Investment Agreement

ADVENTIST HEALTH SYSTEM SUNBELT HEALTHCARE CORPORATION



HEALTHMAGIC, INC.



EMPOWER HEALTH CORPORATION



__________________________________________





INVESTMENT AGREEMENT



__________________________________________









January 29, 1999





INVESTMENT AGREEMENT



This INVESTMENT AGREEMENT (the "Agreement") is made as of January 29, 1999, by and among Adventist Heath System Sunbelt Healthcare Corporation, a Florida not-for-profit corporation ("Adventist"), HealthMagic, I nc., a Delaware corporation ("HMI"), and Empower Health Corporation, a Texas Corporation ("Empower").





WHEREAS, Adventist owns a majority of the issued and outstanding common stock, par value $.01 per share, of HMI ("HMI Common Stock");



WHEREAS, Adventist wishes to invest in 348,757 shares of Series C Convertible Preferred Stock, par value $.01 per share, of Empower ("Series C Preferred Stock") which, calculated on a Fully Diluted Basis currently represent s 10% of the Common Stock of Empower;



WHEREAS, Empower wishes to invest in 10% of HMI Common Stock, calculated on a Fully Diluted Basis; and



WHEREAS, concurrently with the execution of this Agreement, Adventist, HMI and Empower shall enter into the Related Agreements (as defined in Section 1.2(ii) hereof).



NOW, THEREFORE, in consideration of the mutual agreements, covenants, representations and warranties herein contained, and for other good, valid and binding consideration, the receipt an d sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:



ARTICLE 1. TERMS OF INVESTMENT



1.1. Cross Investment.

----------------



(i) Adventist Investment in Empower. At the Closing (as defined in

--------------------------------- Section 1.2 below) Empower shall tender to Adventist 348,757 shares of Series C Preferred Stock (the "Empower Shares") which shall have the rights and preferences specified in the Certificate of Designation attached hereto as Exhibit A. As of the date of this Agreement, the Empower Shares are convertible - --------- into 348,757 shar e s of Empower Common Stock which, as of the date hereof, represent 10% of the Common Stock of Empower calculated on a Fully Diluted Basis. With respect to the shares of Empower Common Stock, "Fully Diluted Basis" means taking into account (1) the number of shares of Empower Common Stock currently outstanding, (2) the number of shares of Empower Common Stock issuable upon conversion of all of the outstanding shares of Empower Series A Preferred Stock and the Empower Series B Preferred Stock (as each is defin e d in Section 4.3 hereof), and the Series C Preferred Stock, (3) the number of shares of Empower Common Stock issuable upon exercise of all outstanding options granted under the Empower 1997 Stock Option Plan, and (4) the number of shares of Empower Common Stock issuable upon exercise or conversion of all other outstanding options, warrants and convertible



securities except the shares of Empower Common Stock issuable upon exercise of the outstanding option for the holder of the Empower Series B Preferred S tock to acquire shares of Empower Common Stock or Series B Preferred Stock convertible into shares of Empower Common Stock (the "Superior Option").



(ii) Empower Investment in HMI. In consideration for the Empower

------------------------- Shares, at the Closing Adventist shall tender to Empower:



(a) 358,846 shares of HMI Common Stock (the "HMI Shares") which, as of the date hereof, represent 10% of the issued and outstanding Common Stock of HMI calculated on a Fully Diluted Basis. With respect to the Common Stock of HMI, "Fully Diluted Basis" means taking into account (1) the number of shares of HMI Common Stock currently outstanding, (2) the number of shares of HMI Common Stock issuable on the exercise of all outstanding options to purchase HMI Common Stock ("HMI Employee Options") under the HMI 1998 Omnibus Stock Option and Incentive Plan or otherwise, (3) the 18,595 shares of HMI Common Stock issu a ble upon the exercise of the Warrant granted to Ziegler Financing Corporation on May 29, 1998 (the "Ziegler Warrant") for so long as outstanding, and (4) the number of shares of HMI Common Stock issuable upon exercise or conversion of all other outstandin g options, warrants and convertible securities except the 448,507 shares of HMI Common Stock issuable upon exercise of the Stock Purchase Warrant and Agreement between HMI and Sabratek Corporation dated November 18, 1998 (the "Sabratek Warrant").



(b) $3.5 Million by wire transfer of immediately available funds or by certified or bank check payable to Empower.



1.2. Closing.

--------



(i) The Closing of the cross-investment (the "Closing") shall take place at a mutually agreed upon time on January 29, 1999 (the "Closing Date") simultaneously with the execution and delivery of this Agreement. At the Closing:



(a) Empower shall deliver to Adventist a certificate representing the Empower Shares issued in the name of Adventist, and



(b) Adventist shall deliver to Empower a certificate representing the HMI Shares, and $3.5 Million by wire transfer of immediately available funds or by certified or bank check payable to Empower.



(ii) The execution, delivery and effectiveness of this Agreement are contingent upon the simultaneous execution and delivery of the following Agreements (the "Related Agreements") of even date herewith:



(a) A Software Sale, License and Development Agreement (the "PMR Sale and License") between HMI and Empower.



(b) The letter agreement ("Letter Agreement") between Adventist, HealthMagic, Empower, Donald W. Hackett and Superior Consultant Holdings Corporation ("Superior").





(c) A registration rights agreement between HMI, Adventist, Empower and Sabratek Corporation ("Sabratek") (the "HMI Registration Rights Agreement").



(d) An amended and restated registration rights agreement between Empower, Adventist and Superior (the "Empower Registration Rights Agreement").



(e) A stock restriction agreement between HMI, Empower and Adventist (the "HMI Stock Restriction Agreement").



(f) A stock restriction agreement between Empower, Adventist and Donald W. Hackett, a shareholder of Empower (the "Empower Stock Restriction Agreement" and collectively with the Letter Agreement the HMI Stock Restriction Agreement, the E mpower Registration Rights Agreement and the HMI Registration Rights Agreement, the "Related Stock Agreements").



(iii) At the Closing, the parties shall provide the following certificates:



(a) HMI shall provide to Empower an officer's certificate certifying the charter and by-laws of HMI,



(b) Adventist shall provide to Empower an officer's certificate certifying the charter and bylaws of Adventist; and



(c) Empower shall provide to HMI and A dventist an officer's certificate certifying (i) the charter and by-laws of Empower, (ii) the resolutions of the Board of Directors of Empower with respect to the approval of this Agreement and the Related Agreements to which it is a party, and (iii) the resolutions of its Board of Directors with respect the adoption of the Certificate of Designation attached hereto as Exhibit A.

---------



(iv) At the Closing, all consents, approvals and other actio ns of and notices and filings with all entities and persons as may be necessary or required with respect to the execution and delivery by the parties of this Agreement and any of the Related Agreements shall have been obtained or waived in writing.



ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF HMI AND ADVENTIST



In order to induce Empower to enter into this Agreement and the PMR Sale and License Agreement, HMI and Adventist jointly and severally represent and warrant to Empower the following:



2.1. Organization and Corporate Power. HMI is a corporation duly

---------------------------------- organized, validly existing and in good standing under the laws of the State of Delaware, and is qualified to do business as a foreign corporation in each jurisdiction in which the failure to be so qualified would have a material adverse effect on the business, condition or results of operations of HMI. HMI has all required corpo rate power and authority to carry on its business as presently conducted, to enter into this Agreement and the Related Agreements to which it is a party (the "HMI Related Agreements") and to carry out the transactions contemplated hereby and thereby.



HMI has made copies of the certificate of incorporation and bylaws of HMI, as amended and restated to date (the "HMI Charter" and the "HMI Bylaws," respectively) available to Empower and said copies are correct and complete on the date hereof.



2.2. Authorization and Non-Contravention. This Agreement and the HMI

----------------------------------- Related Agreements are valid and legally binding obligations of HMI, enforceable against HMI in accordance with their terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and similar laws affecting creditors' rights generally and to general principals of equity. The execution, delivery and performance of this Agreement and the HMI Related Agreements, have been duly authorized by all necessary corporate action of HMI. The Bylaws of HMI provide the President of HMI with the authority to execute contracts on behalf of HMI. Except as set forth in Schedule 2.2, the execution and delivery of this

------------ Agreement and the HMI Related Agreements, and the performance of any obligations set forth in this Agreement and in the HMI Related Agreements will not (i) violate, conflict with, or result in a default under any contract or obliga t ion to which HMI is a party or by which it or its assets are bound, or any provision of the HMI Charter or HMI Bylaws, or cause the creation of any Encumbrance (as defined in this Section 2.2) upon any of the assets of HMI; (ii) violate or result in a vio l ation of, or constitute a default (whether after the giving of notice, lapse of time or both) under, any provision of any law, regulation or role, or any order of, or any restriction imposed by, any court or other governmental agency; (iii) require from H M I any notice to, declaration or filing with, or consent or approval of, any governmental authority or other third party (including any filings pursuant to any state securities laws); or (iv) accelerate any obligation under, or give rise to a right of term i nation of, constitute a material breach of, any agreement, permit, license or authorization to which HMI is a party or by which HMI is bound, or require the issuance of equity securities (including without limitation, by operation of any anti- dilution ad justment). Encumbrance shall mean any security interest, mortgage, lien, pledge, charge, easement, reservation, restriction or similar right of any third party.



2.3. Capitalization.

---------------



(i) Immediately after the Closing: the authorized capital stock of HMI will consist of 5,000,000 shares of HMI Common Stock, of which 3,475,242 shares (including the HMI Shares) shall be issued and outstanding, and held beneficially and of rec ord by the persons and entities identified in Schedule

-------- 2.3(i) in the amounts indicated thereon. - ------



(ii) Except for (a) the shares of HMI Common Stock reserved fo r issuance under the HMI 1998 Omnibus Stock and Incentive Plan, (b) the shares of HMI Common Stock issuable under the HMI Employee Options, (c) the shares of HMI Common Stock issuable under the Ziegler Warrant, (d) the shares of HMI Common Stock issuable u nder the Sabratek Warrant, and (e) as disclosed on Schedule 2.3(ii), as of the Closing, HMI shall not have issued or agreed to issue, and is not obligated to issue any outstanding warrants, options or other rights to purchase or acquire any HMI Common Sto c k, nor any outstanding securities convertible into HMI Common Stock or any warrants, options or other rights to acquire any such convertible securities. HMI's present intention is to issue stock, warrants, options or other rights to purchase or acquire no t more than 130,000 shares of HMI capital stock within thirty (30) days after the Closing Date under the HMI 1998 Omnibus Stock and Incentive Plan.





(iii) Except as set forth in Schedule 2.3(iii), as of the Closing,

----------------- all of the outstanding shares of HMI Common Stock (including the HMI Shares) will have been duly and validly authorized and issued, will be fully paid and non-assessable and will have been offered, issued, sold and delivere d in compliance with applicable federal and state securities laws and not subject to any preemptive rights.



(iv) Other than as set forth in the HMI Registration Rights Agreement, immediately after the Closing, there are no rights to have HMI Common Stock registered for sale to the public in connection with the laws of any jurisdiction.



(v) After the Closing, no agreements relating to the voting of HMI Common Stock, irrevocable proxies or restrictions on the transfer of HMI Common Stock exist except as provided under Federal and state securities laws and except for (a) the HMI Stock Restriction Agreement, (b) the Stockholders Agreement between Adventist and Sabratek Corporation dated as of November 18, 1998 relating to voting and t ransfer restrictions (the "Sabratek Agreement"), (c) the restrictions on transfer set forth in Section 8.5 of the HMI Bylaws, (d) the restrictions on transfer set forth in the HMI Employee Stock Option Agreements for the HMI Employee Options and Restricte d Stock Agreements for stock issued to HMI employees and directors (tree and correct copies of the forms of which have been provided to Empower), (e) the restrictions on transfer set forth in certain HMI employment agreements, and (f) the first right of re fusal set forth in the Sabratek Warrant.



2.4. Subsidiaries; Investments. Except for 487,804 shares of Series B

-------------------------- preferred stock of Direct Medical Knowledge, Inc. (which, pursuant to a merger with WebMd shall be converted into shares of WebMd), HMI has no subsidiaries and has no equity interest in any corporation, joint venture, partnership or other entity.



2.5. Reports and Financial Statements.

---------------------------------



(i) HMI has previously furnished to Empower complete and correct copies, including exhibits, of its (a) audited balance sheets as of December 31, 1996 and December 31, 1997 and audited income statements for the period November 8, 1996 through December 31, 1996 and the twelve month period ended December 31, 1997 (the "HMI Audited Financial Statements"), and (b) unaudited balance sheet as of November 30, 1998 and income statement for the period January 1, 1998 through November 30 , 1998 (the "HMI Unaudited Financial Statements").



(ii) The HMI Audited Financial Statements were prepared in conformity with generally accepted accounting principles ("GAAP") applied on a consistent basis, are complete, correct and consistent in all material respects with the books and records of HMI and fairly present, in all material respects, the financial position of HMI as of the dates thereof and the results of operations of HMI for the periods shown therein. The HMI Unaudited Financial Statements were prepared in conformity with GAAP and fairly present, in all material respects, the financial condition and the results of operations of HMI as of the date and for the period indicated.





(iii) Except as and to the extent refl ected or reserved against in the HMI balance sheet as of November 30, 1998 including the footnotes and schedules thereto (the "HMI Base Balance Sheet"), HMI does not have (i) any material accrued or contingent liability or liabilities arising out of any t ransaction or state of facts existing on or prior to the date of the Base Balance Sheet or (ii) any other material liabilities arising other than in the ordinary course of business since the date of the Base Balance Sheet.



2.6. Absence of Certain Developments. Since the date of the HMI Base

--------------------------------- Balance Sheet there has not been any: (i) material adverse change in the financial condition of HMI or in the assets, liabilities, properties, business or prospects of HMI; (ii) decl a ration, setting aside or payment of any dividend or other distribution with respect to, or any direct or indirect redemption or acquisition of, any HMI Common Stock or any split, combination or other reclassification of such stock; (iii) cancellation of a n y material debt or claim held by HMI or the creation or assumption of any indebtedness for money borrowed by HMI; (iv) loss, destruction or damage to any property which is a material asset of HMI, whether or not insured; (v) acquisition or disposition of any material assets (or any contract or arrangement therefor) or other transaction by HMI other than in the ordinary course of business; or (vi) loss or cancellation of any material contract of HMI.



2.7. Accounts Receivable. All of the accounts receivable of HMI, including

-------------------- but not limited to those shown or reflected on the HMI Base Balance Sheet, represent bona fide sales made in the ordinary course of business, are valid and enforcea ble claims and are fully collectible in the normal course of business after deducting the reserve set forth in the Base HMI Balance Sheet and reasonably adjusted since that date, which reserve, as adjusted, constitutes an estimate of HMI's uncollectible a ccounts consistent with the past collection history of HMI.



2.8. Title to Properties. HMI has good and valid title to all of its owned

------------------- assets including without limitation all ri ghts to those assets reflected on the HMI Base Balance Sheet or acquired by it after the date thereof (except for properties disposed of since that date in the ordinary course of business), free and clear of all liens, claims or encumbrances of any nature . HMI has good and valid leasehold interests in all of its leased personal property and all leases to which HMI is a party are in full force and effect. HMI does not own, directly or indirectly, any real property.



2.9. Tax Matters. HMI has filed all federal, state, local and foreign

------------ income, excise and franchise tax returns, real estate and personal property tax returns, sales and use tax returns and other tax returns require d to be filed by it except where the failure to file such returns would not have a material adverse effect on the assets, liabilities, properties, business or prospects of HMI and has paid all taxes owing by it (whether or not showing on the tax returns), except taxes which have not yet accrued or otherwise become due, for which adequate provision has been made in the HMI Unaudited Financial Statements. All such tax returns were correct and complete in all material respects. Neither the Internal Revenue Se r vice nor any other taxing authority is now conducting any audit, examination or review of any tax return filed by HMI or asserting against HMI any deficiency or claim for additional taxes or interest thereon or penalties in connection therewith. All taxes that HMI is required by law to withhold or collect for payment have been duly withheld and collected, and have been paid or accrued in the HMI Unaudited Financial Statements.





2.10. Certain Contracts and Arrangements. Except as set forth in Schedule

---------------------------------- -------- 2.10 hereto, HMI is not a party to, subject to or bound by: - ----



(i) any contract, lease or agreement creating any obligation of HMI to pay to any third pa rty $100,000 or more with respect to any single such contract or agreement which is not cancelable or terminable upon thirty days notice without penalty;



(ii) any contract or agreement for the sale, license, lease or disposition of products in excess of $100,000;



(iii) any contract containing covenants limiting the freedom of HMI to compete in any line of business or with any person or entity;



(iv) any license agreement (as licensor or licensee) obligating HMI or any third party to pay in excess of $100,000;



(v) any contract or agreement for the purchase of any leasehold improvements, equipment or fixed assets for a price in excess of $100,000;



(vi) any indenture, mortgage, promissory note, loan agreement, guaranty or other agreement or commitment for borrowing in excess of $100,000 or any pledge or security arrangement;



(vii) any stock redemption or purchase agreements or other agreements affecting or relating to the capital stock of HMI (other than the Letter Agreement and the Employee Options); or



(viii) any agreement pertaining to any joint venture, partnership or other arrangement involving the sharing of expenses, revenues or profits.



All of HMI's contracts are in full force and effect and HMI is not in default thereunder, except to the extent that any such default would not have a material adverse effect on the assets, liabilities, properties, business or prospects of HMI, and HM I has not received notice of any alleged default under any such contract, agreement, understanding or commitment.



2.11. Intellectual Property Rights; Employee Restrictions.

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As use d herein, the term "Intellectual Property Rights" shall mean any and all intellectual property rights, including, without limitation, patents, patent applications, patent rights, trademarks, trademark applications, trade names, service marks, service mark applications, copyrights, copyright applications, computer programs and other computer software, inventions, designs, samples, specifications, schematics, know-how, trade secrets, proprietary processes and formulae, all source and object code, algorithms, architecture, structure, display screens, layouts, development tools, promotional materials, data bases, customer lists, supplier and dealer lists and marketing research, and all documentation and media constituting, describing or relating to the foregoin g, including without limitation, manuals, memoranda and records.





(i) Schedule 2.11(i) contains a list of all Intellectual Property

---------------- Rights registered in the name of HMI or of which HMI is the licensor or a lice nsee or in which HMI has any right ("HMI IP Rights"). Except as set forth in Schedule 2.11(i), all HMI IP Rights listed on Schedule 2.11(i) are in full - ---------------- ---------------- force and effect and are sufficient fo r the conduct of HMI' s business as presently conducted. All copyrightable works, inventions and know-how conceived by employees of HMI within the scope of their employment and related to the businesses of HMI are works made for hire and all right, title a nd interest therein have been transferred or assigned to or vested in HMI. Any consultants or independent contractors hired by HMI have assigned or transferred to HMI the work product developed for HMI.



(ii) Except as set forth in Schedule 2.11(ii):

-----------------



(a) HMI has exclusive right to use, sell, license, dispose of, and bring actions for infringement of, all HMI IP Rights;



(b) The business of HMI as pr esently conducted and the development, marketing, licensing, use and servicing of any products of HMI do not violate any agreements which HMI has with any third party, infringe any patent, trademark, copyright or trade secret rights of any third parties o r any other Intellectual Property Rights of any third parties; and



(c) No claim is pending or, to HMI's knowledge, threatened against HMI nor has HMI received any notice or other claim from any person asserting that any of HMI's past, present or contemplated activities infringe or may infringe any Intellectual Property Rights of such person, and HMI is not aware of any infringement by any other person of any HMI IP Rights.



2.12. Litigation. Except as set forth in Schedule 2.12, there is no

---------- ------------- judgment, decree, injunction, or order of any governmental authority or any litigation pending or to HMI's knowledge threatened and to HMI's knowledge there is no governmental proceeding or investigation pending or threatened (i) against HMI or affecting any of its properties or assets, or (ii) against any officer, director or key employee of HMI in his capacity as an officer, director or employee of HMI, or (iii) which may call into que stion the validity or hinder the enforceability of this Agreement or the HMI Related Agreements or transactions contemplated hereby or thereby.



2.13. Employee Benefit Plans. Except for HMI's 1998 Omnibus Stock and

---------------------- Incentive Plan and except as set forth on Schedule 2.13 hereto, HMI does not

------------- maintain or contribute and has never maintained or contributed to any employee benefit plan, stock option, bonus or incentive plan, health plan, severance pay policy or agreement, deferred compensati on agreement, or any similar plan or agreement (an "Employee Benefit Plan"). Except as set forth on Schedule 2.13,

------------- there are no unfunded obligations of HMI under any retirement, pe nsion, profit- sharing, deferred compensation plan or similar program. HMI is not required to make any payments or contributions to any Employee Benefit Plan pursuant to any collective bargaining agreement or any applicable labor relations law.

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