AMENDMENT TO ASSET PURCHASE AGREEMENT
This AMENDMENT TO ASSET PURCHASE AGREEMENT (this "Amendment") is
executed as of the 15th day of September, 2000, by and between Digital
Insurance, Inc., a Delaware corporation ("Digital"), and XxxxxxXxxx.xxx, Inc., a
Pennsylvania corporation ("HealthAxis").
W I T N E S S E T H:
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WHEREAS, Digital and HealthAxis have executed that certain Asset
Purchase Agreement dated June 30, 2000 (the "Asset Purchase Agreement" );
WHEREAS, the Escrow Closing contemplated by the Asset Purchase
Agreement has been deferred;
WHEREAS, the parties desire to amend the Asset Purchase Agreement as
set forth herein;
WHEREAS, the parties desire to deliver the Asset Purchase Agreement and
this Amendment to be held pursuant to the terms of that certain Closing Escrow
Agreement dated as of September 15, 2000 among the parties and SunTrust Bank
(the "Escrow Agreement");
NOW THEREFORE, in consideration of Ten Dollars ($10.00), and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt, adequacy and legal sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, do hereby agree as follows:
Section 1. Amendment to Asset Purchase Agreement. The following
Sections of the Asset Purchase Agreement are amended as follows:
(a) Section 3.1(a) is hereby deleted in its entirety and replaced with
the following:
"(a) Consideration Deliverable at Closing. On the date of the
final consummation of the Closing pursuant to the Closing
Escrow Agreement (the "Escrow Closing"), Digital shall deliver
to HealthAxis the following consideration: (i) $500,000
payable by wire transfer of immediately available funds, and
(ii) $500,000 by delivery of a Promissory Note in the form
attached hereto as Exhibit A, providing for payment of two
principal installments of $250,000 each (plus accrued
interest) on March 1, 2001 and July 1, 2001; provided,
however, that in no event shall any installment be due under
the Promissory Note prior to five (5) business days after
"final acceptance of the Software Rights" (as defined
hereinbelow). For purposes hereof, "final acceptance of the
Software Rights" shall mean Digital's acceptance of the full
integration of eight (8) ready, willing and able carriers
identified in Exhibit B to this Amendment (or, at Digital's
election, may include Blue Cross of Georgia and Guardian
Insurance Company) on the V.3 website, demonstrating that the
Software Rights perform substantially and in all material
respects in accordance with Exhibit A to the Software License
and Consulting Agreement and with all the functionality
specified in Schedule 4 of the Software License and Consulting
Agreement. If Digital substitutes any new carriers (other than
Blue Cross of Georgia and Guardian Insurance Company) to those
listed in Exhibit B to this Amendment, then the number of
carriers required to meet the acceptance test by March 1,
2001, shall be reduced by the number of such new carriers so
added at Digital's request.
The Promissory Note shall be dated as of June 30, 2000 and the
installment payments thereunder shall bear simple interest at
9.5% per annum beginning to accrue as of the date of the
Escrow Closing. All cash payments shall be made by wire
transfer of immediately available funds in accordance with the
wire transfer instructions delivered to Digital by HealthAxis
no later than three (3) business days prior to the payment
date."
(b) Section 4.3(a) is hereby deleted in its entirety and replaced
with the following
"(a) Purchase Price. The purchase price in the form of
$500,000 in cash by wire transfer of immediately available
funds, together with delivery of the $500,000 Promissory Note
pursuant to Section 3.1(a) herein."
(c) Section 5.1 is hereby amended by deleting the last sentence
thereof and inserting the following in lieu thereof at the end
of Section 5.1:
"Conditioned upon final consummation of the Escrow Closing,
each of the Transferred Employees will be leased by HealthAxis to DIGITAL for
the balance of the month in which the Escrow Closing occurs and such employees
shall become employees of Digital as of the first day of the succeeding month.
HealthAxis shall continue the benefits of the leased Transferred Employees for
the balance of the month in which the Escrow Closing occurs. On the last day of
the month immediately following the month in which the Escrow Closing occurs,
Digital shall reimburse HealthAxis (without interest) for the actual payroll and
benefit costs (including, applicable payroll taxes and insurance) for such
Transferred Employees for the period commencing July 1, 2000 and ending at
midnight on the last day of the month in which the Escrow Closing occurs (the
"Employee Costs"); provided however, that HealthAxis shall grant Digital a
credit in the amount of One Hundred Thirty Five Thousand Dollars ($135,000) to
be applied against the total Employee Costs. If DIGITAL determines that it does
not wish to employ up to twelve (12) of the persons listed on Schedule 5.1
hereto, then HealthAxis shall pay the severance costs for up to twelve (12) of
such persons that Digital elects not to employ."
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(d) Section 8.1 is hereby amended by deleting the second sentence
thereof and substituting in lieu thereof the following:
"Until such time as the retail web site has been revised to
reflect Digital as the legal agent of record and Digital has
secured the necessary state licenses to enable it to serve as
the legal agent of record for policies sold through such site
(the "Transition Period"), HealthAxis shall be the agent of
record for policies sold through the retail web site."
(e) Section 9.1 is hereby deleted in its entirety and replaced
with the following:
"Upon the Escrow Closing, Digital shall be entitled to all
revenue from the Insurance Business and the Assumed Contracts
effective as of July 1, 2000, and HealthAxis shall pay Digital
on the date of the Escrow Closing all such amounts collected
by HealthAxis for the period from and after July 1, 2000
through the date of the Escrow Closing less the commissions to
which HealthAxis is entitled pursuant to Section 3.4 hereof.
After the date of the Escrow Closing, Digital shall pay
HealthAxis the commissions as provided in Section 3.4 hereof
provided, that HealthAxis shall maintain all appropriate
licenses to allow HealthAxis to lawfully receive such
payments."
(f) Section 17.1(b) is hereby amended by deleting the date
September 15, 2000 from the second line and substituting in
lieu thereof December 31, 2000.
Section 2. Bring Down Warranties.
(a) Bring Down Warranty regarding Section 11.4. HealthAxis
represents and warrants to Digital that (except as disclosed
in the Bring Down Addendum attached hereto as Exhibit C and
except for changes in day-to-day operational matters relating
to the Assets and the Transferred Employees since June 30,
2000 authorized by Digital) HealthAxis is in compliance with
its obligations under Section 11.4 of the Asset Purchase
Agreement and that, as of the date of this Amendment, there is
no information contained in its representations or warranties
or any of the Schedules to the Asset Purchase Agreement
pertaining to HealthAxis or the Assets, which, because of an
event occurring after June 30, 2000, is incomplete or is no
longer correct.
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(b) Bring Down Warranty regarding Article V and Section 7.2.
Digital represents and warrants to HealthAxis that (except as
disclosed in the Bring Down Addendum attached hereto as
Exhibit C and except for changes in day-to-day operational
matters relating to the Assets and the Transferred Employees
since June 30, 2000 requested by Digital) Digital is in
compliance with its obligations under Article V and Section
7.2 of the Asset Purchase Agreement and that, as of the date
of this Amendment, there is no information contained in its
representations or warranties or any of the Schedules to the
Asset Purchase Agreement pertaining to Digital, which, because
of an event occurring after June 30, 2000, is incomplete or is
no longer correct.
Section 3. Closing Date. It is the parties' intent that, subject to
consummation of the Closing pursuant to the Closing Escrow Agreement, the
"Closing Date" shall be deemed effective as of midnight, June 30, 2000, except
that (i) the date of issuance of the Digital Common Stock and the effective date
of the Addendum to Stockholders Agreement shall be the date of the Escrow
Closing, and (ii) the "Closing Date" as used in Sections 16.1 and 16.2 of the
Asset Purchase Agreement shall be the date of the Escrow Closing.
Section 4. Full Force and Effect. Subject to the final consummation of
the Closing pursuant to the Closing Escrow Agreement, the Asset Purchase
Agreement, as amended hereby, shall remain in full force and effect. To the
extent there are any inconsistencies between the terms of this Amendment and the
terms of the Asset Purchase Agreement, the terms of this Amendment shall
prevail.
Section 5. Counterparts. This Amendment may be executed in several
counterparts, each of which when fully executed shall be an original, and all
such counterparts taken together shall be deemed to constitute one and the same
amendment. Delivery of any signature page via telecopy or other electronic
facsimile transmission shall be deemed equivalent to physical delivery of the
original signature page. Any signature page of any counterpart hereof, whether
bearing an original signature or an electronic facsimile transmission of a
signature, may be appended to any other counterpart hereof to form a completely
executed counterpart hereof.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their duly authorized representatives effective as of the date first
above written.
DIGITAL INSURANCE, INC. XXXXXXXXXX.XXX, INC.
BY: /s/ XXXXXX X. XXXXXXX BY: /s/ XXXXXXX XXXXXX
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XXXXXX X. XXXXXXX XXXXXXX XXXXXX
PRESIDENT & CEO PRESIDENT & CEO
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