EXHIBIT 4.1
TEMPORARY FORBEARANCE AGREEMENT
THIS TEMPORARY FORBEARANCE AGREEMENT (this "AGREEMENT"), dated as of
June 28, 2002, as amended Xxxxx 0, 0000, xxxxx Xxxxxxxxx Xxxxxxxx Financial
Services Inc., a Florida corporation (the "COMPANY"), New Valley Capital
Corporation, a Delaware corporation ("NEW VALLEY"), Frost-Nevada Investments
Trust ("Frost-Nevada") a trust of which Frost-Nevada Limited Partnership
("Frost") is the sole beneficiary, and Berliner Effektengesellschaft AG, a
German corporation ("BERLINER", and together with New Valley and Frost-Nevada,
the "HOLDERS"). 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;
WHEREAS, as of November 29, 2002, Frost transferred its Notes to
Frost-Nevada;
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 January 15, 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 commencing June 30, 2002 and continuing through and including December
31, 2004 (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 and
Berliner 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.
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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) and (iii) 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;
(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.
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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/ XXXXXX X. XXXXX
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Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive Officer
NEW VALLEY CAPITAL 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: President
BERLINER EFFEKTENGESELLSCHAFT AG
By /s/ XXXXXX XXXX
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Name: Xxxxxx Xxxx
Title: CEO
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