EXHIBIT 10.2
TEMPORARY FORBEARANCE AGREEMENT
THIS TEMPORARY FORBEARANCE AGREEMENT (this "AGREEMENT"), dated
as of June 28, 2002, as amended March 3, 2003 and November 15, 2004, among
Ladenburg Xxxxxxxx Financial Services Inc., a Florida corporation (the
"COMPANY"), New Valley Corporation, a Delaware corporation ("NEW VALLEY") and
Frost-Nevada Investments Trust ("FROST-NEVADA", and together with New Valley,
the "HOLDERS") a trust of which Frost-Nevada Limited Partnership ("FROST") is
the sole beneficiary. Capitalized terms not otherwise defined herein shall have
the meanings specified in the Notes (as defined below).
WHEREAS, on May 7, 2001, the Company issued an aggregate of
$20,000,000 principal amount of Senior Convertible Promissory Notes due December
31, 2005 (collectively, as amended from time to time, the "Notes") to the
Holders and Berliner Effektengesellschaft AG ("BERLINER");
WHEREAS, as of November 29, 2002, Frost transferred its Notes
to Frost-Nevada;
WHEREAS, on March 3, 2003, each of the Holders agreed, among
other things, that they would not exercise any rights and remedies they had
against the Company in connection with the Company's failure to pay to such
Holders their pro rata share of all amounts due to such Holders on the interest
payment dates of the Notes commencing March 31, 2004 and continuing through and
including December 31, 2004;
WHEREAS, as of February 27, 2004, New Valley Capital
Corporation, the original holder of the Notes currently held by New Valley,
transferred its Notes to New Valley;
WHEREAS, on March 29, 2004, the Company repurchased the $1.99
million aggregate principal amount of Notes previously issued to Berliner, plus
all accrued interest thereon, for $1.0 million in cash;
WHEREAS, the Company has requested, and each of the Holders
has agreed, subject to the terms and conditions set forth in this Agreement, for
the period commencing on June 28, 2002 and ending on the earlier of May 13, 2005
(the "PAYMENT DATE") or the occurrence of a Termination Event (as defined in
Section 3) (the "WAIVER PERIOD"), (i) to waive any Default or Event of Default
existing solely as a result of the failure of the Company to pay to such Holder
its pro rata share of all amounts due to such Holders on the interest payment
dates of the Notes through and including March 31, 2005 (the "FORBEARANCE
INTEREST PAYMENTS"), with such interest payments to be made to the Holders on
the Payment Date, and (ii) that it shall refrain from exercising its rights and
remedies against the Company in connection with the Company's failure to pay
such Holder its pro rata share of the Forbearance Interest Payments prior to the
Payment Date;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreement of the parties hereinafter set forth, the parties
hereto hereby agree as follows:
1. WAIVER OF DEFAULT. Each of the Holders hereby waives, until
the expiration of the Waiver Period, any Default or Event of Default existing
solely as a result of the Company's failure to pay to such Holder such Holder's
pro rata share of the Forbearance Interest Payments prior to the Payment Date.
The Company acknowledges that interest shall accrue at the rate of 9.0% per
annum with respect to Frost-Nevada and 8.0% per annum with respect to New Valley
on each Forbearance Interest Payment from the date each such payment is due
pursuant to the Notes until all such amounts are paid in full in cash.
2. STANDSTILL. Each of the Holders hereby agrees that during
the Waiver Period it will not exercise any remedy under the Notes, at law or in
equity, which it hereafter may have in respect of any Default or Event of
Default resulting solely from the failure of the Company to pay to such Holder
its pro rata share of the Forbearance Interest Payments prior to the Payment
Date.
3. TERMINATION. This Agreement shall terminate upon the
earlier of (i) the payment in full to each Holder of its pro rata share of the
Forbearance Interest Payments, plus all amounts owing thereon pursuant to the
Notes and Section 1 hereof, (ii) the occurrence of an Event of Default (other
than in connection with the Forbearance Interest Payments), (iii) the conversion
of the Notes pursuant to that certain Amended and Restated Debt Conversion
Agreement among the Company and the Holders entered into as of the date of this
Agreement and (iv) any repurchase of the Notes pursuant to Section 2 of the
Notes; provided, that this Agreement shall only terminate with respect to those
Notes actually repurchased from the Holders pursuant to such section (a
"TERMINATION EVENT").
4. ABSENCE OF WAIVER. The parties hereto agree that, except to
the extent expressly set forth herein, nothing contained herein shall be deemed
to:
(a) be a consent to, or waiver of, any Default or
Event of Default; or
(b) prejudice any right or remedy which any of the
Holders may now have or may in the future have under the Notes or
otherwise, including, without limitation, any right or remedy resulting
from any Default or Event of Default.
5. REPRESENTATIONS. Each party hereto hereby represents and
warrants to the other parties that:
(a) such party is a corporation or partnership, as
applicable, duly organized, validly existing, and in good standing
under the laws of the state of its incorporation or formation, as
applicable;
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(b) the execution, delivery and performance of this
Agreement by such party is within its corporate or trust powers, as
applicable, has been duly authorized by all necessary corporate or
trust action, as applicable, has received all necessary consents and
approvals (if any shall be required), and does not and will not
contravene or conflict with any provisions of law or of the charter or
by-laws, or trust agreement, as applicable, of such party or of any
material agreement binding upon such party or its property; and
(c) this Agreement will be a legal, valid and binding
obligation of such party, enforceable against it in accordance with its
terms.
In addition, the Company represents and warrants that to the best of its
knowledge, except as set forth herein no Default or Event of Default under the
Notes has occurred and is continuing.
6. CONTINUING EFFECT, ETC. Except as expressly provided
herein, the Company hereby agrees that the Notes shall continue unchanged and in
full force and effect, and all rights, powers and remedies of the Holders
thereunder and under applicable law are hereby expressly reserved. In addition,
the Company hereby agrees that its obligations under this Agreement constitute
"Secured Obligations" as defined in the Pledge and Security Agreement, dated as
of May 7, 2001, among the Company, New Valley, Berliner and Frost. The Company
also hereby agrees that it will apply, to the maximum extent possible, any net
proceeds from any public offering by the Company in excess of the amounts
invested in the public offering by the Holders to pay to the Holders any amount
of the Forbearance Interest Payments then outstanding.
7. MISCELLANEOUS.
(a) Section headings used in this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
(b) This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts and each such
counterpart shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same agreement.
(c) This Agreement shall be a contract made under and governed
by the laws of the State of New York.
(d) All obligations of the Company and rights of the Holders
expressed herein shall be in addition to and not in limitation of those provided
by applicable law.
(e) This Agreement shall be binding upon the Company, the
Holders and their respective successors and assigns, and shall inure to the
benefit of the Company, the Holders and their respective successors and assigns.
(f) All amendments or modifications of this Agreement and all
consents, waivers and notices delivered hereunder or in connection herewith
shall be in writing.
8. WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND THE HOLDERS
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives as of the date
first above written.
LADENBURG XXXXXXXX FINANCIAL
SERVICES INC.
By /s/ XXXXXXX X. XXXXXXXX
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Name: Xxxxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
NEW VALLEY CORPORATION
By /s/ XXXXXXX X. XXXXXX
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Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
FROST-NEVADA INVESTMENTS TRUST
By /s/ XXXXXXX XXXXX
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Name: Xxxxxxx Xxxxx, M.D.
Title: Trustee
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