option to purchase 100,000 shares of PAMCO
Stock at the Market Price on January 1, 1998, subject to adjustment as provided
in Paragraph 5 hereof. However, in the event that PILIC has not realized at
least $50 million of new Annualized Premium which is in force on December 31,
1998, no Options shall be issued for the year 1998.
d. The parties agree that the Annualized Premium amounts set
forth in this Paragraph 1 have been specifically negotiated, that partial or
substantial performance shall not be sufficient for the award of an Option, and
that an Option shall only be issued in the event that the respective targeted
Annualized Premium has been produced and is in force on December 31 of that
year.
As used herein, the term "Market Price" shall mean, with respect to one share
of PAMCO Stock at any date, the average of the daily closing prices for the 30
consecutive business days before the day in question, as adjusted for any stock
dividend, split, combination, or reclassification that took effect during such
30 business day period, or, in case no sales took place on any day in question
during such 30 business day period, the last bid price on such day, in either
case on the principal national securities exchange on which the PAMCO Stock is
then listed or admitted to trading, or on the National Association of
Securities Dealers Automated Quotations System ("NASDAQ"), National Market
System, or, if the PAMCO Stock is not listed or admitted for trading on any
such exchange or on the NASDAQ National Market System on any day in question,
then such price as shall be deemed to be the last bid price quoted on the
NASDAQ interdealer quotation system on such day, or, if the PAMCO Stock is not
listed or admitted for trading on the NASDAQ interdealer quotation system, then
the price shall be deemed to be the last reported bid price on such day as
reported by the National Quotation Bureau, Inc., provided, however, that if the
PAMCO Stock is not traded in such matter that the quotations referred to in this
subsection are available for the period required hereunder, the Market Price
shall be determined in good faith by at least a majority of the members of the
Board of Directors of PAMCO.
2. Conditions and Exercise of the Option.
a. The Options to be granted hereunder shall become
exercisable by Field as of the date of the grant, provided that as of such date
the Annualized Premium for which the Options were granted is then in force. If
the Annualized Premium therefor is not then in force, then the Option with
respect to such Annualized Premium shall be terminated and of no further force
or effect.
b. Subject to the terms and conditions hereof, the Option or
any part thereof may be exercised in accordance with the terms hereof, in whole
or in part, by written notice to PAMCO.
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c. The notice of exercise shall specify the number of Option
Shares to be purchased, shall acknowledge and agree that such Option Shares are
being purchased for investment and not for distribution or resale, and shall be
accompanied by payment in cash or by certified or bank cashier's check payable
to the order of PAMCO, for the aggregate price of the Option Shares being
purchased. Such exercise shall be effective upon the actual receipt of such
written notice and payment to PAMCO.
d. Field shall have no rights or privileges as a shareholder
of PAMCO with respect to the Option Shares then being purchased until the date
on which a stock certificate representing such Option Shares has been issued to
Field.
e. Upon the partial exercise by Field of any Option herein
granted, upon written notification to PAMCO and the surrender of the Option to
PAMCO, Field shall be entitled to be issued an Option to purchase such lesser
number of Option Shares as Field shall request. The Option granted hereunder
shall expire with respect to any Option Shares as to which Field has not
exercised the Option on or before the Expiration Date (as defined below).
3. Termination of the Option. Unless sooner exercised, the
Options granted hereunder shall expire at 5:00 P.M. five years from the date of
issue (the "Expiration Date").
4. Transfer of the Option. After the date on which Options are
to be granted pursuant to the provisions of Paragraph 1 hereof, the Options
which have been granted shall be freely transferable by Field, to any person or
entity at any time, without condition, by presentation of the Option to PAMCO,
properly endorsed for transfer. In the event that the Option is being
transferred, the owner agrees by holding this Option that the Option, when
endorsed in blank, may be deemed negotiable and that the owner, when this Option
shall have been endorsed, may be treated by PAMCO and all other persons dealing
with the Option as the absolute owner thereof for any purpose, and as the party
entitled to exercise the rights represented by this Option, or to the transfer
thereof on the books of PAMCO, any notice to the contrary notwithstanding. The
form of this Option is exchangeable upon the surrender thereof by Field to PAMCO
for new Options of like tenor representing in the aggregate the right to
purchase the number of Option Shares purchasable under the Option being
exchanged, each such new Option to represent the right to purchase such number
of Option Shares as shall be designated by Field at the time of such surrender,
but not to exceed in the aggregate the number of Option Shares subject hereto.
5. Adjustment. If the number of issued and outstanding shares of
PAMCO Stock changes at any time on or before the Expiration Date as a result of
any recapitalization, stock split, stock dividend, or other change in the
capital structure of PAMCO, the number of Option Shares covered by the Option
shall be increased or decreased in direct proportion to such change in the
number of shares of issued and outstanding PAMCO Stock, and the per share
purchase price for such Option Shares shall be adjusted accordingly so that it
is the substantial equivalent of the purchase price prior to such change.
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6. Registration. If the registration or qualification of the
Shares subject to the Option under any federal or state law or the consent or
approval of any governmental regulatory body or a national stock exchange is
necessary as a condition of or in connection with the purchase or issuance of
such Shares, PAMCO shall not be obligated to issue or deliver the certificates
representing the Shares as to which the option has been exercised unless and
until such registration, qualification, consent, or approval shall have been
effected or obtained.
7. Field's Obligation. Field, by acceptance of this Agreement,
expressly acknowledges and agrees that: (1) Field will be solely responsible for
all taxes levied by or under federal, state, or municipal authority, to which
Field may be or become subject arising out of or resulting from receipt of any
Option, holding or exercise thereof or holding, sale, transfer, or other
disposition of shares acquired on such exercise; and (2) Field will indemnify
PAMCO and its affiliates, and hold such person harmless, of, from, and against
any and all loss, damage, obligation or liability, and all costs and expenses
(including attorneys' fees) arising as a result of the breach by Field of his
obligations set forth in subsection (1) above.
8. Miscellaneous.
a. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be given by confirmed telecopy
or registered mail addressed as follows:
If to PAMCO: Provident American Corporation
Attention: Xx. Xxxxx X. Xxxxxxx
0000 XxXxxx Xxxx, X.X. Xxx 000
Xxxxxxxxxx, XX 00000
If to Field: Xxxxxxx X. Field
000 Xxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
or such other address as may from time to time be provided by either party.
b. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to its rules on conflicts of law.
c. Integration; Modification. This Agreement constitutes the
entire agreement between PAMCO and Field regarding the subject matter hereof,
and supersedes all prior negotiations and agreements, whether oral or written,
between PAMCO and Field with respect to the subject matter of this Agreement.
This Agreement may not be modified except by a written agreement signed by
PAMCO and Field.
d. Severability. In the event of the invalidity or
unenforceability of any part or provision of this Agreement, such invalidity or
unenforceability shall not affect the validity or enforceability of any other
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part or provision of this Agreement, and the remainder of this Agreement shall
continue in full force and effect in accordance with its terms.
e. Binding Effect. This Agreement shall be binding upon PAMCO
and Field and shall inure to their benefit, and their respective heirs, legal
representatives, successors, and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have placed their hands and
seals as of the day and year first above-written.
PROVIDENT AMERICAN CORPORATION
Attest:
______________________________ By: __________________________________
X. X. Xxxxxxxx, Xx., Secretary Xxxxx X. Xxxxxxx, President
AGREED AND ACCEPTED THIS ______ DAY OF
__________________________, 1996
FIELD:
________________________________(SEAL)
XXXXXXX X. FIELD
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PURCHASE AGREEMENT
To:_____________________________ Date:__________________________________
The undersigned, pursuant to the provisions of the attached Option,
agrees to purchase ________________________ (_____________) Shares of the
Common Stock, $0.10 par value, of Provident American Corporation, and makes
payment herewith in full therefore at the price per share provided by such
Option.
Signature:_____________________________
Address: ______________________________
______________________________
_____________________________________________________________________________
ASSIGNMENT
FOR VALUE RECEIVED, _________________________ hereby sells, assigns,
and transfers all of the rights of the undersigned under the Option attached
hereto, with respect to the number of Shares of Provident American Corporation
covered by such Option to:
NAME OF ASSIGNEE ADDRESS NO. OF OPTION SHARES
---------------- ------- --------------------
Date:________________ Signature:____________________
Witness:_________________________
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