EXHIBIT 10.2
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT is made and entered
into as of January 31, 2002, by and among INSIGNIA FINANCIAL GROUP, INC., a
Delaware corporation ("IFG"), INSIGNIA ESG, INC., a Delaware corporation
("ESG"), INSIGNIA RO, INC., a Delaware corporation ("Seller"), and REAL LIVING,
INC. an Ohio corporation ("Buyer"). (IFG and ESG are sometimes referred to
collectively as "Insignia.")
RECITALS:
A. The parties hereto are parties to a certain Stock Purchase
Agreement, dated December 31, 2001 (the "Stock Purchase Agreement"). (All
capitalized terms used herein and not otherwise defined herein shall be defined
as set forth in the Stock Purchase Agreement. All references to section numbers
contained herein refer to the specified sections of the Stock Purchase
Agreement.)
B. In order to satisfy certain conditions of the HNB Loan and the HCIC
Financing, the parties desire to amend the Stock Purchase Agreement as set forth
herein.
AGREEMENT:
The parties, intending to be legally bound, agree as follows:
1. PAYMENT OF PRELIMINARY ADJUSTMENT AMOUNT. The parties acknowledge
that the Preliminary Adjustment Amount has been determined in accordance with
Section 2.5(a) and that the Preliminary Adjustment Amount is a "positive"
$1,630,406. Accordingly, under the terms of Section 2.5(a), this Preliminary
Adjustment Amount would be an addition to the Purchase Price and the Closing
Amount. Notwithstanding the last sentence of Section 2.5(a), the parties agree
that the Preliminary Adjustment Amount shall not be payable until such time as
the Final Closing Adjustment Amount is payable under Section 2.5(b), at which
time if the Final Closing Adjustment Amount varies from the Preliminary
Adjustment Amount, the Purchase Price shall be adjusted and the Seller or Buyer,
as the case may be, shall owe to the other the differential amount in accordance
with the last three sentences of Section 2.5(b).
2. AMENDMENT. The Stock Purchase Agreement is hereby amended as
follows:
2.1 Definitions.
(a) The following definitions shall be added to Section 1:
"Xxxxx Fargo Agreement"--as defined in Section 2.19.
"WFHM"--as defined in Section 2.19.
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2.2 Reinstatement Provision. The following is added as a new Section
2.18 to follow the current Section 2.17:
2.18. REINSTATEMENT
If Seller or Insignia is compelled to surrender, or
voluntarily surrenders, any portion or all of any payment of money or
property made by Buyer to Insignia pursuant to the terms of this
Agreement to HNB, HCIC, or any other any person or entity (i) pursuant
to the terms of a certain Subordination and Intercreditor Agreement
among Seller, Insignia, HNB, and HCIC, dated as of January 31, 2002, or
(ii) because such payment (or part thereof) is or may be avoided,
invalidated, declared fraudulent, set aside, declared to be void or
voidable as a preference, fraudulent conveyance, impermissible setoff,
or diversion of trust funds, or because of any settlement or compromise
of such claim, then the obligation or liability satisfied or partially
satisfied by such payment (or part thereof) shall remain unsatisfied
and in full force and effect, as if such payment had not been received
by Seller or Insignia, notwithstanding any revocation of such
obligation or liability, or the surrender of any promissory note
evidencing the indebtedness of Buyer, or the return or cancellation of
any instrument or document relating to such obligation or liability.
2.3 First Ohio Mortgage Post-Closing Operations. The following is added
as a new Section 2.19 to follow the new Section 2.18:
2.19. FIRST OHIO MORTGAGE POST-CLOSING OPERATIONS
After the Closing Time and until the earlier of (i) such time
as First Ohio Mortgage is no longer a Control Affiliate of Buyer or
(ii) the expiration or termination of that certain letter agreement
between Seller and Xxxxx Fargo Home Mortgage, Inc. ("WFHM"), dated as
of January 31, 2002 (the "Xxxxx Fargo Agreement"), Buyer shall not
permit First Ohio Mortgage to engage in fraud in connection with any of
the mortgage loan files described in Paragraph 1 of the Xxxxx Fargo
Agreement or fail in any material respect to follow standard industry
practices in the home mortgage business in relation to the work
performed in respect of each such mortgage loan file, and, after the
Closing Time and until the expiration or termination of the Xxxxx Fargo
Agreement, First Ohio Mortgage shall not engage in fraud in connection
with any of such mortgage loan files or fail in any material respect to
follow standard industry practices in the home mortgage business in
relation to the work performed in respect of each such mortgage loan
file.
2.4 Modification of Representation Regarding the Business of First Ohio
Mortgage. Section 3.28(e) is deleted in its entirety and the following is
substituted in lieu thereof:
(e) With respect to each mortgage loan file of First
Ohio Mortgage, all of the signatures contained in each such mortgage
loan file are genuine and, with respect to each mortgage loan file that
serves as collateral for
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the line of credit in favor of First Ohio Mortgage from KeyBank, (i)
all of the documents and information contained in each such mortgage
loan file conform to prudent and customary origination practices in the
mortgage industry and applicable laws and regulations, and (ii) all
such mortgage loans are eligible for mortgage insurance and are
eligible for sale under First Ohio Mortgage's mortgage loan purchase
contracts with lenders.
2.5 Sharing of Fees to Key Bank. The following is added as a new
Section 5.8 to follow the current Section 5.7:
5.8 FEES PAYABLE TO KEY BANK
Seller agrees that it will pay to Key Bank, at the Closing,
the sum of $15,000.00, plus one-half of the total amount of attorneys'
fees for Key Bank's counsel, up to a maximum amount of $750.00 (being
one-half of the maximum total amount of such fees of $1,500.00), in
connection with the release of the Guaranty pursuant to Section 6.4.
2.6 Modification of Limitations of Seller's Indemnity. Section 10.6 is
amended as follows:
(a) The period at the end of the first sentence of Section
10.6(a) is changed to a semicolon and the following is added thereafter:
and Seller and Insignia will have no liability (for indemnification or
otherwise) under Section 10.2(e) or (f) until the total of all Buyer
Losses with respect to such matters exceeds $100,000; provided,
however, that if the total of the Buyer Losses exceeds $100,000, Seller
and Insignia shall be liable for the total amount of all Buyer Losses
from the first dollar thereof, and not merely the amount by which such
Buyer Losses exceed $100,000. Any amount counted for purposes of the
application of the $200,000 threshold amount specified in the preceding
sentence shall also be counted for purposes of the application of the
$100,000 threshold amount specified in the preceding sentence, and vice
versa.
(b) The following is added as a new section 10.6(d):
(d) Under the terms of the Xxxxx Fargo Agreement,
Seller and Insignia have made certain representations to WFHM regarding
the business of First Ohio Mortgage and agreed to indemnify WFHM for
certain liabilities arising out of the operations of, or otherwise
relating to, First Ohio Mortgage. If and to the extent that Seller or
Insignia pays any amount to WFHM pursuant to the terms of the Xxxxx
Fargo Agreement with respect to any particular liability or claim,
Buyer shall not be entitled to indemnification by Insignia or Seller
under Section 10 with respect to such liability or claim. The amount of
any claim for indemnification made by WFHM against Seller or Insignia
pursuant to the Xxxxx Fargo Agreement shall be counted for purposes of
the $200,000 and $100,000 threshold amounts specified in Section
10.6(a) and for purposes of the maximum liability limitation specified
in Section 10.6(b).
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2.7 Modification of Limitations of Buyer's Indemnity. Section 10.7 is
amended as follows:
(a) The reference to Section 10.3(a) in the first sentence of
Section 10.7(a) is amended to refer to Sections 10.3(a) and 10.3(b).
(b) The period at the end of the first sentence of Section
10.7(a) is changed to a semicolon and the following is added thereafter:
and Buyer will have no liability (for indemnification or otherwise)
under Section 10.3(c) until the total of all Seller Losses with respect
to such matters exceeds $100,000; provided, however, that if the total
of the Seller Losses exceeds $100,000, Buyer shall be liable for the
total amount of all Seller Losses from the first dollar thereof, and
not merely the amount by which such Seller Losses exceed $100,000. Any
amount counted for purposes of the application of the $200,000
threshold amount specified in the preceding sentence shall also be
counted for purposes of the application of the $100,000 threshold
amount specified in the preceding sentence, and vice versa.
(c) The reference to Section 10.7 in Section 10.7(b) is
amended to refer to Section 10.
2.8 Additional Subrogation Rights of Seller and Insignia Relating to
the Business of First Ohio Mortgage. The following is added as a new section
10.8(d):
(d) In addition to the subrogation rights provided under
Section 10.8(b), in the event Seller or Insignia pays a Buyer
Indemnified Person the full amount of a Buyer Loss arising from the
operation of First Ohio Mortgage prior to the Closing Date, the payor
indemnifying party shall be subrogated to any claims or rights of First
Ohio Mortgage and neither Buyer nor First Ohio Mortgage shall, without
the consent of Seller, which consent shall not be unreasonably
withheld, delayed or conditioned, release or materially waive such
claims or rights (other than claims or rights existing against an
officer or employee of Buyer or a Buyer Control Affiliate).
3. BALANCE OF AGREEMENT UNCHANGED. Except as specifically amended or
supplemented herein, the Stock Purchase Agreement shall remain unchanged and in
full force and effect.
THIS SPACE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOW
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
IFG:
INSIGNIA FINANCIAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx, Office of the Chairman
ESG:
INSIGNIA ESG, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx, Vice President
SELLER:
INSIGNIA RO, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx, Vice President
BUYER:
REAL LIVING, INC.
By: /s/ Xxxxxx X. Xxxxx, Xx.
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Xxxxxx X. Xxxxx, Xx., President and Chief
Executive Officer
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CONSENT TO AMENDMENT
The undersigned executed the Stock Purchase Agreement only for a
limited purpose. The undersigned hereby consents to the amendments to the Stock
Purchase Agreement set forth in the foregoing First Amendment to Stock Purchase
Agreement.
REALTY ONE, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx, Vice President
The undersigned guaranteed the performance of certain obligations of
Buyer under the Stock Purchase Agreement. The undersigned hereby consents to the
amendments to the Stock Purchase Agreement set forth in the foregoing First
Amendment to Stock Purchase Agreement.
HER, INC.
By: /s/ Xxxxxx X. Xxxxx, Xx.
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Xxxxxx X. Xxxxx, Xx., President and Chief
Executive Officer
JOINDER AGREEMENT
The undersigned is executing this Agreement only for the purpose of the
agreements contained in new Sections 2.19 and 10.8(d) of the Stock Purchase
Agreement as created pursuant to Sections 2.3 and 2.8, respectively, of this
First Amendment to Stock Purchase Agreement.
FIRST OHIO MORTGAGE CORPORATION, INC.
By:
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Name:
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Title:
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