EXHIBIT 7.39
AGREEMENT FOR CONVEYANCE OF SHARES
OF WICKES, INC. IN LIEU OF FORECLOSURE
AND XXXX OF SALE
THIS AGREEMENT FOR CONVEYANCE OF SHARES OF WICKES, INC. IN LIEU OF
FORECLOSURE AND XXXX OF SALE (this "Agreement"), dated as of this ___ day of
April, 2003, by and among (i) RIVERSIDE GROUP, INC., a Florida corporation
having its principal office in Jacksonville, Florida ("Borrower"), (ii) J.
XXXXXX XXXXXX, an individual resident of Jacksonville, Florida ("Xxxxxx"), (iii)
XXXXXX FINANCIAL CORPORATION. , a Florida corporation having its principal
office in Jacksonville, Florida ("Xxxxxx Financial"), and (IV) IMAGINE
INVESTMENTS, INC., a Delaware corporation ("Lender").
PRELIMINARY STATEMENTS
A. As of March 31, 2003, Borrower is indebted to Lender, including accrued
interest, in the amount of $3,589,615.17 ("Riverside A-1 Debt"), as evidenced by
those Promissory Notes listed on Exhibit A-1 (the "A-1 Notes"), and Borrower is
indebted to Lender, including accrued interest, in the amount of $12,590,022.75
(together with interest accruing after that date, the "Riverside A-2 Debt" and,
together with the A-1 Debt, hereinafter referred to as the "Riverside Debt"), as
evidenced by those Promissory Notes listed on Exhibit A-2 (the "A-2 Notes" and,
together with the A-1 Notes, hereinafter referred to as the "Riverside Notes").
B. Borrower is in default in the payment of the Riverside Debt and the
Riverside Notes.
C. The Riverside A-1 Debt and A-1 Notes are secured by the bona fide pledge
of and encumbrance on various assets owned by Borrower (and its affiliates),
including but not limited to the pledge of 758,155 shares (the "A-1 Pledged
Shares") of the common capital stock of Wickes, Inc., a Delaware corporation
("Wickes). The Riverside A-2 Debt and A-2 Notes are secured by the bona fide
pledge of and encumbrance on various assets owned by Borrower (and its
affiliates), including but not limited to the pledge of 2,016,168 shares of the
common capital stock of Wickes (the "A-2 Pledged Shares"). Borrower owns an
additional 23,420 shares of
Wickes common stock (the "Cantor Xxxxxxxxxx Wickes Shares" and, together with
the A-1 Pledged Shares and the A-2 Pledged Shares, are hereinafter referred to
as the "Wickes Shares") that are not pledged to anyone.
D. Borrower has requested that Lender accept the absolute conveyance to
Lender of all of the Wickes Shares in exchange for a portion of the Riverside
Debt in the amount of $13,988,715.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained and for other good and valuable consideration, the parties
hereto hereby agree as follows:
1. Borrower hereby transfers, sells, sets over, grants and delivers to
Lender the absolute ownership of all of the Wickes Shares, which constitute
approximately 34.3% of all of the issued and outstanding common stock in Wickes.
Borrower reiterates that this is an absolute transfer and sale and not a pledge,
hypothecation, mortgage, or any similar manner of security interest. Borrower
acknowledges that it has no rights to reacquire any of the Wickes Shares from
Lender, and Lender is free to do whatever it pleases with the Wickes Shares.
Such transfer of 717,923 of the A-1 Pledged Shares is in exchange for the deemed
payment of $3,589,615.17 of the Riverside A-1 Debt and the A-1 Notes, and such
transfer of 40,232 of the A-1 Pledged Shares, the Cantor Xxxxxxxxxx Wickes
Shares, and the A-2 Pledged Shares is in exchange for the deemed payment of
$10,399,099.83 of the Riverside A-2 Debt and the A-2 Notes. The Riverside Debt
deemed paid as a result of such transfer is called the "Exchanged Debt."
Borrower acknowledges that the conveyance of the Wickes Shares to Lender
pursuant to this Agreement is in lieu of Lender's foreclosure on the Wickes
Shares, which Borrower acknowledges and agrees Lender is entitled to effectuate
as of the date hereof (except as to the Cantor Xxxxxxxxxx Wickes Shares). All
interest on the A-1 Notes that accrues after March 31, 2003 shall be paid by
Borrower at the same time as the Remaining Riverside Debt is due. The parties
acknowledge and agree that the amount of the Exchanged Debt has been calculated
solely, for the purposes of this Agreement, at the rate of $5.00 of Riverside
Debt per Wickes Share, but the parties
acknowledge that they believe that the fair market value of each such Wickes
Share is substantially less than such amount. Lender represents and warrants
that it is acquiring the Wickes Shares without a view toward distribution.
Contemporaneously herewith, Borrower has delivered to Lender the
certificates representing 758,155 of the Wickes Shares identified on Exhibit B
attached hereto and made a part hereof. Borrower represents to Lender that
2,016,168 of the Wickes Shares (the "Pledged Shares") are owned by Borrower but
have been pledged to the parties (the "Third Party Creditors") identified on
Exhibit C attached hereto and made a part hereof, pursuant to the arrangements
set forth on Exhibit C and securing the amount of debt identified on Exhibit C
(the "Third Party Debt"). Notwithstanding that these Pledged Shares are pledged
to the Third Party Creditors and the certificates for the same are held by the
Third Party Creditors, Borrower nevertheless has absolutely sold, and hereby
does absolutely sell, to Lender, all of the Wickes Shares, including the Pledged
Shares.
Borrower agrees to immediately give written notice to the Third Party
Creditors that it has sold the Pledged Shares to Lender, by execution and
delivery of the letter in the form of Exhibit D attached hereto and made a part
hereof. Borrower agrees to pay and discharge the Third Party Debt in accordance
with their respective terms and agrees not to increase the amount of the Third
Party Debt, directly or indirectly, and not to default thereunder, and not to
allow the Third Party Creditors to foreclose on the Pledged Shares and not to
extend or modify the terms of the Third Party Debt in any manner whatsoever.
Borrower agrees to pay the Third Party Debt by no later than September 30, 2003
and to cause the Third Party Creditors to deliver the certificates for all of
the Pledged Shares to Lender, free and clear of all liens, pledges, security
interests and other encumbrances, by no later than September 30, 2003. Further,
Borrower represents to Lender that certificates representing 23,420 shares of
the Wickes Shares were being held at Cantor Xxxxxxxxxx in the World Trade Center
when it was destroyed (the "Cantor Xxxxxxxxxx Wickes Shares"), free and clear of
all liens, security interests, pledges, encumbrances and the like.
Notwithstanding that the certificates for the Cantor Xxxxxxxxxx Wickes Shares
have
not been delivered to the Lender contemporaneously herewith, Borrower
nevertheless has absolutely sold, and hereby does absolutely sell to Lender, the
Cantor Xxxxxxxxxx Wickes Shares. Borrower agrees to take all actions necessary
to cause the transfer agent to issue replacement certificates for the Cantor
Xxxxxxxxxx Wickes Shares in the name of the Lender and to deliver certificates
for the same in the name of Imagine by no later than June 30, 2003, free and
clear of all liens, security interests, pledges, encumbrances and the like.
2. Borrower represents and warrants to Lender as follows:
(a) Attached hereto and made a part hereof as Exhibit E is the last
audit report of Borrower through the year-ended December 31, 2001, and an
interim set of financial statements of Borrower through September 30, 2002 (the
"Financial Statements"). The Financial Statements are true and accurate and
fairly present the financial condition of Borrower as of the respective dates
indicated and have been prepared with generally accepted accounting principles,
consistently applied.
(b) Except as set forth on Schedule 2(b) hereof, Borrower does not have
any other indebtedness for borrowed money, except that owed to Lender and that
owed to the Third Party Creditors.
(c) Borrower owns all of the Wickes Shares, free and clear of all
liens, encumbrances, pledges and the like, other than the pledge to the Third
Party Creditors. No other person or entity has any right or option to purchase
any of the Wickes Shares. The Wickes Shares are all of the shares and interest
in Wickes that Borrower owns, in whole or in part, except that Borrower owns an
additional 53,700 shares of common stock in Wickes that are pledged to Liberty.
Except as set forth on Schedule 2(c) hereof, neither Borrower nor Xxxxxx nor
Xxxxxx Financial has any rights whatsoever to acquire any additional shares of
stock in Wickes.
(d) The Board of Directors of Borrower has approved the transactions
contemplated by this Agreement, and shareholders who own 57% of the issued and
outstanding common stock of Borrower have signed a letter stating that they are
aware of the transactions
contemplated by this Agreement and do not object to the same. Borrower has
delivered copies of resolutions of such Board and such letter to Lender, and all
of the same are true and accurate and in full force and effect as of the date
hereof. All necessary corporate and shareholder actions required to make this
Agreement fully enforceable have been taken. Ownership of all of the Wickes
Shares has been transferred to the Lender.
(e) Borrower is not in default under any of the Third Party Debt,
except as a result of it being cross-defaulted to the Riverside Debt.
(f) Borrower has received a current fairness opinion from TM Capital
Corp. that the Wickes Shares are worth between $.42 and $.98 per Wickes Share.
3. Borrower acknowledges and agrees that if it does not deliver to Lender
certificates for the Pledged Shares, free and clear of all liens, pledges,
security interests and other encumbrances, by September 30, 2003, then an amount
equal to the product of (i) $5.00 per share multiplied by (ii) the number of
Wickes Shares as to which stock certificates for such Wickes Shares have not
been delivered to Lender and duly transferred by such date, free and clear of
all liens, pledges, security interests and other encumbrances, plus interest on
such amount at the rate of ten percent (10%) per annum, from the date hereof
through September 30, 2003, shall be deemed to be immediately due and owing by
Borrower to Lender immediately and shall bear interest from such date at the
highest default rate specified in the loan documents governing the Riverside
Debt and shall be secured by all other security for the Riverside Debt, but
nevertheless, Lender shall continue to be deemed the absolute owner of all the
Wickes Shares including the Pledged Shares. If Borrower defaults with respect to
any of the Third Party Debt, Borrower authorizes Lender (should it so choose in
its sole discretion), to purchase and/or pay off any or all of the Third Party
Debt; in such event, the entire amount so expended by Lender in connection
therewith shall be immediately due and payable by Borrower to Lender and shall
bear interest from such date at the highest default rate specified in the loan
documents governing the Riverside Debt and shall be secured by all security for
the Riverside Debt, and Lender shall be subrogated in all respects to the Third
Party Debt and all collateral for the same. Borrower
agrees to execute and deliver to Lender all instruments and documents requested
by Lender to further document and perfect such encumbrances, pledges, security
interests and the like, to secure such Third Party Debt and the Remaining
Riverside Debt.
4. Borrower acknowledges that after consummation of this Agreement,
Borrower continues to be indebted to Lender under the A-2 Notes in the amount of
$2,190,922.90, which amount includes accrued interest through March 31, 2003
(the "Remaining Riverside Debt"), interest continues to accrue on the Remaining
Riverside Debt at the rate(s) provided in the documents governing the same from
and after March 31, 2003. The Remaining Riverside Debt shall continue to bear
interest at the rates provided in the loan documents governing the same and
shall be payable in accordance with the terms therein provided. The Remaining
Riverside Debt (and all of Borrower's obligations under this Agreement) shall be
secured by all of the collateral presently securing the Riverside Debt under the
loan documents therefor, including specifically all collateral for the A-1
Notes, and Borrower hereby regrants a pledge of, security interest in and
encumbrance on all of the collateral presently securing the A-1 Notes, to secure
the Remaining Riverside Debt. Further Borrower shall execute and deliver to
Lender all instruments and documents requested by Lender to further document and
perfect such pledges and security interests. No collateral for the Riverside
Debt, other than the Wickes Shares sold to Lender herewith, is released by
Lender. Borrower has no defenses or offsets to the payment of the Remaining
Riverside Debt.
5. Each of Borrower, Xxxxxx and Xxxxxx Financial, on behalf of themselves
and their respective heirs, successors and assigns, subsidiaries and affiliated
corporations, partnerships, limited liability companies and other legal
entities, and their respective directors, officers, trustees, managers, members,
shareholders, partners, assigns, attorneys, insurers, representatives,
successors, agents and employees, does hereby release and discharge Lender, its
subsidiaries and affiliated corporations, partnerships, limited liability
companies and other legal entities, and their respective directors, officers,
trustees, managers, members, shareholders, partners, assigns, attorneys,
insurers, representatives, successors, agents and employees from any
and all claims, demands, causes of action, damages, liabilities, actions and the
like, whether under federal, state or local law, statute or ordinance, known or
unknown, matured or unmatured, absolute or contingent, which any of them have or
may have against Lender, arising out of or in connection with any matter
occurring in whole or in part through and including the date of this Agreement.
6. Xxxxxx and Xxxxxx Financial do not object to the transactions
contemplated by this Agreement and agree that their respective obligations to
Lender under the loans to them and/or guarantees of such loans are not in any
way released or diminished by this Agreement.
7. In the event that during the period commencing with the date hereof and
ending two years after the date hereof (the "Period"), the Lender sells or
otherwise disposes of all of the Wickes Shares or receives from Wickes in
liquidation or in redemption for the Wickes Shares an amount (the "Excess") in
excess of the "Threshold Amount," as hereinafter defined, Lender shall pay the
Borrower fifty percent (50%) of such Excess above the Threshold Amount (the
"Contingent Payment"), as additional consideration for the Wickes Shares, but
only on the condition that the entire amount of the Remaining Riverside Debt has
been paid in full to Lender prior to such date or is paid in full out of such
Contingent Payment. The "Threshold Amount" means the sum of (i) the Exchanged
Debt, plus (ii) yield computed as interest on the amount of the Exchanged Debt
at the "prime rate" (defined as the "prime rate" as published in The Wall Street
Journal from time to time), and adjusted on the first day of every calendar
quarter) from and after the date hereof through the date of determination.
Borrower hereby grants a security interest in the Contingent Payment to Lender,
under the Uniform Commercial Code, as enacted in the Commonwealth of Kentucky
(the "UCC"), to secure the Remaining Riverside Debt and any and all other
indebtedness or obligations of any kind whatsoever that may now or hereafter in
the future, including future advances, be owed by Borrower to Lender, and Lender
shall have all of the rights of a secured party under the UCC in connection
therewith. Borrower agrees to execute all UCC-1 Financing Statements and other
agreements in connection with the grant of the foregoing security interest as
Lender may request from time to time and further agrees to pay
all filing and recording fees with respect thereto. Lender shall have absolutely
no obligation to sell the Wickes Shares or to seek the sale, merger or
liquidation of Wickes, and Borrower absolutely waives all claims whatsoever
against Lender in connection with the Wickes Shares, regardless whether Lender
does or does not sell such Wickes Shares and regardless whether Lender seeks the
liquidation, sale or merger of Wickes. Borrower acknowledges and agrees that
Lender has no obligation to seek any of the foregoing. If Lender receives the
Excess after the expiration of the Period, Lender shall have no obligation
whatsoever to make the Contingent Payment or to pay any other amount whatsoever
to Borrower.
8. All notices, requests, demands and other communications required or
permitted to be given or made under this Agreement shall be in writing and shall
be deemed to have been given (a) on the date of personal delivery or
transmission by telegram, cable, telex or facsimile transmission, or (b) three
(3) days following the date of deposit in the United States mail, postage
prepaid, by registered or certified mail, return receipt requested, or (c) one
(1) day following the date of delivery to a nationally recognized overnight
courier service, in each case, addressed as follows, or to such other address,
person or entity as any party shall designate by notice to the others in
accordance herewith:
If to Borrower: Riverside Group, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Facsimile No.: 904/296-0584
Attn: President
If to J. Xxxxxx Xxxxxx: J. Xxxxxx Xxxxxx
0000 Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile No.: 904/296-0584
If to Xxxxxx Financial: Xxxxxx Financial Corporation
0000 Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile No.: 904/296-0584
Attn: President
If to Lender: Imagine Investments, Ind.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: 214/365-6905
Attn: Xxxx Xxxxx
With copy to: Xxxxxxx X. Xxxxxxxxx
Xxxxxxxxxx Xxxx & XxXxxxxx PLLC
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
9. No waiver by any party of compliance by the other with any term or
condition of this Agreement shall be valid unless in writing and signed by the
party against whom enforcement of such waiver is sought. No waiver by any party
shall be construed to be a continuing waiver, nor a waiver of a similar or
another provision.
10. Every provision of this Agreement is and shall be severable from all
others. If any term, condition or provision is declared by any court of
competent jurisdiction to be void, invalid or unenforceable, the remaining
provisions of this Agreement shall not be affected and shall remain in full
force and effect.
11. This Agreement constitutes the entire agreement between the parties
concerning its subject matter and supersedes all prior written or oral
agreements, excepting the various loan documents governing the Remaining
Riverside Debt. No representations, inducement, promise or agreement not
embodied in this Agreement or attached hereto was made by any party. Except as
otherwise provided herein, no amendment of this Agreement shall be binding
unless in writing and signed by all of the parties hereto.
12. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Kentucky.
13. This Agreement shall be binding upon, and inure to the benefit of, each
of the parties hereto, and their respective heirs, personal representatives,
successors and assigns.
14. No right or remedy conferred upon or reserved to any of the parties
under the terms of this Agreement is intended to be, nor shall it be deemed,
exclusive of any other right or remedy provided herein or by law or equity, but
each shall be cumulative of every other right or remedy.
15. This Agreement may be executed in several counterparts, any of which
shall be treated for all purposes as an original, and all of which shall be
treated as one and the same. agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the day, month and year first above written.
Riverside Group, Inc.
By: /s/ J. Xxxxxx Xxxxxx
----------------------------------
Title: Chairman/CEO
----------------------------------
("Borrower")
/s/ J. Xxxxxx Xxxxxx
----------------------------------------
J. Xxxxxx Xxxxxx
("Xxxxxx")
Xxxxxx Financial Corporation
By: /s/ J. Xxxxxx Xxxxxx
----------------------------------
Title: President
----------------------------------
("Xxxxxx Financial")
Imagine Investments, Inc.
By: /s/ Xxxx X. Xxxxx
----------------------------------
Title: Vice President
----------------------------------
("Lender")
LIST OF EXHIBITS
Exhibit A-1 List of A-1 Notes
Exhibit A-2 List A-2 Notes
Exhibit B Certificates Evidencing 758,155 Shares of Wickes Stock
Exhibit C List of Pledged Shares
Exhibit D Letter to Third Party Creditors
Exhibit E Borrower's Audit Report and Financial Statement
