NOTE EXCHANGE AGREEMENT
THIS AGREEMENT made as of the 1st day of December, 1997 by and between
THE XXXXXXX GROUP, INC., a South Carolina corporation (the "Company"), and
AMERICAN BANKERS INSURANCE COMPANY OF FLORIDA ("American").
RECITALS:
A. American holds two promissory notes issued by the Company, one dated
May 16, 1994 in the principal amount of $300,000, and another dated March 18,
1996 in the principal amount of $200,000 (collectively, the "Notes").
B. American desires to exchange the Notes for shares of the Company's
Series C Convertible Preferred Stock (the "Series C Preferred Stock") and the
Company desires to make such an exchange in accordance with the terms hereof. A
copy of the Certificate of Designations, Preferences and Rights of the Series C
Preferred Stock is attached hereto as Exhibit A.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Exchange of Notes; Restrictions Upon Transfer. Subject to the terms
and conditions contained herein, and as of the date hereof, the Company hereby
agrees to issue Fifty Thousand (50,000) shares of Series C Preferred Stock, par
value $.01 per share, of the Company (the "Shares"), to American in exchange for
the surrender by American of the Notes. The Certificate(s) representing the
Shares shall bear an appropriate legend reflecting the aforementioned transfer
restriction as well as the status of such Shares as "restricted securities"
under the Securities Act of 1933, as amended (the "Act").
2. Representations and Warranties of the Company. In order to induce
American to enter into this Agreement, the Company hereby represents and
warrants that:
(a) The Company has the legal right to execute and deliver
this Agreement and to carry out the transactions and perform its
obligations hereunder. This Agreement constitutes a valid, legal and
binding obligation of the Company, enforceable in accordance with its
terms.
(b) The Company is a corporation, duly organized, validly
existing and in good standing under the laws of the State of South
Carolina.
3. Representations and Warranties of American. In order to induce the
Company to enter into this Agreement, American hereby represents and warrants to
the Company that:
(a) American has the legal right to execute and deliver this
Agreement and to carry out the transactions and perform its obligations
contemplated hereunder. This
Agreement has been duly authorized by American and constitutes the
legal, valid and binding obligations of American enforceable in
accordance with its terms.
(b) American is acquiring the Shares for investment and not
with a view to or for resale in connection with the distribution
thereof and acknowledges that the Shares have not been registered under
the Act.
(c) American is the true and lawful beneficial and record
holder of the Notes and has good an marketable title thereto, free and
clear of mortgages, pledges, liens, security interests or any other
encumbrances.
4. Indemnification. The parties hereto agree to indemnify and hold each
other harmless as follows:
(a) The Company agrees to indemnify and hold American harmless
at all times after the date of this Agreement from and against any and
all loss, liability, damage or deficiency resulting from any
misrepresentation, breach of warranty or nonfulfillment of any
covenants or agreements on the part of the Company contained herein or
in any other document or certificate furnished by the Company pursuant
hereto and any loss or damage resulting from any claims, litigation,
actions, suits, proceedings, judgments, reasonable attorneys' fees,
costs and expenses relating to or arising out of such
misrepresentation, breach or nonfulfillment.
(b) American agrees to indemnify and hold the Company harmless
at all times after the date of this Agreement from and against any and
all loss, liability, damage or deficiency resulting from any
misrepresentation, breach of warranty or nonfulfillment of any
covenants or agreements on the part of American contained herein or any
certificate or document furnished by American pursuant hereto and any
loss or damage resulting from any such claims, litigation, actions,
suits, proceedings, judgments, reasonable attorneys' fees, costs and
expenses related to or arising out of such misrepresentation, breach or
nonfulfillment.
(c) Should any claim be made by a person not a party to this
Agreement with respect to any matter to which the foregoing indemnity
relates, the party against whom such claim is asserted (the
"Indemnified Party"), within a reasonable period of time, shall give
written notice to the other party (the "Indemnifying Party") of any
such claim, and the Indemnifying Party shall thereafter defend or
settle any such claim, at its sole expense, on its own behalf and with
counsel of its selection. In such defense or settlement of any claims,
the Indemnified Party shall cooperate with and assist the Indemnifying
Party to the maximum extent reasonably possible. Any payment resulting
from such defense or settlement, together with the total expense
thereof, shall be binding on the Company and American for the purposes
of this paragraph 5.
(d) Notwithstanding the foregoing, should any claim be made by
a person not a party to this Agreement with respect to any matter to
which the foregoing indemnity relates, the Indemnified Party, on not
less than thirty (30) days' notice to the Indemnifying Party, may make
settlement of such claims, and such settlement shall be
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binding on the Indemnifying Party and the Indemnified Party for the
purposes of this paragraph 5; provided, however, that if within said
thirty (30) day period the Indemnifying Party shall have requested the
Indemnified Party not to settle such claim and to deny such claim at
the expense of the Indemnifying Party, the Indemnified Party will
promptly comply and the Indemnifying Party shall have the right to
defend on its own behalf with counsel of its selection. Any payment of
settlement resulting from such contest, together with the total expense
thereof, shall be binding on the Company and American for the purposes
of this paragraph 5.
5. Due Diligence Acknowledgment.
(a) American acknowledges that it has had an opportunity to
review, for information purposes only, the business and financial
information contained in the Company's prospectus dated November 12,
1997 (the "Prospectus"). A copy of the Prospectus is attached hereto as
an Exhibit B.
(b) American acknowledges that it has had an opportunity to
make its own independent examination, investigation, analysis and
evaluation of the Company, including, but not limited to, an
opportunity to ask questions of and receive answers from management
concerning the terms and conditions of the transaction and the business
and financial prospects of the Company.
6. Closing. The closing of the transactions contemplated by this
Agreement shall occur on or before December 31, 1997 on a date and at a time
mutually agreed upon by the parties.
7. Further Assurances. The Company and American hereby covenant and
agree that at any time and from time to time that they will promptly execute and
deliver such further instruments and documents and take such further action as
is reasonably necessary in order to further carry out the intent and purpose of
this Agreement.
8. Notices. All notices, requests and demands and other communications
to any party hereto shall be in writing and shall be deemed to have been duly
given as if delivered by hand or mailed, certified or registered, with postage
prepaid to the following address of each party or such other addresses as may be
hereafter designated in writing by such party to the other parties:
To the Company: The Xxxxxxx Group, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Chief Financial Officer
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To American: American Bankers Insurance Company of Florida
00000 Xxxxx Xxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxx Xxxxxx
Chief Investment Officer and
Senior Vice President
9. Expenses. It is hereby agreed and understood that Xxxxxxx shall bear
and pay all expenses relative to the consummation of the transaction referred to
in this Agreement.
10. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
11. Applicable Law. The Agreement shall be governed by, and construed
in accordance with, the laws of the State of Florida.
12. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction, shall as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13. Counterparts. This Agreement may be executed in one or more
counterparts, all of which together shall represent the same single agreement.
14. Survival of Representations and Indemnity. The representations and
warranties and the indemnification provisions contained herein shall survive the
closing and the delivery of all the required documents hereunder.
15. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the transactions contemplated herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
THE XXXXXXX GROUP, INC.
By:________________________________
Xxxxx X. Xxxxxxx
President
AMERICAN BANKERS INSURANCE
COMPANY OF FLORIDA
By:________________________________
Xxx Xxxxxx
Chief Investment Officer and
Senior Vice President
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