SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
HEALTHAXIS INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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[ LOGO ] Healthaxis
Dear Shareholder:
You are cordially invited to attend the 2002 Annual Meeting of
Shareholders of Healthaxis Inc. (the "Company") which will be held on May 21,
2002, at 9:30 a.m., Central Standard Time, at the offices of the Company located
at 5215 N. O'Connor Blvd., Suite 800, Irving, Texas 75039. The official Notice
of Annual Meeting together with a proxy statement and form of proxy are
enclosed. Please give this information your careful attention.
Healthaxis invites all shareholders to attend the meeting in person. If
you cannot be present, you may vote by mailing the enclosed proxy card or by
other methods made available by your bank, broker or nominee. Voting by written
proxy will ensure your representation at the Annual Meeting if you choose not to
attend in person. Please review the instructions on the proxy card or the
information forwarded by your bank, broker or nominee concerning your voting
options. The shareholders attending the Annual Meeting may vote in person even
if they have returned a proxy.
Sincerely,
/s/ James W. McLane
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James W. McLane
Chairman, President and Chief Executive Officer
HEALTHAXIS INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 21, 2002
TO THE SHAREHOLDERS OF HEALTHAXIS INC.:
Healthaxis Inc. will hold its Annual Meeting of Shareholders at 9:30 a.m.,
Central Standard Time, on May 21, 2002, at the executive offices of Healthaxis
Inc. located at 5215 N. O'Connor Blvd., Suite 800, Irving, Texas 75039, for the
following purposes:
1. To elect nine directors to serve until the next annual meeting of
shareholders and until their successors are duly elected;
2. To ratify the selection of Ernst & Young, LLP as the Company's
independent accountants for the fiscal year ending December 31, 2002; and
3. To act upon such other matters as may properly come before the
meeting.
The Board of Directors has fixed the close of business on April 4, 2002,
as the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER
OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED TO VOTE
BY COMPLETING, DATING AND PROMPTLY RETURNING THE ENCLOSED PROXY CARD OR BY OTHER
MEANS MADE AVAILABLE BY YOUR BANK, BROKER OR NOMINEE. A SELF-ADDRESSED ENVELOPE
IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ J. Brent Webb
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J. BRENT WEBB
SECRETARY
Irving, TX
April 24, 2002
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HEALTHAXIS INC.
5215 N. O'CONNOR BLVD.
SUITE 800
IRVING, TX 75039
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PROXY STATEMENT
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The accompanying proxy is solicited by and on behalf of the Board of
Directors of Healthaxis Inc. for use at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held on May 21, 2002, at 9:30 a.m., Central Standard
Time, at the offices of the Company located at 5215 N. O'Connor Blvd., Suite
800, Irving, TX 75039, and at any postponement or adjournment thereof. The
approximate date on which this Proxy Statement and the accompanying form of
proxy will be sent or given to shareholders is April 24, 2002. All references in
this Proxy Statement to the "Company" includes Healthaxis Inc. and its
subsidiaries.
If the enclosed form of proxy is signed and returned, it will be voted as
specified in the proxy, or if no vote is specified, it will be voted FOR each of
the matters described in this Proxy Statement. You may revoke your proxy at any
time before it is exercised by writing to the Company's Secretary, by timely
delivering a properly executed, later-dated proxy or by voting by ballot at the
annual meeting. The method by which you vote will not limit your right to vote
at the Annual Meeting if you later decide to attend in person. If your shares
are held in the name of a bank, broker or nominee, you must obtain a proxy,
executed in your favor, from the bank, broker or nominee, to be able to vote at
the Annual Meeting.
The expense of the proxy solicitation will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone, telegraph or facsimile by directors, officers or employees of the
Company and its subsidiaries without additional compensation. Upon request by
banks, brokers and nominees who are record holders of the Company's Common
Stock, par value $0.10 per share (the "Common Stock"), the Company is required
to pay the reasonable expenses incurred by such banks, brokers and nominees for
mailing proxy materials and annual shareholder reports to the beneficial owners
of the Common Stock.
OUTSTANDING STOCK AND VOTING RIGHTS
The Company had 53,711,070 shares of Common Stock outstanding at the close
of business on April 4, 2002 (the "Record Date"). In order for a quorum to be
present at the Annual Meeting, a majority of the outstanding shares of the
Company Common Stock entitled to vote as of the close of business on the Record
Date must be present in person or represented by proxy at the Annual Meeting.
All such shares that are present in person or represented by proxy at the Annual
Meeting will be counted in determining whether a quorum is present, including
abstentions and broker non-votes.
Each share of Common Stock outstanding is entitled to one vote on each
matter which may be brought before the Annual Meeting. The election of directors
will be determined by a plurality vote. Approval of any other business matters
properly brought before the Annual Meeting requires the affirmative vote of a
majority of the shares cast on the proposal. Under Pennsylvania law, an
abstention, withholding of authority to vote, or broker non-vote on any proposal
will not have the same legal effect as an "against" vote, and will not be
counted in determining whether the proposal has received the required
shareholder vote.
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SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of April 4, 2002, the beneficial
ownership of the Company Common Stock: (i) by each person known by the Company
to be the beneficial owner of five percent or more of the Company's outstanding
Common Stock, (ii) by each director and nominee for director of the Company,
(iii) by the Chief Executive Officer, the four most highly compensated executive
officers whose compensation exceeded $100,000 during fiscal 2001 and the former
Chief Executive Officer of the Company (the "Named Executive Officers"), and
(iv) by the directors, director nominees and executive officers of the Company
as a group. Unless otherwise specified, all persons listed below have sole
voting and investment power with respect to their shares.
BENEFICIAL OWNERS (1) NUMBER OF SHARES PERCENT OF
-------------------------------------------------------------- BENEFICIALLY OWNED(2) CLASS
--------------------- ----------
UICI......................................................... 25,105,050(3) 46.40%
4001 McEwen, Suite 200
Dallas, TX 75244
Founders Plan Voting Trust................................... 2,682,798(4) 5.00%
2500 DeKalb Pike
East Norriton, PA 19401
Alvin H. Clemens............................................. 3,987342(5) 7.29%
Michael Ashker............................................... 2,116,967(6) 3.80%
Dennis B. Maloney............................................ 1,065,532(7) 1.98%
James W. McLane.............................................. 963,220(8) 1.77%
Henry G. Hager............................................... 143,517)(9) *
Adam Gutstein................................................ 25,000(10) *
Kevin F. Hickey.............................................. 18,850(11) *
James L. Hopkins............................................. 16,250(12) *
Kevin R. Brown............................................... 17,300(13) *
John Carradine............................................... 108,000(14) *
Emry P. Sisson............................................... 75,344(15) *
Vernon Sheppard.............................................. 145,430(16) *
Mark H. Airhart.............................................. 298,142(17) *
All directors and executive officers as a group (16 Persons). 9,216,329 15.94%
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* Less than 1%
(1) The address of each director and executive officer is that of the Company.
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(2) Includes options exercisable within 60 days from April 4, 2002.
(3) Includes 222,396 shares of the Company Common Stock issuable upon exercise
of warrants and 185,185 shares of the Company Common Stock issuable upon
conversion of a convertible debenture. The total shares shown in the table
are based on the Company's most recent records, as supplemented by UICI.
(4) These shares are held in a voting trust and are subject to options granted
to certain former employees of Insurdata Incorporated and other UICI
subsidiaries pursuant to the terms of options. The shares held in this
trust are voted by a majority vote of the trustees of the trust who are
Messrs. Ashker, Clemens, Hager and Edward W. LeBaron, Jr., a former
director of the Company. As a result, no individual trustee is deemed to
have beneficial ownership over these shares. Upon the forfeiture of
options covering shares held in this trust, the related shares are
distributed to UICI, and upon termination of the voting trust the shares
remaining in the trust will be distributed to UICI.
(5) Includes 955,130 shares subject to options, convertible debentures and
warrants exercisable within 60 days. Excludes options to purchase 917,920
shares of the Company Common Stock owned by the Beaver Creek Limited
Partnership in which Mr. Clemens is a partner for which Mr. Clemens
expressly disclaims beneficial ownership.
(6) Includes 1,727,191 shares subject to options and 300,000 shares of the
Company Common Stock subject to warrants exercisable within 60 days.
(7) Includes 1,064,532 shares of the Company Common Stock subject to options,
which are held in the Founders Plan Voting Trust and are currently
exercisable.
(8) Includes options to purchase 661,070 shares of the Company Common Stock
exercisable within 60 days.
(9) Includes options to purchase 86,850 shares of the Company Common Stock
exercisable within 60 days.
(10) Includes options to purchase 15,000 shares of the Company Common Stock
exercisable within 60 days.
(11) Includes options to purchase 18,850 shares of the Company Common Stock
exercisable within 60 days.
(12) Includes options to purchase 16,250 shares of the Company Common Stock
exercisable within 60 days.
(13) Includes options to purchase 17,300 shares of the Company Common Stock
exercisable within 60 days.
(14) Includes options to purchase 83,500 shares of the Company Common Stock
exercisable within 60 days.
(15) Includes options to purchase 75,344 shares of the Company Common Stock
exercisable within 60 days, 28,387 of which are held in the Founders Plan
Voting Trust.
(16) Includes options to purchase 42,763 shares of the Company Common Stock
exercisable within 60 days.
(17) Includes options to purchase 297,642 shares of the Company Common Stock
exercisable within 60 days, 290,972 of which are held in the Founders Plan
Voting Trust.
PROPOSAL I - ELECTION OF DIRECTORS
The Company's Amended and Restated Articles of Incorporation and Bylaws
currently provide that the Board shall consist of not less than three nor more
than twelve directors, and that within these limits, the number of directors
shall be as established by the Board. The Board has set the number of directors
at nine. At the Annual Meeting, shareholders will elect nine directors to serve
for a term of one year until the next Annual Meeting of Shareholders and until
each of their respective successors is elected and qualified, or the earlier of
their death, resignation or removal from office. The Company's Amended and
Restated Articles of Incorporation do not permit shareholders to cumulate their
votes for the election of directors.
The following table sets forth certain information, as of the Record Date,
regarding the Company's Board of Directors. The Board has nominated the nominees
named below, which nominees are currently serving as directors. The nominees
have consented to being named in the Proxy Statement and to serve if elected.
The Board knows of no reason why such nominees would be unable to serve as
directors. If any of the nominees should for any reason become unable to serve,
then valid proxies will be voted for the election of such substitute nominee as
the Board of Directors may designate, or the Board may reduce the number of
directors to eliminate the vacancy.
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SERVED AS
POSITION HELD DIRECTOR YEAR TERM
NAME AGE IN THE COMPANY SINCE WILL EXPIRE
- --------------------------------------- --- ----------------------------------------- ---------- ------------
Michael Ashker..................... 49 Director 1998 2003
Kevin R. Brown..................... 54 Director 2001 2003
Alvin H. Clemens................... 64 Director 1989 2003
Adam Gutstein...................... 39 Director 2001 2003
Henry G. Hager..................... 67 Director 1996 2003
Kevin F. Hickey.................... 50 Director 2001 2003
James L. Hopkins................... 57 Director 2001 2003
Dennis B. Maloney.................. 55 Director 2001 2003
James W. McLane.................... 63 Chairman, President & Chief Executive 2001 2003
Officer
The biographical information for each director of the Company is set forth
below.
MICHAEL ASHKER has served as a director of the Company and Healthaxis.com,
Inc. since 1998. Mr. Ashker is currently the Managing Partner of Agility
Partners, LLC, an investment and consulting company. He served as Chairman of
the Company and Healthaxis.com, Inc., a subsidiary of the Company, from February
2001 through June 2001, as President and Chief Executive Officer of
Healthaxis.com, Inc. from 1998 to February 2001, and as President and Chief
Executive Officer of the Company from August 1999 to February 2001. Mr. Ashker
was the Managing Director and Portfolio Manager of Lynx Capital Group, LLC, and
Managing Member of Lynx Venture Partners I, LLC, from 1995 to 1998.
KEVIN R. BROWN has served as a director of the Company since 2001. Mr.
Brown is currently Chief Executive Officer of Anceta, a for profit affiliate of
the American Medical Group Association, formed to develop a national data
warehouse of health care information. Prior to joining Anceta, Mr. Brown was a
Principal in Healthcare Systems Executive Consulting, a healthcare industry
consulting firm. From 1989 to 1999 Mr. Brown served as Chairman, CEO and
President of AMISYS Managed Care Systems, a publicly held provider of managed
healthcare information systems to the health insurance and HMO industry. Mr.
Brown has also held management positions with the Harvard Community Health Plan
and Kaiser Permanente.
ALVIN H. CLEMENS has served as a director of the Company since 1989. Mr.
Clemens was Chairman of the Board of the Company and its subsidiaries from
October 1989 to February 2001, Chairman of Healthaxis.com, Inc. from 1998 to
February 2001, Chief Executive Officer of the Company from 1989 to 1999, and
President of the Company from 1993 to 1996. Mr. Clemens has also served as the
President of Provident Indemnity Life Insurance Company from November 30, 1999
to the present. Prior to that time, he served as President of Maine National
Life Insurance Company from 1989 to 1995, as owner and Chairman of the Board of
Maine National Life Insurance Company from 1985 to 1989 and as President and a
Director of Academy Life Insurance Company and Pension Life Insurance Company of
America from 1970 to 1985.
ADAM GUTSTEIN has served as a director of the Company since 2001. He has
also served as a Director and President of North America of DiamondCluster
International, Inc., a global business strategy and technical solutions firm,
since February 2000. From 1994 through 2000, Mr. Gutstein served in a variety of
management positions with Diamond Technology Partners, a consulting and
predecessor firm to Diamond Cluster International, Inc.
HENRY G. HAGER has served as a director of the Company since 1996. He has
also served as a director of American Waterworks Company, an investor owned
water treatment and service provider company, since
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1986. Mr. Hager was a partner in the law firm of Stradley, Ronon, Stevens and
Young from 1994 to 1999. From 1985 to 1999, Mr. Hager served as President and
Chief Executive Officer of the Insurance Federation of Pennsylvania.
KEVIN F. HICKEY has served as a director of the Company since 2001. He has
served as the Chairman and Chief Executive Officer of IntelliClaim, a privately
held application service provider that provides insurance payors with
capabilities for enhancing claim processing efficiency and productivity, since
1999. Mr. Hickey has also served as a director of the American Association of
Preferred Provider Organizations since 1999; a director of First
Health/HealtheSolutions, a privately held company, since 1982; and a director of
Benefit Management Group, a privately held company, since 1997.
JAMES L. HOPKINS has served as a director of the Company since 2001. He is
currently serving as a director of Palomar Mountain Spring Water, Inc., a spring
water retailer, 3dfx Interactive, Inc., a former developer of graphics chips and
boards, Corel Corporation, a developer of creative and business applications
software products, LNNi, Inc., an online legislative service, and Enseo, Inc., a
developer of PC -based add in boards for video on demand, and Wavefly
Corporation, a digital information hardware and software company. Mr. Hopkins
served as Chairman of the Board and Chief Executive Officer of Micrografx, Inc.
from October 2000 until October 2001. Prior to that position, Mr. Hopkins served
as managing director of Hoak, Breedlove, Wesneski & Co., a Texas based
"technology boutique" investment banking and financial services firm, from
October 1999 until October 2000. From March 1990 until October 1999 Mr. Hopkins
served as the Chief Financial Officer for STB Systems, Inc., a manufacturer of
computer graphic subsystems, and Senior Vice President of 3dfx Interactive, Inc.
DENNIS B. MALONEY has served as a director of the Company since 2001. He
is currently the President of Symcor Services Inc, Item Processing Division, a
company that provides financial transaction outsourcing services for North
American banks. Mr. Maloney served as Chief Operating Officer of the Company
from February 2001 through April 2001, and served as a director and Chief
Operating Officer of Healthaxis.com, Inc. from January 2000 through April 2001.
Mr. Maloney served as President and Chief Executive Officer of Insurdata
Incorporated from January 1997 to January 2000, and a director of Insurdata
Incorporated from March 1997 to January 2000, when it was merged with
Healthaxis.com, Inc. Prior to such time, he was an executive officer of SHL
Systemhouse, a systems integration company, from 1976 until October 1996.
JAMES W. MCLANE has served as a director of the Company since 2001. He has
also served as President and Chief Executive Officer since February 2001,
Chairman since July 2001, and as a director of Healthaxis.com, Inc. since August
2000. He also serves as a director of Beverly Enterprises, Inc., a healthcare
services provider. Mr. McLane served as President and Chief Operating Officer of
NovaCare, Inc., a provider of physical therapy and orthotics and prosthetics
devices and services, from 1997 to 2000; Executive Vice President of Aetna Life
& Casualty and Chief Executive Officer of Aetna Health Plans from 1991 to 1996.
Prior to that time, he served as Senior Vice President and Division Executive of
Citibank's Corporate Finance Division; Europe/Middle East & Africa Division of
the Capital Markets Group, and Citicorp's Global Insurance Division and Capital
Investments Division. During this period, he also served as Chairman of Ambac,
Inc. and CapMac, Inc., companies which provided financial guarantees on
municipal bonds and asset backed securities.
UICI PROXY AGREEMENT
In consideration of the termination of a previously existing shareholders'
agreement, on November 7, 2001, UICI and the Company entered into a Proxy
Agreement (the "Proxy Agreement") pursuant to which UICI has granted a proxy to
the Company's Board of Directors, with full power of substitution for and in the
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name, place and stead of UICI to appear at the Annual Meeting of shareholders of
the Company, and at any postponement or adjournment thereof, and to vote
thirty-three and one-third percent (33 1/3%) of the number of shares of the
Company Common Stock held of record from time to time by UICI or its affiliates
for the sole purpose of electing directors to the Board of Directors of the
Company, with all the powers and authority UICI would possess if personally
present. The voting rights granted by UICI in the Proxy Agreement require the
votes to be cast in favor of the nominees that a majority of the directors shall
have recommended to stand for election. The Proxy Agreement does not confer upon
the proxies a voting right for any other purpose.
The Proxy Agreement shall terminate at the earlier to occur of (i) the
tenth anniversary of the effective date of the Proxy Agreement, (ii) such date
as UICI beneficially holds less than twenty five percent (25%) of the
outstanding shares of the Company Common Stock on a fully diluted basis, (iii)
such date as any person or persons acting as a "group" (within the meaning of
Rule 13d-5 of the Securities Exchange Act of 1934, as amended) beneficially
holds a greater percentage of the outstanding shares of the Company Common Stock
on a fully diluted basis than the percentage beneficially owned by UICI, or (iv)
the filing by the Company of a voluntary petition in bankruptcy or the filing by
a third party of an involuntary petition in bankruptcy with respect to the
Company.
In accordance with the Proxy Agreement, at the Annual Meeting the Board of
Directors will vote thirty-three and one-third percent (33 1/3%) of the number
of shares of the Company Common Stock held of record by UICI and its affiliates
FOR the proposals contained in this Proxy Statement.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE NOMINEES FOR DIRECTOR.
BOARD MEETINGS AND COMMITTEES
The Board of Directors has an Executive Committee, a Compensation &
Nominating Committee, a Related Party Transactions Committee and an Audit
Committee to perform the functions described below. During 2001, the Board of
Directors of the Company held eight meetings. Each director attended at least
75% of the aggregate meetings held by the Board of Directors and the Committees
on which he served.
The Executive Committee is responsible for conducting business when a
meeting of the full Board of Directors is not feasible. The members of the
Executive Committee are Messrs. Clemens, Gutstein, Hickey, Hopkins and McLane.
The Executive Committee did not meet during 2001.
The Compensation and Nominating Committee is responsible for the
administration of the Company's option plans and other compensation matters, and
making recommendations for nominees for directors when a vacancy of the Board of
Directors exists. The members of the Compensation & Nominating Committee are
Messrs. Clemens, Brown, Hickey and Gutstein. The Compensation and Nominating
Committee met once during 2001, and three times in early 2002. The Report of the
Compensation and Nominating Committee is included in this Proxy Statement.
The Related Party Transactions Committee is responsible for the review and
oversight of contractual and business relationships between the Company and
affiliated parties, including a review of the fairness, profitability, overall
quality and performance standards of any product, licensing and professional
service agreements. The members of the Related Party Transactions Committee are
Messrs. Brown, Hager and Maloney. The Related Party Transactions Committee which
was formed in November 2001, did not meet in 2001, and held its first meeting in
early 2002.
7
The Audit Committee is responsible for the selection of the Company's
auditors, reviewing the scope and results of audits, reviewing management's
overview of the risks, policies, procedures and controls surrounding the
integrity of financial reporting, reviewing the relationship that may affect the
independence of outside auditors, reviewing any internal control or accounting
issues of the Company and reviewing the adequacy of the Company's accounting,
financial and operating systems. The members of the Audit Committee are Messrs.
Hager, Hickey, Hopkins and Ashker. The Audit Committee held four meetings in
2001. Mr. Ashker is not deemed to be independent as defined in Rule 4200(a)(15)
of the National Association of Securities Dealers Manual because he is a former
officer of the Company. The Board of Directors has determined that Mr. Ashker's
appointment to the Audit Committee is in the best interests of the Company and
its shareholders because of Mr. Ashker's familiarity with the Company on an
historical basis.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee & Nominating Committee was a
former officer or employee of the Company or any of its subsidiaries, nor do any
of them have any interlocking relationship with any other company, that requires
disclosure under this heading.
DIRECTOR COMPENSATION
In February 2001, the Board adopted a Director Compensation Plan for
Non-Employee Directors. Under the plan, outside, independent directors received
2,000 options and 500 options for physical attendance at each regular Board or
Board committee meetings, respectively; 1,200 options and 300 options for
attendance by teleconference at each regular Board or Board committee meetings,
respectively; 300 options for attendance by teleconference at each special
meeting of the Board; and 5,000 options to new directors on the date of their
election to the Board. All such options were granted from the 2000 Stock Option
Plan. All options granted under this plan were priced according to the 2000
Option Plan, and fully vested within 30 days of the grant date.
In February 2002, the Board adopted a simplified Director Compensation
Plan for independent, outside, non-employee directors. Under the plan, each
outside director, who is not a current or former employee, will receive a total
of 20,000 options for service in 2002. An additional 2,500 options are granted
to each Committee chair for service in such capacity in 2002. Any newly elected
director who joins the Board during 2002 will receive a pro rata number of
options on the date of their election to the Board. All such options will be
granted from the 2000 Stock Option Plan. All options granted under this plan
shall be priced according to the 2000 Stock Option Plan, and shall vest 25% upon
the date of each scheduled regular quarterly Board of Directors meeting during
2002.
PROPOSAL 2 - RATIFICATION OF SELECTION OF AUDITOR
The Board of Directors has selected Ernst & Young, LLP as independent
certified public accountants for the fiscal year ended December 31, 2002, and
has determined that it would be desirable to request that the shareholders
ratify such selection. The affirmative vote of a majority of the outstanding
shares of Common Stock present at the Annual Meeting in person or by proxy is
necessary for the ratification of the appointment of Ernst & Young, LLP to serve
as the Company's independent certified public accountants for the fiscal year
ended December 31, 2002.
Representatives from Ernst & Young, LLP are expected to be present at the
Annual Meeting and will have the opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
8
AUDIT FEES
For the fiscal year ended December 31, 2001, the Company paid Ernst &
Young LLP, its independent auditor, $230,000 for professional services rendered
for the audit and reviews of the Company's financial statements for fiscal year
2001.
ALL OTHER FEES
For the fiscal year ended December 31, 2001, the Company paid Ernst &
Young LLP $114,000 for all other services rendered for fiscal year 2001.
FORMER AUDITORS
BDO Seidman, LLP served as the Company's principal accountant for fiscal
2000 and 1999, and an interim period from January 1, 2001 through April 17,
2001. By the recommendation of the Company's Audit Committee and action of the
Company's Board of Directors, BDO Seidman, LLP was terminated on April 17, 2001.
On the same date, Ernst & Young, LLP was appointed as the Company's independent
certified public accountants for the year ended December 31, 2001.
The reports of BDO Seidman, LLP on the financial statements of the Company
for the two-year period ended December 31, 2000 and for the interim period in
fiscal 2001 did not contain an adverse opinion or a disclaimer of opinion. The
financial statements for that time period were not qualified or modified as to
uncertainty, audit scope or accounting principles. The Company did not have any
disagreements with BDO Seidman, LLP during the two-year period ended December
31, 2000 and the interim period in fiscal 2001 on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of BDO
Seidman, LLP, would have caused it to make a reference to the subject matter of
the disagreements in connection with its reports.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE RATIFICATION OF THE SELECTION
OF ERNST & YOUNG, LLP AS AUDITORS.
EXECUTIVE OFFICERS
Biographical information regarding the Company's executive officers is as
follows:
JAMES W. MCLANE. See biographical information under the caption Proposal I
- - Election of Directors.
JOHN M. CARRADINE, age 43, has been Treasurer and Chief Financial Officer
of the Company since March 2001, and Executive Vice President of Finance and
Corporate Development since April 1, 2002. Prior to such time, Mr. Carradine
served as Chief Financial Officer and a director of Micrografx, Inc. from 1998
to 2001, a publicly traded software development and services company with
operations in the United States, Europe, Japan, and Australia, where he was
responsible for worldwide financial and administrative functions including all
finance and accounting, technology operations, planning and investor relations.
Prior to Micrografx, Mr. Carradine served as Vice President of Finance and Chief
Financial Officer of Intellicall, Inc. from 1990 to 1998, an American Stock
Exchange listed manufacturer and provider of telecommunications products and
services both in the United States and overseas. Mr. Carradine began his career
with Arthur
9
Young and Company as an Auditor from 1980 to 1983, and subsequently served from
1983 to 1990 as Treasurer for Computer Language Research, Inc., a provider of
software and data processing services.
JOHN D. SMITH, age 37, joined the Company on April 1, 2002, as Executive
Vice President of Operations and Market Development. Mr. Smith was a Senior
Principal with DiamondCluster International, Inc., a global business strategy
and technical solutions firm from January 2001, until joining the Company in
April 2002. From 1995 until 2001, Mr. Smith was Chief Executive Officer of
Beauty Concepts, Inc. a venture capital-backed retail chain. From 1992 until
1994, Mr. Smith was a senior associate with McKinsey & Company, a global
strategy firm. Prior to that time, Mr. Smith spent three years with both General
Electric and IBM.
MARK H. AIRHART, age 56, has been Senior Vice President of Computing &
Network Services for the Company since January 2000, and President of the
Healthaxis Imaging Services, LLC, the Company's imaging and data capture
subsidiary, since August 2000. Mr. Airhart was Vice President of Computing &
Network Services for Insurdata Incorporated from 1997 until January 2000 when
Insurdata merged with Healthaxis.com, Inc. Prior to joining Insurdata, Mr.
Airhart served as senior vice president of operations for SHL Systemhouse, a
then wholly-owned subsidiary of MCI, Inc., which has since been sold and
integrated into EDS. He also spent 10 years as managing director for the Houston
operations of Itel Corporation. Prior to joining Itel, he was the managing
director for the consolidated data center operations of FMC Corporation, and a
senior program systems representative for IBM Corporation.
EMRY P. SISSON, age 37, has been the Company's Senior Vice President of
Web Technologies since May 2001. Prior to this role he was the Vice President of
Application Software Support and was responsible for all software product
support. Prior to joining Insurdata in 1998, Sisson served as the Chief
Operating Officer for BT Systems Integrators, a provider of imaging and
information management solutions. Sisson graduated from the United States
Military Academy at West Point in 1986 with a degree in Computer Science. During
his time in the Military, he served seven years as a combat arms officer.
NANCY MENDOZA, age 43, has been the Company's Senior Vice President of
Application Solutions since May 2001. Ms. Mendoza previously served as Vice
President of Application Solutions and has served in numerous other management
roles since joining Insurdata in 1988.
J. BRENT WEBB, age 40, has been Vice President, Secretary and General
Counsel since April 1, 2002. Mr. Webb has been a Vice President of the Company
since May 2001, and previously served as Assistant Secretary. Mr. Webb joined
Insurdata in January 1999 as Corporate Counsel. Prior to joining Insurdata, Mr.
Webb spent 11 years in private legal practice in the Dallas, Texas area.
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation paid by
the Company and its subsidiaries to the Chief Executive Officer and each Named
Executive Officer during the years ending December 31, 2001, 2000 and 1999.
10
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
----------------------------------------------- Awards
Securities
Other Annual Underlying All Other
Salary Bonus Compensation Options Compensation(1)
Name and Principal Position Year ($) ($) ($) (#) ($)
- ---------------------------------- ---- ---------- ------- ------------- ------------ ---------------
James W. McLane, 2001 299,566(3) -- 24,026(4) -- 4,000
Chairman, Chief Executive Officer 2000 --(3) -- -- 773,270(5) --
and President(2) 1999 -- -- -- -- --
Michael Ashker, 2001 50,000(7) -- 12,780(8) -- 500
Former Chief Executive Officer 2000 190,769 60,000 -- 206,770(5) 1,750
and President (6) 1999 120,000 50,000 -- 271,800(5) --
John Carradine 2001 157,692 7,770 -- 200,000 3,000
Executive Vice President and 2000 -- -- -- -- --
Chief Financial Officer 1999 -- -- -- -- --
Emry P. Sisson 2001 160,855 9,800 -- 100,000 3,187
Senior Vice President of Web 2000 113,895 15,000 -- 14,674(5) 2,149
Technologies 1999 86,554 11,936 -- 17,742(5) 2,965
Vernon Sheppard 2001 187,000 13,090 19,449(10) 25,000 4,000
Senior Vice President of Major 2000 195,270 -- -- 53,026(5) 2,452
Accounts(9) 1999 5,769 -- -- 44,355(5) --
Mark H. Airhart 2001 200,000 14,000 -- -- 2,460
Senior Vice President of 2000 207,511 58,875 -- 13,340(5) 2,510
Operations 1999 157,240 60,040 -- -- 2,499
and President of Healthaxis
Imaging Services
- ----------------------------
(1) Represents the amount contributed to the 401K savings plan by the Company
on behalf of the named executive.
(2) Mr. McLane became President and Chief Executive Officer on February 1,
2001. Prior to that date, Mr. McLane served as a consultant to the
Company.
(3) The amount shown excludes $18,750 in consulting fees paid to Mr. McLane
during 2001 as a consultant, and $68,750 paid as consulting fees in fiscal
year 2000.
(4) Represents travel and living expenses paid by the Company on behalf of Mr.
McLane who lives in Pennsylvania.
(5) Reflects the total shares of Company Common Stock currently underlying the
options granted in the year shown as a result of the January 2001 merger
of Healthaxis.com, Inc. with the Company.
(6) Mr. Ashker resigned as the Company's President and Chief Executive Officer
in February 2001. Following such resignation, the Company entered into a
consulting agreement with Mr. Ashker as described under the caption Other
Agreements in the Section titled Certain Relationships and Related
Transactions.
(7) The amount shown excludes $135,000 in consulting fees paid to Mr. Ashker
during 2001 under the consulting agreement.
(8) Represents living expenses and automobile expenses paid by the Company on
behalf of Mr. Ashker.
(9) Mr. Sheppard was the Company's Senior Vice President of Major Accounts
from May 2001 through March 2002. Mr. Sheppard had previously served as
Vice President of Client Services and in various other senior management
roles after joining Insurdata in 1999. As of April 1, 2002, Mr. Sheppard
is no longer employed by the Company.
(10) Represents travel and living expenses paid by the Company on behalf of Mr.
Sheppard.
11
STOCK OPTIONS GRANTED
The following table sets forth information regarding options granted to
the Chief Executive Officer and each Named Executive Officer during 2001 and the
values of such options held by such individuals at fiscal year end.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
Number of % of Total At Assumed Annual Rates
Securities Options Exercise Of Stock Appreciation for
Name Options Granted to Price Expiration Option Term (1)
Granted (2) Employees $/Share Date 5% 10%
- --------------------------------------- ------------ ----------- -------- ---------- -------------- ------------
James W. McLane........................ -- -- -- -- -- --
Chairman, Chief Executive Officer and
President
Michael Ashker......................... -- -- -- -- -- --
Former Chief Executive Officer and
President of the Company and
Healthaxis
John Carradine......................... 100,000 11.89% $ 0.82 3/19/2011 $51,569 $130,687
Chief Financial Officer 100,000 11.89% $ 1.00 5/18/2011 $62,889 $159,374
Emry P. Sisson......................... 100,000 11.89% $ 1.00 5/18/2011 $62,889 $159,374
Sr. Vice President
Vernon Sheppard........................ 25,000 2.97% $ 1.00 5/18/2011 $15,722 $39,844
Sr. Vice President
Mark H. Airhart........................ -- -- -- -- -- --
Sr. Vice President
- ----------------------------
(1) Pursuant to the rules of the Securities and Exchange Commission, the
amounts under these columns reflect calculations at assumed 5% and 10%
appreciation rates and, therefore, are not intended to forecast future
appreciation, if any, of the respective underlying common stock. The
potential realizable value to the optionees was computed as the difference
between the appreciated value, at the expiration dates of the stock
options, of the applicable underlying common stock obtainable upon
exercise of such stock options over the aggregate exercise price of such
stock options.
(2) All options shown were granted under the Company's 2000 Stock Option Plan
and will vest 25% upon each anniversary date beginning with May 18, 2002.
12
AGGREGATED OPTIONS/SAR EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
The following table sets forth information regarding options exercised
by the Chief Executive Officer and each of the Named Executive Officers during
fiscal 2001, as well as the year end values of shares underlying options:
NUMBER OF SECURITIES UNDERLYING
UNEXERCISED OPTIONS/ SARS AT FISCAL VALUE OF UNEXERCISED IN-THE-MONEY
YEAR END OPTIONS/SARS AT FISCAL YEAR-END ($)
-------- -----------------------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------ --------------- ----------- ----------- ------------- ----------- -------------
James W. McLane --- --- 473,570 300,150 --- ---
Michael Ashker --- --- 1,727,191 --- --- ---
John Carradine --- --- 28,000 172,000 --- ---
Emry P. Sisson --- --- 34,412 129,486 --- ---
Vernon Sheppard --- --- 25,429 52,597 --- ---
Mark H. Airhart --- --- 237,779 66,533 --- ---
EMPLOYMENT AGREEMENTS AND EMPLOYMENT ARRANGEMENTS
Pursuant to the terms of an agreement, entered into in December 2000 to be
effective February 2001, by Healthaxis.com, Inc. and James W. McLane, the
President and Chief Executive Officer of the Company, Mr. McLane receives an
annual salary of $325,000, subject to review and adjustment annually by the
Board of Directors of the Company. Mr. McLane is an "at-will" employee and does
not receive health benefits from the Company. However, Mr. McLane is eligible to
participate in the Company's disability and group life and 401(k) Plan and in
any bonus or incentive plan adopted by the Company with a bonus target equal to
50% of annual base salary. The agreement also provides for the reimbursement of
Mr. McLane for all reasonable and necessary business and travel related expenses
incurred by him, and the use of an apartment in Dallas, Texas during his service
to the Company.
In addition, in December 2000, Healthaxis.com, Inc. granted to Mr. McLane
stock options to purchase 550,000 shares of Healthaxis.com Inc. Common Stock at
an exercise price of $4.00 per share. As a result of the Company's
reorganization in January 2001, these options were converted into the right to
receive 733,700 shares of the Company Common Stock at a price of $3.00. Of this
amount, options to purchase 333,500 shares were immediately exercisable and
options to purchase the remaining 400,200 shares vest at a rate of 100,050
shares per year commencing on the first anniversary of the grant date. These
options have a term of five years. The vesting of these options accelerates in
the event of a change in control of the Company as defined in the Amended and
Restated 1998 Stock Option Plan or if Mr. McLane is not retained as Chief
Executive Officer and is asked to resign from the board, other than for cause.
The Company has entered into Change in Control Employment Agreements with
Messrs. McLane, Carradine, Smith, Sisson and Webb, and with Ms. Mendoza. These
agreements were recommended by the Company's Compensation & Nominating Committee
and approved by the Board of Directors. The effective date of the agreements is
January 1, 2002, except in the case of Mr. Smith, whose agreement was effective
13
April 1, 2002. Under these agreements, the Company will provide the covered
individuals with termination benefits if their employment is terminated by the
Company without "cause" or by the individual for "good reason," as those terms
are defined in the agreement, within six months prior to a change in control or
three years after a change in control. The termination benefits under these
agreements are as follows:
o A lump sum payment equal to two years' salary and his average bonus
for the preceding three years in the case of Mr. McLane; 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 Mr.
Smith; 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.
Sisson, Mr. Webb and Ms. Mendoza;
o 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;
o Continuation of health and insurance benefits for 12 months
following termination of employment; and
o Outplacement services for 12 months following termination of
employment.
Following a change of control, the agreement will be treated as an
employment agreement between the covered individual and the Company, the terms
of which will require the Company to compensate the individual at the rate of
compensation and bonus immediately prior to the change of control. The term of
this employment agreement is three years, commencing on the date the change of
control occurs.
A "change in control" is defined in the agreements as (i) a merger or
consolidation of the Company with or into another corporation in which the
Company in not the surviving corporation; (ii) a dissolution of the Company
(excluding a dissolution of the Company which is a direct result of the
Company's default on the outstanding two percent (2%) convertible debt); (iii) a
transfer of all or substantially all of the assets of the Company in one
transaction or a series of related transactions to one or more other persons or
entities; (iv) any "person" or "group" (as those terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended from time to
time (the "1934 Act")), other than Excluded Persons (as defined below), becomes
the "beneficial owner" (as defined in Rule 13d-3 of the 1934 Act), directly or
indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities; (v) after
January 1, 2002, UICI and/or any affiliate of UICI acquires, directly or
indirectly, the power to vote over 50% of the voting securities of the Company
(except that any shares UICI acquires as a direct result of a forfeiture of the
options to acquire shares of the Company's Common Stock held in the Founders
Voting Trust shall not be included in any determination as to whether UICI has
acquired the power to vote over 50% of the voting securities of the Company);
(vi) after January 1, 2002, individuals who at the beginning of the period
constituted the Board of Directors of the Company (together with any new
directors whose election by such directors or whose nomination for election by
the shareholders of the Company was approved by a majority of the directors then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute at least a majority of the Board of Directors then in
office; or (vii) a significant reorganization of the Company occurs, such as a
spin-off, sale of assets of a business or other restructuring, and as a result,
the duties and responsibilities of the Named Executive Officer are materially
reduced. The term "Excluded Persons" means UICI, any affiliate of UICI, and a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company.
14
Under the agreements, the covered individual may not become an employee
of, independent contractor of, consultant to, or perform any services for
competitors of the Company for a specified period following the termination of
his or her employment by the Company. The specified period is two years in the
case of Mr. McLane, eighteen months in the case of Mr. Carradine and Mr. Smith,
and one year in the case of Mr. Sisson, Mr. Webb and Ms. Mendoza. The agreements
also contain confidentiality obligations that survive indefinitely, and
nonsolicitation obligations that continue for two years following termination of
employment.
The agreements contain a tax gross-up provision relating to any excise tax
that the covered individual incurs by reason of the receipt of any payment that
constitutes an excess parachute payment as defined in Section 280G of the
Internal Revenue Code.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL POLICIES. The Company's compensation programs are intended to
enable the Company to attract, motivate, reward, and retain the management
talent required to achieve aggressive corporate objectives in a highly
competitive industry, and thereby increase shareholder value. It is the
Company's policy to provide incentives to its senior management to achieve both
short-term and long-term objectives and to reward exceptional performance and
contributions to the development of the Company's business. To attain these
objectives, the Company has developed a senior management compensation program
which includes a competitive base salary, an equity based incentive plan, an
employee benefit program, as well as the Management Incentive Program.
MANAGEMENT INCENTIVE PROGRAM - In 2001, the Company replaced the existing
Leadership Incentive Program with the Management Incentive Program (the "MIP").
The MIP is designed to be a more effective incentive compensation plan since it
aligns more closely with Company goals and the need to establish operating
profitability. The Program provides incentives to key members of the management
team by setting goals and objectives and rewarding achievement of such goals and
objectives with cash bonus compensation. Under the program, cash bonus
compensation is not paid out unless the Company reaches $100,000 pre-tax
profitability assuming a fully-funded plan, and preserves a minimum of $7.5
million in cash on the balance sheet. The MIP is administered by a committee
comprised of the CEO, the CFO and the Director of Human Resources, which makes
its recommendations on a quarterly basis to the Compensation Committee of the
Board of Directors.
CEO COMPENSATION - On February 1, 2001, Michael Ashker terminated
full-time employment as President and Chief Executive Officer with the Company
pursuant to a severance agreement. Pursuant to the terms of the Severance
Agreement, Mr. Ashker continued as Chairman of the Board until March 31, 2001,
at his annual salary rate of $200,000 per annum. Effective April 1, 2001, Mr.
Ashker continued as a non-executive Chairman until June 30, 2001, and performed
services pursuant to a 12 month consulting agreement which paid him $15,000 per
month. Mr. Ashker also received (i) standard Company medical benefits for six
months, (ii) reimbursement for Company business-related expenses, (iii) monthly
payments for a Company-leased automobile through June 30, 2001, (iv) his laptop
computer, desktop printer, cell phone and peripherals, and (v) continued
occupancy of a Company-paid apartment in Dallas, Texas through March 31, 2001.
In addition, all unvested stock options previously granted to Mr. Ashker became
fully vested, and the post termination exercise period of such options was
extended to three years from the effective date on which Mr. Ashker no longer
serves as either a director, employee or consultant of the Company.
In February 2001, James W. McLane was named Chairman, Chief Executive
Officer and President. Mr. McLane receives an annual base salary of $325,000,
and is also eligible for bonus compensation under the
15
MIP of up to 50% of Mr. McLane's annual base salary. Payment of such bonus shall
be determined by the Compensation & Nominating Committee based on achievement of
certain goals, and may be made only if the Company reaches $100,000 pre-tax
profitability assuming a fully-funded MIP, and preserves a minimum of $7.5
million in cash on the balance sheet. No bonuses were paid to Mr. McLane under
the MIP in 2001. In addition, Mr. McLane was granted stock options to purchase
550,000 shares of Healthaxis.com, Inc. Common Stock at an exercise price of
$4.00 per share under the Amended and Restated 1998 Stock Option Plan. As a
result of the Company's reorganization completed in January 2001, these options
were converted into the right to purchase 733,700 shares of the Company Common
Stock at a price of $3.00. Of this amount, options to purchase 333,500 shares of
the Company' Common Stock were immediately exercisable and options to purchase
the remaining 400,200 shares vest at a rate of 100,050 shares per year
commencing on the first anniversary of the grant date. These options have a term
of five years. The vesting of these options accelerates in the event of a change
in control of the Company as defined in the Amended and Restated 1998 Stock
Option Plan or if Mr. McLane is terminated as Chief Executive Officer and
director of the Company, other than for cause. Mr. McLane's compensation is
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
comparative companies.
In April 2001, the Company offered up to $400,000 in aggregate
non-recourse loans, at the prime rate of interest, to employees eligible under
the Leadership Incentive Program (now replaced by the MIP) to purchase up to
1,400,000 shares of the Company's Common Stock a third party in a privately
negotiated deal. Under the terms of the stock purchase loan program, eligible
employees could borrow up to $75,000 each for up to 50% of the purchase price of
stock. Under this program, Mr. McLane purchased 250,000 shares of the Company
Common Stock and borrowed $75,000 under the loan program towards the purchase
price.
In January 2002, Mr. McLane was granted 750,000 stock options to purchase
the Company Common Stock at a price of $0.68 per share. Of this amount, options
to purchase 187,500 shares were immediately exercisable, and options to purchase
the remaining 562,500 shares vest at a rate of 187,500 on each of the successive
anniversary dates of the grant. These options have a term of ten years and
vesting accelerates in the event of a change of control of the Company as
defined in the 2000 Stock Option Plan or if McLane is not retained as CEO and is
asked to leave the Board of Directors unless such termination or removal is for
cause.
POLICY WITH RESPECT TO SECTION 162(M) OF THE INTERNAL REVENUE CODE.
Generally, Section 162(m) of the Internal Revenue Code, and the regulations
promulgated thereunder referred to as Section 162(m), denies a deduction to any
publicly held corporation, such as the Company, for compensation exceeding
$1,000,000 paid to the Chief Executive Officer and the four other highest paid
executive officers during any taxable year, excluding, among other things, some
performance-based compensation. The Committee intends to evaluate the level of
compensation and the importance to the Company of qualifying for the
performance-based exclusion with respect to options having an exercise price of
not less than the fair market value of the Common Stock on the date of grant.
The Compensation & Nominating Committee will also continually evaluate to what
extent Section 162(m) will apply to its other compensation programs.
SUBMITTED BY THE COMPENSATION & NOMINATING COMMITTEE OF THE BOARD OF DIRECTORS
Kevin Hickey, Chairman
Kevin Brown
Alvin Clemens
Adam Gutstein
16
REPORT OF AUDIT COMMITTEE
The Audit Committee met four times in 2001. As required by its charter,
which has been adopted by the Board of Directors, the Audit Committee has met
with management to review and discuss the audited financial statements. The
Audit Committee also conducted discussions with the Company's independent
auditors, Ernst & Young, LLP, regarding the matters required by the Statement on
Auditing Standards No. 61. As required by Independence Standards Board Standard
No. 1, "Independence Discussion with Audit Committees," the Audit Committee has
discussed with Ernst & Young, LLP its independence. Based upon the review and
discussions, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the year ended December 31, 2001.
SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
James L. Hopkins, Chairman
Kevin Hickey
Michael Ashker
Henry G. Hager
17
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in cumulative
total return (change in the year-end stock price plus reinvested dividends) to
the Company's shareholders against the cumulative total return of the NASDAQ US
Market Index and the Dow Jones Technology, Software Index for the five years
beginning December 31, 1996. In 2000, the Company changed the Peer Group Index
to reflect that the Company entirely changed its business from being an
insurance holding company with risk-bearing health insurance companies to a
technology company primarily providing software and application integration
services to clients using the Internet for health insurance distribution and
administration.
CUMULATIVE TOTAL RETURN
BASED UPON AN INITIAL INVESTMENT OF $100 ON DECEMBER 31, 1996
WITH DIVIDENDS REINVESTED
[ PERFORMANCE GRAPH ]
- ----------------------- ----------- ------------ ----------- ----------- ----------- ------------
DEC-96 DEC-97 DEC-98 DEC-99 DEC-00 DEC-01
- ----------------------- ----------- ------------ ----------- ----------- ----------- ------------
HEALTHAXIS INC. $100 $ 17 $ 71 $251 $ 10 $ 5
- ----------------------- ----------- ------------ ----------- ----------- ----------- ------------
DOW JONES TECHNOLOGY, $100 $132 $222 $442 $236 $199
SOFTWARE INDEX
- ----------------------- ----------- ------------ ----------- ----------- ----------- ------------
NASDAQ U.S. $100 $122 $173 $321 $193 $153
- ----------------------- ----------- ------------ ----------- ----------- ----------- ------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS REGARDING 2% CONVERTIBLE DEBENTURES
On September 20, 2000, the Company, Mr. Clemens, a director of the
Company, UICI, a significant shareholder of the Company, and Brown Simpson
Partners I, Ltd., entered into a securities purchase agreement
18
with Royal Bank of Canada, which provided for the purchase of $5.0 million in
principal amount of the 2% convertible debenture and warrants to purchase 36,873
shares of the Company Common Stock for an aggregate purchase price of
approximately $3.5 million. As a result of this purchase and the amendments to
the debentures and warrants discussed below, each of Mr. Clemens, UICI and Brown
Simpson Asset Management, LLC, each hold a 2% convertible debenture, which is
convertible into 185,185 shares of the Company Common Stock and a warrant to
purchase 12,291 shares of the Company Common Stock at $3.01 per share. In
connection with this transaction and in exchange for the selling debenture
holder's release of the Company for any and all defaults by the Company under
the 2% convertible debenture, warrant and related agreements, the Company issued
to the selling debenture holder a warrant for 50,000 shares of the Company
Common Stock at an exercise price of $3.01 per share.
On September 28, 2000, the Company entered into an Amendment to the
Securities Purchase Agreement dated September 14, 1999, between the Company and
the holders of the Company' $27.5 million 2% convertible debentures due
September 14, 2002, including Mr. Clemens and UICI. In accordance with the terms
of the amendment, effective January 29, 2001, among other things, (i) the
maturity date of the debentures were extended to September 14, 2005, (ii) the
conversion price was changed to $9.00 per share and (iii) the events of default
were modified. Based upon the revised conversion price, the amended debentures
are convertible into 3,055,555 shares of the Company' Common Stock. The terms of
the warrants to purchase 202,802 shares of the Company' Common Stock issued to
the purchasers of the debentures were also amended to reduce the exercise price
to $3.01 and to extend the exercise period of the warrants for an additional
year, or until September 13, 2005. In addition, as part of this transaction, the
Company and the holders of the debentures entered into an Amended and Restated
Registration Rights Agreement on January 29, 2001. The Company renegotiated the
terms of these agreements in order to extend the maturity dates of the
debentures and to obtain a conditional waiver which suspends any and all past or
current defaults or violations arising under the original terms of these
debentures or the registration rights agreement from September 28, 2000 through
the closing date of the reorganization, and precludes the holders from enforcing
any and all past, current or future defaults or violations by the Company
arising under the original terms of debentures or the registration rights
agreement from September 28, 2000 through the closing date of the
reorganization.
UICI AND ITS AFFILIATES
The Company currently provides services to a number of UICI subsidiaries
and affiliates pursuant to written agreements, including the UICI outsourcing
agreement and the other agreements described below, ranging from one to five
years, with annual renewable options thereafter. These services include the
licensing of some of its propriety work flow and business applications as well
as systems integration and technology management. UICI and its subsidiaries
constitute, in the aggregate, the Company's largest client. For the year ended
December 31, 2001, revenues from services rendered to UICI and its subsidiaries
accounted for an aggregate of approximately $29.7 million, or 68%, of the
Company's total revenues . As of December 31, 2001, the Company had trade
receivables from UICI and its subsidiaries and affiliates of $3.3 million.
UICI and its former subsidiary, Insurdata Incorporated, entered into
various agreements, all of which were assumed by the Company as a result of the
January 2000 merger of Healthaxis.com, Inc. with Insurdata Incorporated and the
completion of the January 2001 reorganization. These agreements were developed
in the context of a parent/subsidiary relationship and therefore are not the
result of arm's-length negotiations between independent parties. There can be no
assurance that each of these agreements, or the transactions provided for
therein, will be effected on terms at least as favorable to the Company as it
could have obtained from unaffiliated third parties.
19
UICI TECHNOLOGY SERVICES AGREEMENT. UICI and its affiliates and the
Company have entered into a technology services agreement. The terms of this
agreement were negotiated between Insurdata Incorporated and UICI concurrent
with the Company's acquisition of Insurdata. Pursuant to the terms of this
agreement, the Company provides UICI and its affiliates with technology support
services, system integration services, data processing services, local area
network and other telecommunications services, and other software and hardware
based services for an initial term of five years commencing in January 2000. At
UICI's option, the parties are required to negotiate, in good faith, a three
year renewal term prior to the expiration of the agreement. If they are unable
to agree on renewal prices, terms and conditions, the agreement will expire at
the end of the initial term.
The agreement is terminable without cause by UICI, or the Company, at
anytime upon not less than 180-day notice to the other party. The agreement
contains no minimum or maximum commitments on behalf of UICI and its affiliates,
and UICI and its affiliates are free to obtain the services provided by the
Company from an unrelated third party during the term of the agreement. In fact,
revenue recognized under this agreement declined to $21.4 million in 2001 from
$21.7 million in 2000, and UICI has advised the Company that it intends to seek
to further reduce its dependence on the Company for services under this
agreement. UICI has advised the Company that it intends to seek to further
reduce its dependence on the Company for services under this agreement due to
UICI's strategic objective of regaining control of and managing its own
information technology staff. UICI has also indicated that it expects that its
payments to the Company under the agreement in 2002 will be less than its
payments in 2001, and will likely decline each year thereafter through the
expiration of the agreement in 2005, at which time UICI has indicated that it
does not intend to renew the agreement.
Generally, the services provided under the agreement must be billed at the
Company's cost plus 10%. The agreement also requires that if the Company charges
an unaffiliated third party a rate that is lower than it charges UICI and its
affiliates for similar services, UICI and its affiliates would be entitled to
receive the lower rate. At the expiration or termination of the agreement, UICI
has the right to hire certain employees of the Company or its affiliates who
have spent greater than 80% of their time providing services to UICI and its
affiliates during the six months preceding the expiration or termination of the
agreement.
In addition, at the expiration or termination of the agreement, the
Company is obligated to provide up to six months of transition assistance
services. The parties also agreed to indemnify and hold one another harmless
against certain enumerated losses and claims.
LICENSE AGREEMENT. On January 25, 2001, the Company entered into a
software license agreement with UICI. Under the agreement, UICI paid a one-time
license fee of approximately $1.8 million for a perpetual, enterprise-wide
software license. UICI had the option to terminate the agreement within the
first two years of its term, in which case a prorated portion of the one-time
license fee would be refunded. On September 24, 2001 this agreement was amended
to shorten the original refund period from December 2002 to March 2002. The
remaining amount refundable was agreed to be $840,000 as of September 30, 2001
and such amount will be recorded as revenue on a prorata basis over the
remaining six month term of the amended contract. Revenue recognized during 2001
under this agreement was approximately $1.4 million.
MEGA HIPAA PROJECT. On May 29, 2001, the Company entered into an agreement
with The MEGA Life and Health Insurance Company, a subsidiary of UICI, for the
development and integration of software for compliance with HIPAA. This was a
fixed price agreement totaling $515,000 payable upon the achievement of certain
milestones. The project was completed in the third quarter of 2001. During
fiscal 2001, UICI paid the Company $515,000 under this agreement.
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MEGA AND MIDWEST DATA CAPTURE SERVICES AGREEMENT. On May 1, 1999, the
Company's data capture subsidiary entered into a services agreement with The
MEGA Life and Health Insurance Company and Mid-West National Life Insurance
Company of Tennessee, subsidiaries of UICI, for the provision of data capture
services. As amended, the agreement expired on December 31, 2001, and has
continued on a month-to-month basis during 2002. Data capture services are
provided on a per transaction basis pursuant to the agreement. For the year
ended December 31, 2001, revenues for services rendered under this Agreement
accounted for an aggregate of $0.9 million.
UICI MARKETING DATA CAPTURE SERVICES AGREEMENT. On December 17, 2001, the
Company's data capture subsidiary entered into a services agreement with UICI
Marketing, a subsidiary of UICI, for the provision of data capture services. The
agreement includes a nominal set-up fee and data capture services are provided
on a per transaction basis. No amounts were billed or paid under this agreement
in fiscal 2001.
UICI ADMINISTRATORS, INC. The Company provides data capture and business
applications to UICI Administrators, Inc., an entity that provides
administrative services and was owned by UICI in fiscal 2001, pursuant to a
written license and services agreement. The agreement with UICI Administrators
is for a three year term that expired in December 2001, with automatic annual
renewal provisions thereafter, subject to prior notice of non-renewal. For the
year ended December 31, 2001, revenues for services rendered to UICI
Administrators under this agreement accounted for an aggregate of $5.0 million,
which is 11.3% of the Company's total revenues.
During 1999, Insurdata Incorporated entered into a contract with UICI
Administrators and an unrelated third party for both programming services and
ongoing processing of medical insurance claims and Medicare claims. The contract
provides for the Company to receive an approximate $1.1 million fixed fee for
programming services payable initially in cash up to $640,000 as programming
services are performed and then by a $460,000 non-interest bearing note with an
estimated value of approximately $370,000 using an estimated implied interest
rate of 8.75%. The note will be paid in equal monthly installments of $7,666
over the five-year life of the contract. The note is collateralized by the
proceeds of the cancellation provisions within the UICI Administrators' contract
with the unrelated third party. The Company recorded no programming revenues
under this arrangement during the year ended December 31, 2001.
On January 17, 2002, UICI sold UICI Administrators, Inc. to American
Administrative Group, Inc. ("AAG"), a party unrelated to either UICI or the
Company. The Company and AAG are currently operating under a temporary
arrangement whereby services continue to be provided under the same terms as the
expired agreement with UICI Administrators, Inc. The Company and AAG are
negotiating a definitive agreement, which is expected to be completed by June
30, 2002; however, there can be no assurances that such an agreement will be
reached.
LEASE AGREEMENTS. The Company previously leased two facilities from
subsidiaries of UICI. The Company leased office space located in Hurst, Texas,
pursuant to a written agreement that expired on December 31, 1999 and continued
on a month to month basis through December 2000. The Company also leased
additional office space in Dallas, Texas, on a month-to-month basis under a
verbal agreement through December 2000. Effective in January 2001, these leases
were replaced with an arrangement pursuant to which the Company provides a
credit to UICI against amounts due under the master information technology
outsourcing agreement for space utilized by Company personnel within these
facilities. For the year ended December 31, 2001, the Company paid and/or
credited an aggregate amount of approximately $72,000 to UICI and its
subsidiaries under these leasing arrangements.
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WINTERBROOK/VSO. Winterbrook/VSO previously provided sales and marketing
services for the Company's imaging and data capture subsidiary pursuant to a
verbal brokerage agreement. The rights to commissions payable to Winterbrook/VSO
under this arrangement are owned by UICI and Ronald L. Jensen, Chairman of UICI
and a former director of Healthaxis.com, Inc. For the year ended December 31,
2001, the Company made net payments to Winterbrook/VSO of approximately $58,450.
At December 31, 2001, the balance of commissions owed to Winterbrook/VSO was
$0.00, and no further commissions will be accrued under the arrangement.
NETLOJIX COMMUNICATIONS, INC. Netlojix Communications, Inc., a telephone
company in which Ronald L. Jensen, Chairman of UICI and a former director of
Healthaxis.com, Inc., and parties affiliated with Mr. Jensen own a controlling
interest, provides telephone services to the Company pursuant to a written
agreement dated September 6, 2000. The agreement will expire in August 2002. For
the year ended December 31, 2001, Healthaxis paid Netlojix Communications, Inc.
approximately $500,000 for services under this agreement.
FOUNDERS PLAN VOTING TRUST. The Insurdata Incorporated merger agreement
provided for a voting trust agreement which required the establishment of a
trust to hold shares of the Company Common Stock, which are held of record by
UICI, but as to which UICI has granted options to purchase such shares to some
of the employees of the former Insurdata Incorporated and other UICI
subsidiaries pursuant to its Insurdata Incorporated Founders' Program. The
trustees of this trust are Michael Ashker, Alvin Clemens, Edward W. LeBaron, Jr.
and Henry Hager who are referred to as the trustees. All of the trustees are
also directors or former directors of the Company. A majority of the trustees
have the power to vote the shares held by the trust in their discretion at all
meetings of shareholders or pursuant to actions by unanimous consent. The voting
trust agreement terminates upon the earlier of the distribution of the shares
subject to the agreement or July 1, 2003. Upon the forfeiture of options
covering shares held in this trust, the related shares are distributed to UICI,
and upon termination of the voting trust the shares remaining in the trust will
be distributed to UICI. As of March 8, 2002, the Insurdata Incorporated
Founders' Trust held 2,682,798 shares of the Company Common Stock, of which
2,450,730 were subject to vested options.
UICI VOTING TRUST. UICI, and Messrs. Ashker, LeBaron and Maloney entered
into a voting trust agreement which provided for the establishment of a trust to
hold 10,103,217 shares of Healthaxis.com, Inc. Common Stock held by UICI. This
trust is referred to as the UICI Voting Trust in this proxy statement. The
initial trustees of this trust are Michael Ashker, Edward W. LeBaron, Jr. and
Dennis B. Maloney who are referred to as the trustees. All of the trustees are
also directors or former directors of the Company. Mr. Maloney and Mr. Ashker
are also former officers of the Company. A majority of the trustees had the
power to vote the shares held by the trust in their discretion at all meetings
of shareholders or pursuant to actions by unanimous consent. UICI retained
dispositive power and the ability to receive all dividends on the shares held in
the trust. The UICI voting trust was terminated effective November 7, 2001.
UICI PROXY AGREEMENT. The Company and UICI are parties to a proxy
agreement effective as of November 7, 2001. A summary of the material terms of
the agreement can be found above under "Proposal I - Election of Directors -
UICI Proxy Agreement".
LOANS
On October 18, 1999, Insurdata Incorporated made loans aggregating
$631,000 to some of its executive officers and senior management, including
Dennis B. Maloney, who was the Company's Chief Operating Officer until May 2001
and is currently a director. These loans were extended by Insurdata Incorporated
for the purpose of enabling such individuals to exercise options to purchase
Insurdata
22
Incorporated Common Stock issued under Insurdata Incorporated Founders' Plan.
Each of the loans is due on December 31, 2002, and bears interest at a rate of
6% per annum, with interest payable quarterly. If the employee is terminated and
there is a public market for the shares, the due date on the loan is accelerated
to 90 days from the later of termination or the establishment of a public
market. These loans are now held by the Company and are secured by Company
Common Stock. Mr. Maloney repaid his loan in full on April 23, 2001. As of
December 31, 2001, the balance outstanding on these loans was $184,000.
In April 2001, the Company offered up to $400,000 in aggregate
non-recourse loans, at the prime rate of interest, to employees eligible under
the Leadership Incentive Program (now replaced by the Management Incentive
Program) to purchase up to 1,400,000 shares of the common stock of the Company
from a third party in a privately negotiated sale. Under the terms of the stock
purchase loan program, eligible employees could borrow up to $75,000 each for up
to 50% of the purchase price of stock. Under this program, Mr. McLane purchased
250,000 shares of the Company Common Stock and borrowed $75,000 under the loan
program towards the purchase price. As of December 31, 2001, the balance
outstanding on these loans to all participants, including Mr. McLane, was
$127,000.
DIAMONDCLUSTER INTERNATIONAL CONSULTING AGREEMENT
In January 2002 the Company engaged DiamondCluster International, Inc. to
provide business strategy consulting services to the Company for a fixed fee of
$300,000 plus expenses payable upon completion of the engagement in 2002.
DiamondCluster International may provide additional services to the Company
during 2002. Mr. Gutstein, a director of the Company, is a director and
President of North America for DiamondCluster International, Inc. Negotiations
for this engagement were completed in 2001 prior to Mr. Gutstein joining the
Board of Directors.
COMMISSION ON SALE OF FORMER HEADQUARTERS BUILDING
On December 17, 2001, the Company sold its former headquarters building
located at 2500 DeKalb Pike, East Norriton, PA to an unrelated Pennsylvania
partnership for $3,000,000 cash. In connection with the sale, a professional
services fee of $28,059 was paid to Michael G. Hankinson, the former Senior Vice
President, General Counsel and Secretary of the Company, for services provided
in managing the sale process on behalf of the Company.
OTHER AGREEMENTS
Mr. Clemens, Healthaxis.com, Inc. and the Company entered into a
termination agreement in August 2000, which provides that the Company will pay
to Mr. Clemens $106,250 on a quarterly basis over five years for an aggregate
payment of $2,125,000. At the Company's option, the quarterly payments may be
made by issuing shares of Common Stock in lieu of making the cash payment.
Pursuant to a separate letter agreement dated September 19, 2000, the Company
has agreed to employ Mr. Clemens on an at-will basis at an annual salary of
$100,000, to provide health insurance for Mr. Clemens and his family, an
automobile through March 2002, and an office and secretarial support until July
2002. Pursuant to these agreements, the Company also extended the expiration
date of Mr. Clemens' 397,198 stock options for an additional three years through
July 7, 2006. The quarterly payments to Mr. Clemens during 2001 were made in
part by issuing Common Stock in lieu of cash. On March 6, 2002, the Company and
Mr. Clemens entered into an agreement pursuant to which Mr. Clemens agreed to
accept 358,332 shares of the Company's Common Stock in full payment and
satisfaction of the remainder of the $2,125,000 obligation.
23
Michael Ashker and the Company are parties to a consulting agreement,
effective as of April 2001, under which Mr. Ashker will receive an aggregate
$180,000 for his services pursuant to the agreement. The consulting agreement
will expire twelve months following the effective date thereof. In the event
that Mr. Ashker is terminated by the Board of Directors of the Company during
the term of the consulting agreement, Mr. Ashker will receive a severance amount
equal to the outstanding balance under the consulting agreement as a lump sum
payment. In addition, under the terms of the consulting agreement, Mr. Ashker
received medical insurance coverage at the current contribution rate for a
period of six months following the effective date of the agreement. Under the
terms of the agreement, Mr. Ashker is also entitled to reimbursement of all
reasonable and necessary Company business-related expenses incurred while
serving as the non-executive Chairman of the Board of the Company, which ended
on June 30, 2001.
In addition, pursuant to the terms of the agreement, all stock options
previously granted to Mr. Ashker have been fully vested and the post-termination
exercise period of these options was extended for a three-year period commencing
upon Mr. Ashker's termination as a director, employee or consultant of the
Company. The Company also agreed to register all shares underlying the options
on a registration statement on Form S-8. In addition, if, during the three-year
post termination exercise period, Mr. Ashker is unable to sell the shares
acquired upon the exercise of his options because the Form S-8 is not effective,
Mr. Ashker will be entitled to piggyback registration rights each time the
Company files a registration statement.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 ("Section 16(a)")
requires the Company' directors, executive officers, and persons who own more
than 10% of a registered class of the Company' equity securities, to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than 10% shareholders are required by
Securities and Exchange Commission regulation to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 2001, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with, except Messrs. Ashker,
Gutstein, Clemens and Maloney filed a Form 5 late in February 2002 to report
two, three, five and one transactions in 2001, respectively.
ADVANCE NOTICE BYLAW PROVISION
The Company's Amended and Restated Bylaws provide that nominations by
shareholders for directors to be elected, or proposals by shareholders to be
considered, at a meeting of shareholders and which have not been previously
approved by the Board of Directors must be submitted to the Secretary of the
Company in writing, either by personal delivery, nationally-recognized express
mail or United States mail, postage prepaid, not later than (i) with respect to
an election to be held, or a proposal considered, at an annual meeting of
shareholders, the latest date upon which shareholder proposals must be submitted
to the Company for inclusion in the Company's proxy statement relating to such
meeting pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, or other applicable rules or regulations under the federal securities
laws or, if no such rules apply, at least ninety days prior to the date one year
from the date of the immediately preceding annual meeting of shareholders, and
(ii) with respect to an election to be held, or a proposal to be considered at a
special meeting of shareholders, the close of business on the tenth day
following the date on which notice of such meeting is first given to
shareholders.
24
SHAREHOLDER PROPOSALS
The deadline for providing the Company timely notice of any shareholder
proposal to be submitted outside of the Rule 14a-8 process for consideration at
the Company's 2003 Annual Meeting of Shareholders (the "2003 Meeting") will be
November 18, 2002. As to all such matters which the Company does not have notice
on or prior to November 18, 2002, discretionary authority shall be granted to
the persons designated in the Company's proxy related to the 2002 Meeting to
vote on such proposal. In addition, the Rule 14a-8 requirements applicable to
inclusion of shareholder proposals in the Company's proxy materials related to
the 2003 Meeting require that a shareholder proposal regarding the 2003 Meeting
must be submitted to the Company at its office located at 5215 N. O'Connor
Blvd., Suite 800, Irving, TX 75039, by November 18, 2002, to receive
consideration for inclusion in the Company's 2003 proxy materials. Any such
proposal must also comply with the proxy rules under the Securities Exchange Act
of 1934, including Rule 14a-8.
ANNUAL REPORT
This Proxy Statement is accompanied by the Annual Report to Shareholders
for the year ended December 31, 2001 (the "Annual Report"). The Annual Report
contains the Company's audited financial statements and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
EACH PERSON SOLICITED HEREUNDER CAN OBTAIN A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001 REQUIRED TO BE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WITHOUT CHARGE, INCLUDING
EXHIBITS TO THE REPORT, BY SENDING A WRITTEN REQUEST THEREFOR TO:
HEALTHAXIS INC.
5215 N. O'CONNOR BLVD.
SUITE 800
IRVING, TX 75039
ATTN: JIM TAYLOR
VICE PRESIDENT OF FINANCE
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ J. Brent Webb
-----------------------
J. BRENT WEBB
SECRETARY
25
HEALTHAXIS INC.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS FOR THE
2002 ANNUAL MEETING OF STOCKHOLDERS ON MAY 21, 2002
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 24, 2002, and hereby appoints James W.
McLane and John Carradine, 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 2002 Annual Meeting of
Shareholders of the Company, to be held on Tuesday, May 21, 2002, at 9:30 a.m.,
Central Standard Time, at the offices of the Company located at 5215 N. O'Connor
Blvd., Suite 800, 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.
1. To elect nine directors to serve until the next annual meeting of
shareholders and until their successors are duly elected;
01 Michael Ashker 02 Kevin R. Brown
03 Alvin H. Clemens 04 Adam Gutstein
05 Henry G. Hager 06 Kevin F. Hickey
07 James L. Hopkins 08 Dennis B. Maloney
09 James W. McLane
If there is any individual director with respect to whom you desire to
withhold your consent, you may do so by indicating his name: .
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To ratify the selection of Ernst & Young, LLP as the Company's
independent accountants for the fiscal year ending December 31, 2002; and
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To act upon such other matters as may properly come before the
meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
matter(s) which may properly come before the meeting and at any adjournment(s)
or postponement(s) thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED, WILL BE
VOTED (1) FOR THE APPROVAL OF ALL NINE OF THE DIRECTOR NOMINEES, (2) FOR THE
RATIFICATION OF THE APPOINTMENT BY THE COMPANY'S BOARD OF DIRECTORS OF ERNST &
YOUNG LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2002, AND (3) TO ACT UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING.
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.
1
Dated:
- --------------------------------------------
- --------------------------------------------
Signature
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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.)
2