AGREEMENT AND
PLAN OF MERGER
between
PROVIDENT AMERICAN CORPORATION,
▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.,
UICI
and
INSURDATA INCORPORATED
dated as of December 6, 1999
TABLE OF CONTENTS
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Page
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ARTICLE I
THE MERGER...................................................2
1.1 The Merger......................................................................................2
1.2 Closing.........................................................................................2
1.3 Effective Time..................................................................................2
1.4 Effects of the Merger...........................................................................2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE MERGER PARTIES; MERGER CONSIDERATION;
EXCHANGE OF CERTIFICATES; OPTIONS........................................3
2.1 Effect of the Merger on Capital Stock...........................................................3
2.2 Dividends, Etc..................................................................................4
2.3 Stock Options...................................................................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES..........................................6
3.1 Representations and Warranties of Insurdata.....................................................6
3.2 Representations and Warranties of HealthAxis...................................................29
3.3 Representations and Warranties of UICI.........................................................49
3.4 Representations and Warranties of Provident....................................................51
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS..................................52
4.1 Covenants of Insurdata and HealthAxis..........................................................52
4.2 Actions of Parties.............................................................................56
ARTICLE V
ADDITIONAL AGREEMENTS.............................................56
5.1 Securities Offering............................................................................56
5.2 Contract and Regulatory Approvals..............................................................56
5.3 HSR Filings....................................................................................57
5.4 Access to Information; Confidentiality.........................................................57
5.5 Fees and Expenses..............................................................................58
5.6 Transition Agreement...........................................................................58
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5.7 Indemnification................................................................................58
5.8 Reasonable Best Efforts........................................................................60
5.9 Public Announcements...........................................................................60
5.10 Cooperation....................................................................................60
5.11 Benefit Plans..................................................................................60
5.12 Tax-Free Reorganization........................................................................60
5.13 UICI Voting of Shares..........................................................................60
5.14 Provident Voting of Shares.....................................................................61
5.15 Tax Matters....................................................................................61
5.16 Technology Outsourcing Agreement...............................................................63
ARTICLE VI
CONDITIONS PRECEDENT..............................................64
6.1 Conditions to Each Party's Obligation to Effect the Merger.....................................64
6.2 Conditions to Obligations of HealthAxis and Provident..........................................65
6.3 Conditions to Obligation of Insurdata and UICI.................................................66
ARTICLE VII
TERMINATION AND AMENDMENT...........................................67
7.1 Termination....................................................................................67
7.2 Effect of Termination..........................................................................69
7.3 Amendment......................................................................................69
7.4 Extension; Waiver..............................................................................69
ARTICLE VIII
GENERAL PROVISIONS..............................................70
8.1 Nonsurvival of Representations, Warranties and Agreements......................................70
8.2 Notices........................................................................................70
8.3 Interpretation.................................................................................72
8.4 Counterparts...................................................................................72
8.5 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership............................72
8.6 Governing Law..................................................................................72
8.7 Assignment.....................................................................................72
8.8 Enforcement....................................................................................73
8.9 Severability...................................................................................73
8.10 No Presumption Against Drafter.................................................................73
Exhibits
--------
Exhibit A --Amended and Restated Articles of Incorporation of HealthAxis
Exhibit B --Amended and Restated Bylaws of HealthAxis
Exhibit C --Transition Agreement
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Exhibit D --HealthAxis Shareholders' Agreement
Exhibit E --Material Terms of Technology Outsourcing Agreement
Exhibit F --Registration Rights Agreement
Exhibit G --Voting Trust Agreement
Schedules
---------
Schedule 1 -- Initial Directors of Surviving Corporation
Schedule 2 -- Initial Officers of Surviving Corporation
Schedule 3 -- HealthAxis Offering
Schedule 4 -- Provident Offering
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of December 6, 1999 (the
"Agreement"), is made and entered into by and among Provident American
Corporation, a Pennsylvania corporation ("Provident"), ▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a
Pennsylvania corporation ("HealthAxis"), UICI, a Delaware corporation ("UICI"),
and Insurdata Incorporated, a Texas corporation and a wholly-owned subsidiary of
UICI ("Insurdata"). Provident, HealthAxis, UICI and Insurdata are, at times,
each referred to herein as a "Party" and collectively as the "Parties".
HealthAxis and Insurdata are, at times, each referred to herein as a "Merger
Party" and collectively as the "Merger Parties".
WHEREAS, the respective Boards of Directors of the Merger Parties have
determined that the merger of Insurdata with and into HealthAxis (the "Merger"),
upon the terms and subject to the conditions set forth in this Agreement, would
be fair to and in the best interests of their respective shareholders, and such
Boards of Directors have approved the Merger, pursuant to which each share of
common stock, no par value, of Insurdata (the "Insurdata Common Stock") issued
and outstanding immediately prior to the Effective Time (as defined in Section
1.3) will be converted into, subject to the terms hereof, the right to receive
the Merger Consideration (as defined in Section 2.1(b));
WHEREAS, the respective Boards of Directors of Provident and UICI have
approved the execution of this Agreement (including all agreements attached as
Exhibits to this Agreement) by each such Party, upon the terms and subject to
the conditions set forth herein, as being in the best interests of their
respective shareholders;
WHEREAS, Provident and UICI have determined that it is advisable and in
their respective best interests to pool the complimentary resources and
capabilities of Insurdata and HealthAxis and therefore propose to form a joint
venture to combine these capabilities and resources;
WHEREAS, the Parties desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger; and
WHEREAS, it is intended that the Merger constitute a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that this Agreement shall constitute a "plan of
reorganization" for purposes of the Code.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
Parties hereto, intending to be legally bound, hereby agree as follows:
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ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Texas Business Corporation Act
("TBCA") and Pennsylvania Business Corporation Law ("PBCL"), Insurdata shall be
merged with and into HealthAxis, and the separate corporate existence of
Insurdata shall cease and HealthAxis shall continue as the surviving corporation
(HealthAxis is sometimes hereinafter referred to as the "Surviving
Corporation"). The name of the Surviving Corporation shall be ▇▇▇▇▇▇▇▇▇▇.▇▇▇,
Inc.
1.2 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1, and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the closing of the Merger (the "Closing") shall take place at 10:00
a.m., Chicago, Illinois time, on January 5, 2000 or, if later, the second
business day after satisfaction and/or waiver of all of the conditions set forth
in Article VI (the "Closing Date"), at the offices of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, unless another date, time or
place is agreed to in writing by the Parties hereto.
1.3 Effective Time. Subject to the provisions of this Agreement, the
Merger Parties hereto shall cause the Merger to be consummated by filing
articles of merger (the "Articles of Merger") with the Secretary of State of the
State of Texas, as provided in the TBCA, and the Department of State of the
Commonwealth of Pennsylvania, as provided in PBCL, as soon as practicable on or
after the Closing Date. The Merger shall become effective upon the acceptance
for record of such filings or at such time thereafter as is provided in the
Articles of Merger (the "Effective Time").
1.4 Effects of the Merger. The Merger shall have the effects as set
forth in the applicable provisions of the TBCA and PBCL and as provided in this
Agreement, including the matters set forth in this Section 1.4. Without limiting
the generality of the foregoing and subject thereto, at the Effective Time all
the property, rights, privileges, immunities, powers and franchises of
HealthAxis and Insurdata shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, and duties of HealthAxis and Insurdata shall become
the debts, liabilities, obligations and duties of the Surviving Corporation.
(a) The Amended and Restated Articles of Incorporation of
HealthAxis shall be further amended and restated at the Effective Time
to read in the form of Amended and Restated Articles of Incorporation
set forth in Exhibit A attached hereto and such further Amended and
Restated Articles of Incorporation shall be the Articles of
Incorporation of the Surviving Corporation until duly amended in
accordance with the terms thereof and the PBCL.
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(b) The Amended and Restated Bylaws of HealthAxis shall be further
amended and restated at the Effective Time to read in the form of the
Amended and Restated Bylaws set forth in Exhibit B attached hereto and
such further Amended and Restated Bylaws shall be the Bylaws of the
Surviving Corporation until thereafter amended as provided by
applicable law, the Surviving Corporation's Articles of Incorporation
or the Bylaws.
(c) The persons set forth on Schedule 1 of this Agreement shall be
the directors of the Surviving Corporation until their successors have
been duly elected or appointed and qualified or until their earlier
death, resignation or removal in accordance with the Surviving
Corporation's Articles of Incorporation and Bylaws.
(d) The persons set forth on Schedule 2 of this Agreement shall be
the officers of the Surviving Corporation holding the offices set forth
opposite their names until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Articles of
Incorporation and Bylaws.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE MERGER PARTIES; MERGER CONSIDERATION;
EXCHANGE OF CERTIFICATES; OPTIONS
2.1 Effect of the Merger on Capital Stock. At the Effective Time, by
virtue of the Merger and without any further action on the part of the holders
of any shares of Insurdata Common Stock or the holders of any shares of common
stock, no par value per share, of HealthAxis ("HealthAxis Common Stock"):
(a) Capital Stock of HealthAxis. Each share of HealthAxis Common
Stock, and each share of HealthAxis Preferred Stock (as defined in
Section 3.2(b)), issued and outstanding immediately prior to the
Effective Time shall not be converted or otherwise affected by the
Merger and shall remain outstanding after the Merger.
(b) Capital Stock of Insurdata. Subject to Section 2.2, at the
Effective Time each issued and outstanding share of Insurdata Common
Stock shall be converted into (as adjusted pursuant to this Article II)
the right to receive 1.33 (the "Exchange Ratio") share of the
HealthAxis Common Stock (the "Merger Consideration") upon surrender of
the stock certificates representing the Insurdata Common Stock pursuant
to this Article II. No fractional shares of HealthAxis shall be issued
as a result of the Merger. In lieu of the issuance of fractional
shares, cash adjustments will be paid to the former holders of
Insurdata Common Stock in respect of any fraction of a shares of
HealthAxis which
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would otherwise be issuable under this Agreement. Such cash adjustment
shall be equal to an amount determined by multiplying such fraction by
$15.00.
(c) Cancellation and Retirement of Insurdata Common Stock. As a
result of the Merger and without any action on the part of the holders
thereof, at the Effective Time, all shares of Insurdata Common Stock
shall cease to be outstanding and shall be canceled and retired and
shall cease to exist, and each holder of such shares of Insurdata
Common Stock shall thereafter cease to have any rights with respect to
such shares of Insurdata Common Stock, except the right to receive,
without interest, the Merger Consideration, plus cash in lieu of
fractional shares, if any, in accordance with Section 2.1(b) upon the
surrender of a certificate representing such shares of Insurdata Common
Stock (an "Insurdata Certificate").
(d) No Further Ownership Rights in Insurdata. From and after the
Effective Time, each holder of an Insurdata Certificate immediately
prior to the Effective Time shall, upon surrender of such Insurdata
Certificate for cancellation to the Exchange Agent (as defined herein),
together with the Letter of Transmittal, duly executed, and such other
documents as the Surviving Corporation or the Exchange Agent shall
reasonably request, be entitled to receive in exchange therefor a
certificate from HealthAxis, as the Surviving Corporation, representing
that number of shares of HealthAxis Common Stock (a "HealthAxis
Certificate"), plus cash in lieu of fractional shares, if any, which
such holder has the right to receive pursuant to this Article II (in
each case less the amount of any required withholding taxes), and the
Insurdata Certificate so surrendered shall forthwith be canceled. Until
surrendered as contemplated by this Section 2.1(d), each Insurdata
Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration, plus cash
in lieu of fractional shares, if any, with respect to the shares of
Insurdata Common Stock formerly represented thereby. If any HealthAxis
Certificate to be issued in the Merger is to be issued in a name other
than that in which the certificate in exchange therefor is registered,
it shall be a condition of such issuance that the person requesting
such issuance shall pay any transfer or other tax required by reason of
the issuance of HealthAxis Certificates in a name other than that of
the registered holder of the certificate surrendered, or shall
establish to the satisfaction of the Surviving Corporation or its agent
that such tax has been paid or is not applicable.
2.2 Dividends, Etc.
(a) Dividends on HealthAxis Common Stock. Notwithstanding any other
provisions of this Agreement, no dividends or other distributions
declared after the Effective Time on HealthAxis Common Stock shall be
paid with respect to any shares of Insurdata Common Stock represented
by an Insurdata Certificate, until such Insurdata Certificate is
surrendered for exchange as provided herein. Subject to the effect of
applicable laws, following surrender of any such Insurdata Certificate,
there shall be paid
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to the holder of HealthAxis Certificates issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of
dividends or other distributions, if any, with a record date after the
Effective Time theretofore payable with respect to such whole shares of
HealthAxis Common Stock and not paid, less the amount of any
withholding taxes that may be required thereon, and (ii) at the
appropriate payment date, the amount of dividends or other
distributions, if any, with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable
with respect to such whole shares of HealthAxis Common Stock, less the
amount of any withholding taxes that may be required thereon.
(b) No Transfers; Closing of Stock Transfer Book. At or after the
Effective Time, there shall be no transfer on the stock transfer books
of Insurdata of the shares of Insurdata Common Stock that were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates representing any such shares are presented
to the Surviving Corporation, they shall be canceled and exchanged for
the Merger Consideration, plus cash in lieu of fractional shares, if
any, deliverable in respect thereof pursuant to this Agreement.
(c) Lost, Stolen or Destroyed Certificates. In the event that any
Insurdata Certificate shall have been lost, stolen or destroyed upon
the making of an affidavit of that fact by the person claiming such
Insurdata Certificate to be lost, stolen or destroyed and, if required
by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to
such Insurdata Certificate, the Exchange Agent shall issue in exchange
for such lost, stolen or destroyed Insurdata Certificate the Merger
Consideration, plus cash in lieu of fractional shares, if any, and
unpaid dividends and distributions on shares of HealthAxis Common
Stock, if any, as provided in this Section 2.2(c), deliverable in
respect thereof pursuant to this Agreement.
(d) Change in HealthAxis Common Stock.
(i) In the event of any change in HealthAxis Common Stock
between the date of this Agreement and the Effective Time by reason of
any stock split, stock dividend, subdivision, reclassification,
combination, exchange of HealthAxis Common Stock or the like, the
Merger Consideration and other terms set forth in this Agreement shall
be appropriately adjusted.
(ii) The pricing terms set forth herein are based on the
information disclosed in Section 3.2(b) hereof. If the number of such
shares and share equivalents outstanding is greater than the foregoing,
the Merger Consideration and other terms set forth in this Agreement
shall be appropriately adjusted.
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2.3 Stock Options. At the Effective Time, each stock option (all
options issued pursuant to the Insurdata Stock Option Plans are referred to
herein, collectively, as the "Insurdata Options" and, individually, as an
"Insurdata Option") issued and outstanding under the Insurdata Incorporated 1999
Stock Option Plan, and any other plan or program maintained by Insurdata under
which Options have been granted, as listed on Section 3.1(b) of the Insurdata
Disclosure Schedule (the "Insurdata Stock Option Plans") shall be converted into
an option to purchase shares of HealthAxis Common Stock, as provided below.
Following the Effective Time, each such Insurdata Option shall be exercisable
upon the same terms and conditions as then are applicable to such Insurdata
Option, except that (i) each such Insurdata Option shall be exercisable for that
number of shares (rounding down to the nearest whole share, with cash being
payable for any fraction of a share) of HealthAxis Common Stock equal to the
product of (x) the number of shares of Insurdata Common Stock for which such
Insurdata Option was exercisable immediately prior to the Effective Time and (y)
the Exchange Ratio and (ii) the exercise price of such Insurdata Option shall be
equal to the quotient (rounded up to the nearest one hundredth) obtained by
dividing the exercise price per share of such Insurdata Option by the Exchange
Ratio. Following the Effective Time, any restriction on the exercise of any
Insurdata Option shall continue in full force and effect and the term,
exercisability, vesting schedule and other provisions of such Insurdata Option
(except as set forth in this Section 2.3) shall remain unchanged. From and after
the date of this Agreement, no additional options to purchase shares of
Insurdata Common Stock shall be granted under the Insurdata Stock Option Plans
or otherwise. Except as otherwise agreed to by the Parties, no person shall have
any right under any stock option plan (or any option granted thereunder) or
other plan, program or arrangement of Insurdata with respect to, including any
right to acquire, equity securities of Insurdata following the Effective Time.
At or as soon as practicable after the Effective Time, HealthAxis, as the
Surviving Corporation, shall issue to each holder of an Insurdata Option that is
converted into an option to purchase shares of HealthAxis Common Stock a
statement that accurately reflects the number of shares of HealthAxis Common
Stock for which the Insurdata Option is exercisable and the exercise price of
the Insurdata Option as contemplated by this Section 2.3. HealthAxis shall take
all corporate actions necessary to reserve for issuance such number of shares of
HealthAxis Common Stock as will be necessary to satisfy exercises in full of all
Surviving Corporation Insurdata Options after the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Insurdata. Except as disclosed in
the disclosure memorandum delivered by Insurdata (the "Insurdata Disclosure
Memorandum") at or prior to the date of this Agreement (it being understood that
each section of the Insurdata Disclosure Memorandum shall list all items
applicable to such section, although the inadvertent omission of an item from
one section shall not be deemed to be a breach of this Agreement if such item
and an explanation of the nature of such item is clearly disclosed in another
section of
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the Insurdata Disclosure Memorandum), Insurdata represents and warrants to
HealthAxis and Provident as follows:
(a) Organization, Standing and Power. Insurdata is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Texas, has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as
now being conducted and is duly qualified or licensed to do business as
a foreign corporation and in good standing to conduct business in each
jurisdiction in which the business it is conducting, or the operation,
ownership or leasing of its properties, makes such qualification or
license necessary, other than such jurisdictions where the failure so
to qualify or become so licensed would not individually or in the
aggregate have a Material Adverse Effect on Insurdata. Insurdata has
heretofore made available to HealthAxis complete and correct copies of
its Articles of Incorporation and Bylaws, both as currently in effect
as of the date of this Agreement. As used in this Agreement, a
"Material Adverse Effect" shall mean, with respect to any specified
Party to this Agreement, any event, change, condition, fact or effect
which has or could reasonably be expected to have a material adverse
effect on (i) the business, results of operations, or financial
condition of such Party and its Subsidiaries taken as a whole or (ii)
the ability of such Party to consummate the transactions contemplated
by this Agreement. As used in this Agreement, the word "Subsidiary,"
with respect to any Party to this Agreement, means any corporation,
partnership, joint venture or other organization, whether incorporated
or unincorporated, of which: (i) such Party or any other Subsidiary of
such Party is a general partner; (ii) voting power to elect a majority
of the Board of Directors or others performing similar functions with
respect to such corporation, partnership, joint venture, limited
liability company or other organization is held by such Party or by any
one or more of its Subsidiaries, or by such Party and any one or more
of its Subsidiaries; or (iii) at least 10% of the equity, other
securities or other interests is, directly or indirectly, owned or
controlled by such Party or by any one or more of its Subsidiaries or
by such Party and any one or more of its Subsidiaries. For purposes of
this Agreement, the term "knowledge" when used with respect to a Party
means that neither such Party, nor, if such Party is not an individual,
any of its officers or general partners, have any actual knowledge,
implied knowledge or belief that the statement made is incorrect. For
this purpose, "implied knowledge" means all information available in
the books, records and files of the Party and all information that any
of the officers or senior managers of the Party should have known in
the course of operating and managing the business and affairs of the
Party.
(b) Capital Structure. As of the date of this Agreement, the
authorized capital stock of Insurdata consists of 50,000,000 shares of
Insurdata Common Stock. As of the date of this Agreement: (i)
16,396,667 shares of Insurdata Common Stock were issued and
outstanding; and (ii) no shares of Insurdata Common Stock were held in
treasury. All outstanding shares of Insurdata Common Stock are validly
issued, fully paid and
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nonassessable and are not subject to preemptive or other similar
rights. As of the date of this Agreement, (i) 321,000 shares of
Insurdata Common Stock are subject to issuance pursuant to the exercise
of Insurdata Options (of which 18,750 shares of Insurdata Common Stock
are subject to vested options and of which 25,000 have been committed
for grant to an employee scheduled to commence employment on December
15, 1999) and (ii) 2,179,000 shares of Insurdata Common Stock are
reserved for future grants of options pursuant to Insurdata Option
Plans. Section 3.1(b) of the Insurdata Disclosure Memorandum sets forth
the following information with respect to each Insurdata Option
outstanding as of the date hereof: (i) the particular plan pursuant to
which such Insurdata Option was granted; (ii) the name of the optionee;
(iii) the number of shares of Insurdata Common Stock subject to such
Insurdata Option; (iv) the exercise price of such Insurdata Option; (v)
the date on which such Insurdata Option was granted; and (vi) the date
on which such Insurdata Option Expires. Insurdata has delivered to
HealthAxis accurate and complete copies of the Insurdata Stock Option
Plans and the stock option agreements evidencing all Insurdata Options
granted under the Insurdata Stock Option Plans. Set forth in Section
3.1(b) of the Insurdata Disclosure Memorandum is a true and complete
list of the following: (i) each grant of shares of Insurdata Common
Stock to employees which are subject to any risk of forfeiture
("Restricted Share Grants") and a total thereof, and (ii) any
obligation of Insurdata to issue shares of Insurdata Common Stock as a
result of the transactions contemplated hereby ("Change in Control
Share Grants") and a total thereof. There are no bonds, debentures,
notes or other indebtedness of Insurdata, or assets of any other
entities convertible into, or exchangeable for, securities of Insurdata
except as provided in this Section 3.1(b) or Section 3.1(b) of the
Insurdata Disclosure Memorandum. Except as set forth in this Section
3.1(b) or in Section 3.1(b) of the Insurdata Disclosure Memorandum,
there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to
which Insurdata or any Insurdata Subsidiary is a party or by which such
entity is bound, obligating Insurdata or any Insurdata Subsidiary to
issue, deliver or sell, or cause to be issued, delivered, or sold,
additional shares of capital stock, securities or other ownership
interests of Insurdata or any Insurdata Subsidiary or obligating
Insurdata or any Insurdata Subsidiary to issue, grant, extend or enter
into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking or obligating Insurdata or any
Insurdata Subsidiary to repurchase, redeem or otherwise acquire any
outstanding shares of capital stock, securities or other ownership
interests of Insurdata or any Insurdata Subsidiary. Except as set forth
in Section 3.1(b) of the Insurdata Disclosure Memorandum, there are no
commitments, agreements, arrangements or undertakings of any kind to
which Insurdata or any Insurdata Subsidiary is party, or by which such
entity is bound, obligating Insurdata or any Insurdata Subsidiary to
make any equity or similar investment in, or capital contribution to,
any Person.
(c) Subsidiaries; Investments. Section 3.1(c) of the Insurdata
Disclosure Memorandum sets forth for Insurdata and each Subsidiary of
Insurdata, its exact legal
8
name, the jurisdiction of its incorporation or organization, its
federal employer identification number, its address, telephone number
and facsimile number, its directors and officers, and all fictitious,
assumed or other names of any type that are registered or used by it or
under which it has done business at any time since such company's date
of incorporation. Except as set forth in Section 3.1(c) of the
Insurdata Disclosure Memorandum, each Subsidiary is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has the power and
authority and all necessary government approvals to own, lease and
operate its properties and to carry on its business as now being
conducted. Each Subsidiary of Insurdata is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary.
Insurdata has heretofore made available to HealthAxis complete and
correct copies of the articles of incorporation (or other
organizational documents) and bylaws (each as amended) of each of its
Subsidiaries. Section 3.1(c) of the Insurdata Disclosure Memorandum
sets forth, as to each Subsidiary of Insurdata, its authorized capital
stock and the number of issued and outstanding shares of capital stock
(or similar information with respect to any Subsidiary not organized as
a corporate entity) and each owner thereof. All outstanding shares of
the capital stock of the Subsidiaries of Insurdata are validly issued,
fully paid and nonassessable and are not subject to preemptive or other
similar rights. Except as set forth on Section 3.1(c) of the Insurdata
Disclosure Memorandum, Insurdata is the sole record and beneficial
owner of all of the shares of capital stock or other ownership
interests of each Insurdata Subsidiary.
(d) Authority; No Violations; Consents and Approvals.
(i) Insurdata has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Insurdata.
This Agreement has been duly executed and delivered by Insurdata and,
assuming that this Agreement constitutes the valid and binding
agreement of HealthAxis, Provident and UICI, constitutes a valid and
binding obligation of the Insurdata enforceable in accordance with its
terms and conditions except that the enforcement hereof may be limited
by (A) applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally, (B) general principles of
equity (regardless of whether enforceability is considered in a
proceeding at law or in equity) and (C) any ruling or action of any
Governmental Entity as set forth in Section 3.1(d)(iii).
9
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Insurdata will
not conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration (including pursuant
to any put right) of any obligation or the loss of a material benefit
under, or the creation of a Lien (as defined in Section 3.1(s)) on
assets or property, or right of first refusal with respect to any asset
or property or change any other rights, benefits, liabilities or
obligations (any such conflict, violation, default, right of
termination, cancellation or acceleration, loss, creation or right of
first refusal, or change, a "Violation"), pursuant to, (A) any
provision of the Articles of Incorporation or Bylaws of Insurdata or
the comparable documents of any of its Subsidiaries or (B) except as to
which requisite waivers or consents have been obtained as specifically
identified in Section 3.1(d) of the Insurdata Disclosure Memorandum and
assuming the consents, approvals, authorizations or permits and filings
or notifications referred to in paragraph (iii) of this Section 3.1(d)
are duly and timely obtained or made, any loan or credit agreement,
note, mortgage, deed of trust, indenture, lease, or any other
agreement, obligation, instrument, concession or license or any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Insurdata, or any of its properties or assets, except, in
the case of clause (B), for such Violations which would not
individually or in the aggregate have a Material Adverse Effect on
Insurdata.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental
Entity"), is required by or with respect to Insurdata or any of its
Subsidiaries in connection with the execution and delivery of this
Agreement by Insurdata or the consummation by Insurdata of the
transactions contemplated hereby, except for: (A) the filing of a
pre-merger notification and report form under the ▇▇▇▇- ▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the
expiration or termination of the applicable waiting period thereunder;
(B) the filing of the Articles of Merger with the Secretary of State of
the State of Texas and the Department of State of the Commonwealth of
Pennsylvania; (C) such filings as may be required by applicable federal
or state securities laws, and (D) where the failure to obtain, give or
make any consent, approval, order, or authorization of, or
registration, declaration or filing with, notice to, or permit from a
Government Entity would not have a Material Adverse Effect on
Insurdata.
(e) Government Filings. Insurdata has made available to HealthAxis
a true and complete copy of each report or schedule filed by Insurdata
with any Governmental Entity.
10
(f) Information Supplied. None of the information supplied or to be
supplied by Insurdata to HealthAxis and Provident contains or will
contain any untrue statement of a material fact or omits or will omit
to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The books of account and
other financial records of Insurdata and its Subsidiaries have been
maintained in form and substance adequate for preparing audited
financial statements in accordance with generally accepted accounting
principles ("GAAP").
(g) Compliance with Applicable Laws.
(i) Except as disclosed in Section 3.1(g) of the Insurdata
Disclosure Memorandum, the business of Insurdata and each of its
Subsidiaries is being conducted in compliance in all material respects
with all applicable laws, including, without limitation, all insurance
laws, ordinances, rules and regulations, decrees and orders of any
Governmental Entity, and all notices, reports, documents and other
information required to be filed thereunder within the last three years
were properly filed and were in compliance in all material respects
with such laws.
(ii) Insurdata and each of its Subsidiaries owns or validly
holds all licenses, franchises, permits, approvals, authorizations,
exemptions, classifications, registrations, rights and similar
documents ("Licenses") which are necessary for it to own, lease or
operate its properties and assets and to conduct its business as now
conducted, except for such Licenses the failure to hold which would not
individually or in the aggregate have a Material Adverse Effect on
Insurdata. The business of Insurdata and each of its Subsidiaries has
been and is being conducted in compliance in all material respects with
all such Licenses. All such Licenses are in full force and effect, and
there is no proceeding or investigation pending or, to the knowledge of
Insurdata, threatened which would reasonably be expected to lead to the
revocation, amendment, failure to renew, limitation, suspension or
restriction of any such License.
(h) Absence of Certain Changes or Events. Since September 30, 1999,
there has not been, occurred, or arisen any change, any event
(including without limitation any damage, destruction, or loss whether
or not covered by insurance), condition, or state of facts of any
character with respect to the business or financial condition of
Insurdata or any of its Subsidiaries, except (i) as disclosed in
Section 3.1(h) of the Insurdata Disclosure Memorandum, and (ii) for
events in the ordinary course of business consistent with past practice
that would not, individually or in the aggregate, result in a Material
Adverse Effect on Insurdata.
(i) Financial Statements; No Material Undisclosed Liabilities. The
consolidated financial statements of Insurdata for the year ended
December 31, 1998 and
11
for the nine months ended September 30, 1999 have been prepared in
accordance with GAAP applied on a consistent basis during the periods
involved (except as indicated in the notes thereto) and, except as set
forth on Schedule 3.1(i) of the Insurdata Disclosure Memorandum, fairly
present, in accordance with the applicable requirements of GAAP, the
consolidated financial position of its subsidiaries, as of the dates
thereof and the consolidated results of operations and cash flows for
the periods then ended (subject, in the case of unaudited statement, to
normal year-end audit adjustments). Insurdata has no subsidiaries which
are not consolidated for accounting purposes. Except as reflected in
Section 3.1(i) of the Insurdata Disclosure Memorandum, since September
30, 1999, neither Insurdata nor any of its Subsidiaries has incurred
any liabilities, absolute, accrued, contingent or otherwise, whether
due or to become due (and there is no basis for such liabilities)
except: (i) liabilities arising in the ordinary course of business
consistent with past practice, which individually or in the aggregate
would not have a Material Adverse Effect on Insurdata; or (ii) other
liabilities which, individually or in the aggregate, together with
those liabilities referenced in subparagraph (i), would not have a
Material Adverse Effect on Insurdata.
(j) Litigation. Except as set forth in Section 3.1(j) of the
Insurdata Disclosure Memorandum (A) there is no suit, action,
investigation, arbitration or proceeding pending or, to the knowledge
of Insurdata, threatened against or affecting Insurdata or any of its
Subsidiaries, at law or in equity, before any person and (B) there is
no writ judgment, decree, injunction, rule or similar order of any
Governmental Entity or arbitrator outstanding against Insurdata or any
of its Subsidiaries.
(k) Taxes. Except as set forth in Section 3.1(k) of the Insurdata
Disclosure Memorandum:
(i) Insurdata and each of its Subsidiaries has (x) duly and
timely filed (or there have been filed on their behalf) with the
appropriate taxing authorities all Tax Returns required to be filed by
them, and all such Tax Returns are true, correct and complete in all
material respects and (y) timely paid or there have been paid on their
behalf all Taxes shown to be due on such Returns.
(ii) Each of Insurdata and its Subsidiaries has properly
accrued on its respective financial statements all Taxes due for which
Insurdata or its Subsidiaries may be liable, whether or not shown on
any Tax Return as being due (including by reason of being a member of
an affiliated group or as a transferee of the assets of, or successor
to, any corporation, person, association, partnership, joint venture or
other entity). Each of Insurdata and its Subsidiaries has established
(and until the Closing Date shall continue to establish and maintain)
on its books and records reserves that are adequate for the payment of
all Taxes not yet due and payable.
12
(iii) Each of Insurdata and its Subsidiaries has complied in
all material respects with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes, including Taxes
required to have been withheld in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder, or
other third party and sales, gross receipts and use taxes, and has,
within the time and manner prescribed by law, withheld and paid over to
the proper governmental authorities all amounts required to be withheld
and paid over under all applicable laws, or such amounts are held in
separate bank accounts for such purpose.
(iv) There are no Liens for Taxes upon the assets or properties
of Insurdata or any of its Subsidiaries except for statutory liens for
current Taxes not yet due.
(v) Neither Insurdata nor any of its Subsidiaries has requested
any extension of time nor has any such extension been requested on its
behalf within which to file any Tax Return in respect of any taxable
year which has not since been filed.
(vi) Based upon Insurdata's knowledge, no federal, state, local
or foreign audits or other administrative proceedings or court
proceedings ("Audits") exist with regard to any Taxes or Tax Returns of
Insurdata or any of its Subsidiaries and there has not been received
any written notice that such an Audit is pending or threatened with
respect to any Taxes due from or with respect to Insurdata or any of
its Subsidiaries or any Tax Return filed by or with respect to
Insurdata or any of its Subsidiaries. No material issues have been
raised in any examination by any taxing authority with respect to the
businesses and operations or Insurdata or its Subsidiaries which (i)
reasonably could be expected to result in an adjustment to the
liability for Taxes for such period examined or (ii), by application of
similar principles, reasonably could be expected to result in an
adjustment to the liability for Taxes for any other period not so
examined.
(vii) None of Insurdata and its Subsidiaries is a party to any
Tax allocation or sharing agreement. None of Insurdata and its
Subsidiaries (A) has been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group the common
parent of which was UICI) or (B) has any liability for the Taxes of any
other party (other than any of Insurdata and its Subsidiaries) under
Treasury Regulation Section 1.1502-6 (or any provision of state, local
or foreign law), as a transferee or successor, by contract or
otherwise.
For purposes of this Agreement, (i) "Taxes" (including, with
correlative meaning, the term "Tax") shall mean all taxes, charges,
fees, levies, penalties or other assessments imposed by any federal,
state, local or foreign taxing authority, including, but not limited
to, income, gross receipts, excise, property, sales, transfer,
franchise, payroll, withholding, social security and other taxes, and
shall include any interest, penalties or
13
additions attributable thereto and (ii) "Tax Return" shall mean any
return, report, information return or other document (including any
related or supporting information) required to be prepared with respect
to Taxes.
(l) Pension And Benefit Plans; ERISA.
(i) Section 3.1(l)(i) of the Insurdata Disclosure Memorandum
sets forth a complete list of all (A) "employee benefit plans" as
defined in sections 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"); and (B) all retirement or deferred
compensation plans, incentive compensation plans, stock plans,
unemployment compensation plan, vacation pay, severance pay, bonus or
benefit arrangement, insurance or hospitalization program or any other
fringe benefit arrangements for any current or former employee,
director, consultant or agent, whether pursuant to contract,
arrangement, custom or informal understanding, which does not
constitute an employee benefit plan as defined in section 3(3) of
ERISA, and (C) any employment agreement or consulting agreement, which
Insurdata, or any of its Subsidiaries or any trade or business, whether
or not incorporated, that together with Insurdata or any of its
Subsidiaries would be deemed a "single employer" within the meaning of
Section 4001(b) of ERISA (an "Insurdata ERISA Affiliate"), maintains,
is a party to, participates in or with respect to which has any
liability or contingent liability (such plans and arrangements referred
to as the "Insurdata Benefit Plans").
(ii) With respect to each Insurdata Benefit Plan, a complete
and correct copy of each of the following documents (if applicable) has
been provided or made available to HealthAxis: (A) the most recent plan
and related trust documents, and all amendments thereto; (B) the most
recent summary plan description, and all related summaries of material
modifications thereto; (C) the most recent Form 5500 (including
schedules and attachments); (D) the most recent IRS determination
letter or request therefor; and (E) the most recent actuarial reports
(including for purposes of Financial Accounting Standards Board report
no. 87, 106 and 112), if any; and there have been no material changes
in the financial condition in the respective plans from that stated in
the annual reports and actuarial reports supplied. In the case of any
Insurdata Benefit Plan which is not in written form, HealthAxis has
been supplied with an accurate description of such Insurdata Benefit
Plan as in effect on the date hereof.
(iii) Except as set forth in Section 3.1(l)(iii) of the
Insurdata Disclosure Memorandum, Insurdata Benefit Plans and their
related trusts intended to qualify under Sections 401(a) and 501(a) of
the Code, respectively, have received favorable determination letters
from the Internal Revenue Service which cover all applicable law for
which the remedial amendment period (within the meaning of Section
401(b) of the Code and applicable regulations) has expired; neither
Insurdata nor any of its respective Insurdata ERISA Affiliates is aware
of any event or circumstance that could reasonably
14
be expected to result in the failure of such Insurdata Benefit Plan or
its related trust to be so qualified; and no event has occurred which
will or could give rise to disqualification of any such plan under such
sections or to a tax under section 511 of the Code.
(iv) Except as set forth in Section 3.1(l)(iv) of the Insurdata
Disclosure Memorandum, the Insurdata Benefit Plans have been maintained
and administered in all respects in accordance with their terms and
applicable laws, and no event has occurred which will or could cause
any such Insurdata Benefit Plan to fail to comply with such
requirements and no notice has been issued by any governmental
authority questioning or challenging such compliance.
(v) Except as disclosed in Section 3.1(l)(v) of the Insurdata
Disclosure Memorandum, there are no pending or, to the knowledge of
Insurdata, threatened actions, claims or proceedings against or
relating to any Insurdata Benefit Plan other than routine benefit
claims by persons entitled to benefits thereunder. There are no
investigations or audits of or relating to any Insurdata Benefit Plan.
Insurdata has no knowledge of any facts which could form the basis of
any such investigation or audit.
(vi) Except as disclosed in Section 3.1(l)(vi) of the Insurdata
Disclosure Memorandum and as otherwise provided in Section 2.3, neither
the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will (A) result in any payment
becoming due to any employee (current, former or retired) of Insurdata,
(B) increase any benefits under any Insurdata Benefit Plan, or (C)
result in the acceleration of the time of payment of, vesting of or
other rights with respect to any such benefits.
(vii) Insurdata has no knowledge of any oral or written
statement made by or on behalf of Insurdata or an Insurdata ERISA
Affiliate regarding any Insurdata Benefit Plan that was not in
accordance with such Benefit Plan.
(viii) Actuarially adequate accruals for all obligations under
the Insurdata Benefit Plans are reflected in the financial statements
of Insurdata and such obligations include a pro rata amount of the
contributions which would otherwise have been made in accordance with
past practices and applicable law for the plan years which include the
Closing Date.
(ix) Except as described in section 3.1(l)(ix) of the Insurdata
Disclosure Memorandum, there have been no acts or omissions by
Insurdata which have given rise to or may give rise to fines,
penalties, taxes or related charges under section 502 of ERISA or
Chapters 43, 47 or 68 of the Code for which Insurdata or any Insurdata
ERISA Affiliate may be liable.
15
(x) Except as described in section 3.1(l)(x) of the Insurdata
Disclosure Memorandum, none of the payments payable under the Insurdata
Benefit Plans as a result of the Merger would, in the aggregate,
constitute excess parachute payments (as defined in section 280G of the
Code (without regard to subsection (b)(4) thereof)).
(xi) No Insurdata Benefit Plan is subject to Title IV of ERISA.
(xii) None of Insurdata nor any Insurdata ERISA Affiliate
contributes to, has contributed to, or has any liability or contingent
liability with respect to a multiemployer plan (as defined in section
3(37) of ERISA).
(xiii) There has been no act or omission that would impair the
ability of Insurdata and the Insurdata ERISA Affiliates (or any
successor thereto) to unilaterally amend or terminate any Insurdata
Benefit Plan.
(xiv) Except as described in Section 3.1(1)(xiv) of the
Insurdata Disclosure Memorandum, there are no self-insured Benefit
Plans. With respect to each self-insured Benefit Plan, Insurdata and/or
its Subsidiaries maintains a reserve of no less than twenty-five
percent (25%) of the aggregate claims paid with respect to the most
recently completed plan year.
(xv) Except as set forth in Section 3.1(1)(xv) of the Insurdata
Disclosure Memorandum, each Insurdata Benefit Plan is fully funded to
the extent that a benefit has accrued thereunder or that an account
balance is maintained on behalf of an Employee notwithstanding whether,
under the terms of such Plan or as permitted by applicable law, such
Plan is not required to be funded. Except as set forth in Section
3.1(1)(xv) of the Insurdata Disclosure Memorandum, each Insurdata
Benefit Plan is fully funded to the extent that a benefit has accrued
thereunder or that an account balance is maintained on behalf of an
Employee notwithstanding whether, under the terms of such Plan or as
permitted by applicable law, such Plan is not required to be funded.
(m) Labor Matters.
(i) Except as set forth in Section 3.1(m) of the Insurdata
Disclosure Memorandum, (A) neither Insurdata nor any of its
Subsidiaries is a party to any labor or collective bargaining agreement
and no employees of Insurdata or any of its Subsidiaries are
represented by any labor organization; (B) within the preceding three
years, there have been no representation or certification proceedings,
or petitions seeking a representation proceeding, pending or, to the
knowledge of Insurdata, threatened in writing to be brought or filed
with the National Labor Relations Board or any other labor relations
tribunal or authority; and (C) within the preceding three years, to the
knowledge of Insurdata, there have been no organizing activities
involving Insurdata or any of its
16
Subsidiaries with respect to any group of employees of Insurdata or any
of its Subsidiaries.
(ii) There are no strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances or other material labor
disputes pending or threatened in writing against or involving
Insurdata or any of its Subsidiaries. There are no unfair labor
practice charges, grievances or complaints pending or, to the knowledge
of Insurdata, threatened in writing by or on behalf of any employee or
group of employees of Insurdata or any of its Subsidiaries. Each of
Insurdata and its Subsidiaries' relations with its employees are
currently on a good and normal basis.
(iii) Insurdata and each of its Subsidiaries is in compliance
with all laws, regulations and orders relating to the employment of
labor, including all such laws, regulations and orders relating to
wages, hours, Worker Adjustment Retraining and Notification Act of
1988, as amended ("WARN Act"), collective bargaining, discrimination,
civil rights, safety and health, workers' compensation and the
collection and payment of withholding and/or social security taxes
and any similar tax, except where non compliance would not individually
or in the aggregate adversely affect Insurdata and its Subsidiaries
taken as a whole in any material respect.
(iv) Except as set forth in Section 3.1(m) of the Insurdata
Disclosure Memorandum and except for any limitation of general
application which may be imposed under applicable employment laws,
Insurdata and each of the Insurdata Subsidiaries has the right to
terminate the employment of each of its employees at will and to
terminate the engagement of any of its independent contractors without
payment to such employee or independent contractor other than for
services rendered through termination and without incurring any penalty
or liability other than for severance pay in accordance with any
severance pay policy of Insurdata or an Insurdata Subsidiary disclosed
to HealthAxis.
(v) Except as set forth in Section 3.1(m) of the Insurdata
Disclosure Memorandum, since January 1, 1998, no employee of Insurdata
or its Subsidiaries having an annual salary of $100,000 or more has
indicated an intention to terminate or has terminated his or her
employment with such company.
(n) Environmental Matters.
(i) For purposes of this Agreement:
(A) "Environmental Law" means any applicable law regulating
or prohibiting Releases of Hazardous Materials into any
part of the natural environment, or pertaining to the
protection of natural resources, the environment, and
public
17
and employee health and safety from Hazardous Materials
including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act
("CERCLA") (42 U.S.C. ss. 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. ss. 1801 et
seq.), the Resource Conservation and Recovery Act (42
U.S.C. ss. 6901 et seq.), the Clean Water Act (33
U.S.C. ss. 1251 et seq.), the Clean Air Act (33 U.S.C.
ss. 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. ss. 7401 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. ss. 136 et
seq.), and the Occupational Safety and Health Act (29
U.S.C. ss. 651 et seq.) ("OSHA") (to the extent OSHA
regulates occupational exposure to Hazardous Materials)
and the regulations promulgated pursuant thereto, and
any such applicable state or local statutes, and the
regulations promulgated pursuant thereto, as such laws
have been and may be amended or supplemented through
the Closing Date;
(B) "Hazardous Material" means any substance, material or
waste which is regulated as hazardous or toxic by any
public or governmental authority in the jurisdictions
in which the Merger Party or its Subsidiaries conducts
business, or the United States, including, without
limitation, any material or substance which is defined
as a "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste" or
"restricted hazardous waste," "contaminant," "toxic
waste" or "toxic substance" under any provision of
Environmental Law and shall also include, without
limitation, petroleum, petroleum products, asbestos,
polychlorinated biphenyls and radioactive materials;
(C) "Release" means any release, spill, effluence,
emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching, or migration
of Hazardous Material into the environment; and
(D) "Remedial Action" means all actions, including, without
limitation, those involving any capital expenditures,
required by a governmental entity or required under any
Environmental Law, or voluntarily undertaken to (w)
clean
18
up, remove, treat, or in any other way mitigate the
adverse effects of any Hazardous Materials Released in
the environment; (x) prevent the Release or threat of
Release, or minimize the further Release of any
Hazardous Material so it does not endanger or threaten
to endanger the public health or welfare or the
environment; (y) perform preremedial studies and
investigations or postremedial monitoring and care
pertaining or relating to a Release or threat of
Release; or (z) bring the Merger Party into compliance
with any Environmental Law.
(ii) Except as set forth in Section 3.1(n) of the Insurdata
Disclosure Memorandum:
(A) The operations of Insurdata and each of its
Subsidiaries have been and, as of the Closing Date,
will be, in compliance with all Environmental Laws,
except for such noncompliance which would not
individually or in the aggregate have a Material
Adverse Effect on Insurdata;
(B) Neither Insurdata nor any of its Subsidiaries is
subject to any outstanding orders from, or agreements
with, any Governmental Entity or other person
respecting (x) Environmental Laws, (y) Remedial Action
or (z) any Release or threatened Release of a Hazardous
Material;
(C) Neither Insurdata nor any of its Subsidiaries has
received any written communication alleging, with
respect to any such party, the violation of or
potential liability under any Environmental Law;
(D) No judicial or administrative proceedings or
governmental investigations are pending or, to the
knowledge of Insurdata, threatened against Insurdata or
any of its Subsidiaries alleging the violation of or
seeking to impose liability pursuant to any
Environmental Law; and
(E) No environmental approvals, clearances or consents are
required under applicable law from any governmental
entity or authority in order to consummate the
transactions contemplated herein.
19
(iii) This Section 3.1(n) sets forth the sole representations
and warranties of Insurdata with respect to Environmental Laws.
(o) Property and Assets.
(i) Section 3.1(o)(i) of the Insurdata Disclosure Memorandum
sets forth all of the real property owned in fee by Insurdata and its
Subsidiaries. Insurdata or its Subsidiaries have good and marketable
title to each parcel of real property owned by them free and clear of
all Liens, except as otherwise set forth in Section 3.1(o)(i) of the
Insurdata Disclosure Memorandum.
(ii) Each lease, sublease or other agreement (collectively, the
"Real Property Leases") under which Insurdata or any of its
Subsidiaries uses or occupies or has the right to use or occupy, now or
in the future, any real property is valid, binding and in full force
and effect, all rent and other sums and charges payable by Insurdata or
any of its Subsidiaries as a tenant thereunder are current, and no
termination event or condition or uncured default of a material nature
on the part of Insurdata or any of its Subsidiaries or, to Insurdata's
knowledge, the landlord, exists under any Real Property Lease.
Insurdata and its Subsidiaries have a good and valid leasehold interest
in each parcel of real property leased by them free and clear of all
Liens, except as otherwise set forth in Section 3.1(o)(ii) of the
Insurdata Disclosure Memorandum. All real property used or occupied by
Insurdata or any Insurdata Subsidiary is structurally sound and in good
condition, normal wear and tear excepted, and is sufficient for its
current uses and the operations and business of Insurdata and its
Subsidiaries as presently conducted.
(iii) Except as set forth in Section 3.1(o)(iii) of the
Insurdata Disclosure Memorandum, Insurdata and its Subsidiaries own
good and indefeasible title to, or have a valid leasehold interest in
or a valid right under contract to use, all tangible personal property
that is used in the conduct of their business, free and clear of any
Liens, except for any mechanics or similar statutory liens arising in
the ordinary course of business. All such tangible personal property is
in good operating condition and repair (normal wear and tear excepted)
and is suitable for its current uses and the operations and business of
Insurdata and its Subsidiaries as presently conducted.
(p) Intellectual Property.
(i) Section 3.1(p) of the Insurdata Disclosure Memorandum sets
forth, for the Intellectual Property owned by Insurdata or any of its
Subsidiaries, a complete and accurate list of all U.S. and foreign (a)
Patents and Patent Applications; (b) Trademarks; (c) Copyright
registrations and mask work, Copyright and mask work applications, and
material unregistered Copyrights. Section 3.1(p) of the Insurdata
Disclosure Memorandum lists all Software (other than readily available
commercial software
20
programs) which are owned, licensed, leased, by Insurdata or any of its
Subsidiaries, and identifies which Software is owned, licensed, or
leased, as the case may be, and, for all Insurdata Software, provides a
product description of the Insurdata Software, the language in which it
was written and the types of hardware platforms on which it runs.
(ii) Section 3.1(p) of the Insurdata Disclosure Memorandum sets
forth a complete and accurate list of all agreements, enforceable
understandings and enforceable commitments (whether oral or written,
and whether between Insurdata or any of its Subsidiaries and third
parties or inter-corporate) to which Insurdata or any of its
Subsidiaries is a party or otherwise bound, (i) granting or obtaining
any right to use or practice any rights under any Intellectual
Property, or (ii) restricting Insurdata's or any of its Subsidiaries'
rights to use any Intellectual Property, including license agreements,
development agreements, distribution agreements, settlement agreements,
consent to use agreements, and covenants not to ▇▇▇ (collectively, the
"License Agreements"). The License Agreements are valid and binding
obligations of all parties thereto, enforceable in accordance with
their terms, and there exists no event or condition which will result
in a violation or breach of, or constitute (with or without due notice
of lapse of time or both) a default by any party under any such License
Agreement. Neither Insurdata nor any of its Subsidiaries has licensed
or sublicensed its rights in any Intellectual Property other than
pursuant to the License Agreements and there are no exclusive License
Agreements for Insurdata Software or other Intellectual Property owned
by Insurdata and its Subsidiaries. No royalties, honoraria or other
fees are payable by Insurdata or any of its Subsidiaries to any third
parties for the use of or right to use any Intellectual Property
except, pursuant to the License Agreements.
(iii) Except as set forth on Section 3.1(p) of the Insurdata
Disclosure Memorandum:
(A) Insurdata or one of its Subsidiaries owns, or has a
valid right to use, free and clear of all Liens, all of
the Intellectual Property necessary to permit the
operation of Insurdata and its Subsidiaries as
presently conducted and as proposed to be conducted.
Insurdata or one of its Subsidiaries is listed in the
records of the appropriate United States, state, or
foreign registry as the sole current owner of record
for each application and registration listed on Section
3.1(p) of the Insurdata Disclosure Memorandum.
(B) All of such Insurdata Software and other Intellectual
Property were created as a work for hire (as defined
under U.S. copyright law) for Insurdata or its
Subsidiaries. To the extent that any author or
developer of any Insurdata
21
Software or other Intellectual Property was not a
regular full-time salaried employee of Insurdata or its
Subsidiaries at the time such person contributed to
such Insurdata Software or other Intellectual Property,
such author or developer has executed agreements
assigning to Insurdata or its Subsidiaries all of such
Insurdata Software and Intellectual Property developed
by such author or developer.
(C) The Intellectual Property owned by Insurdata or any of
its Subsidiaries and, to the knowledge of Insurdata and
its Subsidiaries, any Intellectual Property used by
Insurdata or any of its Subsidiaries, is subsisting, in
full force and effect, and has not been canceled,
expired, or abandoned, and is valid and enforceable.
(D) There is no pending or, to the knowledge of Insurdata
and its Subsidiaries, threatened claim, suit,
arbitration or other adversarial proceeding before any
court, agency, arbitral tribunal, or registration
authority in any jurisdiction (i) involving the
Intellectual Property owned by Insurdata or any of its
Subsidiaries, or to the knowledge of Insurdata and its
Subsidiaries, the Intellectual Property licensed to
Insurdata or any of its Subsidiaries or (ii) alleging
that the activities or the conduct of Insurdata's or
any of its Subsidiaries' business does nor will
infringe upon, violate or constitute the unauthorized
use of the intellectual property rights of any third
party or challenging the ownership, use, validity,
enforceability or registrability of any Intellectual
Property by Insurdata or any of its Subsidiaries. There
are no settlements, forebearances to use, consents,
judgments, or orders or similar obligations other than
the License Agreements which (a) restrict Insurdata's
or any of its Subsidiaries' rights to use any
Intellectual property, (b) restrict Insurdata's or any
Subsidiaries' business in order to accommodate a third
party's intellectual property rights or (c) permit
third parties to use any Intellectual Property owned or
controlled by Insurdata or any of its Subsidiaries.
(E) No other Software, other than ordinary upgrades to the
Insurdata Software, is used to operate the business of
22
Insurdata and its Subsidiaries as presently conducted.
To the best knowledge of Insurdata, no rights of any
third party are necessary to market, license, sell,
modify, update, and/or create derivative works for the
Insurdata Software listed at Section 3.1(p) of the
Insurdata Disclosure Memorandum as presently and
contemplated to be marketed, licensed, sold, modified,
updated and/or created by Insurdata.
(F) Insurdata and its Subsidiaries maintains
machine-readable master-reproducible copies of the
object and executable code, master reproducible copies
of the source code listings, technical documentation
and user manuals for the most current releases or
versions thereof and for all earlier releases or
versions of the Insurdata Software currently being
supported by Insurdata and its Subsidiaries; in each
case, the machine-readable copy of the object and
executable code substantially conforms to the
corresponding source code listing from which it was
compiled; the Insurdata Software is written in the
language as set forth Section 3.1(p) of the Insurdata
Disclosure Memorandum, for use on the hardware set
forth at Section 3.1(p) of the Insurdata Disclosure
Memorandum with standard operating systems; the
Insurdata Software can be maintained and modified by
reasonably competent programmers familiar with such
language, hardware and operating systems; in each case,
each component of the Insurdata Software that creates,
accepts, displays, stores, retrieves, accesses,
recognizes, distinguishes, compares, sorts,
manipulates, processes, calculates or otherwise uses
dates or date-related data will do so accurately,
without operating defects, using dates in the twentieth
and twenty- first centuries, and will not be adversely
affected by the advent of the year 2000, the advent of
any leap year, the advent of the twenty-first century,
or the transition from the twentieth century through
the year 2000 and into the twenty-first century
(collectively, "Y2K Compliant"), provided that all
hardware and operating system software in connection
with which the Insurdata Software is used perform in
such a manner; with respect to the hardware and third
party application and operating software with which the
Insurdata Software is used, Insurdata and its
23
Subsidiaries have received written assurances from the
hardware manufacturers and third party software
licensors that this hardware and software is Y2K
Compliant and such hardware and software have
successfully completed Y2K Compliance testing
administered by or on behalf of Insurdata and its
Subsidiaries, to the knowledge of Insurdata and its
Subsidiaries the Insurdata Software does not contain
any unauthorized code such as a virus, Trojan horse,
worm, or other software routine designed to permit
unauthorized access to disable, erase or otherwise harm
the Insurdata Software, hardware or data automatically,
with the passage of time, or under the control of a
person other than the Merger Parties. The twenty-first
century will be deemed to commence on January 1, 2001.
(G) Insurdata and its Subsidiaries have taken reasonable
precautions to test for and prevent unauthorized codes
such as viruses, Trojan horses, worms, or other
software routines designed to permit unauthorized
access to disable, erase or otherwise harm the
Insurdata Software with the passage of time, or under
the control of a person other than Insurdata or its
Subsidiaries. No export control licenses are necessary
for the Insurdata Software in order to permit the
operation of the business of Insurdata and its
Subsidiaries as presently conducted.
(H) The conduct of Insurdata's and its Subsidiaries'
business as currently conducted or planned to be
conducted does not infringe upon (either directly or
indirectly such as through contributory infringement or
inducement to infringe) any intellectual property
rights owned or controlled by any third party. To the
knowledge of Insurdata and its Subsidiaries, no third
party is misappropriating, infringing, or violating any
Intellectual Property owned or used by Insurdata or any
of its Subsidiaries and no such claims, suits,
arbitrations or other adversarial proceedings have been
brought against any third party by Insurdata or any of
its Subsidiaries which remain unresolved.
(I) Insurdata and each of its Subsidiaries take reasonable
measures to protect the confidentiality of and all
proprietary rights in its Trade Secrets, including
requiring
24
its employees and other parties having access thereto
to execute written non-disclosure agreements. To the
knowledge of Insurdata and its Subsidiaries, no Trade
Secret has been disclosed or authorized to be disclosed
to any third party other than pursuant to a
non-disclosure agreement. To the knowledge of Insurdata
and its Subsidiaries, no party to any non-disclosure
agreement relating to its Trade Secrets is in breach or
default thereof.
(J) No current or former partner, director, officer, or
employee of Insurdata or any of its Subsidiaries (or
any of their respective predecessors in interest) will,
after giving effect to the transactions contemplated
herein, own or retain any rights in or to (including,
but not limited to, the right to royalty payments) any
of the Intellectual Property owned, marketed, used or
under development by Insurdata and its Subsidiaries.
(iv) The consummation of the transactions contemplated hereby
will not result in the loss or impairment of Insurdata's or any of its
Subsidiaries' rights to own or use any of the Intellectual Property,
nor will it require the consent of any governmental authority or third
party in respect of any such Intellectual Property.
(v) The following definition shall be applicable to this
Agreement:
"HealthAxis Software" means all Software owned by HealthAxis.
"Insurdata Software" means all Software owned by Insurdata.
"Intellectual Property" shall mean trademarks, names, corporate names,
proprietary name, brand name, product service marks, trade names,
Internet domain names, designs, logos, slogans, and general intangibles
of like nature, together with all goodwill, registrations and
applications related to the foregoing (collectively, "Trademarks");
patents and industrial design registrations or applications, including
any continuations, divisionals, continuations-in-part, renewals,
reissues, and applications for any of the foregoing (collectively
"Patents and Patent Applications"); copyrights (including any
registrations and applications for any of the foregoing) and including
but not limited to the Web Site and Web Site Content (collectively,
"Copyrights"); Software, "mask works" (as defined under 17 USC ss. 901)
and any registrations and applications for "mask works"; technology,
trade secrets and other confidential information, know-how, proprietary
processes, formulae, algorithms, models, and methodologies
(collectively, "Trade Secrets"); rights under statutory or common laws
of publicity and privacy relating to the
25
use of the names, likenesses, voices, signatures and biographical
information of real persons; in each case whether or not perfected,
whether active or inactive, in use, under development or design, and in
each case used in or necessary for the conduct of a Party's and each of
its Subsidiaries' business as currently conducted or contemplated to be
conducted.
"Software" means any and all computer programs (including operating
systems and applications systems html code, CGI code, java applets and
other software used to create and maintain Web sites) whether or not
operational, including, but not limited to, implementations in computer
programs of algorithms, processes, formulae, interfaces, navigational
devices, menu structures or arrangements, icons, operational
instructions, scripts, commands, syntax, screen design, reports design
and other designs, concepts, and visual expressions, technical manuals,
user manuals and other documentation therefor, whether in
machine-readable form, programming language or any other language or
symbols, and whether stored, encoded, recorded or written on disk,
tape, film, memory device, paper or other media of any nature.
"Web Site" shall mean the Web site currently found at the following
URL, ▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇.▇▇▇ or ▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇, as
applicable, and all other Web sites and any successors thereto owned or
created by or on behalf of Insurdata or HealthAxis and their
Subsidiaries.
"Web Site Content" shall mean all text, photos, graphics, audio, video
and other information or content, material, without limitation, in all
forms and formats (collectively, "Content"), available for access on
the Web Site but excluding the Content of any Web sites linked to the
Web Site, whether by agreement or otherwise, and any Content supplied
by insurance carriers for inclusion on the HealthAxis Web Site.
(q) Material Contracts. Section 3.1(q) of the Insurdata Disclosure
Memorandum contains a true and complete list of each of the following
written or oral contracts, agreements, instruments, orders,
arrangements, commitments or understandings ("Contracts") in effect as
of the date of this Agreement (true and complete copies of any written
Contract or summaries in writing describing any oral Contract of which
have been made available to HealthAxis) to which Insurdata or any of
its Subsidiaries is a party or by which any of their respective assets
or properties is or may be bound (each of which is an "Insurdata
Material Contract"):
(i) all employment, agency (other than insurance agency),
consultation, or representation Contracts or other Contracts of any
type (including without limitation loans or advances) with any present
officer, director, Key Employee (as defined below), agent (other than
an insurance agent), consultant, or other similar representative of
Insurdata or any of its Subsidiaries (or former officer, director, Key
26
Employee, agent (other than an insurance agent), consultant or similar
representative of Insurdata or any of its Subsidiaries if there exists
any present or future liability with respect to such Contract);
(ii) all Contracts relating to the borrowing of money by
Insurdata, relating to the deferred purchase price for property or
services, or relating to the direct or indirect guarantee by Insurdata
or any of its Subsidiaries of any liability;
(iii) all Contracts pursuant to which Insurdata or any of its
Subsidiaries has agreed to indemnify or hold harmless any person or
entity (other than indemnifications or hold harmless covenants in the
ordinary course of business and consistent with past practice);
(iv) all leases or subleases of real property used in the
business, operations, or affairs of Insurdata or any of its
Subsidiaries;
(v) all Contracts under which any rights in and/or ownership of
any material software products, technology or other intangible property
of Insurdata or its Subsidiaries was acquired; and
(vi) any other Contract requiring the payment of at least
$250,000 or which cannot be terminated upon 60 days or less notice.
Each Contract disclosed or required to be disclosed in Section 3.1(q)
of the Insurdata Disclosure Memorandum is in full force and effect and
constitutes a legal, valid and binding obligation of Insurdata or any
of its Subsidiaries to the extent any such entity is a party thereto
and, to the knowledge of Insurdata, each other party thereto. Neither
Insurdata nor any of its Subsidiaries has received from any other party
to such Contract any written notice of termination or intention to
terminate or not to honor the terms of such Contract, or to the
knowledge of Insurdata, any oral notice of termination or intention to
terminate or not to honor the terms of such Contract. Except as set
forth in Section 3.1(q) of the Insurdata Disclosure Memorandum, neither
Insurdata nor any of its Subsidiaries nor, to the knowledge of
Insurdata, any other party to such Contract is in violation or breach
of or default under any such Contract (or with or without notice or
lapse of time or both, would be in violation or breach of or default
under any such Contract), which violations, breach or default would
individually or in the aggregate have a Material Adverse Effect on
Insurdata As used in this Agreement "Key Employee" shall mean employees
of a Party, having a salary of $100,000 or more per year.
(r) Related Party Transactions. Except as set forth in Section
3.1(r) of the Insurdata Disclosure Memorandum, no director, officer,
Key Employee, "affiliate" or "associate" (as such terms are defined in
Rule 12b-2 under the Exchange Act, each a
27
"Related Party") of Insurdata (i) has borrowed any monies from or has
outstanding any indebtedness, liabilities or other similar obligations
to Insurdata or any of its Subsidiaries; (ii) owns any direct or
indirect interest of any kind in, or is a director, officer, employee,
partner, affiliate or associate of, or consultant or lender to, or
borrower from, or has the right to participate in the management,
operations or profits of, any person or entity which is (A) a
competitor, supplier, customer, distributor, lessor, tenant, creditor
or debtor of Insurdata or any of its Subsidiaries, (B) engaged in a
business related to the business of Insurdata or any of its
Subsidiaries, or (C) participating in any transaction to which
Insurdata or any of its Subsidiaries is a party; or (iii) is otherwise
a party to any contract, arrangement or understanding with Insurdata or
any of its Subsidiaries.
(s) Liens. Except as set forth in Section 3.1(s) of the Insurdata
Disclosure Memorandum, neither Insurdata nor any of its Subsidiaries
has granted, created, or suffered to exist with respect to any of its
assets, any mortgage, pledge, charge, hypothecation, collateral
assignment, lien (statutory or otherwise), encumbrance or security
agreement of any kind or nature whatsoever (collectively, the "Liens").
(t) Operations; Insurance. Section 3.1(t) of the Insurdata
Disclosure Memorandum contains a true and complete list and description
of all liability, property, workers compensation, directors and
officers liability, and other similar insurance policies or agreements
that insure the business, operations, or affairs of Insurdata and its
Subsidiaries or affect or relate to the ownership, use, or operations
of any of the assets or properties of Insurdata and its Subsidiaries.
Excluding insurance policies that have expired and been replaced in the
ordinary course of business, no insurance policy has been canceled
within the last year except as disclosed in Section 3.1(t) of the
Insurdata Disclosure Memorandum, and, to the knowledge of Insurdata or
its Subsidiaries, no threat has been made to cancel any insurance
policy of any of Insurdata or its Subsidiaries during such period and,
to Insurdata's knowledge, there is no basis for any such cancellation.
Except as set forth in Section 3.1(t) of the Insurdata Disclosure
Memorandum, there are no claims that are pending under any of the
insurance policies described in Section 3.1(t) of the Insurdata
Disclosure Memorandum.
(u) Board Recommendation and Shareholder Approval. The Board of
Directors of Insurdata has, at a meeting duly called and held, or by
the unanimous written consent in lieu of a formal meeting (i)
determined that this Agreement and the transactions contemplated hereby
are fair to and in the best interests of the shareholders of Insurdata
and has approved the same, (ii) resolved to recommend, subject to the
fiduciary duties of the Board of Directors, that the shareholders of
Insurdata approve this Agreement and the transactions contemplated
herein, and (iii) resolved to call a special meeting of the
shareholders of Insurdata to approve the Merger. The Board of Directors
of Insurdata has taken all action necessary to exempt the transactions
contemplated by this Agreement from (i) the operation of any "fair
price," moratorium," "control share
28
acquisition," "business combination" or any other anti-takeover statute
or similar statute enacted under the state or federal laws of the
United States or similar statute or regulation (a "Takeover Statute")
and (ii) any restrictions or limitations set forth in the Articles of
Incorporation or By-Laws of Insurdata, other than approval by the
requisite shareholders of Insurdata.
(v) Vote Required. The affirmative vote of the holders of at least
two-thirds of the outstanding shares of Insurdata Common Stock is the
only vote of the holders of any class or series of Insurdata's capital
stock necessary (under applicable law or otherwise) to approve the
Merger and the transactions contemplated hereby.
(w) No Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of
Insurdata or any of its Subsidiaries.
(x) Questionable Payments. To the knowledge of Insurdata, no
current or former director, officer, representative, agent or employee
of Insurdata or any of its Subsidiaries (when acting in such capacity
or otherwise on behalf of Insurdata or any of its Subsidiaries) (i) has
used or is using corporate funds for any illegal contributions, gifts,
entertainment or other unlawful expenses relating to political
activity; (ii) has used or is using any corporate funds for any direct
or indirect unlawful payments to any foreign or domestic government
officials or employees; (iii) has violated or is violating any
provision of the Foreign Corrupt Practices Act of 1977, (iv) has
established or maintained, or is maintaining, any unlawful or
unrecorded fund of corporate monies or other properties, (v) has made
any false or fictitious entries on the books and records of Insurdata
or any of its Subsidiaries, (vi) has made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment of any nature
using corporate funds or otherwise on behalf of Insurdata or any of its
Subsidiaries; or (vii) made any material gift of assets or services
that is not deductible for federal income tax purposes using corporate
funds or otherwise on behalf of Insurdata or any of its Subsidiaries.
3.2 Representations and Warranties of HealthAxis. Except as disclosed
in the disclosure memorandum delivered by HealthAxis (the "HealthAxis Disclosure
Memorandum") at or prior to the date of this Agreement (it being understood that
each section of the HealthAxis Disclosure Memorandum shall list all items
applicable to such section, although the inadvertent omission of an item from
one section shall not be a breach of this Agreement if such item and an
explanation of the nature of such item is clearly disclosed in another section
of the HealthAxis Disclosure Memorandum), HealthAxis represents and warrants to
Insurdata and UICI as follows:
(a) Organization, Standing and Power. HealthAxis is a corporation
duly organized, validly existing and in good standing under the laws of
the Commonwealth of
29
Pennsylvania, has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now
being conducted and is duly qualified or licensed to do business as a
foreign corporation and in good standing to conduct business in each
jurisdiction in which the business it is conducting, or the operation,
ownership or leasing of its properties, makes such qualification or
license necessary, other than such jurisdictions where the failure so
to qualify or become so licensed would not, individually or in the
aggregate, have a Material Adverse Effect on HealthAxis. HealthAxis has
heretofore made available to Insurdata complete and correct copies of
its Articles of Incorporation, as currently in effect as of the date of
this Agreement, and its Bylaws, as currently in effect as of the date
of this Agreement.
(b) Capital Structure. As of the date of this Agreement, the
authorized capital stock of HealthAxis consists of 40,000,000 shares of
HealthAxis Common Stock and 5,500,000 shares of preferred stock. As of
the date of this Agreement, there were (i) 16,738,811 shares of
HealthAxis Common Stock issued and outstanding and (ii) 3,031,191
shares of preferred stock, par value $1.00 per share, issued and
outstanding of which (i) 545,916 outstanding shares have been
designated as Series A Convertible Preferred Stock (convertible into
545,916 shares of Common Stock); (ii) 625,529 outstanding shares have
been designated as Series B Convertible Preferred Stock (convertible
into 625,529 shares of Common Stock); (iii) 1,526,412 outstanding
shares have been designated as Series C Convertible Preferred Stock
(convertible into 1,526,412 shares of Common Stock); and (iv) 333,334
outstanding shares have been designated as Series D Convertible
Preferred Stock (convertible into 333,334 shares of Common Stock)
(collectively, the Series A Convertible Preferred Stock, Series B
Convertible Preferred Stock, Series C Convertible Preferred Stock and
Series D Convertible Preferred Stock is referred to herein as the
"HealthAxis Preferred Stock"). No shares of HealthAxis Common Stock or
HealthAxis Preferred Stock are held in treasury. All outstanding shares
of HealthAxis Common Stock and HealthAxis Preferred Stock are validly
issued, fully paid and nonassessable and are not subject to preemptive
or similar rights. As of the date of this Agreement, 3,117,096 shares
of HealthAxis Common Stock are subject to issuance pursuant to the
exercise of stock options (all options issued pursuant the HealthAxis
Employee Stock Option Plans (defined below) are referred to herein
collectively, as the "HealthAxis Options" and individually as a
"HealthAxis Option") issued and outstanding under the HealthAxis
Employee Stock Option Plan (the "HealthAxis Stock Option Plans") (of
which 1,482,206 shares of HealthAxis Common Stock are subject to vested
options), and 1,050,500 shares of HealthAxis Common Stock are subject
to issuance pursuant to the exercise of outstanding warrants and 75,000
shares of HealthAxis Series D Preferred Stock are subject to issuance
pursuant to the exercise of outstanding warrants. Section 3.2(b) of the
HealthAxis Disclosure Memorandum sets forth the following information
with respect to each HealthAxis Option outstanding as of the date
hereof: (i) the particular plan pursuant to which such HealthAxis
Option was granted; (ii) the name of the optionee; (iii) the number of
shares of HealthAxis Common
30
Stock subject to such HealthAxis Option; (iv) the exercise price of
such HealthAxis Option; (v) the date on which such HealthAxis Option
was granted; and (vi) the date on which such HealthAxis Option expires.
HealthAxis has delivered to Insurdata accurate and complete copies of
the HealthAxis Stock Option Plans and the stock option agreements
evidencing all HealthAxis Options granted under the HealthAxis Stock
Option Plans. Set forth in Section 3.2(b) of the HealthAxis Disclosure
Memorandum is a true and complete list of the following: (i) Restricted
Share Grants of shares of HealthAxis Common Stock and a total thereof,
and (ii) any Change in Control Share Grants of HealthAxis to issue
shares of HealthAxis Common Stock as a result of the transactions
contemplated hereby and a total thereof. There are no bonds,
debentures, notes or other indebtedness of HealthAxis, or assets of any
other entities convertible into, or exchangeable for, securities of
HealthAxis except as provided in this Section 3.2(b) or Section 3.2(b)
of the HealthAxis Disclosure Memorandum. Except as set forth in this
Section 3.2(b) or in Section 3.2(b) of the HealthAxis Disclosure
Memorandum, there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of
any kind to which HealthAxis or any HealthAxis Subsidiary is a party or
by which such entity is bound, obligating HealthAxis or any HealthAxis
Subsidiary to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock, securities or other
ownership interests of HealthAxis or any HealthAxis Subsidiary or
obligating HealthAxis or any HealthAxis Subsidiary to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking or obligating
HealthAxis or any HealthAxis Subsidiary to repurchase, redeem or
otherwise acquire any outstanding shares of capital stock, securities
or other ownership interests of HealthAxis or any HealthAxis
Subsidiary. Except as set forth in Section 3.2(b) of the HealthAxis
Disclosure Memorandum, there are no commitments, agreements,
arrangements or undertakings of any kind to which HealthAxis or any
HealthAxis Subsidiary is party, or by which such entity is bound,
obligating HealthAxis or any HealthAxis Subsidiary to make any equity
or similar investment in, or capital contribution to, any Person.
Except as set forth in Section 3.2(b) of the HealthAxis Disclosure
Memorandum, the execution, delivery and performance by HealthAxis of
this Agreement and the transactions contemplated hereby will not result
in the acceleration of any HealthAxis Option and HealthAxis will not
take any action to cause any such acceleration.
(c) Subsidiaries; Investments. Section 3.2(c) of the HealthAxis
Disclosure Memorandum sets forth for HealthAxis and each Subsidiary of
HealthAxis, its exact legal name, the jurisdiction of its incorporation
or organization, its federal employer identification number, its
address, telephone number and facsimile number, its directors and
officers, and all fictitious, assumed or other names of any type that
are registered or used by it or under which it has done business at any
time since such company's date of incorporation. Each Subsidiary is an
entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has
the
31
power and authority and all necessary government approvals to own,
lease and operate its properties and to carry on its business as now
being conducted. Each Subsidiary of HealthAxis is duly qualified or
licensed and in good standing to do business in each jurisdiction in
which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing
necessary. HealthAxis has heretofore made available to Insurdata
complete and correct copies of the articles of incorporation (or other
organizational documents) and bylaws (each as amended) of each of its
Subsidiaries. Section 3.2(c) of the HealthAxis Disclosure Memorandum
sets forth, as to each Subsidiary of HealthAxis, its authorized capital
stock and the number of issued and outstanding shares of capital stock
(or similar information with respect to any Subsidiary not organized as
a corporate entity) and each owner thereof. All outstanding shares of
the capital stock of the Subsidiaries of HealthAxis are validly issued,
fully paid and nonassessable and are not subject to preemptive or other
similar rights. Except as set forth on Section 3.2(c) of the HealthAxis
Disclosure Memorandum, HealthAxis is the sole record and beneficial
owner of all of the shares of capital stock or other ownership
interests of each HealthAxis Subsidiary.
(d) Authority; No Violations; Consents and Approvals.
(i) HealthAxis has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of HealthAxis.
This Agreement has been duly executed and delivered by HealthAxis and
assuming that this Agreement constitutes the valid and binding
agreement of Insurdata, UICI and Provident, constitutes a valid and
binding obligation of HealthAxis enforceable in accordance with its
terms and conditions except that the enforcement hereof may be limited
by (A) applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally, (B) general principles of
equity (regardless of whether enforceability is considered in a
proceeding at law or in equity) and (C) any ruling or action of any
Governmental Entity as set forth in Section 3.2(d)(iii).
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by HealthAxis will
not result in any Violation pursuant to (A) any provision of the
Articles of Incorporation or Bylaws of HealthAxis or the comparable
documents of any of its Subsidiaries or (B) except as to which
requisite waivers or consents have been obtained as specifically
identified in Section 3.2(d) of the HealthAxis Disclosure Memorandum
and assuming the consents, approvals, authorizations or permits and
filings or notifications referred to in paragraph (iii) of this Section
3.2(d) are duly and timely obtained or made, any loan or credit
agreement, note, mortgage, deed of trust, indenture, lease, or any
other agreement,
32
obligation, instrument, concession or license or any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
HealthAxis, or any of its properties or assets, except, in the case of
clause (B), for such Violations which would not, individually or in the
aggregate, adversely affect HealthAxis and its Subsidiaries.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from a
Governmental Entity is required by or with respect to HealthAxis or any
of its Subsidiaries in connection with the execution and delivery of
this Agreement by HealthAxis or the consummation by HealthAxis or
Insurdata of the transactions contemplated hereby, except for: (A) the
filing of a pre- merger notification and report form under the HSR Act,
and the expiration or termination of the applicable waiting period
thereunder; (B) the filing of the Articles of Merger with the Secretary
of State of the State of Texas and the Department of State of the
Commonwealth of Pennsylvania; (C) such filings as may be required by
applicable federal or state securities laws; and (D) where failure to
obtain consent, give or make any approval, order, or authorization of,
or registration, declaration or filing with notice to, or permit from a
Governmental Entity would not have a Material Adverse Effect on
HealthAxis.
(e) Government Filings. HealthAxis has made available to Insurdata
a true and complete copy of each report or schedule filed by HealthAxis
with any Governmental Entity.
(f) Information Supplied. None of the information supplied or to be
supplied by HealthAxis and Provident to Insurdata and UICI contains or
will contain any untrue statement of a material fact or omits or will
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading. The books of account and
other financial records of HealthAxis and its Subsidiaries have been
maintained in form and substance adequate for preparing audited
financial statements in accordance with GAAP.
(g) Compliance with Applicable Laws.
(i) Except as disclosed in Section 3.2(g) of the HealthAxis
Disclosure Memorandum, the business of HealthAxis and each of its
Subsidiaries is being conducted in compliance in all material respects
with all applicable laws, including, without limitation, all insurance
laws, ordinances, rules and regulations, decrees and orders of any
Governmental Entity, and all notices, reports, documents and other
information required to be filed thereunder within the last three years
were properly filed and were in compliance in all material respects
with such laws.
33
(ii) HealthAxis and each of its Subsidiaries owns or validly
holds all Licenses which are necessary for it to own, lease or operate
its properties and assets and to conduct its business as now conducted,
except for such Licenses the failure to hold which would not
individually or in the aggregate have a Material Adverse Effect on
HealthAxis. The business of HealthAxis and each of its Subsidiaries has
been and is being conducted in compliance in all material respects with
all such Licenses. All such Licenses are in full force and effect, and
there is no proceeding or investigation pending or, to the knowledge of
HealthAxis, threatened which would reasonably be expected to lead to
the revocation, amendment, failure to renew, limitation, suspension or
restriction of any such License.
(h) Absence of Certain Changes or Events. Since September 30, 1999,
there has not been, occurred, or arisen any change, any event
(including without limitation any damage, destruction, or loss whether
or not covered by insurance), condition, or state of facts of any
character with respect to the business or financial condition of
HealthAxis or any of its Subsidiaries, except (i) as disclosed in
Section 3.2(h) of the HealthAxis Disclosure Memorandum and (ii) for
events in the ordinary course of business consistent with past practice
that would not, individually or in the aggregate, result in a Material
Adverse Effect on HealthAxis.
(i) Financial Statements; No Material Undisclosed Liabilities. The
consolidated financial statements of HealthAxis dated at September 30,
1999 have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present, in accordance with the applicable
requirements of GAAP, the consolidated financial position of its
Subsidiaries, as of the dates thereof and the consolidated results of
operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
HealthAxis has no Subsidiaries which are not consolidated for
accounting purposes. Since September 30, 1999, neither HealthAxis nor
any of its Subsidiaries has incurred any liabilities, except: (i)
liabilities arising in the ordinary course of business consistent with
past practice, which individually or in the aggregate would not have a
Material Adverse Effect on HealthAxis; (ii) as specifically and
individually reflected in Section 3.2(i) of the HealthAxis Disclosure
Memorandum; or (iii) other liabilities, which, individually or in the
aggregate, together with those liabilities referenced in subparagraphs
(i) and (ii), would not have a Material Adverse Effect on HealthAxis.
(j) Litigation. Except as set forth on Section 3.2(j) of the
HealthAxis Disclosure Memorandum, (A) there is no suit, action,
investigation, arbitration or proceeding pending or, to the knowledge
of HealthAxis, threatened against or affecting HealthAxis or any of its
Subsidiaries, at law or in equity, before any person and (B) there
34
is no writ judgment, decree, injunction, rule or similar order of any
Governmental Entity or arbitrator outstanding against HealthAxis or any
of its Subsidiaries.
(k) Taxes. Except as set forth in Section 3.2(k) of the HealthAxis
Disclosure Memorandum:
(i) HealthAxis and each of its Subsidiaries has (x) duly and
timely filed (or there have been filed on their behalf) with the
appropriate taxing authorities all Tax Returns required to be filed by
them, and all such Tax Returns are true, correct and complete in all
material respects and (y) timely paid or there have been paid on their
behalf all Taxes shown to be due on such Returns.
(ii) Each of HealthAxis and its Subsidiaries has properly
accrued on its respective financial statements all Taxes due for which
HealthAxis or its Subsidiaries may be liable, whether or not shown on
any Tax Return as being due (including by reason of being a member of
an affiliated group or as a transferee of the assets of, or successor
to, any corporation, person, association, partnership, joint venture or
other entity). Each of HealthAxis and its Subsidiaries has established
(and until the Closing Date shall continue to establish and maintain)
on its books and records reserves that are adequate for the payment of
all Taxes not yet due and payable.
(iii) Each of HealthAxis and its Subsidiaries has complied in
all material respects with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes, including Taxes
required to have been withheld in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder, or
other third party and sales, gross receipts and use taxes, and has,
within the time and manner prescribed by law, withheld and paid over to
the proper governmental authorities all amounts required to be withheld
and paid over under all applicable laws, or such amount are held in
separate bank accounts for such purpose.
(iv) There are no Liens for Taxes upon the assets or properties
of HealthAxis or any of its Subsidiaries except for statutory liens for
current Taxes not yet due.
(v) Neither HealthAxis nor any of its Subsidiaries has
requested any extension of time within which to file any Tax Return in
respect of any taxable year which has not since been filed.
(vi) Based upon HealthAxis' knowledge, Audits exist with regard
to any Taxes or Tax Returns of HealthAxis or any of its Subsidiaries
and there has not been received any written notice that such an Audit
is pending or threatened with respect to any Taxes due from or with
respect to HealthAxis or any of its Subsidiaries or any Tax
35
Return filed by or with respect to HealthAxis or any of its
Subsidiaries No material issues have been raised in any examination by
any taxing authority with respect to the businesses and operations or
HealthAxis or its Subsidiaries which (i) reasonably could be expected
to result in an adjustment to the liability for Taxes for such period
examined or (ii), by application of similar principles, reasonably
could be expected to result in an adjustment to the liability for Taxes
for any other period not so examined.
(vii) None of HealthAxis and its Subsidiaries is a party to any
Tax allocation or sharing agreement. None of HealthAxis and its
Subsidiaries (A) has been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group the common
parent of which was Provident) or (B) has any liability for the Taxes
of any other party (other than any of HealthAxis and its Subsidiaries)
under Treasury Regulation Section 1.1502-6 (or any provision of state,
local or foreign law), as a transferee or successor, by contract or
otherwise.
(l) Pension And Benefit Plans; ERISA.
(i) Section 3.2(l)(i) of the HealthAxis Disclosure Memorandum
sets forth a complete list of all (A) "employee benefit plans" as
defined in sections 3(3) of the ERISA; and (B) all retirement or
deferred compensation plans, incentive compensation plans, stock plans,
unemployment compensation plan, vacation pay, severance pay, bonus or
benefit arrangement, insurance or hospitalization program or any other
fringe benefit arrangements for any current or former employee,
director, consultant or agent, whether pursuant to contract,
arrangement, custom or informal understanding, which does not
constitute an employee benefit plan as defined in section 3(3) of
ERISA, and (C) any employment agreement or consulting agreement, which
HealthAxis, or any of its Subsidiaries or any trade or business,
whether or not incorporated, that together with HealthAxis or any of
its Subsidiaries would be deemed a "single employer" within the meaning
of Section 4001(b) of ERISA (an "HealthAxis ERISA Affiliate"),
maintains, is a party to, participates in or with respect to which has
any liability or contingent liability (such plans and arrangements
referred to as the "HealthAxis Benefit Plans").
(ii) With respect to each HealthAxis Benefit Plan, a complete
and correct copy of each of the following documents (if applicable) has
been provided or made available to HealthAxis: (A) the most recent plan
and related trust documents, and all amendments thereto; (B) the most
recent summary plan description, and all related summaries of material
modifications thereto; (C) the most recent Form 5500 (including
schedules and attachments); (D) the most recent IRS determination
letter or request therefor; and (E) the most recent actuarial reports
(including for purposes of Financial Accounting Standards Board report
no. 87, 106 and 112), if any; and there have been no material changes
in the financial condition in the respective plans from that stated in
the annual reports and actuarial reports supplied. In the case of any
HealthAxis Employee
36
Benefit Plan which is not in written form, Insurdata has been supplied
with an accurate description of such HealthAxis Benefit Plan as in
effect on the date hereof.
(iii) Except as set forth in Section 3.2(l)(iii) of the
HealthAxis Disclosure Memorandum, HealthAxis Benefit Plans and their
related trusts intended to qualify under Sections 401(a) and 501(a) of
the Code, respectively, have received favorable determination letters
from the Internal Revenue Service which cover all applicable law for
which the remedial amendment period (within the meaning of Section
401(b) of the Code and applicable regulations) has expired; neither
HealthAxis nor any of its respective HealthAxis ERISA Affiliates is
aware of any event or circumstance that could reasonably be expected to
result in the failure of such HealthAxis Benefit Plan or its related
trust to be so qualified; and no event has occurred which will or could
give rise to disqualification of any such plan under such sections or
to a tax under section 511 of the Code.
(iv) Except as set forth in Section 3.2(l)(iv) of the
HealthAxis Disclosure Memorandum, the HealthAxis Benefit Plans have
been maintained and administered in all respects in accordance with
their terms and applicable laws, and no event has occurred which will
or could cause any such HealthAxis Benefit Plan to fail to comply with
such requirements and no notice has been issued by any governmental
authority questioning or challenging such compliance.
(v) Except as disclosed in Section 3.2(l)(v) of the HealthAxis
Disclosure Memorandum, there are no pending or, to the knowledge of
HealthAxis, threatened actions, claims or proceedings against or
relating to any HealthAxis Benefit Plan other than routine benefit
claims by persons entitled to benefits thereunder. There are no
investigations or audits of or relating to any HealthAxis Benefit Plan.
HealthAxis has no knowledge of any facts which could form the basis of
any such investigation or audit.
(vi) Except as disclosed in Section 3.2(l)(vi) of the
HealthAxis Disclosure Memorandum and as otherwise provided in Section
2.3, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (A) result in
any payment becoming due to any employee (current, former or retired)
of HealthAxis, (B) increase any benefits under any HealthAxis Benefit
Plan, or (C) result in the acceleration of the time of payment of,
vesting of or other rights with respect to any such benefits.
(vii) HealthAxis has no knowledge of any oral or written
statement made by or on behalf of HealthAxis or a HealthAxis ERISA
Affiliate regarding any HealthAxis Benefit Plan that was not in
accordance with such Benefit Plan.
37
(viii) Actuarially adequate accruals for all obligations under
the HealthAxis Benefit Plans are reflected in the financial statements
of HealthAxis and such obligations include a pro rata amount of the
contributions which would otherwise have been made in accordance with
past practices and applicable law for the plan years which include the
Closing Date.
(ix) Except as described in Section 3.2(l)(ix) of the
HealthAxis Disclosure Memorandum, there have been no acts or omissions
by HealthAxis which have given rise to or may give rise to fines,
penalties, taxes or related charges under section 502 of ERISA or
Chapters 43, 47 or 68 of the Code for which HealthAxis or any
HealthAxis ERISA Affiliate may be liable.
(x) Except as described in section 3.2(l)(x) of the HealthAxis
Disclosure Memorandum, none of the payments payable under the
HealthAxis Benefit Plans would as a result of the Merger, in the
aggregate, constitute excess parachute payments (as defined in section
280G of the Code (without regard to subsection (b)(4) thereof)).
(xi) No HealthAxis Benefit Plan is subject to Title IV of
ERISA.
(xii) None of HealthAxis nor any HealthAxis ERISA Affiliate
contributes to, has contributed to, or has any liability or contingent
liability with respect to a multiemployer plan (as defined in section
3(37) of ERISA).
(xiii) There has been no act or omission that would impair the
ability of Insurdata and the HealthAxis ERISA Affiliates (or any
successor thereto) to unilaterally amend or terminate any HealthAxis
Benefit Plan.
(xiv) Except as described in Section 3.2(l)(xiv) of the
HealthAxis Disclosure Memorandum, there are no self-insured HealthAxis
Benefit Plans. Except as described in Section 3.2(l)(xiv) of the
HealthAxis Disclosure Letter, with respect to each self-insured
HealthAxis Benefit Plan, HealthAxis and/or its Subsidiaries maintains a
reserve of no less than twenty-five percent (25%) of the aggregate
claims paid with respect to the most recently completed plan year.
(xv) Except as set forth in Section 3.2(1)(xv) of the
HealthAxis Disclosure Memorandum, each HealthAxis Benefit Plan is fully
funded to the extent that a benefit has accrued thereunder or that an
account balance is maintained on behalf of an Employee notwithstanding
whether, under the terms of such Plan or as permitted by applicable
law, such Plan is not required to be funded. Except as set forth in
Section 3.2(1)(xv) of the HealthAxis Disclosure Memorandum, each
HealthAxis Benefit Plan is fully funded to the extent that a benefit
has accrued thereunder or that an account balance
38
is maintained on behalf of an Employee notwithstanding whether, under
the terms of such Plan or as permitted by applicable law, such Plan is
not required to be funded.
(m) Labor Matters.
(i) Except as set forth in Section 3.2(m) of the HealthAxis
Disclosure Memorandum, (A) neither HealthAxis nor any of its
Subsidiaries is a party to any labor or collective bargaining agreement
and no employees of HealthAxis or any of its Subsidiaries are
represented by any labor organization; (B) within the preceding three
years, there have been no representation or certification proceedings,
or petitions seeking a representation proceeding, pending or, to the
knowledge of HealthAxis, threatened in writing to be brought or filed
with the National Labor Relations Board or any other labor relations
tribunal or authority; and (C) within the preceding three years, to the
knowledge of HealthAxis, there have been no organizing activities
involving HealthAxis or any of its Subsidiaries with respect to any
group of employees of HealthAxis or any of its Subsidiaries.
(ii) There are no strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances or other material labor
disputes pending or threatened in writing against or involving
HealthAxis or any of its Subsidiaries. There are no unfair labor
practice charges, grievances or complaints pending or, to the knowledge
of HealthAxis, threatened in writing by or on behalf of any employee or
group of employees of HealthAxis or any of its Subsidiaries. Each of
HealthAxis and its Subsidiaries relations with its employees are
currently on a good and normal basis.
(iii) HealthAxis and each of its Subsidiaries is in compliance
with all laws, regulations and orders relating to the employment of
labor, including all such laws, regulations and orders relating to
wages, hours, WARN Act, collective bargaining, discrimination, civil
rights, safety and health, workers' compensation and the collection and
payment of withholding and/or social security taxes and any similar
tax, except where non compliance would not individually or in the
aggregate adversely affect HealthAxis and its Subsidiaries taken as a
whole in any material respect.
(n) Environmental Matters.
(i) Except as set forth in Section 3.2(n) of the HealthAxis
Disclosure Memorandum:
(A) The operations of HealthAxis and each of its
Subsidiaries have been and, as of the Closing Date,
will be, in compliance with all Environmental Laws,
except for such noncompliance which would not
individually or in the
39
aggregate have a Material Adverse Effect on HealthAxis
and its Subsidiaries;
(B) Neither HealthAxis nor any of its Subsidiaries is
subject to any outstanding orders from, or agreements
with, any Governmental Entity or other person
respecting (x) Environmental Laws, (y) Remedial Action
or (z) any Release or threatened Release of a Hazardous
Material;
(C) Neither HealthAxis nor any of its Subsidiaries has
received any written communication alleging, with
respect to any such party, the violation of or
potential liability under any Environmental Law;
(D) No judicial or administrative proceedings or
governmental investigations are pending or, to the
knowledge of HealthAxis, threatened against HealthAxis
or any of its Subsidiaries alleging the violation of or
seeking to impose liability pursuant to any
Environmental Law; and
(E) No environmental approvals, clearances or consents are
required under applicable law from any governmental
entity or authority in order to consummate the
transactions contemplated herein.
(ii) This Section 3.2(n) sets forth the sole representations
and warranties of HealthAxis with respect to Environmental Laws.
(o) Property and Assets.
(i) Section 3.2(o)(i) of the HealthAxis Disclosure Memorandum
sets forth all of the real property owned in fee by HealthAxis and its
Subsidiaries. HealthAxis or its Subsidiaries have good and marketable
title to each parcel of real property owned by them free and clear of
all Liens, except as otherwise set forth in Section 3.2(o)(i) of the
HealthAxis Disclosure Memorandum.
(ii) Each of the Real Property Leases under which HealthAxis or
any of its Subsidiaries uses or occupies or has the right to use or
occupy, now or in the future, any real property is valid, binding and
in full force and effect, all rent and other sums and charges payable
by HealthAxis or any of its Subsidiaries as a tenant thereunder are
current, and no termination event or condition or uncured default of a
material nature on the part of HealthAxis or any of its Subsidiaries
or, to HealthAxis' knowledge, the
40
landlord, exists under any Real Property Lease. HealthAxis and its
Subsidiaries have a good and valid leasehold interest in each parcel of
real property leased by them free and clear of all Liens, except as
otherwise set forth in Section 3.2(o)(ii) of the HealthAxis Disclosure
Memorandum. Except as set forth in Section 3.2(o)(ii) of the HealthAxis
Disclosure Memorandum, all real property used or occupied by HealthAxis
or any HealthAxis Subsidiary is structurally sound and in good
condition, normal wear and tear excepted, and is sufficient for its
current uses and the operations and business of HealthAxis and its
Subsidiaries as presently conducted.
(iii) Except as set forth in Section 3.2(o)(iii) of the
HealthAxis Disclosure Memorandum, HealthAxis and its Subsidiaries own
good and indefeasible title to, or have a valid leasehold interest in
or a valid right under contract to use, all tangible personal property
that is used in the conduct of their business, free and clear of any
Liens, except for any mechanics or similar statutory liens arising in
the ordinary course of business. All such tangible personal property is
in good operating condition and repair (normal wear and tear excepted)
and is suitable for its current uses and the operations and business of
HealthAxis and its Subsidiaries as presently conducted.
(p) Intellectual Property.
(i) Section 3.2(p) of the HealthAxis Disclosure Memorandum sets
forth, for the Intellectual Property owned by HealthAxis or any of its
Subsidiaries, a complete and accurate list of all U.S. and foreign (a)
Patents and Patent Applications; (b) Trademarks; (c) Copyright
registrations and mask work, Copyright and mask work applications, and
material unregistered Copyrights. Section 3.2(p) of the HealthAxis
Disclosure Memorandum lists all Software (other than readily available
commercial software programs) which are owned, licensed, leased, by
HealthAxis or any of its Subsidiaries, and identifies which Software is
owned, licensed, or leased, as the case may be, and, for all HealthAxis
Software, provides a product description of the HealthAxis Software,
the language in which it was written and the types of hardware
platforms on which it runs.
(ii) Section 3.2(p) of the HealthAxis Disclosure Memorandum
sets forth a complete and accurate list of all agreements, enforceable
understandings and enforceable commitments (whether oral or written,
and whether between HealthAxis or any of its Subsidiaries and third
parties or inter-corporate) to which HealthAxis or any of its
Subsidiaries is a party or otherwise bound, (i) granting or obtaining
any right to use or practice any rights under any Intellectual
Property, or (ii) restricting HealthAxis' or any of its Subsidiaries'
rights to use any Intellectual Property, including License Agreements.
The License Agreements are valid and binding obligations of all parties
thereto, enforceable in accordance with their terms, and there exists
no event or condition which will result in a violation or breach of, or
constitute (with or without due notice of lapse of
41
time or both) a default by any party under any such License Agreement.
Neither HealthAxis nor any of its Subsidiaries has licensed or
sublicensed its rights in any Intellectual Property other than pursuant
to the License Agreements and there are no exclusive License Agreements
for HealthAxis Software or other Intellectual Property owned by
HealthAxis and its Subsidiaries. No royalties, honoraria or other fees
are payable by HealthAxis or any of its Subsidiaries to any third
parties for the use of or right to use any Intellectual Property
except, pursuant to the License Agreements.
(iii) Except as set forth on Section 3.2(p) of the HealthAxis
Disclosure Memorandum:
(A) HealthAxis or one of its Subsidiaries owns, or has a
valid right to use, free and clear of all Liens, all of
the Intellectual Property necessary to permit the
operation of HealthAxis and its Subsidiaries as
presently conducted and as proposed to be conducted.
HealthAxis or one of its Subsidiaries is listed in the
records of the appropriate United States, state, or
foreign registry as the sole current owner of record
for each application and registration listed on Section
3.2(p) of the HealthAxis Disclosure Memorandum.
(B) All of such HealthAxis Software and other Intellectual
Property were created as a work for hire (as defined
under U.S. copyright law) for HealthAxis or its
Subsidiaries. To the extent that any author or
developer of any HealthAxis Software or other
Intellectual Property was not a regular full-time
salaried employee of HealthAxis or its Subsidiaries at
the time such person contributed to such HealthAxis
Software or other Intellectual Property, such author or
developer has executed agreements assigning to
HealthAxis or its Subsidiaries all of such HealthAxis
Software and Intellectual Property developed by such
author or developer.
(C) The Intellectual Property owned by HealthAxis or any of
its Subsidiaries and, to the knowledge of HealthAxis
and its Subsidiaries, any Intellectual Property used by
HealthAxis or any of its Subsidiaries, is subsisting,
in full force and effect, and has not been canceled,
expired, or abandoned, and is valid and enforceable.
42
(D) There is no pending or, to the knowledge of HealthAxis
and its Subsidiaries, threatened claim, suit,
arbitration or other adversarial proceeding before any
court, agency, arbitral tribunal, or registration
authority in any jurisdiction (i) involving the
Intellectual Property owned by HealthAxis or any of its
Subsidiaries, or to the knowledge of HealthAxis and its
Subsidiaries, the Intellectual Property licensed to
HealthAxis or any of its Subsidiaries or (ii) alleging
that the activities or the conduct of HealthAxis' or
any of its Subsidiaries' business does nor will
infringe upon, violate or constitute the unauthorized
use of the intellectual property rights of any third
party or challenging the ownership, use, validity,
enforceability or registrability of any Intellectual
Property by HealthAxis or any of its Subsidiaries.
There are no settlements, forebearances to use,
consents, judgments, or orders or similar obligations
other than the License Agreements which (a) restrict
HealthAxis' or any of its Subsidiaries' rights to use
any Intellectual property, (b) restrict HealthAxis' or
any Subsidiaries' business in order to accommodate a
third party's intellectual property rights or (c)
permit third parties to use any Intellectual Property
owned or controlled by HealthAxis or any of its
Subsidiaries.
(E) No other Software, other than ordinary upgrades to the
HealthAxis Software, is used to operate the business of
HealthAxis and its Subsidiaries as presently conducted.
To the best knowledge of HealthAxis, no rights of any
third party are necessary to market, license, sell,
modify, update, and/or create derivative works for the
HealthAxis Software listed at Section 3.2(p) of the
HealthAxis Disclosure Memorandum as presently and
contemplated to be marketed, licensed, sold, modified,
updated and/or created by HealthAxis.
(F) HealthAxis and its Subsidiaries maintains
machine-readable master-reproducible copies of the
object and executable code, master reproducible copies
of the source code listings, technical documentation
and user manuals for the most current releases or
versions of the HealthAxis Software and for all earlier
releases or versions thereof currently being supported
by HealthAxis and its
43
Subsidiaries; in each case, the machine-readable copy
of the object and executable code substantially
conforms to the corresponding source code listing from
which it was compiled; the HealthAxis Software is
written in the language as set forth Section 3.2(p) of
the HealthAxis Disclosure Memorandum, for use on the
hardware set forth at Section 3.2(p) of the HealthAxis
Disclosure Memorandum with standard operating systems;
the HealthAxis Software can be maintained and modified
by reasonably competent programmers familiar with such
language, hardware and operating systems; in each case,
each component of the HealthAxis Software that creates,
accepts, displays, stores, retrieves, accesses,
recognizes, distinguishes, compares, sorts,
manipulates, processes, calculates or otherwise uses
dates or date-related data will do so accurately,
without operating defects, using dates in the twentieth
and twenty-first centuries, and will not be adversely
affected by the advent of the year 2000, the advent of
any leap year, the advent of the twenty-first century,
or the transition from the twentieth century through
the year 2000 and into the twenty-first century,
provided that all hardware and operating software in
connection with which the HealthAxis Software is used
perform in such a manner; with respect to the hardware
and third party application and operating software with
which the HealthAxis Software is used, HealthAxis and
its Subsidiaries have received written assurances from
the hardware manufacturers and third party software
licensors that this hardware and software is Y2K
Compliant and such hardware and software have
successfully completed Y2K Compliance testing
administered by or on behalf of HealthAxis and its
Subsidiaries, to the knowledge of HealthAxis and its
Subsidiaries the HealthAxis Software does not contain
any unauthorized code such as a virus, Trojan horse,
worm, or other software routine designed to permit
unauthorized access to disable, erase or otherwise harm
the HealthAxis Software, hardware or data
automatically, with the passage of time, or under the
control of a person other than the Merger Parties. The
twenty-first century will be deemed to commence on
January 1, 2001.
44
(G) HealthAxis and its Subsidiaries have taken reasonable
precautions to test for and prevent unauthorized codes
such as viruses, Trojan horses, worms, or other
software routines designed to permit unauthorized
access to disable, erase or otherwise harm the
HealthAxis Software with the passage of time, or under
the control of a person other than HealthAxis or its
Subsidiaries. No export control licenses are necessary
for the HealthAxis Software in order to permit the
operation of the business of HealthAxis and its
Subsidiaries as presently conducted.
(H) The conduct of HealthAxis' and its Subsidiaries'
business as currently conducted or planned to be
conducted does not infringe upon (either directly or
indirectly such as through contributory infringement or
inducement to infringe) any intellectual property
rights owned or controlled by any third party. To the
knowledge of HealthAxis and its Subsidiaries, no third
party is misappropriating, infringing, or violating any
Intellectual Property owned or used by HealthAxis or
any of its Subsidiaries and no such claims, suits,
arbitrations or other adversarial proceedings have been
brought against any third party by HealthAxis or any of
its Subsidiaries which remain unresolved.
(I) HealthAxis and each of its Subsidiaries take reasonable
measures to protect the confidentiality of and all
proprietary rights in its Trade Secrets, including
requiring its employees and other parties having access
thereto to execute written non-disclosure agreements.
To the knowledge of HealthAxis and its Subsidiaries, no
Trade Secret has been disclosed or authorized to be
disclosed to any third party other than pursuant to a
non-disclosure agreement. To the knowledge of
HealthAxis and its Subsidiaries, no party to any
non-disclosure agreement relating to its Trade Secrets
is in breach or default thereof.
(J) No current or former partner, director, officer, or
employee of HealthAxis or any of its Subsidiaries (or
any of their respective predecessors in interest) will,
after giving effect to the transactions contemplated
herein, own or retain any rights in or to (including,
but not limited to, the right to royalty payments) any
of the Intellectual Property owned,
45
marketed, used or under development by HealthAxis and
its Subsidiaries.
(iv) The consummation of the transactions contemplated hereby
will not result in the loss or impairment of HealthAxis' or any of its
Subsidiaries' rights to own or use any of the Intellectual Property,
nor will it require the consent of any governmental authority or third
party in respect of any such Intellectual Property.
(q) Material Contracts. Section 3.2(q) of the HealthAxis Disclosure
Memorandum contains a true and complete list of each of the following
written or oral Contracts in effect as of the date of this Agreement
(true and complete copies of any written Contract or summaries in
writing describing any oral Contract of which have been made available
to Insurdata) to which HealthAxis or any of its Subsidiaries is a party
or by which any of their respective assets or properties is or may be
bound (each of which is a "HealthAxis Material Contract"):
(i) all employment, agency (other than insurance agency),
consultation, or representation Contracts or other Contracts of any
type (including without limitation loans or advances) with any present
officer, director, Key Employee (as defined below), agent (other than
an insurance agent), consultant, or other similar representative of
HealthAxis or any of its Subsidiaries (or former officer, director, Key
Employee, agent (other than an insurance agent), consultant or similar
representative of HealthAxis or any of its Subsidiaries if there exists
any present or future liability with respect to such Contract);
(ii) all Contracts relating to the borrowing of money by
HealthAxis, relating to the deferred purchase price for property or
services, or relating to the direct or indirect guarantee by HealthAxis
or any of its Subsidiaries of any liability;
(iii) all Contracts pursuant to which HealthAxis or any of its
Subsidiaries has agreed to indemnify or hold harmless any person or
entity (other than indemnifications or hold harmless covenants in the
ordinary course of business and consistent with past practice);
(iv) all leases or subleases of real property used in the
business, operations, or affairs of HealthAxis or any of its
Subsidiaries;
(v) all Contracts under which any rights in and/or ownership of
any material software products, technology or other intangible property
of HealthAxis or its Subsidiaries was acquired; and
46
(vi) any other Contract requiring the payment of at least
$250,000 or which cannot be terminated upon 60 days or less notice.
Each Contract disclosed or required to be disclosed in Section 3.2(q) of the
HealthAxis Disclosure Memorandum is in full force and effect and constitutes a
legal, valid and binding obligation of HealthAxis or any of its Subsidiaries to
the extent any such entity is a party thereto and, to the knowledge of
HealthAxis, each other party thereto. Neither HealthAxis nor any of its
Subsidiaries has received from any other party to such Contract any written
notice of termination or intention to terminate or not to honor the terms of
such Contract, or to the knowledge of HealthAxis, any oral notice of termination
or intention to terminate or not to honor the terms of such Contract. Except as
set forth in Section 3.2(q) of the HealthAxis Disclosure Memorandum, neither
HealthAxis nor any of its Subsidiaries nor, to the knowledge of HealthAxis, any
other party to such Contract is in violation or breach of or default under any
such Contract (or with or without notice or lapse of time or both, would be in
violation or breach of or default under any such Contract), which violations,
breach or default would individually or in the aggregate have a Material Adverse
Effect on HealthAxis.
(r) Related Party Transactions. Except as set forth in Section
3.2(r) of the HealthAxis Disclosure Memorandum, no Related Party of
HealthAxis (i) has borrowed any monies from or has outstanding any
indebtedness, liabilities or other similar obligations to HealthAxis or
any of its Subsidiaries; (ii) owns any direct or indirect interest of
any kind in, or is a director, officer, employee, partner, affiliate or
associate of, or consultant or lender to, or borrower from, or has the
right to participate in the management, operations or profits of, any
person or entity which is (A) a competitor, supplier, customer,
distributor, lessor, tenant, creditor or debtor of HealthAxis or any of
its Subsidiaries, (B) engaged in a business related to the business of
HealthAxis or any of its Subsidiaries, or (C) participating in any
transaction to which HealthAxis or any of its Subsidiaries is a party;
or (iii) is otherwise a party to any contract, arrangement or
understanding with HealthAxis or any of its Subsidiaries.
(s) Liens. Except as set forth in Section 3.2(s) of the HealthAxis
Disclosure Memorandum, neither HealthAxis nor any of its Subsidiaries
has granted, created, or suffered to exist with respect to any of its
assets, any Liens.
(t) Operations; Insurance. Section 3.2(t) of the HealthAxis
Disclosure Memorandum contains a true and complete list and description
of all liability, property, workers compensation, directors and
officers liability, and other similar insurance policies or agreements
that insure the business, operations, or affairs of HealthAxis and its
Subsidiaries or affect or relate to the ownership, use, or operations
of any of the assets or properties of HealthAxis and its Subsidiaries.
Excluding insurance policies that have expired and been replaced in the
ordinary course of business, no insurance policy has been canceled
within the last year except as disclosed in Section 3.2(t) of the
HealthAxis
47
Disclosure Memorandum, and, to the knowledge of HealthAxis or its
Subsidiaries, no threat has been made to cancel any insurance policy of
any of HealthAxis or its Subsidiaries during such period and, to
HealthAxis's knowledge, there is no basis for any such cancellation.
Except as set forth in Section 3.2(t) of the HealthAxis Disclosure
Memorandum, there are no claims that are pending under any of the
insurance policies described in Section 3.2(t)of the HealthAxis
Disclosure Memorandum.
(u) Board Recommendation. The Board of Directors of HealthAxis, at
a meeting duly called and held or by unanimous written consent, has by
the requisite vote of directors determined that this Agreement and the
transactions contemplated hereby (including any amendment to the
Articles of Incorporation or Bylaws of HealthAxis and the authorization
of any increase in the number of shares of HealthAxis Common Stock
authorized to be issued and any class of HealthAxis Preferred Stock)
are fair to and in the best interests of the shareholders of HealthAxis
be and has approved the same, and resolved to recommend that the
shareholders of HealthAxis approve this Agreement and the transactions
contemplated herein. The Board of Directors of HealthAxis has taken all
action necessary to exempt the transactions contemplated by this
Agreement from (i) the operation of any "fair price," "moratorium,"
"control share acquisition," "business combination" or any other
Takeover Statute and (ii) any restrictions or limitations set forth in
the Articles of Incorporation or Bylaws of HealthAxis, other than
approval by the requisite shareholders of HealthAxis.
(v) Vote Required. The affirmative vote of the holders of a
majority of HealthAxis Common Stock and of a majority of each class of
HealthAxis Preferred Stock are the only votes of the holders of any
class or series of HealthAxis' capital stock necessary under applicable
law or otherwise, to approve the Merger and the other transactions
contemplated hereby on the part of HealthAxis.
(w) No Brokers. Except for BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (whose fee
shall not exceed the amount set forth on Section 3.2(w) of the
HealthAxis Disclosure Memorandum), no broker, investment banker,
financial advisor or other person is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of HealthAxis or any of its
Subsidiaries.
(x) Questionable Payments. To the knowledge of HealthAxis, no
current or former director, officer, representative, agent or employee
of HealthAxis or any of its Subsidiaries (when acting in such capacity
or otherwise on behalf of HealthAxis or any of its Subsidiaries) (i)
has used or is using corporate funds for any illegal contributions,
gifts, entertainment or other unlawful expenses relating to political
activity; (ii) has used or is using any corporate funds for any direct
or indirect unlawful payments to any foreign or domestic government
officials or employees; (iii) has violated or is violating
48
any provision of the Foreign Corrupt Practices Act of 1977, (iv) has
established or maintained, or is maintaining, any unlawful or
unrecorded fund of corporate monies or other properties, (v) has made
any false or fictitious entries on the books and records of HealthAxis
or any of its Subsidiaries, (vi) has made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment of any nature
using corporate funds or otherwise on behalf of HealthAxis or any of
its Subsidiaries; or (vii) made any material gift of assets or services
that is not deductible for federal income tax purposes using corporate
funds or otherwise on behalf of HealthAxis or any of its Subsidiaries.
(y) Offerings. The disclosure documents, if any, and all other
information, in writing or otherwise, provided to prospective
purchasers in the offering by HealthAxis of its securities on the terms
and conditions set forth on Schedule 3 hereto (the "HealthAxis
Offering") and the offering by HealthAxis of its securities on the
terms and conditions set forth on Schedule 4 hereto (the "Provident
Offering"), the proceeds of which are being funded prior to or
contemporaneously with the execution and delivery of this Agreement,
does not and will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The offering
and sale of the securities in the HealthAxis Offering and the Provident
Offering will not be required to be registered under Section 5 of the
Securities Act of 1933, as amended, or under applicable state
securities laws and otherwise has been and will be made in compliance
with all applicable federal and state securities laws.
3.3 Representations and Warranties of UICI. UICI represents and
warrants to HealthAxis and Provident as follows:
(a) Organization, Standing and Power. UICI is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as
now being conducted and is duly qualified or licensed to do business as
a foreign corporation and in good standing to conduct business in each
jurisdiction in which the business it is conducting, or the operation,
ownership or leasing of its properties, makes such qualification or
license necessary, other than such jurisdictions where the failure so
to qualify or become so licensed would not individually or in the
aggregate have a Material Adverse Effect on UICI. UICI is the record
and beneficial owner of a majority of the issued and outstanding shares
of capital stock of Insurdata.
49
(b) Authority; No Violations; Consents and Approvals.
(i) UICI has all requisite corporate power and authority to
enter into this Agreement (including the agreements attached as
Exhibits to this Agreement to which it is a party) and to consummate
the transactions contemplated hereby. The execution and delivery of
this Agreement (including the agreements attached as Exhibits to this
Agreement to which it is a party) and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of UICI and, assuming that this
Agreement constitutes the valid and binding agreement of HealthAxis and
Provident, constitutes a valid and binding obligation of UICI
enforceable in accordance with its terms and conditions except that the
enforcement hereof may be limited by (A) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (B) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity) and
(C) any ruling or action of any Governmental Entity as set forth in
this Article III.
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by UICI will not
conflict with, or result in any Violation pursuant to, (A) any
provision of the Articles of Incorporation or Bylaws of UICI or the
comparable documents of any of its Subsidiaries (other than Insurdata)
or (B) any loan or credit agreement, note, mortgage, deed of trust,
indenture, lease, or any other agreement, obligation, instrument,
concession or license or any judgment, order, decree, statue, law,
ordinance, rule or regulation applicable to UICI, or any of its
properties or assets, except, in the case of clause (B), for such
Violations which would not, individually or in the aggregate,
materially and adversely affect the ability of UICI to consummate the
transactions contemplated hereby.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
Governmental Entity is required by or with respect to UICI or any of
its Subsidiaries (other than Insurdata) in connection with the
execution and delivery of this Agreement by UICI or the consummation by
UICI of the transactions contemplated hereby, except for: (A) the
filing of a pre-merger notification and report form under the HSR Act,
and the expiration or termination of the applicable waiting period
thereunder; (B) the filing of the Articles of Merger with the Secretary
of State of the State of Texas and the Department of State of the
Commonwealth of Pennsylvania; (C) such filings as may be required by
applicable federal or state securities laws; and (D) where the failure
to obtain, give or make consent, approval, order, or authorization of,
or registration, declaration or filing with, notice to, or permit from
a Government Entity would not materially and adversely affect the
ability of the Parties to consummate the transactions contemplated
hereby.
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(c) Insurdata Tax Representations. To the best knowledge of UICI,
the representations of Insurdata in Section 3.1(k) are correct and
complete.
3.4 Representations and Warranties of Provident. Provident represents
and warrants to Insurdata and UICI as follows:
(a) Organization, Standing and Power. Provident is a corporation
duly organized, validly existing and in good standing under the laws of
the Commonwealth of Pennsylvania, has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted and is duly qualified or licensed to do
business as a foreign corporation and in good standing to conduct
business in each jurisdiction in which the business it is conducting,
or the operation, ownership or leasing of its properties, makes such
qualification or license necessary, other than such jurisdictions where
the failure so to qualify or become so licensed would not individually
or in the aggregate have a Material Adverse Effect on Provident.
Provident is the record and beneficial owner of a majority of the
issued and outstanding shares of HealthAxis Common Stock.
(b) Authority; No Violations; Consents and Approvals.
(i) Provident has all requisite corporate power and authority
to enter into this Agreement (including the agreements attached as
Exhibits to this Agreement to which it is a party) and to consummate
the transactions contemplated hereby. The execution and delivery of
this Agreement (including the agreements attached as Exhibits to this
Agreement to which it is a party) and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Provident (including the
receipt of an opinion of HealthAxis's financial advisor to the effect
that the consideration to be paid in the Merger is fair from a
financial point of view) and, assuming that this Agreement constitutes
the valid and binding agreement of HealthAxis and Provident,
constitutes a valid and binding obligation of Provident enforceable in
accordance with its terms and conditions except that the enforcement
hereof may be limited by (A) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
now or hereafter in effect relating to creditors' rights generally and
(B) general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity) and (C) any ruling
or action of any Governmental Entity as set forth in this Article III.
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Provident will
not conflict with, or result in any Violation pursuant to, (A) any
provision of the Articles of Incorporation or Bylaws of Provident or
the comparable documents of any of its
51
Subsidiaries (other than HealthAxis) or (B) any loan or credit
agreement, note, mortgage, deed of trust, indenture, lease, or any
other agreement, obligation, instrument, concession or license or any
judgment, order, decree, statue, law, ordinance, rule or regulation
applicable to Provident, or any of its properties or assets, except, in
the case of clause (B), for such Violations which would not
individually or in the aggregate materially and adversely affect the
ability of Provident to consummate the transactions contemplated
hereby.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
Governmental Entity is required by or with respect to Provident or any
of its Subsidiaries (other than HealthAxis) in connection with the
execution and delivery of this Agreement by Provident or the
consummation by Provident of the transactions contemplated hereby,
except for: (A) the filing of a pre-merger notification and report form
under the HSR Act, and the expiration or termination of the applicable
waiting period thereunder; (B) the filing of the Articles of Merger
with the Secretary of State of the State of Texas and the Department of
State of the Commonwealth of Pennsylvania; (C) such filings as may be
required under applicable federal or state securities laws; and (D)
where the failure to obtain consent, approval, order, or authorization
of, or registration, declaration or filing with, notice to, or permit
from a Government Entity would not materially and adversely affect the
ability of the Parties to consummate the transactions contemplated
hereby.
(c) HealthAxis Tax Representations. To the best knowledge of
Provident, the representations of HealthAxis in Section 3.2(k) are
correct and complete.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of Insurdata and HealthAxis. During the period from the
date of this Agreement and continuing until the earlier of (i) the Effective
Time or (ii) the termination of this Agreement pursuant to Article VII, both
Insurdata and HealthAxis agree (and have caused their respective Subsidiaries to
agree) as follows (except to the extent that HealthAxis or Insurdata, as the
case may be, shall consent in writing, which consent shall not be unreasonably
withheld or delayed):
(a) Ordinary Course. Each Merger Party will (and will cause each of
its Subsidiaries to) conduct its business only in the ordinary course
and consistent with past practices. Without limiting the generality of
the foregoing and except as expressly provided herein:
(i) Each Merger Party will use (and will cause each of its
Subsidiaries to use) reasonable best efforts to (A) maintain in full
force and effect all Material
52
Contracts, except those which expire in accordance with their terms and
(B) maintain all Licenses, qualifications, and authorizations of the
Merger Parties to do business in each jurisdiction in which it is so
licensed, qualified, or authorized, except in the case of (A) and (B)
above where it is determined in good faith by the Board of Directors of
the Merger Party that the maintenance of any such Material Contract or
License, qualification or authorization is no longer necessary or
advisable for the conduct of business of such Merger Party as presently
conducted or as proposed to be conducted after the Effective Time,
after consultation with the other Merger Party.
(ii) Each Merger Party will (and will cause each of its
Subsidiaries to) in all material respects (A) maintain all its assets
and properties in good working order and condition (ordinary wear and
tear excepted), and (B) continue all current marketing and selling
activities relating to its business, operations and affairs, except
where it is determined in good faith by the Board of Directors that
such assets, properties or marketing or selling activities are no
longer necessary or advisable for the conduct of business of such
Merger Party as presently conducted or as proposed to be conducted
after the Effective Time, after consultation with the other Merger
Party.
(iii) Each Merger Party will (and will cause each of its
Subsidiaries to) maintain its books and records in the usual manner and
consistent with past practice and will not permit a material change in
any underwriting, investment, actuarial, financial reporting, tax, or
accounting practice or policy or in any assumption underlying such a
practice or policy, or in any method of calculating any bad debt,
contingency, insurance, or other reserve for financial reporting
purposes or for other accounting purposes (including any practice,
policy, assumption, or method relating to or affecting the
determination of its insurance in force, premium or investment income,
reserves or other similar amounts, or operating ratios with respect to
expenses, losses or lapses).
(iv) Each Merger Party will (and will cause each of its
Subsidiaries to) (A) prepare properly and to file duly and validly all
Tax Returns required to be filed prior to the Closing Date with the
appropriate taxing authority, (B) pay duly and fully all Taxes which
are due with respect to the periods covered by such Tax Returns or
otherwise levied or assessed upon such entity or any of its assets or
properties, and to withhold or collect and pay to the proper taxing
authorities all Taxes that such entity is required to so withhold or
collect and pay, unless such taxes are being contested in good faith
and (C) provide the other Merger Party with copies of all federal
income tax returns and all material state income tax returns as soon as
practicable after the preparation, but prior to the filing, thereof.
Each Merger Party agrees not to make or permit to be made (and will
prohibit its Subsidiaries from making) without the written consent of
the other Merger Party any tax election or settle or compromise any
income tax liability that may reasonably be expected to be material to
the Merger Parties and their respective Subsidiaries taken as a whole.
53
(v) Insurdata will (and will cause each of its Subsidiaries to)
use its reasonable best efforts to maintain in full force and effect
substantially the same levels of insurance coverage as is afforded
under the insurance coverage described in Section 3.1(t) of the
Insurdata Disclosure Memorandum and HealthAxis will (and will cause
each of its Subsidiaries to) use its reasonable best efforts to
maintain in full force and effect substantially the same levels of
insurance coverage as is afforded under the insurance coverage
described in Section 3.2(t) of the HealthAxis Disclosure Memorandum.
(vi) Each Merger Party will (and will cause each of its
Subsidiaries to) continue to comply in all material respects with all
laws applicable to its business, operations or affairs.
(vii) Each Merger Party shall not (and shall cause each of its
Subsidiaries to not): (A) except in the ordinary course of business
consistent with past practice or as may be required pursuant to any
agreement entered into prior to the date hereof, grant any increases in
the compensation of any of its directors, officers or Key Employees;
(B) pay or agree to pay any pension, retirement allowance or other
employee benefit not required to be paid prior to the Effective Time by
any of the existing Benefit Plans as in effect on the date hereof to
any such director, officer or employee, whether past or present; (C)
enter into any new, or amend, modify or grant any consent or waiver
with respect to any existing, employment, retention or severance or
termination agreement with any director, officer or employee; or (D)
become obligated under any new benefit plan, which was not in existence
on the date hereof, or amend any such plan or arrangement in existence
on the date hereof if such amendment would have the effect of enhancing
any benefits thereunder.
(viii) Each Merger Party shall not (and shall cause each of
their respective Subsidiaries to not) assume or incur (which shall not
be deemed to include entering into credit agreements, lines of credit
or similar arrangements until borrowings are made under such
arrangements) any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights
to acquire any debt securities of the Merger Parties or any of their
respective Subsidiaries or guarantee any debt securities of others or
enter into any lease (whether such lease is an operating or capital
lease) or create any Liens on the property of the Merger Parties or any
of their respective Subsidiaries in connection with any indebtedness
thereof, or enter into any "keep well" or other agreement or
arrangement to maintain the financial condition of another person.
(ix) Each Merger Party shall not (and shall cause each of its
respective Subsidiaries to not) pay, discharge, settle or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the
54
payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice. Neither Merger Party shall effect (and
shall prohibit each of their respective Subsidiaries from effecting)
any settlements of any legal proceedings without the prior written
consent (such consent not to be unreasonably withheld) of the other
Merger Party.
(x) Except for any transactions contemplated by this Agreement,
neither Merger Party shall, nor shall either Merger Party permit any
Subsidiary to, enter into any agreement or arrangement with any Related
Party, other than wholly owned Subsidiaries.
(xi) Each Merger Party will (and shall cause each of its
respective Subsidiaries to), (i) conduct its business in a diligent
manner, (ii) not make any material changes in its business practices
and (iii) use its reasonable best efforts to preserve its business
organization intact, keeping available the services of its current
officers, employees, agents and representatives, and maintaining the
goodwill of its customers, suppliers and other persons with which it
has business relations.
(b) Dividends; Changes in Stock. Neither of the Merger Parties nor
any of their respective Subsidiaries shall (i) declare or pay any
dividends on or make other distributions in respect of any of its
capital stock, (ii) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of
its capital stock, or (iii) repurchase or otherwise acquire any shares
of its capital stock, except as required by the terms of any employee
benefit plan as in effect on the date of this Agreement.
(c) Issuance of Securities. Neither of the Merger Parties nor any
of their respective Subsidiaries shall (i) except in the ordinary
course of business consistent with past practices pursuant to its
respective Stock Option Plans, grant any options, warrants or rights,
to purchase shares of its capital stock, (ii) amend the terms of or
reprice any warrant or option currently outstanding or amend the terms
of the stock option plans currently in existence, or (iii) except as
expressly provided in this Agreement, issue, deliver or sell, or pledge
or otherwise encumber any shares of its capital stock, or authorize or
propose to issue, deliver or sell, any shares of its capital stock or
any securities convertible into, or any rights, warrants or options to
acquire, any such shares or convertible securities, or agree to do any
of the foregoing, other than the issuance of shares and capital stock
upon the exercise of options or warrants that are outstanding on the
date of this Agreement.
(d) No Acquisitions; No Subsidiaries. Neither Merger Party nor any
Subsidiary of such Merger Party shall merge or consolidate with, or
acquire any equity interest in, any corporation, partnership,
association or other business organization, or enter into an agreement
with respect thereto. Neither Merger Party nor any Subsidiary of
55
such Merger Party shall (i) acquire or agree to acquire any assets of
any corporation, partnership, association or other business
organization or division thereof, except for the purchase of inventory
and supplies in the ordinary course of business, (ii) begin to engage
in any new type of business or (iii) create any Subsidiary.
(e) No Dispositions. Other than dispositions set forth in Section
4.1(e) of the applicable Disclosure Memorandum of a Merger Party and
dispositions in the ordinary course of business consistent with past
practice which are not material, individually or in the aggregate, to
such party, neither Merger Party nor any Subsidiary of such Merger
Party shall sell, lease (whether such lease is an operating or capital
lease), encumber or otherwise dispose of, or agree to sell, lease,
encumber or otherwise dispose of, any of its properties.
(f) Maintenance of Existence; No Dissolution, Etc. Except as
otherwise permitted or contemplated by this Agreement, each Merger
Party shall (and shall cause each of its respective Subsidiaries to)
maintain its existence and good standing in their respective
jurisdictions of incorporation or organization and neither Merger Party
nor any of their respective Subsidiaries shall authorize, recommend,
propose or announce an intention to adopt a plan of complete or partial
liquidation or dissolution of such entity.
4.2 Actions of Parties. Except as contemplated or permitted by this
Agreement, no Party shall authorize, take or agree or commit to (and shall cause
each of its respective Subsidiaries to take or commit or agree to) take any
action that is reasonably likely to result in any of the representations or
warranties hereunder being untrue in any material respect or in any of the
covenants hereunder or any of the conditions to the Merger not being satisfied
in all material respects.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Securities Offering. Prior to or contemporaneously with the
execution and delivery of this Agreement, HealthAxis shall have completed the
HealthAxis Offering and the Provident Offering, all upon the terms and
conditions set forth on Schedule 3 and Schedule 4 to this Agreement,
respectively.
5.2 Contract and Regulatory Approvals. The Parties will use (and will
cause each of their respective Subsidiaries to use) their reasonable best
efforts to obtain as promptly as practicable (a) all approvals and consents
required of any person or entity under all Contracts to which any Party or any
of its Subsidiaries is a party to consummate the transactions contemplated
hereby, and (b) all approvals, authorizations, and clearances of Governmental
Entities required of any Party and each of its Subsidiaries to consummate the
transactions contemplated hereby. The Parties will, and will cause each of its
Subsidiaries to, (i) provide such
56
other information and communications to such Governmental Entities as any other
Party or such authorities may reasonably request, and (ii) cooperate with any
Party in obtaining, as promptly as practicable, all approvals, authorizations,
and clearances of governmental or regulatory authorities and other persons or
entities required of any other Party to consummate the transactions contemplated
hereby. Without limiting the generality of the foregoing, the Parties shall use
their reasonable best efforts to take or cause to be taken all actions
necessary, proper or advisable to obtain any consent, waiver, approval or
authorization relating to any federal, state or local statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other
laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization, lessening of competition or
restraint of trade and includes the HSR Act that is required for consummation of
the transactions contemplated by this Agreement; provided, however, that the
foregoing shall not obligate any Party to agree to take any action which would
have a Material Adverse Effect on the expected benefits to such Party of the
transactions contemplated hereby.
5.3 HSR Filings. The Parties will (a) take all actions necessary to
make the filings required of it or its affiliates under the HSR Act with respect
to the transactions contemplated by this Agreement, (b) comply with any request
for additional information received by any other Party or its affiliates from
the Federal Trade Commission or Antitrust Division of the Department of Justice
pursuant to the HSR Act, (c) cooperate with any other Party in connection with
such Party's filings under the HSR Act, and (d) request early termination of the
applicable waiting period.
5.4 Access to Information; Confidentiality.
(a) Upon reasonable notice, each Merger Party shall (and shall
cause each of their respective Subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of each other
Party, reasonable access to the personnel, facilities and assets of
such Merger Party and to all existing books, records, tax returns, work
papers and other documents and information relating to such Merger
Party and provide to the other Merger Party with such copies of the
existing books, records, tax returns, work papers and other documents
and information relating to such Merger Party, and with such additional
financial, operating and other data and information regarding such
Merger Party as may be reasonably requested.
(b) The Parties and their respective representatives will hold all
non-public information obtained from any other Party in connection with
the transactions contemplated hereby in confidence and will not, except
as required by law, without the prior written consent of the other
Parties, disclose such information other than for purposes of
evaluating the transactions contemplated hereby.
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5.5 Fees and Expenses. Except as otherwise provided in the Transition
Agreement (as defined in Section 5.6) and except with respect to claims for
damages incurred as a result of the breach of this Agreement, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, legal, accounting or other
advisory fees) shall be paid by the party incurring such expense.
5.6 Transition Agreement. Contemporaneously with the execution and
delivery of this Agreement, HealthAxis and Insurdata shall enter into the
Transition Agreement in the form attached hereto as Exhibit C.
5.7 Indemnification.
(a) From and after the Effective Time the Surviving Corporation
shall, indemnify, defend and hold harmless each person who is now, or
has been at any time prior to the date hereof or who becomes prior to
the Effective Time, an officer or director of Insurdata or who served
at the request of Insurdata as an officer or director of another entity
(the "Insurdata Indemnified Parties") against all losses, claims,
damages, costs, expenses (including attorneys' fees and expenses),
liabilities or judgments or amounts that are paid in settlement with
the approval of the indemnifying party (which approval shall not be
unreasonably withheld) of or in connection with any threatened or
actual claim, action, suit, proceeding or investigation based in whole
or in part on or arising in whole or in part out of the fact that such
person is or was a director or officer of Insurdata and pertaining to
any matter existing or occurring at or prior to the Effective Time and
whether asserted or claimed prior to, or at or after, the Effective
Time ("HealthAxis Indemnified Liabilities"), including all Indemnified
Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Agreement or the transactions
contemplated hereby, in each case to the full extent a corporation is
permitted under applicable law to indemnify its own directors or
officers as the case may be (and HealthAxis and the Surviving
Corporation, as the case may be, will pay expenses in advance of the
final disposition of any such action or proceeding to each Indemnified
Party to the full extent permitted by law). From and after the
Effective Time UICI shall indemnify, defend and hold harmless
HealthAxis (HealthAxis, together with the Insurdata Indemnified
Parties, being referred to herein as the "Indemnified Parties") against
all losses, claims, damages, costs, expenses (including attorneys' fees
and expenses), liabilities or judgments or amounts that are paid in
settlement with the approval of the indemnifying party (which approval
shall not be unreasonably withheld) of or in connection with any
threatened or actual claim, action, suit, proceeding or investigation,
whether asserted or claimed prior to, or at or after, the Effective
Time, based in whole or in part on or arising in whole or in part out
of (x) the matters identified in clauses (i) and (ii) of Section 3.1(l)
of the Insurdata Disclosure Memorandum, provided that the indemnity by
UICI in this clause (x) shall only apply to any such losses, claims,
damages, costs, expenses (including attorneys fees and expenses),
liabilities, judgments or amounts
58
which in the aggregate exceed $50,000 and (y) the matter identified in
clause (i) of Section 3.1(j) of the Insurdata Disclosure Memorandum,
provided that the indemnity by UICI in this clause (y) shall only apply
to any losses, claims, damages, costs, expenses (including attorneys
fees and expenses), liabilities, judgments or amounts which in the
aggregate exceed $100,000 (clauses (x) and (y) collectively being the
"UICI Indemnified Liabilities" and, together with the HealthAxis
Indemnified Liabilities, the "Indemnified Liabilities"). Without
limiting the foregoing, in the event any such claim, action, suit,
proceeding or investigation is brought against any Indemnified Parties
(whether arising before or after the Effective Time), then upon notice
of such claim, action, suit, proceeding or investigation given to the
indemnifying party as hereinafter provided the Indemnified Parties
shall permit the indemnifying party (at its expense) to assume the
defense with respect to any such claim, action, suit or proceeding;
provided, however, that counsel for the indemnifying party who shall
conduct such defense shall be reasonably satisfactory to the
Indemnified Parties and the Indemnified Parties may participate in such
defense at Indemnified Parties expense. Any Indemnified Party wishing
to claim indemnification under this Section 5.7, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify the
indemnifying party (but the failure so to notify shall not relieve a
party from any liability which it may have under this Section 5.7
except to the extent such failure prejudices such party). In the event
that the indemnifying party does not promptly assume the defense of any
matter as above provided, or counsel for the Indemnified Parties
reasonably believes and advises the Indemnified Parties in writing that
there are issues that raise conflicts of interest between the
indemnifying party and the Indemnified Parties or among the Indemnified
Parties, each group of Indemnified Parties who are not subject to such
conflicts may retain counsel satisfactory to such group, and the
indemnifying party shall pay all reasonable fees and expenses of such
counsel for each such group of Indemnified Parties promptly as
statements therefore are received; provided, however, that the
indemnifying party shall not be liable for any settlement effected
without its prior written consent (which consent shall not be
unreasonably withheld); and provided, further, however, that the
indemnifying party shall not be responsible for the fees and expenses
of more than one counsel for each group of Indemnified Parties without
such conflicts. In any event, the indemnifying party and the
Indemnified Parties shall cooperate in the defense of any action or
claim. The indemnifying party agrees that the foregoing rights to
indemnification, including provisions relating to advances of expenses
incurred in defense of any action or suit, existing in favor of the
Indemnified Parties with respect to matters occurring through the
Effective Time, shall survive the Merger and shall continue in full
force and effect for a period of not less than six years from the
Effective Time; provided, however, that all rights to indemnification
in respect of any Indemnified Liabilities asserted or made within such
period shall continue until the disposition of such Indemnified
Liabilities. Furthermore, the provisions with respect to
indemnification set forth in the Articles of Incorporation or Bylaws of
the Surviving Corporation shall not be amended for a period of six
years following the Effective Time if such amendment would
59
materially and adversely affect the rights thereunder of individuals
who at any time prior to the Effective Time were directors or officers
of Insurdata in respect of actions or omissions occurring at or prior
to the Effective Time.
(b) The provisions of this Section 5.7 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his
heirs and his personal representatives and shall be binding on all
successors and assigns of the indemnifying party.
5.8 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, except as otherwise expressly contemplated hereby, each of the
Parties hereto agrees to use all reasonable best efforts to take, or cause to be
taken, all action and to do, or cause to be done as promptly as practicable, all
things necessary, proper or advisable, under applicable laws and regulations or
otherwise, to consummate and make effective the Merger and the other
transactions contemplated by this Agreement, subject, as applicable, to
shareholder approval.
5.9 Public Announcements. The Parties hereto will consult with each
other regarding the form and content of any press release or public announcement
pertaining to the Merger and shall not issue any such press release or make any
such public announcement prior to such consultation, except as may be required
by applicable law, court process or obligations pursuant to any listing
agreement with any national securities exchange, in which case the Party
proposing to issue such press release or make such public announcement shall use
reasonable efforts to consult in good faith with the other Party as to the form
and content of any such disclosure before issuing any such press release or
making any such public announcement.
5.10 Cooperation. From the date hereof until the Effective Time, the
Parties agree to work together to coordinate all aspects of transition planning
and the integration of Insurdata and its Subsidiaries with the businesses of
HealthAxis and its Subsidiaries from and after the Effective Time.
5.11 Benefit Plans. For employees of Insurdata as of the Effective Time
who continue to be employed by the Surviving Corporation after the Effective
Time, HealthAxis shall cause the Surviving Corporation to provide employee
benefits which are substantially comparable in the aggregate to the benefits
provided under the Insurdata Employee Benefit Plans until the first anniversary
of the Effective Time.
5.12 Tax-Free Reorganization. Each of the Parties shall use its best
efforts to cause the Merger to be treated as a reorganization within the meaning
of Section 368(a) of the Code. The Parties shall not permit any of their
respective affiliates to take any action which would cause the Merger to fail to
qualify as a reorganization within the meaning of Section 368(a) of the Code.
5.13 UICI Voting of Shares. UICI agrees to vote all of the Insurdata
Common Stock owned by it in favor of the Merger and to execute and deliver, or
cause to be delivered, such
60
additional or further consents as HealthAxis may reasonably request to effect
the approvals on behalf of Insurdata. UICI agrees to vote all shares of
HealthAxis capital stock owned by it and to cause any affiliate of UICI to vote
all shares of HealthAxis capital stock owned by such affiliate in favor of all
proposals submitted to shareholders of HealthAxis in connection with the Merger
and the transactions contemplated by this Agreement, including any amendment to
the Articles of Incorporation or Bylaws of HealthAxis and the authorization of
any increase in the number of shares of HealthAxis Common Stock authorized to be
issued and any class of HealthAxis Preferred Stock.
5.14 Provident Voting of Shares. Provident agrees to vote all of the
HealthAxis Common Stock and HealthAxis Preferred Stock owned by it and to cause
any affiliate of Provident to vote all shares of HealthAxis capital stock owned
by such affiliate in favor of the Merger and all proposals submitted to the
shareholders of HealthAxis in connection with the Merger and the transactions
contemplated by this Agreement, including any amendment to the Articles of
Incorporation or Bylaws of HealthAxis and the authorization of any increase in
the number of shares of HealthAxis Common Stock authorized to be issued and any
class of HealthAxis Preferred Stock and to execute and deliver, or cause to be
delivered, such additional or further consents as Insurdata may reasonably
request to effect the approvals on behalf of HealthAxis.
5.15 Tax Matters.
(a) As soon as practicable after the Closing Date, UICI will
prepare and file all appropriate Tax Returns for the operations of
Insurdata for all tax periods ending on or before the Closing Date,
including, for those jurisdictions and tax authorities that permit or
require a short period Tax Return, for the period ending on the Closing
Date. The books and records of UICI and Insurdata will be kept, and the
Federal, state and other income Tax Returns of the "affiliated group"
(as defined in Section 1504(a) of the Code) of which UICI and Insurdata
is a member will be filed, so as to accurately reflect the operations
of Insurdata through the end of the Closing Date. Such Insurdata Tax
Returns will be prepared in a manner consistent with past accounting
methods, elections, conventions and practices. The Surviving
Corporation and Provident each shall have the right to review any such
Tax Returns prepared on Insurdata's behalf at least 15 days prior to
the filing of any such Tax Return. The Surviving Corporation shall pay
and hold UICI harmless from its share of the affiliated group tax
liability, if any, as determined in accordance with paragraph (h)
hereunder.
(b) As soon as practicable after the Closing Date, Provident will
prepare and file all appropriate Tax Returns to the extent permitted by
law for the operations of HealthAxis for all periods ending on or
before the Closing Date, including, for those jurisdictions and tax
authorities that permit or require a short period Tax Return, for the
period ending on the Closing Date. The books and records of Provident
and HealthAxis
61
will be kept, and the Federal, state and other income Tax Returns of
HealthAxis or of the "affiliated group" (as defined in Section 1504(a)
of the Code), if any, of which Provident and HealthAxis is a member
will be filed, so as to accurately reflect the operations of HealthAxis
through the end of the Closing Date. Such HealthAxis Tax Returns will
be prepared in a manner consistent with past accounting methods,
elections, conventions and practices. The Surviving Corporation and
UICI shall each have the right to review any such Tax Returns prepared
on HealthAxis's behalf at least 15 days prior to the filing of any such
Tax Return. The Surviving Corporation shall pay and hold Provident
harmless from its share of the affiliated group tax liability, if any,
as determined in accordance with paragraph (h) hereunder.
(c) The Surviving Corporation shall prepare and file all
appropriate Tax Returns for the operations of the Surviving Corporation
for all periods ending after the Closing Date.
(d) Each of UICI and Provident (hereafter an "Indemnitor") will
indemnify and hold the Surviving Corporation harmless from any tax
liability of the Surviving Corporation arising under Treasury
Regulations ss. 1.1502-6 or any similar provision under state law that
is attributable to the Surviving Corporation having been a part of an
affiliated or unitary group of which the relevant Indemnitor was a
party, other than Taxes attributable to the operations of HealthAxis or
Insurdata, as the case may be.
(e) The Surviving Corporation will pay or cause to be paid all
Taxes (including any interest or penalties thereon) for the tax periods
described in paragraph (c) above, and will indemnify and hold each of
UICI and Provident harmless therefrom on an actual after-tax basis as
determined by the independent certified accounting firm that regularly
prepares the Tax Returns of the Surviving Corporation or such successor
firm as the Parties may appoint.
(f) Each of UICI, Provident and the Surviving Corporation will
cooperate fully with each other in connection with (i) the preparation
and filing of any Federal, state or local Tax Returns that include the
business and operations of the Insurdata and HealthAxis for all tax
periods ending on or before the Closing Date, and (ii) any audit
examination by any government taxing authority of the returns referred
to in clause (i). Such cooperation shall include, without limitation,
the furnishing or making available of records, books of account or
other materials of either Insurdata or HealthAxis, as applicable, that
are necessary or helpful for the defense against assertions of any
taxing authority as to any Tax Returns that include operations of the
Surviving Corporation.
(g) An Indemnitor shall promptly notify the Surviving Corporation
of any proposed adjustment of any item on any Tax Return of the
affiliated group for any tax period ending on or before the Closing
Date, if such proposed adjustment may affect the
62
tax liability of the Surviving Corporation. If an affiliated group tax
liability is adjusted for any taxable year as a result of an amended
return, a claim for refund or audit by the Internal Revenue Service or
other appropriate taxing authority, a redetermination of the tax
liability of Insurdata or HealthAxis, as the case may be, shall be made
in accordance with paragraph (h) hereunder. The Surviving Corporation
agrees to indemnify and hold harmless UICI or Provident, as the case
may be, from the amount of any such adjustment attributable to the
operations of the Surviving Corporation. Such Indemnitor shall advise
the Surviving Corporation of the status of any conferences, meetings
and proceedings with tax authorities or appearances before any court
pertaining to such adjustment or adjustments, and shall advise the
Surviving Corporation of the outcome of such proceedings. However,
nothing herein shall entitle Surviving Corporation to interfere with
the relevant Indemnitor's right to make any judgments or to take any
actions it deems appropriate in connection with the disposition of any
such proposed adjustments.
(h) The tax liability of the Surviving Corporation for purposes of
determining any affiliated group tax liability, if any, attributable to
the operations of Insurdata or HealthAxis, as the case may be, for
periods ending on or prior to the Closing Date shall be determined on
the separate return basis as set forth in Code Section 1552(a)(2) and
Treasury Regulations Section 1.1552-1(a)(2). Payment of any such
amounts, including the amount of any adjusting payment determined
hereunder as a result of the filing of any amended return or any audit
adjustment, due to Provident, UICI or the Surviving Corporation, as the
case may be, shall be made the later of (i) the date that is ten (10)
days before the date such payments must be made to the taxing authority
or (ii) the date that is ten (10) days after the date on which
Provident, UICI or the Surviving Corporation, as the case may be,
received notice of such obligation. Payment of any amount to the
Surviving Corporation resulting from a claim for refund or amended
return shall be made within ten (10) days after such refund amount is
received by Provident or UICI, as the case may be.
5.16 Technology Outsourcing Agreement. As soon as reasonably
practicable after the date hereof, but in any event prior to the Effective Time,
UICI and its affiliates shall have entered into a Technology Outsourcing
Agreement with Insurdata, pursuant to which Insurdata shall agree to provide to
UICI and its affiliates technology support services, data processing services
and such other software and hardware based services necessary and sufficient to
support the operations of UICI and its affiliates and having the material terms
set forth in Exhibit E hereto.
63
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each Party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) Shareholder Approvals. The Merger shall have been approved and
adopted by (i) the affirmative vote or written consent of the holders
of a majority of the outstanding shares of HealthAxis Common Stock and
by the holders of a majority of the outstanding shares of each class of
HealthAxis Preferred Stock and entitled to vote thereon as well as a
written waiver from each holder of HealthAxis Preferred Stock waiving
any preemptive right such holder may have in connection with the Merger
and the right of UICI to purchase additional shares of HealthAxis
capital stock pursuant to the terms of the Shareholders Agreement and
(ii) of the affirmative vote or written consent of at least two-thirds
of the outstanding shares of Insurdata Common Stock..
(b) Governmental and Regulatory Consents. All actions, consents,
approvals, filings and notices listed in Section 3.1(d) of the
Insurdata Disclosure Memorandum and Section 3.2(d) of the HealthAxis
Disclosure Memorandum shall have been taken, made or obtained, except
for such actions, consents or approvals the failure of which to obtain
would not have a Material Adverse Effect on the Surviving Corporation
or materially and adversely affect the consummation of the Merger;
provided, however, that such consents or approvals shall be in full
force and effect at the Effective Time and shall not obligate any Party
to agree to take any action which would have a Material Adverse Effect
on the expected benefits to such Party of the transactions contemplated
hereby.
(c) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated
or shall have expired, and no restrictive order or other requirements
shall have been placed on any Party or the Surviving Corporation in
connection therewith.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect; provided,
however, that prior to invoking this condition, each Party shall use
reasonable best efforts to have any such decree, ruling, injunction or
order vacated.
(e) No Other Proceeding. There shall not be pending any action,
suit or proceeding before any court of competent jurisdiction or any
Governmental Entity in which there is a reasonable probability of an
outcome that would have a Material Adverse Effect on the Surviving
Corporation (i) challenging or seeking to restrain or prohibit the
64
consummation of the Merger; or (ii) which would affect adversely the
right of Surviving Corporation to own its assets or operate its
business.
(f) Shareholders Agreement. Each of the parties to the HealthAxis
Shareholders Agreement shall have executed and delivered to HealthAxis
and to each other the Shareholders Agreement substantially in the form
attached hereto as Exhibit D.
(g) Registration Rights Agreement. HealthAxis shall have executed
and delivered to UICI the Registration Rights Agreement substantially
in the form attached hereto as Exhibit F.
(h) Voting Trust Agreement. The Voting Trust Agreement, in the form
attached hereto as Exhibit G, shall have been executed and delivered by
UICI and the Voting Trustees thereunder and UICI shall have transferred
to such Voting Trustees the 1,834,500 shares of Insurdata Common Stock
held by UICI which are subject to options granted by UICI to employees
of Insurdata under the Insurdata Founders Stock Option Program.
6.2 Conditions to Obligations of HealthAxis and Provident. The
obligations of HealthAxis and Provident to effect the Merger are further subject
to the satisfaction or waiver of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Insurdata and UICI set forth in this Agreement shall be
true and correct (without regard to any materiality qualifiers
contained therein) in each case as of the date of this Agreement and
(except to the extent such representations and warranties speak as of a
particular date) as of the Closing as though made on and as of the
Closing, except where the failure of one or more representations or
warranties to be true and correct, individually or in the aggregate,
would not result in a Material Adverse Effect on Insurdata or
materially and adversely affect the consummation of the Merger.
HealthAxis shall have received with respect to Insurdata a certificate
signed on behalf of Insurdata as of the Closing Date by the chief
executive officer and the chief financial officer of Insurdata
reaffirming the matters set forth in this paragraph and shall have
received with respect to UICI a certificate signed on behalf of UICI as
of the Closing Date by the chief executive officer and the chief
financial officer of UICI reaffirming the matters set forth in this
paragraph.
(b) Performance of Obligation of Insurdata and UICI. Insurdata and
UICI shall have performed and complied with, in all material respects,
all agreements and covenants required to be performed and complied with
by Insurdata and UICI under this Agreement at or prior to the Closing
Date.
65
(c) No Material Adverse Change. There shall not have occurred or
arisen after September 30, 1999 and prior to the Effective Time any
change, event (including without limitation any damage, destruction or
loss, whether or not covered by insurance), condition (financial or
otherwise), or state of facts with respect to Insurdata or any of its
Subsidiaries which would constitute a Material Adverse Effect on
Insurdata.
(d) Federal Tax Opinion. HealthAxis and Provident shall have
received an opinion of Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP (or another
nationally recognized law firm) to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and that each of Insurdata and
HealthAxis will be a party to that reorganization within the meaning of
Section 368(b) of the Code. In rendering such opinion, counsel may rely
upon customary representations of Insurdata and HealthAxis reasonably
satisfactory to such counsel.
6.3 Conditions to Obligation of Insurdata and UICI. The obligation of
Insurdata and UICI to effect the Merger is further subject to the satisfaction
or waiver of the following conditions:
(a) Representations and Warranties. The representations and
warranties of HealthAxis and Provident set forth in this Agreement
shall be true and correct (without regard to any materiality qualifiers
contained therein), in each case as of the date of this Agreement and
(except to the extent such representations and warranties speak as of a
particular date) as of the Closing Date as though made on and as of the
Closing Date, except where the failure of one or more representations
or warranties to be true and correct, individually or in the aggregate,
would not result in a Material Adverse Effect on HealthAxis or
materially and adversely affect the consummation of the Merger.
Insurdata shall have received with respect to HealthAxis certificates
signed on behalf of HealthAxis as of the Closing Date by the chief
executive officer and chief financial officer of HealthAxis reaffirming
the matters set forth in this paragraph and shall have received with
respect to Provident a certificate signed on behalf of Provident as of
the Closing Date by the chief executive officer and the chief financial
officer of Provident reaffirming the matters set forth in this
paragraph.
(b) Performance of Obligations of HealthAxis and Provident.
HealthAxis and Provident shall have performed and complied with, in all
material respects, all agreements and covenants required to be
performed and complied with by HealthAxis and Provident under this
Agreement at or prior to the Closing Date.
(c) No Material Adverse Change. There shall not have occurred or
arisen after September 30, 1999 and prior to the Effective Time any
change, event (including without limitation any damage, destruction or
loss, whether or not covered by insurance),
66
condition (financial or otherwise), or state of facts with respect to
HealthAxis or any of its Subsidiaries which would constitute a Material
Adverse Effect on HealthAxis.
(d) Federal Tax Opinion. Insurdata and UICI shall have received an
opinion of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇ (or another nationally recognized law
firm) to the effect that the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a)
of the Code and that each of Insurdata and HealthAxis will be a party
to that reorganization within the meaning of Section 368(b) of the
Code. In rendering such opinion, counsel may rely upon customary
representations of Insurdata and HealthAxis reasonably satisfactory to
such counsel.
(e) Securities Offering. The HealthAxis Offering and the Provident
Offering shall have closed in accordance with the terms and conditions
set forth on Schedule 3 and Schedule 4, respectively.
(f) HealthAxis Balance Sheet. HealthAxis shall have unrestricted
cash on its balance sheet (after giving effect to the receipt of
proceeds from the HealthAxis Offering and including $2.0 million of
proceeds from the Provident Offering) of not less than the sum of (i)
$1.0 million plus (ii) the proceeds of the HealthAxis Offering, net of
offering costs and expenses not in excess of 5% of the total gross
proceeds of the HealthAxis Offering, less (iii) the fee payable to
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as provided in Section 3.2(w) of this
Agreement. For purposes of the foregoing, the term "unrestricted cash"
shall mean the balance of the cash account as shown on the balance
sheet of HealthAxis, prepared in accordance with GAAP on a basis
consistently applied, as at the Closing Date and certified by the Chief
Financial Officer of HealthAxis.
(g) Charter and Bylaws. The Amended and Restated Articles of
Incorporation and Amended and Restated Bylaws of HealthAxis in the form
attached hereto as Exhibit A and Exhibit B, respectively, shall become
the Amended and Restated Articles of Incorporation and Amended and
Restated Bylaws of the Surviving Corporation at the Effective Time.
(h) Dissenters' Rights. No holder of shares of HealthAxis Common
Stock or Insurdata Common Stock shall have perfected appraisal rights
under the TBCA or the PBCL.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
shareholders of the Merger Parties:
67
(a) by mutual written consent of the Parties;
(b) by any Party if any permanent injunction or other order of a
court or other competent authority preventing the consummation of the
Merger shall have become final and non-appealable;
(c) by any Party, if the Merger shall not have been consummated on
or before January 31, 2000; provided that the right to terminate this
Agreement under this Section 7.1(c) shall not be available to any Party
whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Merger to occur on or
before such date; provided, further, notwithstanding this Section
7.1(c), the provisions of Section 5.6 shall govern all issues of
liability with respect to HealthAxis;
(d) by either Merger Party if at the duly held meeting of the
shareholders of HealthAxis (including any adjournment thereof) held for
the purpose of voting on the Merger, this Agreement and the
consummation of the transactions contemplated hereby, the holders of at
least a majority of the outstanding shares of HealthAxis Common Stock
shall not have approved the Merger or if the holders of at least a
majority of each class of HealthAxis Preferred Stock shall not have
approved the Merger, this Agreement and the consummation of the
transactions contemplated hereby;
(e) by HealthAxis, upon a breach of any representation or warranty
of Insurdata or UICI, or in the event Insurdata or UICI fails to comply
in any respect with any of its covenants and agreements, or if any
representation or warranty of Insurdata or UICI shall be or become
untrue, in each case, where such breach, failure to so comply or
untruth (either individually or in the aggregate with all other such
breaches, failures to comply or untruths) would cause one or more of
the conditions set forth in Sections 6.1 or 6.2 to be incapable of
being satisfied as of the occurrence thereof, provided, however, that
(i) if such breach, failure to comply or untruth is curable by
Insurdata or UICI, then HealthAxis may not terminate this Agreement
under this Section 7.1(e) with respect to such breach, failure or
untruth prior to or during the 30-day period commencing upon delivery
by HealthAxis of written notice to Insurdata and UICI of such breach or
inaccuracy, or after such 30-day period if during such period such
breach, failure or untruth is cured and (ii) the right to terminate
this Agreement under this Section 7.1(e) shall not be available to
HealthAxis if HealthAxis shall have committed a material uncured breach
of this Agreement; or
(f) by Insurdata, upon a breach of any representation or warranty
of HealthAxis or Provident, or in the event HealthAxis or Provident
fails to comply in any respect with any of its covenants or agreements,
or if any representation or warranty of HealthAxis or Provident shall
be or become untrue, in each case, where such breach,
68
failure to so comply or untruth (either individually or in the
aggregate with all other such breaches, failures to comply or untruths)
would cause one or more of the conditions set forth in Sections 6.1 or
6.3 to be incapable of being satisfied as of the occurrence thereof,
provided, however, that (i) if such breach, failure to comply or
untruth is curable by HealthAxis or Provident, then Insurdata may not
terminate this Agreement under this Section 7.1(f) with respect to such
breach, failure or untruth prior to or during the 30-day period
commencing upon delivery by Insurdata of written notice to HealthAxis
and Provident or such breach or inaccuracy, or after such 30-day period
if during such period such breach, failure or untruth is cured and (ii)
the right to terminate this Agreement under this Section 7.1(f) shall
not be available to Insurdata if Insurdata shall have committed a
material uncured breach of this Agreement.
7.2 Effect of Termination. If this Agreement is validly terminated by
any Party pursuant to Section 7.1, this Agreement will forthwith become null and
void and there will be no liability or obligation on the part of any Party (or
any of their respective Subsidiaries or affiliates), except (i) that the
provisions of Section 5.1, 5.4(b), Section 5.5, Section 5.9 and this Section 7.2
will continue to apply following any such termination, and (ii) that nothing
contained herein shall relieve any Party hereto from liability for willful
breach of its representations, warranties, covenants or agreements contained in
this Agreement.
7.3 Amendment. Subject to applicable law, this Agreement may be
amended, modified or supplemented only by written agreement of the Parties at
any time prior to the Effective Time of the Merger with respect to any of the
terms contained herein; provided, however, after this Agreement is approved by
the Merger Party's shareholders, no such amendment or modification shall (a)
change the amount or change the form of consideration to be delivered to the
holders of shares of Insurdata Common Stock or (b) change the amounts payable in
respect of the Insurdata Options.
7.4 Extension; Waiver. At any time prior to the Effective Time, the
Parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed: (a) extend the time for the
performance of any of the obligations or other acts of the other Parties hereto;
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto; and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a Party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such Party. The failure of
any party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
69
ARTICLE VIII
GENERAL PROVISIONS
8.1 Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time; provided, however, that Article II, Sections 5.1, 5.4(b), 5.5, 5.6 and 5.9
shall survive the Effective Time.
8.2 Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received upon receipt. Any such notice or
communication shall be provided to the following address or telecopy number, or
to such other address or addresses as such person may subsequently designate by
notice given hereunder:
(a) if to Provident:
Provident American Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to HealthAxis:
▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President and CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
70
with a copy to:
Blank Rome Comisky & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to UICI:
UICI
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(d) If to Insurdata:
Insurdata Incorporated
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
71
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
8.3 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents, glossary of defined terms and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the word "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The phrase
"made available" in this Agreement shall mean that the information referred to
has been made available if requested by the Party to whom such information is to
be made available.
8.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the Parties and delivered to the other Parties, it being understood that all
Parties need not sign the same counterpart.
8.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (and any other documents and instruments referred to
herein) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the Parties with respect to the
subject matter hereof and, except as provided in Article II and Sections 5.4 and
5.6, is not intended to confer upon any person other than the Parties hereto any
rights or remedies hereunder.
8.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Pennsylvania, without giving effect to
the principles of conflicts of law thereof.
8.7 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the Parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
Parties, such consent not to be unreasonably withheld and any such assignment
that is not consented to shall be null and void. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
72
8.8 Enforcement. The Parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of applicable
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
8.9 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
8.10 No Presumption Against Drafter. Each of the Parties has jointly
participated in the negotiation and drafting of this Agreement. In the event of
any ambiguity or a question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by each of the Parties and no
presumptions or burdens of proof shall arise favoring any Party by virtue of the
authorship of any of the provisions of this Agreement.
[The remainder of this page intentionally left blank.]
73
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
PROVIDENT AMERICAN CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
UICI
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
INSURDATA INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
74
Schedule 1
Directors
---------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Sch. 1-1
Schedule 2
Officers
--------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ - Chairman of the Board
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - Chief Executive Officer and President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ - Chief Operating Officer
▇▇▇▇▇▇▇ ▇▇▇▇▇ - Chief Financial Officer and Treasurer
▇▇▇▇ ▇▇▇▇ - Chief Technology Officer
▇▇▇▇▇▇ ▇▇▇▇▇▇ - Executive Vice President-Strategy and Corporate Development
▇▇▇▇▇ Rubschnuk - Senior Vice President-Marketing
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ - Senior Vice President-Software Solutions
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - Secretary
Sch. 2-1
Schedule 3
HealthAxis Offering
The "HealthAxis Offering" shall mean the issuance by HealthAxis of
shares of HealthAxis Common Stock at a price of $15.00 per share in a private
offering, not required to be registered under the Securities Act of 1933, as
amended, or under applicable state securities laws, which offering generates at
least $55.0 million of gross cash proceeds to HealthAxis. The offering costs and
expenses in connection with the HealthAxis Offering shall not exceed 5.0% of the
total gross proceeds.
Sch. 3-1
Schedule 4
Provident Offering
The "Provident Offering" shall mean the issuance by HealthAxis to
Provident of 133,333 shares of HealthAxis Common Stock at a price of $15.00 per
share in a private offering, not required to be registered under the Securities
Act of 1933, as amended, or under applicable state securities laws.
Sch. 4-1