| UNITED STATES | OMB APPROVAL |
| SECURITIES AND EXCHANGE COMMISSION | OMB Number: 3235-0059 |
| Washington, D.C. 20549 | Expires: January 31, 2008 |
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Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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![](https://capedge.com/proxy/DEF 14A/0001145443-06-001128/healthaxis_logo.jpg)
Chairman
![](https://capedge.com/proxy/DEF 14A/0001145443-06-001128/jameswmclane.jpg)
Chief Executive Officer
![](https://capedge.com/proxy/DEF 14A/0001145443-06-001128/johnmcarradinesig.jpg)
April 10, 2006
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 10, 2006
1. | To elect eight directors to serve until the next annual meeting of shareholders and until their successors are duly elected; |
2. | To ratify the selection of McGladrey & Pullen, LLP as the Company’s independent public accountants for the fiscal year ending December 31, 2006; and |
3. | To act upon such other matters as may properly come before the meeting, including any motion to adjourn to a later time to permit further solicitation of proxies if necessary to establish a quorum, or to obtain additional votes in favor of the proposals or before any postponements or adjournments thereof. |
![](https://capedge.com/proxy/DEF 14A/0001145443-06-001128/jbrentwebb.jpg)
Secretary
April 10, 2006
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OUTSTANDING STOCK AND VOTING RIGHTS | 1 | |||||
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS | 2 | |||||
PROPOSAL I — ELECTION OF DIRECTORS | 3 | |||||
BOARD OF DIRECTOR AND COMMITTEE MATTERS | 5 | |||||
The Company’s Director Nomination Process | 6 | |||||
Affirmative Determinations of Director Independence | 7 | |||||
Corporate Governance | 7 | |||||
Compensation Committee Interlocks and Insider Participation | 8 | |||||
Director Compensation | 8 | |||||
PROPOSAL II — RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS | 8 | |||||
Fees Billed by Independent Public Accountants | 8 | |||||
Audit Committee Pre-Approval Policy | 9 | |||||
Changes in the Company’s Independent Public Accountants | 9 | |||||
EXECUTIVE OFFICERS AND KEY EMPLOYEES | 10 | |||||
EXECUTIVE COMPENSATION | 11 | |||||
Summary Compensation Table | 11 | |||||
Stock Options Granted | 12 | |||||
Aggregated Option/SAR Exercises in Last Fiscal Year And Fiscal Year End Option/SAR Values | 13 | |||||
EQUITY COMPENSATION PLAN INFORMATION | 13 | |||||
EMPLOYMENT AGREEMENTS | 14 | |||||
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION | 16 | |||||
REPORT OF AUDIT COMMITTEE | 18 | |||||
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | 18 | |||||
STOCK PERFORMANCE GRAPH | 19 | |||||
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | 20 | |||||
ADVANCE NOTICE BYLAW PROVISION | 20 | |||||
SHAREHOLDER PROPOSALS | 20 | |||||
HOUSEHOLDING INFORMATION | 20 | |||||
OTHER MATTERS | 21 | |||||
ANNUAL REPORT ON FORM 10-K | 21 |
7301 North State Highway 161
Suite 300
Irving, TX 75039
AND CERTAIN BENEFICIAL OWNERS
5% Beneficial Owners(1) | Number of Shares Beneficially Owned(2) | Percent of Class | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Sharad K. Tak c/o Tak Investments, Inc. 400 Professional Drive, Suite 420 Gaithersburg, MD 20879 | 5,555,556 | (3) | 59.0 | % | ||||||
LB I Group Inc. c/o Lehman Brothers, Inc. 745 Seventh Avenue, 2nd Floor New York, NY 10019 | 664,999 | (4) | 10.9 | % | ||||||
Directors and Executive Officers | ||||||||||
James W. McLane | 325,051 | (5) | 5.1 | % | ||||||
Adam J. Gutstein | 25,500 | (6) | * | |||||||
Kevin F. Hickey | 25,260 | (7) | * | |||||||
Thomas L. Cunningham | 24,646 | (8) | * | |||||||
John W. Coyle | 18,500 | (9) | * | |||||||
James J. Byrne | 17,500 | (10) | * | |||||||
Barry L. Reisig | 4,000 | (11) | * | |||||||
John M. Carradine | 183,525 | (12) | 2.9 | % | ||||||
Lawrence F. Thompson | 50,000 | (13) | * | |||||||
J. Brent Webb | 109,251 | (14) | 1.8 | % | ||||||
Jimmy D. Taylor | — | — | ||||||||
All directors and executive officers as a group (12 Persons) | 823,233 | (15) | 12.0 | % |
* | Less than 1% |
(1) | The address of each director and executive officer is 7301 North State Highway 161, Suite 300, Irving, TX 75039. |
(2) | Includes options and warrants exercisable within 60 days from March 31, 2006. |
(3) | Includes warrants to purchase 3,333,334 shares of common stock exercisable within 60 days, and excludes warrants to purchase up to 2,777,777 shares of common stock that are contingent on the Company compelling the exercise thereof, or the exercise by Tak Investments, Inc. of other included warrants, all as more particularly described below under the caption “Certain Relationships and Related Transactions”. |
(4) | As reported on Schedule 13G/A filed on September 2, 2005, excludes Series A Convertible Preferred Stock convertible into 740,401 Common Shares and warrants to acquire 387,117 Common Shares. |
(5) | Includes options to purchase 264,016 shares of the Common Stock exercisable within 60 days. |
(6) | Includes options to purchase 24,500 shares of the Common Stock exercisable within 60 days. |
(7) | Includes options to purchase 25,260 shares of the Common Stock exercisable within 60 days. |
(8) | Includes options to purchase 21,688 shares of the Common Stock exercisable within 60 days. |
(9) | Includes options to purchase 17,500 shares of the Common Stock exercisable within 60 days. |
(10) | Includes options to purchase 17,500 shares of the Common Stock exercisable within 60 days. |
(11) | Includes options to purchase 4,000 shares of the Common Stock exercisable within 60 days. |
(12) | Includes options to purchase 181,075 shares of the Common Stock exercisable within 60 days. |
(13) | Includes options to purchase 50,000 shares of the Common Stock exercisable within 60 days. |
(14) | Includes options to purchase 107,501 shares of the Common Stock exercisable within 60 days. |
(15) | Includes options to purchase 753,040 shares of Common Stock exercisable within 60 days. |
Name | Age | Position Held In the Company | Served as Director Since | |||||||||||
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James J. Byrne | 70 | Director | 2003 | |||||||||||
John M. Carradine | 47 | President & Chief Executive Officer | 2005 | |||||||||||
John W. Coyle | 53 | Director | 2003 | |||||||||||
Thomas L. Cunningham | 62 | Director | 2003 | |||||||||||
Adam J. Gutstein | 43 | Director | 2001 | |||||||||||
Kevin F. Hickey | 54 | Director | 2001 | |||||||||||
James W. McLane | 67 | Chairman | 2001 | |||||||||||
Barry L. Reisig | 60 | Director | 2005 |
of Harris Adacom Corporation. Mr. Byrne has also held management positions with United Technologies, General Electric and Honeywell. Mr. Byrne currently serves on the Board of Lennox International Inc., an industry-leading provider of residential and commercial air conditioning and heating systems, a NYSE listed company. Mr. Byrne has also served on boards in Mexico, Hong Kong, Germany, France and the United Kingdom. In addition, he served as a board member of the American Electronics Association (AEA) and was Chairman of AEA’s Texas Council. He is a Fellow and member of the board of the Legacy Center for Public Policy.
a privately held company, since 1982; a director of Benefit Management Group, a privately held company, since 1997; a director of Wellcare, Inc., a publicly traded Medicaid managed care organization, since 2002; and a director of HealthMarket, Inc., a consumer directed health plan, from 2002 until 2004.
Nominating Committee are “independent” as defined by the rules of The Nasdaq Stock Market. The Nominating Committee held two meetings in 2005. A written charter for the Nominating Committee has been adopted by the Board of Directors and is available on the Company’s website at www.healthaxis.com.
was made, or the proposal was submitted, by the shareholder; (iv) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had the nominee been nominated by the Board of Directors; and (v) the consent of each nominee to serve as a director of the Company if so elected. All late nominations will be rejected. Director candidates recommended by shareholders shall be evaluated by the Nominating Committee based on the same criteria outlined above to be applied to director candidates identified by the Nominating Committee.
John W. Coyle
Thomas L. Cunningham
Adam J. Gutstein
Kevin F. Hickey
Barry L. Reisig
• | Amended and Restated Audit Committee Charter |
• | Nominating Committee Charter |
• | Compensation Committee Charter |
• | Code of Conduct |
• | Audit Committee Policy for Pre-approval of Audit and Non-Audit Services |
• | Procedures for Contacting the Board of Directors |
2005 | 2004 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Audit Fees | $ | 260,094 | $ | 162,094 | ||||||
Audit-Related Fees | 30,000 | 34,745 | ||||||||
Tax Fees | 0 | 0 | ||||||||
All Other Fees | 0 | 0 | ||||||||
Total | $ | 290,094 | $ | 196,839 |
VOTEFOR THE RATIFICATION OF THE SELECTION
OF MCGLADREY & PULLEN, LLP AS INDEPENDENT PUBLIC ACCOUNTANTS.
Annual Compensation | Long-Term Compensation | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name and Principal Position | Year | Salary ($) | Bonus ($) | Other Annual Compensation ($) | Awards of Securities Underlying Options (#) | All Other Compensation(1) ($) | ||||||||||||||||||||
John M. Carradine, | 2005 | 215,000 | — | 10,000 | (2) | 110,000 | 6,300 | |||||||||||||||||||
Chief Executive Officer | 2004 | 215,000 | 15,000 | — | 40,000 | 6,150 | ||||||||||||||||||||
2003 | 183,600 | — | — | 6,075 | 4,115 | |||||||||||||||||||||
Lawrence F. Thompson, | 2005 | 116,667 | 16,000 | 24,928 | (3) | 50,000 | 1,500 | |||||||||||||||||||
Executive Vice President | 2004 | — | — | — | — | — | ||||||||||||||||||||
2003 | — | — | — | — | — | |||||||||||||||||||||
J. Brent Webb, | 2005 | 150,000 | 15,000 | 10,000 | (2) | 50,000 | 4,500 | |||||||||||||||||||
Senior Vice President, | 2004 | 150,000 | 12,5000 | — | 40,000 | 4,402 | ||||||||||||||||||||
Secretary and | 2003 | 130,500 | 225 | — | 9,433 | 4,082 | ||||||||||||||||||||
General Counsel | ||||||||||||||||||||||||||
James W. McLane, | 2005 | 226,025 | (4) | — | 34,788 | (5) | 75,000 | 8,781 | ||||||||||||||||||
Chairman and Former | 2004 | 251,150 | (4) | — | 40,869 | (5) | 100,000 | 7,250 | ||||||||||||||||||
Chief Executive Officer | 2003 | 251,150 | (4) | — | 39,107 | (5) | 14,016 | 5,650 | ||||||||||||||||||
Jimmy D. Taylor, | 2005 | 135,429 | (7)(8) | — | 10,000 | (2) | 40,000 | 4,063 | ||||||||||||||||||
Former Chief | 2004 | 135,900 | (7) | — | — | 20,000 | 4,707 | |||||||||||||||||||
Financial Officer(6) | 2003 | 132,051 | 19,010 | — | 6,900 | 4,080 |
(1) | Represents the amount contributed to the 401K savings plan by the Company on behalf of the named executive. |
(2) | Includes $10,000 paid in exchange for waiving certain employment agreement rights in connection with the May 2005 financing transaction. |
(3) | Represents travel, living and automobile expenses paid by the Company on behalf of Mr. Thompson who lives in California, and tax gross-up payments to cover individual income tax associated with the Company’s payment of these expenses. |
(4) | Includes $900 each year in benefit waiver payments under the Company’s standard benefit policies. |
(5) | Represents travel and living expenses paid by the Company on behalf of Mr. McLane who lives in Pennsylvania, and a tax gross-up payment to cover individual income tax associated with the Company’s payment of these expenses. Amount shown for 2005 also includes $10,000 paid in exchange for waiving certain employment agreement rights in connection with the May 2005 financing transaction. |
(6) | Mr. Taylor was the Company’s Chief Financial Officer through December 15, 2005. |
(7) | Includes $862 in 2005 and $900 in 2004 in benefit waiver payments under the Company’s standard benefit policies. |
(8) | Includes $5,192 in unused vacation payment under the Company’s standard benefit policies. |
Potential Realizable Value At Assumed Annual Rates Of Stock Appreciation for Option Term(1) | |||||||||||||||||||||||||||
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Name | Number of Securities Underlying Options Granted | % of Total Options Granted to Employees in Fiscal Year | Exercise Price $/Share | Expiration Date | 5% | 10% | |||||||||||||||||||||
John M. Carradine | 60,000 | (2) | 13 | % | $ | 1.80 | 5/13/2015 | $ | 67,921 | $ | 172,124 | ||||||||||||||||
Chief Executive Officer | 50,000 | (2) | 11 | % | $ | 2.25 | 11/9/2015 | $ | 70,751 | $ | 179,296 | ||||||||||||||||
Lawrence F. Thompson Executive Vice President | 50,000 | (2) | 11 | % | $ | 1.80 | 5/13/2015 | $ | 56,601 | $ | 143,437 | ||||||||||||||||
J. Brent Webb Sr. Vice President, Secretary and General Counsel | 50,000 | (2) | 11 | % | $ | 1.80 | 5/13/2015 | $ | 56,601 | $ | 143,437 | ||||||||||||||||
James W. McLane Chairman and Former Chief Executive Officer | 75,000 | (2) | 17 | % | $ | 1.80 | 5/13/2015 | $ | 84,901 | $ | 215,155 | ||||||||||||||||
Jimmy D. Taylor Former Chief Financial Officer | 40,000 | (2) | 9 | % | $ | 1.80 | (3) | — | — |
(1) | The amounts under these columns reflect calculations at assumed 5% and 10% appreciation rates and, therefore, are not intended to forecast future appreciation, if any, of the respective underlying common stock. The potential realizable value to the optionees was computed as the difference between the appreciated value, at the expiration dates of the stock options, of the applicable underlying common stock obtainable upon exercise of such stock options over the aggregate exercise price of such stock options. |
(2) | These options were granted under the Company’s 2005 Stock Incentive Plan, and are all fully vested. |
(3) | All of Mr. Taylor’s options have expired unexercised following 90 days from his resignation as of December 15, 2005. |
Number of Securities Underlying Unexercised Options/SARS at Fiscal Year End (#) | Value of Unexercised In-the- Money Options/SARs at Fiscal Year-End ($) | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Shares Acquired on Exercise (#) | Value Realized ($) | Exercisable | Unexercisable | Exercisable | Unexercisable | |||||||||||||||||||||
John M. Carradine | — | — | 181,075 | — | — | — | |||||||||||||||||||||
Lawrence F. Thompson | — | — | 50,000 | — | — | — | |||||||||||||||||||||
J. Brent Webb | — | — | 107,501 | — | — | — | |||||||||||||||||||||
James W. McLane | — | — | 264,016 | — | — | — | |||||||||||||||||||||
Jimmy D. Taylor | — | — | 67,501 | — | — | — |
Plan Category | Number of Securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in left column) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by security holders(1) | 1,004,333 | $ | 3.03 | 994,968 | ||||||||||
Equity compensation plans not approved by security holders(2)(3) | 211,245 | $ | 22.57 | 0 | ||||||||||
Total | 1,215,578 | $ | 6.43 | 994,968 |
(1) | This category consists of the Healthaxis Inc. 2005 Stock Incentive Plan, which amended and restated the Healthaxis Inc. 2000 Stock Option Plan, both of which were approved by the shareholders. |
(2) | This table does not include 191,285 shares of Common Stock that may be issued upon exercise of options outstanding under the Healthaxis.com, Inc. Amended and Restated 1998 Stock Option Plan which was assumed in the Healthaxis.com merger with the Company as approved by the shareholders. The weighted average exercise price of these outstanding options is $18.72. |
(3) | This category includes an aggregate of 171,225 shares subject to options outstanding under the Provident American Corporation Stock Option Plan For Directors and the Provident American Corporation Amended And Restated Stock Option Plan For Directors and other historical plans related to the issuance of options to former officers, directors and related to the Company’s discontinued insurance operations. The Company no longer makes any option grants under any of these plans. This category also includes a total of 40,020 shares subject to outstanding warrants that were issued by the Company in connection with historical consulting and services arrangements. The Healthaxis.com warrants were originally issued in connection with various marketing and carrier partner agreements related to the discontinued retail website operations. |
• | A lump sum payment equal to the executive’s salary through the termination date not yet paid and a pro-rated bonus based on the number of days of the current fiscal year as of the termination date; |
• | A lump sum payment equal to eighteen months’ salary and the average bonus for the preceding three years in the case of Mr. Carradine; and a lump sum payment equal to one year’s salary and the average bonus for the preceding three years in the case of Mr. Webb. The annual salary for purposes of determining these payments for Mr. Carradine and Mr. Webb will not be less than the annual salary in effect for each individual as of December 31, 2002; |
• | Immediate acceleration of any vesting periods for any options to purchase the Company’s common stock and an extension of the period during which such options may be exercised from 90 days following termination of employment to thirty-six months following termination of employment; |
• | Continuation of health and insurance benefits for 12 months following termination of employment; and |
• | Outplacement services for 12 months following termination of employment. |
the Company’s Board of Directors. On December 31, 2005, Mr. Herbert received 40,000 fully vested stock options issued pursuant to the Company’s 2005 Incentive Stock Plan, with an exercise price of $2.25. Mr. Herbert is further entitled to participate in all of the Company’s equity compensation plans, practices, policies and programs generally available to other senior executives of the Company and its affiliated companies. The Employment Agreement also contains non-compete and confidentiality provisions. Mr. Herbert is entitled to a six month severance payment in the event his employment is terminated by the Company other than for Cause (as defined in the Employment Agreement), death or disability, or by Mr. Herbert for Good Reason (as defined in the Employment Agreement).
Chairman and Chief Executive Officer, or as Chairman only, unless a lesser amount was mutually agreed to by Mr. McLane and the Company. As of October 1, 2005, Mr. McLane ceased to serve as Chief Executive Officer. No bonuses were paid to Mr. McLane under any plans in 2003, 2004 or 2005. During his tenure as Chief Executive Officer, the Company reimbursed Mr. McLane for all reasonable and necessary business and travel related expenses incurred by him, and the use of an apartment in Irving, Texas during his service to the Company. Mr. McLane also received from the Company tax gross up payments to cover taxes on certain living and other expenses related to his travel to, and temporary living arrangement in, Irving, Texas. Mr. McLane’s 2005 compensation was based on the Committee’s evaluation of his contribution to the Company as well as the amount of his compensation relative to Chief Executive Officers of comparable companies.
James J. Byrne
Adam J. Gutstein
John W. Coyle
James J. Byrne
Barry L. Reisig
of this agreement, Healthcare BPO Partners provides India-based personnel and infrastructure that are utilized by the Company to provide business process outsourcing services and other software development and technical support services to support the Company’s operations. The Indian operations, which are dedicated for the Company’s exclusive use, are managed by the Company and based in Jaipur, India. These Indian operations supplement the Company’s operations in Utah, Texas and Jamaica. Under this Agreement, Healthcare BPO Partners also provides the Company with data center space and support services in the United States. The terms on which these remote resources are provided to the Company have been reviewed and approved by the Audit Committee and are at globally competitive rates. During 2005, the Company paid a total of $376,000 to Healthcare BPO Partners for the remote resources and related services provided under the agreement and, at December 31, 2005, the Company had accounts payable to Healthcare BPO Partners of $135,000.
![](https://capedge.com/proxy/DEF 14A/0001145443-06-001128/d18950line.jpg)
7301 North State Highway 161
Suite 300
Irving, TX 75039
Attn: J. Brent Webb, Secretary
![](https://capedge.com/proxy/DEF 14A/0001145443-06-001128/jbrentwebb.jpg)
J. Brent Webb
Secretary
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| Both of such attorneys or substitutes (if both are present and acting at said meeting or any adjournment(s) or postponement(s) thereof, or, if only one shall be present and acting, then that one) shall have and may exercise all of the powers of said attorneys-in-fact hereunder. |
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| Dated:______________________________________________________________, 2006 ___________________________________________________________________________ Signature (This proxy should be marked, dated, signed by the stockholder(s) exactly as his or her name appears hereon, and returned promptly in the enclosed envelope. Persons signing in a fiduciary capacity should so indicate. If shares are held by joint tenants or as community property, both should sign.) |
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Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 11:59 PM Eastern Time
the day prior to special meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
Internet Use the internet to vote your proxy. Have your proxy card in hand when you access the web site. | OR | Telephone Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call. | OR | Mail |
If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS FOR THE
2006 ANNUAL MEETING OF STOCKHOLDERS ON MAY 10, 2006
The undersigned shareholder of HEALTHAXIS INC., a Pennsylvania corporation (the “Company”), hereby acknowledges receipt of the official Notice of Annual Meeting of Shareholders, dated April 10, 2006, and hereby appoints J. Brent Webb and Ronald K. Herbert, and each of them as proxies and attorneys-in-fact, with full power to each of substitution, on behalf and in the name of the undersigned, to represent the undersigned at the 2006 Annual Meeting of Shareholders of the Company, to be held on Wednesday, May 10, 2006, at 8:00 a.m., Central Daylight Time, at the offices of the Company located at 7301 North State Highway 161, Suite 300, Irving, Texas 75039, and any adjournment(s) or postponement(s) thereof, and to vote all shares of Common Stock which the undersigned would be entitled to vote if then and there personally present, on the matters set forth on the reverse side.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED, WILL BE VOTED (1) FOR THE APPROVAL OF ALL EIGHT OF THE DIRECTOR NOMINEES, (2) FOR THE RATIFICATION OF THE SELECTION OF MCGLADREY & PULLEN, LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2006, AND (3) TO ACT UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING, INCLUDING ANY MOTION TO ADJOURN THE MEETING TO A LATER TIME TO PERMIT FURTHER SOLICITATION OF PROXIES IF NECESSARY TO ESTABLISH A QUORUM OR TO OBTAIN ADDITIONAL VOTES IN FAVOR OF THE PROPOSALS OR BEFORE ANY POSTPONEMENTS OR ADJOURNMENTS THEREOF.
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You can now access your HealthAxis, Inc. account online.
Access your HealthAxis, Inc. shareholder account online via Investor ServiceDirect® (ISD).
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