THIRD AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS THIRD AMENDMENT TO ASSET PURCHASE AGREEMENT ("Amendment") is made
and entered into as of November __, 1999, by and among Mortgage Concepts, Inc.,
a Kentucky corporation ("Seller"), Xxxxxxx X. Xxxxxxxxx, Xxxxxxx X. Xxxx
(collectively "Shareholders"), Collateral One Mortgage Corporation, a Virginia
corporation ("Purchaser") and First Chesapeake Financial Corporation, a Virginia
corporation ("Financial").
WHEREAS, Seller, Shareholders, Purchaser and Financial have previously
entered into that certain Asset Purchase Agreement, as amended (the
"Agreement"), wherein the Purchaser has agreed to purchase substantially all of
the assets of Seller and certain related entities;
WHEREAS, Seller, Shareholders, Purchaser and Financial desire to amend
the Agreement in certain respects, all as hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual
covenants and agreements contained in this Amendment, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller, Shareholders, Purchaser and Financial hereby amend the
Agreement as follows:
1. Section 2.1(b) of the Agreement is deleted in its entirety and in
its place is substituted the following:
2.1 (b) on or before November 11, 1999, Purchaser shall pay
Seller the sum of (i) Eight Hundred Thousand Dollars ($800,000.00); plus (ii)
simple interest on the amount of $756,180 beginning October 9, 1999; less (iii)
simple interest on the advances to Seller totaling $193,280 less authorized
advances thereunder in cash or cashier's check or by wire transfer of funds to
an account designated by Seller. Interest hereunder shall be calculated at a
rate of twelve percent (12%) per annum. Calculations of the advances to Seller
and accrued interest amounts are included as Attachments A-1 to A3 of this Third
Amendment.
2. Section 2.1(c) of the Agreement is deleted in its entirety and in
its place is substituted the following:
2.1 (c) (i) in January 2000, Purchaser shall issue that number
of unregistered shares of Financial common stock with a value of Two Hundred
Fifty Thousand Dollars ($250,000.00) as determined by the posted closing price
of Financial stock as listed on the NASDAQ Bulletin Board on the date of this
Third Amendment.
2.1 (c) (ii) on or before the tenth day of each month
beginning in February 2000 and concluding in May 2000 Purchaser shall pay Seller
in cash, certified or cashier's check or by wire transfer the sum equal to 40%
of the net operating profit for Collateral One Mortgage Corporation for the
preceding month to an aggregate amount of Two Hundred Six Thousand One Hundred
Eighty Dollars ($206,180.00). Any unpaid balance hereunder (the "Balloon Payment
Amount") shall be added to and paid in accordance with the amounts payable in
May 2000 under Section 2.1. (c) (iii) hereof.
2.1. (c) (iii) on or before June 1, 2000, Purchaser shall (1)
pay Seller in cash, certified or cashier's check or by wire transfer the sum of
Four Hundred Sixty Two Thousand Five Hundred Dollars ($462,500.00) plus any
Balloon Payment Amount, as adjusted pursuant to Section 2.2 below, and (2) shall
issue that number of unregistered shares of Financial common stock with a value
of Two Hundred Forty Three Thousand Seven Hundred Fifty Dollars ($243,750.00) as
determined by the posted closing price of Financial stock as listed on the
NASDAQ Bulletin Board on the Closing Date ("Shares"), adjusted pursuant to
section 2.2 below (collectively, the payments set forth in this section 2.1(c),
the "Final Payment"). Purchaser, in its sole and absolute discretion, may defer
payment of the Final Payment for a period of ninety (90) days following the
Anniversary Date so that the adjustment set forth in section 2.2(a), if any, may
be calculated by its outside accounting firm. In the event that Purchaser defers
payment of the Final Payment after June 1, 2000, interest shall accrue on the
unpaid balance of the Final Payment (minus any adjustment pursuant to section
2.2(a)) at the rate of six percent (6 %) per annum from the Anniversary Date
until paid. The remainder of the Purchase Price shall be payable in accordance
with section 2.3(c).
3. Section 2.2 (b) of the Agreement is deleted in its entirety and in
its place is substituted the following:
2.2 (b) In the event that there is a reduction in the Final
Payment pursuant to the above formula, Purchaser, in its sole discretion, shall
elect whether the reduction shall first be made against the payment set forth in
section 2.1(c)(1) or against the payment set forth in section 2.1(c)(2). In any
case, any reduction made against the payment set forth in section 2.1(c)(1)
shall not exceed a maximum of fifty percent (50%) of that total cash payment
amount set forth in Section 2.1 (c)(iii)(1) with the balance of any adjustment
against the payments of stock set forth in Sections 2.1(c)(iii)(2). 2.3(b)(i)
and/or 2.3(b)(ii) herein.
4. Section 2.3 (a) of the Agreement is deleted in its entirety and no
further advance payments shall be made.
5. Section 2.3 (b) of the Agreement is deleted in its entirety and in
its place is substituted the following:
2.3 (b) (i) For the period beginning June 1, 2000, at the end
of each subsequent calendar quarter, Purchaser shall issue that number of
unregistered shares of Financial common stock with a value equal to seventy
percent (70%) of the net operating profits of Purchaser for such quarter as
determined by the posted closing price of Financial stock listed on the NASDAQ
Bulletin Board on the date of this Third Amendment; provided that the maximum
number of shares of stock payable to Seller pursuant to this Section 2.3(b)(i)
shall equal that number of shares with a value equal of Five Hundred Thousand
Dollars ($500,000.00) as determined by the posted closing price of Financial
stock listed on the NASDAQ Bulletin Board on the date of this Third Amendment,
at which time the payments shall end.
2.3 (b) (ii) Upon the termination of such payments, at the end
of each subsequent calendar quarter, Purchaser shall issue that number of
unregistered shares of Financial common stock with a value equal to seventy
percent (70%) of the net operating profits of Purchaser for such quarter as
determined by the posted closing price of Financial stock listed on the NASDAQ
Bulletin Board on the Closing Date; provided that the maximum number of shares
of stock payable to Seller pursuant to this Section 2.3(b)(ii) shall equal that
number of shares with a value equal of Two Hundred Forty Three Thousand Seven
Hundred Fifty Dollars ($243,750.00) as determined by the posted closing price of
Financial stock listed on the NASDAQ Bulletin Board on the Closing Date.
6. Section 2.7 of the Agreement is deleted in its entirety and Seller
does hereby relinquish any and all rights to unwind under the Agreement and does
hereby release its first priority security interest in all issued and
outstanding shares of stock of Purchaser.
7. The Registration Rights Agreement with Seller and/or the
Shareholders included as Exhibit 2.4(b) is hereby amended to encompass all
additional shares of Financial common stock identified in this Third Amendment
to the Agreement.
8. This Third Amendment is conditional upon delivery of the payment
described in Section 2.1(b). In the event the payment is not made, the Agreement
shall be deemed to exist in its form on the day prior to execution of this Third
Amendment.
In all other respects, the Agreement is hereby ratified and approved by the
parties. In the event that there is a conflict between this Third Amendment and
the Agreement, this Third Amendment shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Third
Amendment as of the date first set forth above.
PURCHASER: COLLATERAL ONE MORTGAGE CORPORATION,
a Virginia corporation
By:______________________________
Its:_____________________________
SELLER: MORTGAGE CONCEPTS, INC.,
a Kentucky corporation
By:______________________________
Its:_____________________________
SHAREHOLDERS: XXXXXXX X. XXXXXXXXX
__________________________________________
XXXXXXX X. XXXX
__________________________________________
FINANCIAL: FIRST CHESAPEAKE FINANCIAL CORPORATION,
a Virginia corporation
By:______________________________
Its:_____________________________
