EXHIBIT 10.28.1
AMENDMENT TO FIRST AMENDED
AND
RESTATED STOCK PURCHASE AGREEMENT
THIS AMENDMENT TO FIRST AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
(this "Amendment") is made and entered into as of December 19, 1997 by and
among Virtual Mortgage Network, Inc., a Nevada corporation ("Buyer"), Xxxxxx
Mortgage Corporation, a California corporation (the "Company"), and Xxxxxx X.
Xxxxxx, an individual and the sole stockholder of the Company ("Stockholder"),
and is made with reference to that certain First Amended and Restated Stock
Purchase Agreement (the "Agreement") dated as of June 6, 1997, by and among
Buyer, the Company and Stockholder. Capitalized terms used herein without
definition shall have the same meanings herein as set forth in the Agreement.
BACKGROUND INFORMATION
WHEREAS, the parties desire to amend the Agreement to change the
amount and form of consideration, among other things:
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
Section 1. AMENDMENTS TO THE AGREEMENT
A. Section 1.2 of the Agreement is hereby amended and restated in
its entirety to read as follows:
"1.2 Purchase Price. The aggregate consideration to be paid by Buyer
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to Stockholder pursuant to this Agreement (the "Total Purchase Price")
shall be $2,484,000, payable as follows:
(i) An aggregate cash payment of $950,000 shall be payable at
the Closing less (a) the $50,000 deposit referred to in Section 1.3 of
the Agreement and (b) $500,000 in forgiveness of the Secured
Promissory Note, dated September 30, 1997 entered into by Stockholder
and payable to Buyer; and
(ii) An aggregate cash payment of $1.534 million shall be due
and payable at the closing of the Offering. The obligation to pay
such amount shall be evidenced by a promissory note of Buyer payable
to Stockholder, dated the date hereof."
B. Section 1.3(b) of the Agreement is hereby deleted in its
entirety.
C. Section 3.1 of the Agreement is hereby amended and restated in
its entirety to read as follows:
"3.1 Closing. The Closing of the purchase and sale of the Shares and
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the consummation of the other transactions contemplated by this Agreement
shall occur on the later of (i) the closing of the Offering or (ii) the
date all conditions precedent to the Closing shall be fulfilled or waived,
in either case, at 10:00 a.m., California time, at the offices of O'Melveny
& Xxxxx LLP in Newport Beach, California, or at such other hour or place or
on such other date as shall be agreed upon among Stockholder, the Company
and Buyer the actual date being herein generally referred to as the
"Closing Date." If the Closing fails to occur by October 31, 1997, or by
such later date to which the Closing may be extended as provided above,
Buyer shall have until December 31, 1997 to close the Acquisition and if
the Closing has not occurred by the end of such time, this Agreement shall
automatically terminate, and except as expressly provided herein, neither
Stockholder, the Company nor Buyer shall have any further obligations
hereunder."
D. Section 3.2(vi) of the Agreement is hereby deleted in its
entirety.
E. Section 7.4 of the Agreement is hereby deleted in its entirety.
F. Section 8.6 of the Agreement is hereby amended and restated in
its entirety to read as follows:
"8.6 New Transactions. Before the Closing Date, the Company will
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not: (i) enter into any contract, commitment, or transaction not in the
usual and ordinary course of its business; (ii) enter into any contract,
commitment, or transaction in the usual and ordinary course of business
involving an amount exceeding Ten Thousand Dollars ($10,000) individually,
or Twenty-Five Thousand Dollars ($25,000) in the aggregate, except that the
Company may borrow up to $100,000 from Stockholder for deposit with
PaineWebber -Warehouse Line, pursuant to that certain Promissory Note,
dated December __, 1997, made by the Company in favor of Stockholder (the
"PaineWebber Note"); (iii) make any capital expenditures in excess of Two
Thousand Dollars ($2,000) for any single item or Five Thousand Dollars
($5,000) in the aggregate, or enter into any leases of capital equipment or
property under which the annual lease charge is in excess of Ten Thousand
Dollars ($10,000); (iv) sell or dispose of any capital assets; or (v) agree
to do any of the above listed
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acts."
G. Section 8.13 of the Agreement is hereby added as follows:
"8.13 Guaranties. Stockholder shall maintain each personal guaranty of
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any credit facility of the Company that is in effect on the Closing Date
until the earlier of (a) the mutual agreement between the Stockholder and
the lender under such credit facility to terminate the personal guaranty
while maintaining the availability of the credit facility to the Company
for at least the borrowing limit in effect on the Closing Date for the
period of time specified in each such credit facility or such other period
of time mutually agreed on after the Closing Date by the Company and the
applicable lender and (b) March 31, 1998."
H. Section 9.4, 9.5 and 9.6 of the Agreement are hereby added as
follows:
"9.4 Status of Resolution of Claims. Buyer agrees to inform
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Stockholder quarterly of the status of the claims with respect to all loan
repurchase obligations, notifications and settlements of Stockholder listed
on Schedule 9.4 hereto. Schedule 9.4 shall also set forth the loan loss
provisions as of the Closing Date with respect to such claims (the "Loan
Loss Provision").
9.5 Payment of Claims. Upon the ultimate settlement or resolution
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of all loan repurchase claims listed on Schedule 9.4 hereto, if the amount
recorded as a loss upon resolution of all such claims (net of any insurance
proceeds or other recoveries in respect of such claims less Buyer's cost to
effect such recoveries) in the aggregate, is less than the aggregate of the
Loan Loss Provision, Buyer agrees to split equally with Stockholder the
amount of such deficit.
9.6 New Borrowings under Guarantied Credit Facilities. Buyer agrees
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that following the Closing Date, it will not permit the Company to make any
new borrowings under any credit facility as to which a personal guaranty of
Stockholder is still in effect, unless the proceeds of such new borrowing
are used solely to fund origination of mortgage loans for which a
commitment to purchase from an investor, pursuant to delegated underwriting
guidelines, is in place and such mortgage loans conform to such
guidelines."
H. Section 10.5 of the Agreement is hereby amended and restated in
its entirety to read as follows:
"10.5 Indebtedness. The Company shall not incur any
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Indebtedness other than current liabilities incurred in the usual and
ordinary course of business and liabilities incurred in connection with the
PaineWebber Note. The Company shall refrain from paying any obligation or
liability, absolute or contingent, except current liabilities shown on the
Balance Sheet or current liabilities incurred since the Balance Sheet Date
in the usual and ordinary course of business."
I. Section 11.1(h) of the Agreement is hereby amended and restated
in its entirety to read as follows:
"(h) Noncompetition Agreements. Stockholder shall have executed and
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delivered to Buyer a Noncompetition Agreement in a form reasonably
acceptable to Buyer and its legal counsel (the "Xxxxxx Noncompetition
Agreement")."
J. Sections 12.1, 12.2 and 12.3 of the Agreement are hereby deleted
in their entirety.
K. Section 12.5 to the Agreement shall be added as follows:
"12.5 PaineWebber Note. On the Closing Date, Stockholder shall lend
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the Company $100,000 for deposit with PaineWebber - Warehouse Line, which
shall be evidenced by the PaineWebber Note, pursuant to the terms thereto."
L. Section 14.1 of the Agreement is hereby amended by deleting
clause (iii)(b) and relettering clause (iii)(c) as clause (iii)(b).
M. Section 14.2 of the Agreement is hereby amended and restated in
its entirety as follows:
"(a) Indemnification of Buyer. Stockholder and, in the event the
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Acquisition is not consummated and only to the extent applicable, the
Company, jointly and severally covenant and agree to indemnify and save and
hold Buyer, its officers, directors, employees, agents and representatives,
each person who controls Buyer within the meaning of the Securities Act,
and the Company (in the event the Acquisition is consummated and only to
the extent applicable) harmless from and against any loss, expense,
liability, claim or legal damages (including, without limitation,
reasonable fees and disbursements of counsel and other costs and expenses
incident to any actual or threatened claim, suit, action or proceeding)
arising out of or resulting from: (i) any inaccuracy in or breach of any
representation, warranty, covenant or agreement made by Stockholder or the
Company in this Agreement or in any writing delivered pursuant to this
Agreement or at the Closing; (ii) the failure of Stockholder or the Company
to
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perform or observe fully any covenant, agreement or provision to be
performed or observed by it pursuant to this Agreement; (iii) any actual or
threatened claim, suit, action or proceeding arising out of or resulting
from the conduct by the Company of its business or operations on or before
the Closing Date, including, but not limited to, those arising out of or
relating to (A) the employment relationship existing before Closing between
the Company and its affiliates and any and all current or former employees
of either, or (B) the compliance with all Agency and other standards and
regulations and contractual commitments applicable to mortgage loans
originated before Closing by the Company; (iv) any failure to have obtained
all Permits, consents, waivers, approvals, licenses and authorizations
required in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby; (v) the
Company maintaining after the Closing its existing escrow practices through
the date it completes its first post-closing annual escrow analysis; (vi)
the Company maintaining its existing practices relating to adjusting
mortgage interest rates through the anniversary date of the Closing; and
(vii) any tax liabilities incurred by the Company and/or Buyer as a result
of the divestiture by the Company of the Divested Business provided,
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however, that Stockholder shall have no obligation to indemnify Buyer
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pursuant to any of the foregoing to the extent the Buyer is obligated to
indemnify Stockholder with respect to such matter pursuant to Section
14.2(b). Stockholder agrees to reimburse Buyer, the Company, or other
indemnified party, as the case may be, promptly upon demand for any
unreimbursed payment made or loss suffered by Buyer, the Company, or other
indemnified party, as the case may be, at any time after the Closing Date
in respect of any damage, loss, cost, expense, deficiency, liability,
judgment, claim, action or demand to which the foregoing indemnity relates,
provided, however, any such unreimbursed payment or loss suffered that does
not exceed $5,000 shall not be reimbursed until the aggregate amount of
such unreimbursed payments or losses exceeds $5,000."
(b) Indemnification of Stockholder. Buyer covenants and agrees to
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indemnify and save and hold Stockholder harmless from and against any loss,
expense, liability, claim or legal damages (including, without limitation,
reasonable fees and disbursements of counsel and other costs and expenses
incident to (i) any actual or threatened claim, suit, action or proceeding)
arising out of or resulting from any inaccuracy in or breach of any
representation, warranty, covenant or agreement made by Buyer in this
Agreement or in any writing delivered pursuant to this Agreement or at the
Closing; (ii) the failure by Buyer to perform or observe any covenant,
agreement or condition to be performed or observed by it pursuant to this
Agreement; and (iii) any loan repurchase obligations, notifications and
settlements,
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whether arising prior to or after the Closing, including without
limitation, those referenced on Schedule 9.4 to the Agreement. Buyer agrees
to reimburse Stockholder promptly upon demand for any payment made or loss
suffered by Stockholder at any time after the Closing Date in respect of
any damage, loss, cost, expense, deficiency, liability, judgment, claim,
action or demand to which the foregoing indemnity relates.
(c) Term; Aggregate Dollar Limitation; Indemnification Procedure. The
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indemnification provided for in this Section 14.2 shall be effective for a
period of one year following the Closing Date, subject to the exceptions
contained in clauses (i) through (iii) of Section 14.1 of this Agreement
and clause (vii) of Section 14.2(a) of this Agreement. The aggregate
dollar amount of all payments the Stockholder shall be obligated to make
pursuant to this Section 14.2 and Section 14.1 shall not exceed $1,000,000.
Whenever a claim shall arise for indemnification under this Section 14.2,
the party entitled to indemnification (the "Indemnified Party") shall
promptly notify the party from whom indemnification is sought (the
"Indemnifying Party") of such claim and, when known, the facts constituting
the basis for such claim. In the event of any such claim for
indemnification resulting from or in connection with a claim or legal
proceeding by a third party, the Indemnifying Party shall have the right,
at its option and at its own expense, to be represented by counsel of its
choice who must be reasonably satisfactory to the Indemnified Party, and to
defend against, negotiate, settle or otherwise deal with any claim or
proceeding which relates to any loss, liability, damage or deficiency
resulting from a third party claim indemnified against hereunder; provided,
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however, that no settlement shall be made without the prior written consent
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of the Indemnified Party, which consent shall not be unreasonably withheld;
and provided further, however, that the Indemnified Party may, at its own
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expense, participate in any such proceeding with the counsel of its choice.
As long as the Indemnifying Party is in good faith defending such claim or
proceeding, the Indemnified Party shall not compromise or settle such claim
without the prior written consent of the Indemnifying Party. If the
Indemnifying Party does not assume the defense of any such claim or
litigation in accordance with the terms hereof, the Indemnified Party may
defend against such claim or litigation in such manner as it may deem
appropriate, including, but not limited to, settling such claim or
litigation (after giving notice of the same to the Indemnifying Party) on
such terms as the Indemnified Party may deem appropriate, and the
Indemnifying Party will promptly indemnify the Indemnified Party in
accordance with the provisions of this Section 14.2."
N. Section 14.3 of the Agreement shall be deleted
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in its entirety.
Section 2. MISCELLANEOUS
A. Reference to and Effect on the Agreement and the Other
Documents.
(i) On and after the date hereof, each reference in the Agreement to
"this Agreement," "hereunder," "hereof," "herein" or words of like import
referring to the Agreement, and each reference to the "Agreement,"
"thereunder," "thereof" or words of like import referring to the Agreement
in the other documents delivered and executed pursuant to the Agreement,
shall mean and be a reference to the Agreement as amended by this
Amendment.
(ii) Except as specifically amended by this Amendment, the Agreement
and any ancillary agreements executed pursuant to the Agreement shall
remain in full force and effect and are hereby ratified and confirmed.
(iii) Upon the Closing, Buyer hereby forgives Stockholder's promise to
pay to Buyer $500,000 evidenced by that certain Secured Promissory Note,
dated September 30, 1997.
(iv) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of
Buyer, Stockholder or the Company under, the Agreement or any of the other
ancillary agreements executed pursuant to the Agreement.
B. Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
C. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, INTERPRETED
UNDER, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS, AND NOT
THE LAWS PERTAINING TO CONFLICTS OR CHOICE OF LAWS, OF THE STATE OF CALIFORNIA
APPLICABLE TO AGREEMENTS MADE OR TO BE PERFORMED WHOLLY IN CALIFORNIA. THE SOLE
FORUM FOR RESOLVING DISPUTES ARISING UNDER OR RELATING TO THIS AMENDMENT SHALL
BE THE MUNICIPAL AND SUPERIOR COURTS FOR THE COUNTY OF ORANGE, CALIFORNIA, OR
THE FEDERAL DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA AND ALL
RELATED APPELLATE COURTS, AND THE PARTIES HEREBY CONSENT TO THE JURISDICTION OF
SUCH COURTS AND AGREE THAT VENUE SHALL BE IN ORANGE COUNTY, CALIFORNIA.
D. Counterparts; Effectiveness. This Amendment may be executed in
any number of counterparts and by different
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parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Amendment, or has caused this Amendment to be executed on its behalf by a
representative duly authorized, all as of the date first above set forth.
"BUYER"
VIRTUAL MORTGAGE NETWORK, INC.
By: /s/ Xxxx X. Xxxxxx
_________________________________
Name: Xxxx X. Xxxxxx
_________________________________
Title: President and
_______________________________
Chief Financial Officer
_______________________________
"STOCKHOLDER"
XXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxx
_______________________________________
Xxxxxx X. Xxxxxx
"COMPANY"
XXXXXX MORTGAGE CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
_________________________________
Name: Xxxxxx X. Xxxxxx
_________________________________
Title: Chairman
_______________________________
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