-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VLNTGl27aabpULu5mX6PfhdNX0IAB4dacKrcj9zX2OALvgze8YQEhOGz2+4BckTp a/prmLHRRQhre9QToXigzQ== 0000930661-02-003139.txt : 20020827 0000930661-02-003139.hdr.sgml : 20020827 20020827165849 ACCESSION NUMBER: 0000930661-02-003139 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 20020827 GROUP MEMBERS: JAMES M. FAIL GROUP MEMBERS: JAMES M. FAIL LIVING TRUST GROUP MEMBERS: KATHRYN FAIL LUTTRULL GROUP MEMBERS: MARITAL TRUST OF JAMES M. FAIL LIVING TRUST GROUP MEMBERS: P.S.F. HOLDINGS LIMITED PARTNERSHIP GROUP MEMBERS: STONE CAPITAL, INC. GROUP MEMBERS: STONE HOLDINGS, INC. GROUP MEMBERS: STONE INVESTMENTS, INC. GROUP MEMBERS: WINN HOLDINGS, LLC FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: IMAGINE INVESTMENTS INC CENTRAL INDEX KEY: 0001051043 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 8150 N CENTRAL EXPRESSWAY STE 1901 CITY: DALLAS STATE: TX ZIP: 75206 BUSINESS PHONE: 2143651900 MAIL ADDRESS: STREET 1: 8150 N CENTRAL EXPRESSWAY STE 1901 CITY: DALLAS STATE: TX ZIP: 75206 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: RIVERSIDE GROUP INC/FL CENTRAL INDEX KEY: 0000277356 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-LUMBER & OTHER BUILDING MATERIALS DEALERS [5211] IRS NUMBER: 591144172 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-32168 FILM NUMBER: 02749887 BUSINESS ADDRESS: STREET 1: 7800 BELFORT PARKWAY STREET 2: SUITE 100 CITY: JACKSONVILLE STATE: FL ZIP: 32256 BUSINESS PHONE: 9042812200 MAIL ADDRESS: STREET 1: 7800 BELFORT PARKWAY STREET 2: SUITE 100 CITY: JACKSONVILLE STATE: FL ZIP: 32256 FORMER COMPANY: FORMER CONFORMED NAME: RIVERSIDE GROUP INC DATE OF NAME CHANGE: 19820628 FORMER COMPANY: FORMER CONFORMED NAME: WESTERN GRAIN INTERNATIONAL INC DATE OF NAME CHANGE: 19840627 SC 13D/A 1 dsc13da.txt AMENDMENT NO. 4 TO SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. 4) (1) Riverside Group, Inc. (Name of Issuer) Common Stock, par value $.01 per share (Title of Class of Securities) 769 135 104 (CUSIP Number) Gary M. Goltz Imagine Investments, Inc. 8150 North Central Expressway, Suite 1901 Dallas, Texas 75206 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) Copies to: Sally A. Schreiber Munsch Hardt Kopf & Harr, P.C. 4000 Fountain Place 1445 Ross Avenue Dallas, Texas 75202 (214) 855-7500 June 25, 2002 (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f), or 13d-1(g), check the following box [_]. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (1) The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see, the Notes). CUSIP No. 769 135 104 - ------------------------------------------------------------------------------- 1) Names of Reporting Persons I.R.S. Identification Nos. of Above Persons (entities only) Imagine Investments, Inc. 75-2709444 - ------------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (See Instructions) (a) [_] (b) [_] - ------------------------------------------------------------------------------- 3) SEC Use Only - ------------------------------------------------------------------------------- 4) Source of Funds (See Instructions) WC - ------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [_] - ------------------------------------------------------------------------------- 6) Citizenship or Place of Organization Delaware - ------------------------------------------------------------------------------- Number of (7) Sole Voting Power 0 Shares ------------------------------------------------------- Beneficially (8) Shared Voting Power 0* Owned by Each ------------------------------------------------------- Reporting Person (9) Sole Dispositive Power 0 With ------------------------------------------------------- (10) Shared Dispositive Power 0* - ------------------------------------------------------------------------------- 11) Aggregate Amount Beneficially Owned by Each Reporting Person 0* - ------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [X] - ------------------------------------------------------------------------------- 13) Percent of Class Represented by Amount in Row (11) 0* - ------------------------------------------------------------------------------- 14) Type of Reporting Person (See Instructions) CO - ------------------------------------------------------------------------------- * Does not include any of the shares of the Issuer pledged to Imagine Investments, Inc. (currently, 2,617,243 shares, or 54.9% of the outstanding common stock of the Issuer) or any shares of the Issuer owned by Wilson Financial Corporation (currently believed to be 2,543,553 shares, or 53.4% of the outstanding common stock of the Issuer). Imagine Investments, Inc. is the pledgee of 59.8% of the common stock and all of the preferred stock of Wilson Financial Corporation. See Item 3. CUSIP No. 769 135 104 - ------------------------------------------------------------------------------- 1) Names of Reporting Persons I.R.S. Identification Nos. of Above Persons (entities only) Stone Investments, Inc. 86-0740106 - ------------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (See Instructions) (a) [_] (b) [_] - ------------------------------------------------------------------------------- 3) SEC Use Only - ------------------------------------------------------------------------------- 4) Source of Funds (See Instructions) WC - ------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [_] - ------------------------------------------------------------------------------- 6) Citizenship or Place of Organization Delaware - ------------------------------------------------------------------------------- Number of (7) Sole Voting Power 0 Shares ------------------------------------------------------- Beneficially (8) Shared Voting Power 0* Owned by Each ------------------------------------------------------- Reporting Person (9) Sole Dispositive Power 0 With ------------------------------------------------------- (10) Shared Dispositive Power 0* - ------------------------------------------------------------------------------- 11) Aggregate Amount Beneficially Owned by Each Reporting Person 0* - ------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [X] - ------------------------------------------------------------------------------- 13) Percent of Class Represented by Amount in Row (11) 0* - ------------------------------------------------------------------------------- 14) Type of Reporting Person (See Instructions) HC, CO - ------------------------------------------------------------------------------- * Does not include any of the shares of the Issuer pledged to Imagine Investments, Inc. (currently, 2,617,243 shares, or 54.9% of the outstanding common stock of the Issuer) or any shares of the Issuer owned by Wilson Financial Corporation (currently believed to be 2,543,553 shares, or 53.4% of the outstanding common stock of the Issuer). Imagine Investments, Inc. is the pledgee of 59.8% of the common stock and all of the preferred stock of Wilson Financial Corporation. See Item 3. CUSIP No. 769 135 104 - ------------------------------------------------------------------------------- 1) Names of Reporting Persons I.R.S. Identification Nos. of Above Persons (entities only) Stone Capital, Inc. 75-2262907 - ------------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (See Instructions) (a) [_] (b) [_] - ------------------------------------------------------------------------------- 3) SEC Use Only - ------------------------------------------------------------------------------- 4) Source of Funds (See Instructions) WC - ------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [_] - ------------------------------------------------------------------------------- 6) Citizenship or Place of Organization Delaware - ------------------------------------------------------------------------------- Number of (7) Sole Voting Power 0 Shares ------------------------------------------------------ Beneficially (8) Shared Voting Power 0* Owned by Each ------------------------------------------------------ Reporting Person (9) Sole Dispositive Power 0 With ------------------------------------------------------ (10) Shared Dispositive Power 0* - ------------------------------------------------------------------------------- 11) Aggregate Amount Beneficially Owned by Each Reporting Person 0* - ------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [X] - ------------------------------------------------------------------------------- 13) Percent of Class Represented by Amount in Row (11) 0* - ------------------------------------------------------------------------------- 14) Type of Reporting Person (See Instructions) HC, CO - ------------------------------------------------------------------------------- * Does not include any of the shares of the Issuer pledged to Imagine Investments, Inc. (currently, 2,617,243 shares, or 54.9% of the outstanding common stock of the Issuer) or any shares of the Issuer owned by Wilson Financial Corporation (currently believed to be 2,543,553 shares, or 53.4% of the outstanding common stock of the Issuer). Imagine Investments, Inc. is the pledgee of 59.8% of the common stock and all of the preferred stock of Wilson Financial Corporation. See Item 3. CUSIP No. 769 135 104 - ------------------------------------------------------------------------------- 1) Names of Reporting Persons I.R.S. Identification Nos. of Above Persons (entities only) Stone Holdings, Inc. 75-2681508 - ------------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (See Instructions) (a) [_] (b) [_] - ------------------------------------------------------------------------------- 3) SEC Use Only - ------------------------------------------------------------------------------- 4) Source of Funds (See Instructions) WC - ------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [_] - ------------------------------------------------------------------------------- 6) Citizenship or Place of Organization Delaware - ------------------------------------------------------------------------------- Number of (7) Sole Voting Power 0 Shares ------------------------------------------------------ Beneficially (8) Shared Voting Power 0* Owned by Each ------------------------------------------------------ Reporting Person (9) Sole Dispositive Power 0 With ------------------------------------------------------ (10) Shared Dispositive Power 0* - ------------------------------------------------------------------------------- 11) Aggregate Amount Beneficially Owned by Each Reporting Person 0* - ------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [X] - ------------------------------------------------------------------------------- 13) Percent of Class Represented by Amount in Row (11) 0* - ------------------------------------------------------------------------------- 14) Type of Reporting Person (See Instructions) HC, CO - ------------------------------------------------------------------------------- * Does not include any of the shares of the Issuer pledged to Imagine Investments, Inc. (currently, 2,617,243 shares, or 54.9% of the outstanding common stock of the Issuer) or any shares of the Issuer owned by Wilson Financial Corporation (currently believed to be 2,543,553 shares, or 53.4% of the outstanding common stock of the Issuer). Imagine Investments, Inc. is the pledgee of 59.8% of the common stock and all of the preferred stock of Wilson Financial Corporation. See Item 3. CUSIP No. 769 135 104 - ------------------------------------------------------------------------------- 1) Names of Reporting Persons I.R.S. Identification Nos. of Above Persons (entities only) P.S.F. Holdings Limited Partnership 75-2891070 - ------------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (See Instructions) (a) [_] (b) [_] - ------------------------------------------------------------------------------- 3) SEC Use Only - ------------------------------------------------------------------------------- 4) Source of Funds (See Instructions) WC - ------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [_] - ------------------------------------------------------------------------------- 6) Citizenship or Place of Organization Texas - ------------------------------------------------------------------------------- Number of (7) Sole Voting Power 0 Shares ------------------------------------------------------- Beneficially (8) Shared Voting Power 0* Owned by Each ------------------------------------------------------- Reporting Person (9) Sole Dispositive Power 0 With ------------------------------------------------------- (10) Shared Dispositive Power 0* - ------------------------------------------------------------------------------- 11) Aggregate Amount Beneficially Owned by Each Reporting Person 0* - ------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [X] - ------------------------------------------------------------------------------- 13) Percent of Class Represented by Amount in Row (11) 0* - ------------------------------------------------------------------------------- 14) Type of Reporting Person (See Instructions) HC, PN - ------------------------------------------------------------------------------- * Does not include any of the shares of the Issuer pledged to Imagine Investments, Inc. (currently, 2,617,243 shares, or 54.9% of the outstanding common stock of the Issuer) or any shares of the Issuer owned by Wilson Financial Corporation (currently believed to be 2,543,553 shares, or 53.4% of the outstanding common stock of the Issuer). Imagine Investments, Inc. is the pledgee of 59.8% of the common stock and all of the preferred stock of Wilson Financial Corporation. See Item 3. CUSIP No. 769 135 104 - ------------------------------------------------------------------------------- 1) Names of Reporting Persons I.R.S. Identification Nos. of Above Persons (entities only) The Marital Trust established pursuant to the provisions of Section 3 of Article 3 of the agreement establishing the James M. Fail Living Trust. - ------------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (See Instructions) (a) [_] (b) [_] - ------------------------------------------------------------------------------- 3) SEC Use Only - ------------------------------------------------------------------------------- 4) Source of Funds (See Instructions) WC - ------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [_] - ------------------------------------------------------------------------------- 6) Citizenship or Place of Organization Alaska - ------------------------------------------------------------------------------- Number of (7) Sole Voting Power 0 Shares ------------------------------------------------------- Beneficially (8) Shared Voting Power 0* Owned by Each ------------------------------------------------------- Reporting Person (9) Sole Dispositive Power 0 With ------------------------------------------------------- (10) Shared Dispositive Power 0* - ------------------------------------------------------------------------------- 11) Aggregate Amount Beneficially Owned by Each Reporting Person 0* - ------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [X] - ------------------------------------------------------------------------------- 13) Percent of Class Represented by Amount in Row (11) 0* - ------------------------------------------------------------------------------- 14) Type of Reporting Person (See Instructions) HC, OO - ------------------------------------------------------------------------------- * Does not include any of the shares of the Issuer pledged to Imagine Investments, Inc. (currently, 2,617,243 shares, or 54.9% of the outstanding common stock of the Issuer) or any shares of the Issuer owned by Wilson Financial Corporation (currently believed to be 2,543,553 shares, or 53.4% of the outstanding common stock of the Issuer). Imagine Investments, Inc. is the pledgee of 59.8% of the common stock and all of the preferred stock of Wilson Financial Corporation. See Item 3. CUSIP No. 769 135 104 - ------------------------------------------------------------------------------- 1) Names of Reporting Persons I.R.S. Identification Nos. of Above Persons (entities only) James M. Fail Living Trust - ------------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (See Instructions) (a) [_] (b) [_] - ------------------------------------------------------------------------------- 3) SEC Use Only - ------------------------------------------------------------------------------- 4) Source of Funds (See Instructions) WC - ------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [_] - ------------------------------------------------------------------------------- 6) Citizenship or Place of Organization Alaska - ------------------------------------------------------------------------------- Number of (7) Sole Voting Power 0 Shares ------------------------------------------------------- Beneficially (8) Shared Voting Power 0* Owned by Each ------------------------------------------------------- Reporting Person (9) Sole Dispositive Power 0 With ------------------------------------------------------- (10) Shared Dispositive Power 0* - ------------------------------------------------------------------------------- 11) Aggregate Amount Beneficially Owned by Each Reporting Person 0* - ------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [X] - ------------------------------------------------------------------------------- 13) Percent of Class Represented by Amount in Row (11) 0* - ------------------------------------------------------------------------------- 14) Type of Reporting Person (See Instructions) HC, OO - ------------------------------------------------------------------------------- * Does not include any of the shares of the Issuer pledged to Imagine Investments, Inc. (currently, 2,617,243 shares, or 54.9% of the outstanding common stock of the Issuer) or any shares of the Issuer owned by Wilson Financial Corporation (currently believed to be 2,543,553 shares, or 53.4% of the outstanding common stock of the Issuer). Imagine Investments, Inc. is the pledgee of 59.8% of the common stock and all of the preferred stock of Wilson Financial Corporation. See Item 3. CUSIP No. 769 135 104 - ------------------------------------------------------------------------------- 1) Names of Reporting Persons I.R.S. Identification Nos. of Above Persons (entities only) James M. Fail - ------------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (See Instructions) (a) [_] (b) [_] - ------------------------------------------------------------------------------- 3) SEC Use Only - ------------------------------------------------------------------------------- 4) Source of Funds (See Instructions) WC - ------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [_] - ------------------------------------------------------------------------------- 6) Citizenship or Place of Organization United States - ------------------------------------------------------------------------------- Number of (7) Sole Voting Power 0 Shares ------------------------------------------------------- Beneficially (8) Shared Voting Power 0* Owned by Each ------------------------------------------------------- Reporting Person (9) Sole Dispositive Power 0 With ------------------------------------------------------- (10) Shared Dispositive Power 0* - ------------------------------------------------------------------------------- 11) Aggregate Amount Beneficially Owned by Each Reporting Person 0* - ------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [X] - ------------------------------------------------------------------------------- 13) Percent of Class Represented by Amount in Row (11) 0* - ------------------------------------------------------------------------------- 14) Type of Reporting Person (See Instructions) HC, IN - ------------------------------------------------------------------------------- * Does not include any of the shares of the Issuer pledged to Imagine Investments, Inc. (currently, 2,617,243 shares, or 54.9% of the outstanding common stock of the Issuer) or any shares of the Issuer owned by Wilson Financial Corporation (currently believed to be 2,543,553 shares, or 53.4% of the outstanding common stock of the Issuer). Imagine Investments, Inc. is the pledgee of 59.8% of the common stock and all of the preferred stock of Wilson Financial Corporation. See Item 3. CUSIP No. 769 135 104 - ------------------------------------------------------------------------------- 1) Names of Reporting Persons I.R.S. Identification Nos. of Above Persons (entities only) Winn Holdings, LLC 75-2891040 - ------------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (See Instructions) (a) [_] (b) [_] - ------------------------------------------------------------------------------- 3) SEC Use Only - ------------------------------------------------------------------------------- 4) Source of Funds (See Instructions) WC - ------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [_] - ------------------------------------------------------------------------------- 6) Citizenship or Place of Organization Texas - ------------------------------------------------------------------------------- Number of (7) Sole Voting Power 0 Shares ------------------------------------------------------- Beneficially (8) Shared Voting Power 0* Owned by Each ------------------------------------------------------- Reporting Person (9) Sole Dispositive Power 0 With ------------------------------------------------------- (10) Shared Dispositive Power 0* - ------------------------------------------------------------------------------- 11) Aggregate Amount Beneficially Owned by Each Reporting Person 0* - ------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [X] - ------------------------------------------------------------------------------- 13) Percent of Class Represented by Amount in Row (11) 0* - ------------------------------------------------------------------------------- 14) Type of Reporting Person (See Instructions) HC, OO - ------------------------------------------------------------------------------- * Does not include any of the shares of the Issuer pledged to Imagine Investments, Inc. (currently, 2,617,243 shares, or 54.9% of the outstanding common stock of the Issuer) or any shares of the Issuer owned by Wilson Financial Corporation (currently believed to be 2,543,553 shares, or 53.4% of the outstanding common stock of the Issuer). Imagine Investments, Inc. is the pledgee of 59.8% of the common stock and all of the preferred stock of Wilson Financial Corporation. See Item 3. CUSIP No. 769 135 104 - ------------------------------------------------------------------------------- 1) Names of Reporting Persons I.R.S. Identification Nos. of Above Persons (entities only) Kathryn Fail Luttrull - ------------------------------------------------------------------------------- 2) Check the Appropriate Box if a Member of a Group (See Instructions) (a) [_] (b) [_] - ------------------------------------------------------------------------------- 3) SEC Use Only - ------------------------------------------------------------------------------- 4) Source of Funds (See Instructions) WC - ------------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [_] - ------------------------------------------------------------------------------- 6) Citizenship or Place of Organization United States - ------------------------------------------------------------------------------- Number of (7) Sole Voting Power 0 Shares ------------------------------------------------------- Beneficially (8) Shared Voting Power 0* Owned by Each ------------------------------------------------------- Reporting Person (9) Sole Dispositive Power 0 With ------------------------------------------------------- (10) Shared Dispositive Power 0* - ------------------------------------------------------------------------------- 11) Aggregate Amount Beneficially Owned by Each Reporting Person 0* - ------------------------------------------------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [X] - ------------------------------------------------------------------------------- 13) Percent of Class Represented by Amount in Row (11) 0* - ------------------------------------------------------------------------------- 14) Type of Reporting Person (See Instructions) HC, IN - ------------------------------------------------------------------------------- * Does not include any of the shares of the Issuer pledged to Imagine Investments, Inc. (currently, 2,617,243 shares, or 54.9% of the outstanding common stock of the Issuer) or any shares of the Issuer owned by Wilson Financial Corporation (currently believed to be 2,543,553 shares, or 53.4% of the outstanding common stock of the Issuer). Imagine Investments, Inc. is the pledgee of 59.8% of the common stock and all of the preferred stock of Wilson Financial Corporation. See Item 3. SCHEDULE 13D/A This Amendment No. 4 to Schedule 13D ("Amendment No. 4") amends that certain Schedule 13D filed on December 12, 1997, with the Securities and Exchange Commission, as amended by that certain Amendment No. 1 to Schedule 13D filed on October 15, 1998, that certain Amendment No. 2 to Schedule 13D filed on March 5, 1999, and that certain Amendment No. 3 to Schedule 13D filed on January 20, 2000 (as so amended, the "Schedule 13D"), with respect to the common stock, par value $0.10 per share, of Riverside Group, Inc., a Florida corporation (the "Issuer"). The Schedule 13D is hereby incorporated by reference for all purposes. Capitalized terms used but not defined herein shall have the meanings subscribed to them on Schedule 13D. Item 2. Identity and Background. Item 2 is hereby amended and restated in its entirely to read as follows: (a) This statement is filed by (i) Imagine Investments, Inc., a Delaware corporation ("Imagine Investments"), (ii) Stone Investments, Inc., a Delaware corporation ("Stone Investments"), (iii) Stone Capital, Inc., a Delaware corporation ("Stone Capital"), (iv) Stone Holdings, Inc., a Delaware corporation ("Stone Holdings"), (v) P.S.F. Holdings Limited Partnership, a Texas limited partnership ("P.S.F."), (vi) the Marital Trust established pursuant to the provisions of Section 3 of Article 3 of the agreement establishing the James M. Fail Living Trust (the "Marital Trust"), (vii) James M. Fail Living Trust (the "Living Trust"), (viii) James M. Fail, (ix) Winn Holdings, LLC, a Texas limited liability company ("Winn Holdings"), and (x) Kathryn Fail Luttrull (collectively, the "Reporting Persons"). Imagine Investments is a wholly-owned subsidiary of Stone Investments. Stone Investments is a wholly-owned subsidiary of Stone Capital. Stone Capital is a wholly-owned subsidiary of Stone Holdings. Each of the Marital Trust, Living Trust, and P.S.F. owns approximately 40%, 30%, and 30%, respectively, of the common stock of Stone Holdings. Additionally, the Marital Trust and the Living Trust own, in the aggregate, approximately 22.6% of the preferred stock of Stone Holdings. Mr. Fail is a trustee of each of the Marital Trust and the Living Trust and has sole voting and dispositive power with respect to each of such trusts. Winn Holdings has a 1% general partnership interest in and is the general partner of P.S.F. Kathryn Fail Luttrull is the sole member and manager of Winn Holdings. (b) The business address of each of the Reporting Persons is c/o Stone Investments, Inc., 8150 North Central Expressway, Suite 1901, Dallas, Texas 75206. (c) The principal business of Imagine Investments, Stone Investments, Stone Capital, Stone Holdings, P.S.F., and Winn Holdings is investments, including investing in securities of other entities. The principal business of each of the Marital Trust and Living Trust is to implement and effectuate the investment activities of Mr. Fail and his family, including investing in securities of other entities. The present principal occupation of James M. Fail is Chairman of the Board and Chief Executive Officer of Stone Holdings and serving in other principal positions in certain other of the Reporting Persons as more fully described on Schedule I attached hereto and incorporated herein by reference. The present principal occupation of Kathryn Fail Luttrull is manager and sole member of Winn Holdings and serving in other principal positions in certain other of the Reporting Persons as more fully described on Schedule I attached hereto and incorporated herein by reference. (d) During the last five years, none of the Reporting Persons or the Covered Persons (as hereinafter defined) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the last five years, none of the Reporting Persons or the Covered Persons has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) The place of organization for each of Imagine Investments, Stone Investments, Stone Capital, and Stone Holdings is Delaware. The place of organization of each of P.S.F. and Winn Holdings is Texas. The place of organization of each of the Marital Trust and the Living Trust is Alaska. The place of citizenship of James M. Fail and Kathryn Fail Luttrull is the United States of America. Unless otherwise indicated on Schedule I annexed hereto and incorporated herein by reference, the place of citizenship of each of the Covered Persons is the United States of America. For additional information required by Instruction C to Schedule 13D with respect to the general partners, controlling persons, executive officers, and directors of the foregoing Reporting Persons, to the extent applicable (collectively, "Covered Persons"), please see Schedule I annexed hereto and incorporated herein by reference. Item 3. Source and Amount of Funds or Other Consideration. Item 3 is hereby amended and restated in its entirety to read as follows: Imagine Investments funded each of the loans and purchases described below in Item 6 with working capital. Item 4. Purpose of Transaction. Item 4 is hereby amended and restated in its entirety to read as follows: The purpose of each of the transactions described in Item 6 was solely for investment purposes. Unless and until an event of default has occurred under the 1999 Loan (as defined in Item 6 below) or Imagine Investments acquires any of the shares that are pledged to it, Imagine Investments has no right to vote or dispose or direct the vote or disposition of any of such pledged shares (except to the limited extent described in Item 5(b) below). However, if and when and event of default occurs under the 1999 Loan or Imagine Investments does acquire any of such shares, each of the Reporting Persons reserves the right to attempt to influence the management and policies of the Issuer and/or control the Issuer. Imagine Investments also reserves the right to foreclose on the pledged shares pursuant to the terms of its pledge agreement in any manner permitted by applicable laws and the pledge agreement. Each of the Reporting Persons also reserves the right to acquire such pledged shares itself through the foreclosure process or otherwise and to sell, either in the open market or in one or more privately negotiated transactions, any or all of any pledged shares that it may so acquire. Furthermore, each of the Reporting Persons may consider the possibility of a future acquisition of control of the business of the Issuer by other means, including a tender offer, merger or other business combination, open market purchases, private transactions, or otherwise. None of the Reporting Persons has made any definitive plans to attempt to acquire control of the Issuer, nor has any of the Reporting Persons entered into any contracts, arrangements, or understandings with the Issuer or its affiliates for this purpose. However, in light of the current financial situation of the Issuer, Imagine Investments has suggested to the Issuer the possibility of improving the Issuer's financial condition by exchanging some or all of the debt owed to Imagine Investments by the Issuer for shares of common stock of the Issuer. The current suggestion involves terms pursuant to which Imagine Investments would acquire a majority of the outstanding common stock of the Issuer and, as a result, be entitled to elect all of the directors of the Issuer and control the Issuer. However, there is no assurance that such suggestion will lead to an agreement and, even if an agreement is reached, there is no assurance that the agreement would be consummated. In addition, Imagine has been requested by the Issuer to make an additional loan to the Issuer. Imagine is considering the possibility of making one or more additional loans to the Issuer. No specific terms have been negotiated and, if any such loan is made, it could be secured by assets of the Issuer or contain other terms customary in commercial loans. However, there is no assurance that any loan will be made or, if made, there is no assurance as to the precise terms of the loan. Other than as indicated above, none of the Reporting Persons has any current plans or proposals with respect to any of the following: (a) the acquisition or disposition of securities of the Issuer; (b) any extraordinary corporate transaction, such as a merger, reorganization, or liquidation, involving either the Issuer or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; (d) a change in the present board of directors or management of the Issuer, including plans or proposal to change the number or term of directors or to fill any existing vacancies on the board; (e) any material change in the present capitalization or dividend policy of the Issuer; (f) any other material change in the Issuer's business or corporate structure; (g) any changes in the Issuer's charter or bylaws that may impede the acquisition of control of the Issuer by any person; (h) causing a class of securities of the Issuer to be delisted from any national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system or a registered national securities association; (i) a class of securities of the Issuer to become eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934; or (j) any action similar to any of the foregoing. However, the Reporting Persons reserve the right to take any and all such actions in the future. Item 5. Interest in Securities of the Issuer. Item 5 is hereby amended and restated in its entirety to read as follows: (a) As a result of the transactions described below in Item 6, as of the date of this Amendment No. 4, Imagine Investments actually owns no shares of common stock of the Issuer of record but is the pledgee of 2,617,243 shares of common stock of the Issuer (approximately 54.9% of the outstanding common stock of the Issuer as of March 26, 2002). In addition, Imagine Investments is the pledgee of 59.8% of the common stock and all of the preferred stock of Wilson Financial Corporation, a Florida corporation ("Wilson Financial"), which Imagine Investments believes is the record owner of 2,543,553 shares of common stock of the Issuer (53.4% of the outstanding common stock of the Issuer), which shares are included in the shares of common stock of the Issuer that are pledged to it. Accordingly, each of the Reporting Persons is currently the beneficial owner of no shares of the Issuer. However, each of them may in the future be deemed to acquire beneficial ownership of the 2,617,243 shares of the Issuer that are pledged to Imagine Investments and may also be deemed to acquire beneficial ownership of the 2,543,553 shares of the Issuer that are owned by Wilson Financial as a result of the pledge of stock of Wilson Financial to Imagine Investments. Under certain circumstances, the Reporting Persons may be deemed to be the beneficial owner of such shares of the Issuer even before they take actual title to any of the pledged shares. To the extent the existence of pledge may be deemed to constitute beneficial ownership of the pledged shares, each of the Reporting Persons disclaims beneficial ownership of any of the pledged shares. (b) The persons who pledged the shares of Issuer as security for the 1999 Loan have agreed not to permit the Issuer to take certain actions without the consent of Imagine Investments. Those actions include stock issuances, mergers, sell all or substantially all its assets, amendments of the Issuer's Articles of Incorporation or Bylaws that are adverse to Imagine Investment's rights with respect to the pledged shares, liquidation, and recapitalizations. See paragraph 4 of the Stock Pledge Agreement that is attached as Exhibit 7.12 to this Schedule 13D. If and when an event of default occurs under the 1999 Loan or Imagine Investments directly acquires any of the shares of common stock of the Issuer that are pledged to it, the Reporting Persons will have the power to vote and dispose of those shares, which power may be deemed to be shared by the Reporting Persons. If and when an event of default occurs under the 1999 Loan or Imagine Investments acquires the pledged shares of Wilson Financial, the Reporting Persons will share with Wilson Financial the power to vote and dispose of the shares of the Issuer's common stock owned by Wilson Financial. (c) See paragraphs (e) and (h) of Item 6 for a description of the extension of the maturity date of certain loans owed by Wilson Financial to Imagine Investments. (d) Not applicable. (e) The Reporting Persons ceased to be the beneficial owners of more than 5% of the outstanding common stock of the Issuer on December 31, 2001, when the option Imagine Investments held expired. See paragraph (f) of Item 6 below. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer: Item 6 is hereby amended and restated in its entirety to read as follows: In order to provide a better understanding of the beneficial ownership of common stock of the Issuer by the Reporting Persons, the following chronology is provided: (a) Pursuant to a letter agreement dated November 28, 1997 (the "1997 Letter Agreement"), a copy of which was previously filed as an Exhibit to this Schedule 13D, Imagine Investments loaned to Wilson Financial, $440,000 (the "1997 Loan"). The 1997 Loan was secured by, among other things, a first lien on 130,542 shares of common stock of the Issuer (2.5% of the outstanding at that time) (the "1997 Pledged Shares") and was guaranteed by Steven Wilson, an individual ("Mr. Wilson"). Wilson Financial also agreed (A) following any default under a then-existing loan made by BankBoston, N.A. (formerly known as First National Bank of Boston) ("BankBoston") to Wilson Financial or following any default under the 1997 Loan, to use its best efforts to obtain a second lien on any other shares of common stock of Issuer owned by Wilson Financial that were pledged to BankBoston or any other lender (which was never done), (B) under certain circumstances, to grant a lien in any shares of common stock of Issuer owned by Wilson Financial as to which BankBoston released its lien (which was never done), and (C) under certain circumstances, not to grant any liens on the common stock of Issuer owned by Wilson Financial other than to BankBoston or Imagine Investments. This loan matured on October 31, 1998, and was repaid with the proceeds of the $6 Million Loan. (b) Pursuant to the 1997 Letter Agreement, on November 28, 1997, Imagine Investments purchased 520,000 shares of common stock of Issuer (9.8% of the outstanding at that time) from Wilson Financial for $1,560,000 ($3.00 per share). Of this amount, $1,195,285.93 was directed to Robert T. Shaw as payment in full of certain obligations of Wilson Financial to Mr. Shaw and the balance was paid in cash to Wilson Financial. Imagine Investments was granted certain tag-along rights with respect to the these shares. It was also granted certain piggyback rights with respect to these shares and also on the 1997 Pledged Shares to the extent Imagine Investments acquired them upon foreclosure. (c) Pursuant to a Stock Purchase Agreement dated November 5, 1998, between the Issuer and Imagine Investments, a copy of which was previously filed as an Exhibit to this Schedule 13D, the Issuer elected Robert T. Shaw (a director and the President of Imagine Investments) and Harry Carneal (a director and Executive Vice President of Imagine Investments) to its Board of Directors on October 5, 1998. Mr. Shaw resigned on August 10, 1999, and Mr. Carneal resigned on September 7, 1999, and neither is currently a director of the Issuer. (d) Pursuant to a Promissory Note dated November 24, 1998, Imagine Investments loaned Wilson Financial $444,388 (the "1998 Loan"). The 1998 Loan was secured by the pledge of 160,000 shares of common stock of the Issuer (3.0% of the outstanding at that time) and was guaranteed by Mr. Wilson. This loan matured on December 24, 1998, and was repaid with the proceeds of the $6 Million Loan. (e) Pursuant to a Loan Agreement dated February 24, 1999, Imagine Investments loaned Wilson Financial $6,000,000 (the "$6 Million Loan"). A portion of the proceeds of the $6 Million Loan were used to pay in full the 1997 Loan and the 1998 Loan and, on November 30, 1999, the loan from the BankBoston. The $6 Million Loan is guaranteed by Mr. Wilson and, pursuant to a Stock Pledge Agreement (the "1999 Pledge Agreement"), is secured by a pledge of 2,543,553 shares (which number of shares includes the shares of stock previously pledged as security for the 1997 Loan, the 1998 Loan, and the loan from BankBoston) of common stock of the Issuer owned by Wilson Financial and 73,690 shares of common stock of the Issuer owned by Mr. Wilson (collectively, the "1999 Pledged Shares"). The 1999 Pledged Shares represent approximately 54.9% of the issued and outstanding shares of common stock of the Issuer as of May 8, 2002. Mr. Wilson's guaranty of the $6 Million Loan is also secured by the shares of common stock of Wilson Financial owned of record by Mr. Wilson, which shares represent approximately 59.8% of the issued and outstanding common stock of Wilson Financial, and the shares of preferred stock of Wilson Financial owned of record by Mr. Wilson, which preferred shares represent 100% of the issued and outstanding preferred stock of Wilson Financial. Pursuant to the 1999 Pledge Agreement, Wilson Financial and Mr. Wilson agreed not to permit the Issuer to take certain actions without the consent of Imagine Investments. Those actions include stock issuances, mergers, sell all or substantially all its assets, amendments of the Issuer's Articles of Incorporation or Bylaws that are adverse to Imagine Investment's rights with respect to the pledged shares, liquidation, and recapitalizations. See paragraph 4 of the Stock Pledge Agreement that is attached as Exhibit 7.12 to this Schedule 13D. Also pursuant to the 1999 Pledge Agreement, upon the occurrence of an Event of Default, as defined in the 1999 Pledge Agreement, among other things, all rights of Wilson Financial to exercise any voting rights and privileges shall cease and shall become immediately vested in Imagine Investments. Pursuant to the 1999 Pledge Agreement, Imagine Investments also has the right to receive and the power to direct the receipt of dividends from, and the proceeds of all redemptions and liquidations that are made, paid, or declared with respect to the 1999 Pledged Shares. The $6 Million Loan and the In-Kind Note (hereinafter defined) (collectively, the "1999 Loan") are cross-defaulted and cross-collateralized. As noted in Item 6(i) below, the 1999 Loan matured on December 31, 2001, but the maturity date has been extended to September 30, 2002. (f) Pursuant to a Stock Option Agreement dated February 24, 1999, a copy of which was previously filed as an Exhibit to this Schedule 13D, Wilson Financial and Mr. Wilson jointly and severally granted to Imagine Investments an option to purchase 785,173 shares of common stock of the Issuer (approximately 14.9% of the outstanding common stock of the Issuer at that time) for $1.75 per share (which was more than the per-share price at which the common stock of the Issuer was trading on the date such option was granted). Mr. Wilson and Wilson Financial retained the direct power to vote and direct the disposition of the Option Shares. The option was scheduled to expire on December 31, 2001, unless Imagine Investments unilaterally chose to extend the term of the option to December 31, 2004. However, if Imagine Investments chose to extend the term of the option, it had to extend the maturity date of the Term Loan to the date through which it extended the expiration date of the option. Imagine Investments did not elect to extend the term of the option so it expired on December 31, 2001. (g) On October 15, 1999, Cybermax, Inc., a wholly-owned subsidiary of the Issuer ("Cybermax"), purchased 520,000 shares of common stock of the Issuer owned by Imagine Investments in exchange for 630,933 shares of common stock of Buildscape, Inc., a Florida corporation. (h) On February 28, 2000, when Wilson Financial was unable to pay the interest due on such date on the $6 Million Loan, Imagine Investments accepted from Wilson Financial, in lieu of such payment, a promissory note in the amount of such interest, $375,548.93 (the "In-Kind Note"). The In-Kind Note is secured by the same assets that secured the $6 Million Loan and is guaranteed by Mr. Wilson. The $6 Million Loan and the In-Kind Note are cross-defaulted and cross-collateralized. As described in Item 6(j) below, the In-Kind Note matured on February 28, 2001, but its maturity date has been extended to September 30, 2002. (i) As documented by an Amendment to Loan Agreement and Notes dated as of June 25, 2002, executed by Imagine Investments and Wilson Financial and ratified by Mr. Wilson, the maturity of the $6 Million Loan, which was scheduled to mature by its terms on December 31, 2001, was extended to September 30, 2002. (j) As documented by an Amendment to Loan Agreement and Notes dated as of June 25, 2002, executed by Imagine Investments and Wilson Financial and ratified by Mr. Wilson, the maturity of the In-Kind Note, which was scheduled to mature by its terms on February 28, 2001, was extended to September 30, 2002. Item 7. Material to be Filed as Exhibits: Item 7 is amended to read in its entirety as follows: 7.1 Letter Agreement dated November 28, 1997, executed by Imagine Investments, as lender, Wilson Financial, as borrower, and Mr. Wilson, as guarantor, relating to (i) the 1997 Loan and (ii) the purchase by Imagine Investments from Wilson Financial of 520,000 shares of common stock of the Issuer (incorporated by reference to Exhibit A of the Schedule 13D, filed with the Securities and Exchange Commission on December 12, 1997 (File No. 005-32168)). 7.2 Term Promissory Note dated November 28, 1997, executed by Wilson Financial and payable to Imagine Investments in the principal amount of $440,000 (incorporated by reference to Exhibit B of the Schedule 13D, filed with the Securities and Exchange Commission on December 12, 1997 (File No. 005-32168)). 7.3 Unconditional Guaranty Agreement dated November 28, 1997, by Mr. Wilson in favor of Imagine Investments, relating to the 1997 Loan (incorporated by reference to Exhibit C of the Schedule 13D, filed with the Securities and Exchange Commission on December 12, 1997 (File No. 005-32168)). 7.4 Stock Pledge Agreement dated as of November 28, 1997, executed by Wilson Financial and Imagine Investments, and consented to by Mr. Wilson, relating to the capital stock of the Issuer pledged by Wilson Financial to Imagine Investments to secure the 1997 Loan (incorporated by reference to Exhibit D of the Schedule 13D, filed with the Securities and Exchange Commission on December 12, 1997 (File No. 005-32168)). 7.5 Stock Purchase Agreement dated as of October 5, 1998, executed by the Issuer and Imagine Investments, pursuant to which, among other things, the Issuer agreed to cause Imagine Investments' designees to be elected to the Issuer's board of directors (incorporated by reference to Exhibit E of Amendment No. 1 to the Schedule 13D, filed with the Securities and Exchange Commission on October 15, 1998 (File No. 005-32168)). 7.6 Promissory Note dated November 24, 1998, executed by Wilson Financial and payable to Imagine Investments in the principal amount of $444,388.* 7.7 Unconditional Guaranty Agreement dated November 24, 1998, executed by Mr. Wilson in favor of Imagine Investments, relating to the 1998 Loan.* 7.8 Stock Pledge Agreement dated as of November 24, 1998, executed by Wilson Financial and Imagine Investments, and consented to by Mr. Wilson, relating to the capital stock of the Issuer pledged by Wilson Financial to Imagine Investments to secure the 1998 Loan.* 7.9 Stock Option Agreement dated as of February 24, 1999, executed by Wilson Financial and Mr. Wilson in favor of Imagine Investments, pursuant to which Imagine Investments has the option to purchase 785,173 shares of the Issuer (incorporated by reference to Exhibit F of Amendment No. 2 to the Schedule 13D, filed with the Securities and Exchange Commission on March 5, 1999 (File No. 005-32168)). 7.10 Loan Agreement dated as of February 24, 1999, executed by Imagine Investments, as lender, Wilson Financial, as borrower, and Mr. Wilson, as guarantor, relating to the $6 Million Loan.* 7.11 Term Promissory Note dated February 24, 1999, executed by Wilson Financial and payable to Imagine Investments in the principal amount of $6,000,000.* 7.12 Stock Pledge Agreement dated as of February 24, 1999, executed by Wilson Financial, Mr. Wilson, and Imagine Investments, relating to the capital stock of the Issuer pledged by Wilson Financial to Imagine Investments to secure the $6 Million Loan and the In-Kind Note.* 7.13 Unconditional Guaranty Agreement dated February 24, 1999, executed by Mr. Wilson in favor of Imagine Investments, relating to the $6 Million Loan and the In-Kind Note.* 7.14 Stock Pledge Agreement dated as of February 24, 1999, executed by Mr. Wilson, Wilson Financial, and Imagine Investments, relating to the capital stock of Wilson Financial pledged by Mr. Wilson to Imagine Investments to secure the $6 Million Loan and the In-Kind Note.* 7.15 In-Kind Note dated February 28, 2000, executed by Wilson Financial and payable to Imagine Investments in the principal amount of $375,548.93, representing the first year's interest on the $6 Million Loan.* 7.16 Unconditional Guaranty Agreement, executed by Mr. Wilson in favor of Imagine Investments, relating to the In-Kind Note.* 7.17 Letter Agreement dated February 24, 1999, executed by Imagine Investments, Wilson Financial, and BankBoston, setting forth the terms and conditions by which the collateral, including the shares of the Issuer's common stock, securing a loan by BankBoston to Wilson Financial would be released from BankBoston's first priority security interest.* 7.18 Agreement dated October 15, 1999, executed by Imagine Investments, the Issuer, Cybermax, Inc., Cybermax Tech, Inc., and Buildscape, Inc. relating to the sale of shares of the Issuer held by Imagine Investments to Cybermax, Inc.* 7.19 Amendment to Loan Agreement and Notes dated as of June 25, 2002, executed by Imagine Investments and Wilson Financial, and ratified by Mr. Wilson, which amendment, among other things, extends the maturity date of the $6 Million Loan and the In-Kind Note to September 30, 2002.* - -------- * Filed herewith. [Signature page follows.] SIGNATURE After reasonable inquiry, and to the best of each of the undersigned's knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. IMAGINE INVESTMENTS, INC., a Delaware corporation By: /s/ Gary M. Goltz ------------------------------------ Name: Gary M. Goltz ---------------------------------- Title: Vice President --------------------------------- Date: August 26, 2002 ---------------------------------- STONE INVESTMENTS, INC., a Delaware corporation By: /s/ Gary M. Goltz ------------------------------------ Name: Gary M. Goltz ---------------------------------- Title: Vice President --------------------------------- Date: August 26, 2002 ---------------------------------- STONE CAPITAL, INC., a Delaware corporation By: /s/ Gary M. Goltz ------------------------------------ Name: Gary M. Goltz ---------------------------------- Title: Vice President --------------------------------- Date: August 26, 2002 ---------------------------------- STONE HOLDINGS, INC., a Delaware corporation By: /s/ Gary M. Goltz ------------------------------------ Name: Gary M. Goltz ---------------------------------- Title: Executive Vice President --------------------------------- Date: August 26, 2002 ---------------------------------- P.S.F. HOLDINGS LIMITED PARTNERSHIP, a Texas limited partnership By: Winn Holdings, LLC, a Texas limited liability company, its general partner By: /s/ Kathryn Fail Luttrull ------------------------------------ Kathryn Fail Luttrull Sole member Date: August 26, 2002 ---------------------------------- THE MARITAL TRUST By: /s/ James M. Fail ----------------------------------- James M. Fail Trustee Date: August 26, 2002 --------------------------------- THE JAMES M. FAIL LIVING TRUST By: /s/ James M. Fail ----------------------------------- James M. Fail Trustee Date: August 26, 2002 --------------------------------- /s/ James M. Fail -------------------------------------- James M. Fail Date: August 26, 2002 --------------------------------- WINN HOLDINGS, LLC, a Texas limited liability company By: /s/ Kathryn Fail Luttrull ----------------------------------- Kathryn Fail Luttrull Sole member Date: August 26, 2002 --------------------------------- /s/ Kathryn Fail Luttrull -------------------------------------- Kathryn Fail Luttrull Date: August 26, 2002 --------------------------------- SCHEDULE I IMAGINE INVESTMENTS, INC. The following is a list of all executive officers and directors of Imagine Investments, Inc., the present principal occupation of each of which (unless otherwise indicated) is serving in the capacities hereinafter set forth and in other capacities set forth on this Schedule 1, as applicable. Unless otherwise indicated, each officer's and director's business address is c/o Stone Investments, Inc., 8150 North Central Expressway, Suite 1901, Dallas, Texas 75206. Unless otherwise indicated, the name, principal business and address of any corporation or other organization in which such present principal occupation or employment of the following persons is conducted is c/o Stone Investments, Inc., 8150 North Central Expressway, Suite 1901, Dallas, Texas 75206. Robert T. Shaw President and Director Harry T. Carneal Executive Vice President and Director R. Brad Oates Director Gary M. Goltz Vice President and Secretary Charles Greiner (1) Vice President Patricia W. Gliessner Vice President and Assistant Secretary Jay Bryan Treasurer Gordon Lewaren Assistant Treasurer Diane Richardson Assistant Secretary STONE INVESTMENTS, INC. The following is a list of all executive officers and directors of Stone Investments, Inc., the present principal occupation of each of which (unless otherwise indicated) is serving in the capacities hereinafter set forth and in other capacities set forth on this Schedule 1, as applicable. Unless otherwise indicated, each officer's and director's business address is c/o Stone Investments, Inc., 8150 North Central Expressway, Suite 1901, Dallas, Texas 75206. Unless otherwise indicated, the name, principal business and address of any corporation or other organization in which such present principal occupation or employment of the following persons is conducted is c/o Stone Investments, Inc., 8150 North Central Expressway, Suite 1901, Dallas, Texas 75206. James M. Fail Chairman of the Board, Chief Executive Officer and Director Harry T. Carneal President, Treasurer and Director R. Brad Oates Director Jay Bryan Vice President Ross Mandel Vice President Gary M. Goltz Vice President, General Counsel and Secretary Gordon Lewaren Assistant Treasurer Mark S. Powell Assistant Secretary Kathryn Fail Luttrull Assistant Secretary Diane Richardson Assistant Secretary STONE CAPITAL, INC. The following is a list of all executive officers and directors of Stone Capital, the present principal occupation of each of which (unless otherwise indicated) is serving in the capacities hereinafter set forth and in other capacities set forth on this Schedule 1, as applicable. Unless otherwise indicated, each officer's and director's business address is c/o Stone Investments, Inc., 8150 North Central Expressway, Suite 1901, Dallas, Texas 75206. Unless otherwise indicated, the name, principal business and address of any corporation or other organization in which such present principal occupation or employment of the following persons is conducted is c/o Stone Investments, Inc., an investment company, 8150 North Central Expressway, Suite 1901, Dallas, Texas 75206. James M. Fail Chairman of the Board, Director, and Chief Executive Officer Harry T. Carneal President, Treasurer, Secretary and Director Gary M. Goltz Vice President, General Counsel and Assistant Secretary Victoria L. Garrett (2) Assistant Vice President, Assistant Secretary and Assistant Treasurer Gordon Lewaren Assistant Treasurer Kathryn Fail Luttrull Director Diane Richardson Assistant Secretary STONE HOLDINGS, INC. The following is a list of all executive officers and directors of Stone Holdings, the present principal occupation of each of which (unless otherwise indicated) is serving in the capacities hereinafter set forth and in other capacities set forth on this Schedule 1, as applicable. Unless otherwise indicated, each officer's and director's business address is c/o Stone Investments, Inc., 8150 North Central Expressway, Suite 1901, Dallas, Texas 75206. Unless otherwise indicated, the name, principal business and address of any corporation or other organization in which such present principal occupation or employment of the following persons is conducted is c/o Stone Investments, Inc., an investment company, 8150 North Central Expressway, Suite 1901, Dallas, Texas 75206. James M. Fail Chairman of the Board, Chief Executive Officer and Director Harry T. Carneal President, Treasurer, Secretary and Director Jay Bryan Vice President Gary M. Goltz Executive Vice President, General Counsel and Assistant Secretary Kathryn Fail Luttrull Vice President, Director Gordon Lewaren Assistant Treasurer Mark S. Powell Assistant Secretary Tom Dwyer Vice President of Strategy and Special Counsel Diane Richardson Assistant Secretary P.S.F. HOLDINGS LIMITED PARTNERSHIP The General Partner of P.S.F. Holdings Limited Partnership is Winn Holdings, LLC, a Texas limited liability company. For information pertaining to Winn Holdings, LLC, please see the cover pages and Items 2-6 contained in this Schedule 13D of which this Schedule 1 is a part. THE MARITAL TRUST James M. Fail is a trustee of the Marital Trust. For information pertaining to Mr. Fail, please see the cover pages and Items 2-6 contained in this Schedule 13D of which this Schedule 1 is a part. THE JAMES M. FAIL LIVING TRUST James M. Fail is a trustee of the James M. Fail Living Trust. For information pertaining to Mr. Fail, please see the cover pages and Items 2-6 contained in this Schedule 13D of which this Schedule 1 is a part. WINN HOLDINGS, LLC Kathryn Fail Luttrull is the sole member and manager of Winn Holdings, LLC. For information pertaining to Ms. Luttrull, please see the cover pages and Items 2-6 contained in this Schedule 13D of which this Schedule 1 is a part. - ---------- (1) Mr. Greiner's present principal employer is Azair, Inc., the address of which is 4540 Glenn Curtiss Drive, Dallas, Texas 75248. (2) Ms. Garrett's present principal employer is Delaware Trust Capital Management Company, the address of which is 300 Delaware Avenue, 9th Floor, Wilmington, DE 19801. EX-7.6 3 dex76.txt PROMISSORY NOTE DATED NOVEMBER 24, 1998 Exhibit 7.6 PROMISSORY NOTE $444,388.00 Dallas, Texas November 24, 1998 FOR VALUE RECEIVED, WILSON FINANCIAL CORPORATION, a Florida corporation ("Maker") promises and agrees to pay to the order of IMAGINE INVESTMENTS, INC., a Delaware corporation, or to any holder of this Note ("Payee"), the principal sum of FOUR HUNDRED FORTY-FOUR THOUSAND THREE HUNDRED EIGHTY-EIGHT DOLLARS ($444,388.00), together with interest upon such principal balance at the rate provided below, in legal tender of the United States of America. The unpaid principal balance of, and all accrued interest on, this Note, unless sooner paid, shall be due and payable in full on or before December 24, 1998, which date shall be the final maturity date of this Note. 1. Interest Rate. The principal balance of this Note shall bear interest at the rate of ten percent (10%) per annum. All parties hereto hereby specifically agree that the laws of the Commonwealth of Kentucky shall govern the rate of interest which this Note bears. 2. Payment of Interest. All accrued interest on the principal balance of this Note, from time to time, shall be paid at the maturity of this Note. All interest on the principal balance of this Note shall be computed on the basis of the actual number of days elapsed over an assumed year of 360 days. 3. Repayment of Principal. The principal balance of this Note shall be paid in full at the maturity date of this Note. No portion of the principal balance of this Note, nor any accrued interest thereon, may be prepaid at any time, in whole or in part, without the written consent of Payee. 4. Application of Payments. Payments made under this Note shall be applied at the holder's sole option, first to any expenses or sums advanced by Payee in respect of and in accordance with the terms of this Note or the Loan Agreement or under the terms of any document or instrument securing the repayment of this Note; second, to accrued but unpaid interest upon the principal balance of this Note; and then to the principal balance of this Note due at the time of such payment, Maker shall immediately, on demand of Payee, pay to Payee the amount of such shortfall. 5. Overdue Payments; Default Rate. All overdue payments of principal or interest on this Note shall bear additional interest until paid in full at the rate per annum (calculated as aforesaid) of five percent (5%) per annum in excess of the rate otherwise payable under the terms of this Note or the highest rate allowed by applicable law, whichever is lower, and shall be due and payable on demand of the holder hereof. All payments under this Note shall be paid to Payee at 8150 North Central Expressway, Suite 1901, Dallas, Texas 75206 or to such other person or at such other place as may be designated in writing by Payee. 6. Security. This Note is secured by security interests pursuant to a Stock Pledge Agreement and an Unconditional Guaranty Agreement (collectively, the "Security Documents") and is entitled to all the benefits of the Security Documents. 7. Default. Upon the occurrence of any uncured default under this Note or under any Security Document, that default shall be a default under this Note, and Payee may at any time thereafter, at its sole option and without notice, declare the entire unpaid principal balance of and all accrued interest on this Note to be immediately due and payable. 8. Events of Default. Each of the following events shall constitute an event of default under this Note, the occurrence of any of which shall entitle the holder hereof to declare the entire principal balance of this Note, together with all accrued interest and all other liabilities, indebtedness and obligations of Maker to Payee, whether now existing or hereafter created, to be immediately due and payable, and to take any and all action allowed Payee by law or equity, under the terms of this Note and/or under the terms of any of the Security Documents and under the terms of any other agreements between Maker and Payee: (a) The failure of Maker to make any payment of principal or interest provided for in this Note on the date upon which it is due; (b) The occurrence of an Event of Default as described in this Note or any Security Document; (c) The failure of Maker to perform or the breach by Maker of any of the agreements, covenants and warranties and agreements set forth in this Note or in the Security Documents or any other agreement between Maker and Payee, whether now existing or hereafter entered into; (d) Any liens, garnishments, levy, attachments or encumbrance of any kind is placed against any property which serves as collateral for this Note; (e) The holder of this Note determining that any representation, warranty, statement, report, or application made or provided by Maker to Payee or the holder hereof is or was at the time made untrue or materially misleading; (f) The issuance of any tax lien or levy against Maker or any of its property or Maker's failure to pay, withhold, collect or remit any tax when assessed or due; (g) If any representation, warranty or other statement of fact made by Maker or any Guarantor in any other Security Document shall be false or misleading; (h) Maker or any Guarantor shall (i) become insolvent, (ii) become generally unable to pay its or his respective debts as they become due; (iii) make an assignment for the benefit of creditors, (iv) call a meeting of creditors for the composition of debts or (v) have filed against it or him a petition in bankruptcy or for reorganization or for the appointment of a custodian, receiver or trustee or the equivalent which is not removed or dismissed within thirty (30) days thereafter; (i) There shall hereafter occur any material and adverse change in the business operations and condition, financial or otherwise, of Maker or any Guarantor or in the value of the collateral securing repayment of this Note; and 2 (j) If a final judgment or judgments for the payment of money in the aggregate in excess of $10,000.00 shall be rendered against Maker or a Guarantor and such judgment(s) shall remain unsatisfied or unstayed for a period of thirty (30) days. 9. No Waiver, Remedies. The failure of Payee to exercise any of its rights and remedies shall not constitute a waiver of the right to exercise them at that or any other time. All rights and remedies of Payee in the event of a default shall be cumulative to the greatest extent permitted by law. 10. Expenses. If there is any default under this Note or any Security Document and this Note is placed in the hands of any attorney for collection or is collected through any court including any bankruptcy court, Maker promises and agrees to pay to Payee its actually incurred attorneys fees based upon hourly rates, court costs and all other expenses incurred in collecting or attempting to collect or securing or attempting to secure this Note as provided by the laws of the Commonwealth of Kentucky, or any other state where the collateral or any part of it is situated. This section shall be deemed supplemental to, and not to be in substitution for, that section of any Security Document dealing with the reimbursement of expenses. 11. Waivers. Maker waives (a) presentment, demand, notice of dishonor, protest, notice of protest and non-payment, and (b) all exemptions to which Maker may now or hereafter be entitled under the laws of the Commonwealth of Kentucky, of any other state, or of the United States, and agrees that Payee shall have the right (i) to grant Maker or any guarantor of this Note any extension of time for payment of this Note or any other indulgence or forbearance whatsoever, and (ii) to release any security for or guarantor of payment of this Note, without in any way affecting the liability of Maker under this Note or the Guarantor under the Security Documents, and without waiving any rights Payee may have under this Note or by virtue of the laws of the Commonwealth of Kentucky, or any other state of the United States. 12. Time of Essence. Time is of the essence in the payment and performance of all of Borrower's obligations under this Note and all documents securing this Note or relating hereto. 13. Venue and Jurisdiction. Maker further agrees that in the event of any litigation for collection of or relating to this note, jurisdiction and venue shall be proper and appropriate in any court sitting in Sarasota or Duval Counties, Florida, and Borrower hereby consents to such jurisdiction and venue. 14. Waiver of Jury Trial. MAKER VOLUNTARILY AND INTENTIONALLY WAIVES AND SHALL NOT ASSERT ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING FROM OR CONNECTED WITH THIS NOTE, THE SECURITY DOCUMENTS OR ANY AGREEMENT MADE OR CONTEMPLATED TO BE MADE IN CONNECTION THEREWITH, OR ANY COURSE OF DEALING, COURSE OF CONDUCT, STATEMENT OR ACTIONS OF ANY PARTY IN CONNECTION WITH THIS NOTE. 15. Partial Invalidity. If any one or more of the provisions of this Note, or the applicability of any such provision to a specific situation, shall be held invalid or unenforceable, such provision shall be modified to the minimum extent necessary to make it or its application valid and enforceable, and the validity and enforceability of all other provisions of this Note and all other applications of any such provision shall not be affected thereby. In the event such provision(s) cannot be modified to make it or them enforceable, the invalidity or unenforceability 3 of any such provision(s) of this Note shall not impair the validity or enforceability of any other provision of this Note. 16. Binding Effect. This Note shall bind the heirs, representatives, successors and assigns of Maker and shall inure to the benefit of Payee and its successors and assigns. Maker shall not assign or allow the assumption of its rights and obligations hereunder without Holder's prior written consent. WILSON FINANCIAL CORPORATION illegible By: /s/ J. Steven Wilson ____________________________________ ____________________________________ Witness President, CEO Title: _____________________________ ("Maker") 4 EX-7.7 4 dex77.txt UNCONDITIONAL GUARANTY AGREEMENT Exhibit 7.7 UNCONDITIONAL GUARANTY AGREEMENT In consideration of the Loan evidenced by the attached Note between Wilson Financial Corporation and Imagine Investments, Inc. dated November 24, 1998 in the original principal sum of $444,388.00, the undersigned unconditionally guarantees the prompt payment of (i) the entire principal balance of this Note, (ii) all accrued interest upon the principal balance hereof, (iii) late fees and (iv) all attorneys' fees and costs and expenses of collection incurred by Lender together with the costs and expenses of maintaining and securing collateral pursuant to all documents and instruments securing repayment of this Note, when due, whether by acceleration or otherwise regardless of the genuineness, validity or enforceability of this Note. The undersigned consents and agrees to be bound by all of the terms of this Note (as the same may be extended or renewed). The undersigned waives all rights and subrogation with respect to this Note or any collateral securing its payment and all rights of recourse or indemnity until this Note and all other obligations of Maker to Payee shall have been fully paid. If any payment made by Maker to Payee later deemed to be a preference or otherwise required to be repaid or returned, the amount of such return or repayment shall continue to be covered by this Guaranty. THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THE UNDERSIGNED MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN EVIDENCED BY THIS NOTE OR ANY RELATED LOAN OR LENDING TRANSACTION OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION THEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR PAYEE MAKING THE LOAN EVIDENCED BY THIS NOTE. THE UNDERSIGNED AGREES THAT THIS GUARANTY SHALL BE AND IS DEEMED TO BE INCORPORATED INTO AND MADE A PART OF THIS NOTE AS THOUGH A PART THEREOF. The liability of the undersigned shall in no way be affected by any renewal or extension of time of payment of any instrument, indebtedness or liability, or by any release or surrender of other security or collateral or guaranty, or by delay in enforcement of payment of the principal or interest or of any security in connection therewith, or by any other indulgence Lender may grant Maker. Lender may employ Maker as collection agent for all purposes of demanding and securing payment of any or all of the instruments or liability. The undersigned hereby declares to and covenants with Lender, its successors or assigns, that the undersigned has no defense whatever to any action, suit or other proceedings, at law or otherwise, that may be instituted under or on account of this Guaranty, including all questions as to the validity, regularity or enforceability of the obligation of Maker. Notwithstanding the death of the undersigned, this instrument shall be binding on the estate of the decedent as to any obligation incurred either before or after or extended after such death. Lender shall not be bound to exhaust its recourse against or upon the security or collateral it may hold or against any other person before being entitled to payment from the undersigned or of the amount hereby guaranteed. This Guaranty Agreement constitutes a guaranty of payment. Lender is hereby authorized and empowered, at its option, to appropriate and apply to the payment and extinguishment of the liability created by the foregoing guaranty at any time after such liability created by the foregoing guaranty at any time after such liability shall become payable, any and all monies or other property of the undersigned and the proceeds thereof (including safekeeping or pledge) for this or any other liability of the undersigned, and including any balance on deposit or otherwise for the account of, or to the credit of, or belonging to, any of the undersigned. Lender is hereby authorized and empowered, at its option, at any time after the liability created by the foregoing guaranty becomes payable, to sell assign and deliver any securities or property at any time given unto or left in the possession or custody of Lender for any purpose (including safekeeping or pledge) for this or any other liability of the undersigned or in which any of the undersigned may have interest, at public or private sale, for cash, upon credit, or for future delivery, all at the option of Lender or any of its officers, without demand, advertisement, or notice, all of which are hereby expressly waived. Upon any sale or sales at public or private sale, above provided for, Lender, its successors or assigns, may bid for and/or any part of such securities or property free from any right of redemption, which is hereby waived and released. In case of any sale by Lender of any of said securities or property on credit or for future delivery, the securities and property sold may be retained by Lender until the selling price is paid by the purchaser and Lender shall incur no liability in case of failure of the purchaser to take up and pay for the securities or property so sold. In case of any such failure, the securities or property may be again sold. illegible /s/ J. Steven Wilson ________________________________ ________________________________________ Witness J. Steven Wilson ("Guarantor") 2 EX-7.8 5 dex78.txt STOCK PLEDGE AGREEMENT Exhibit 7.8 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT is entered into and effective as of November 24, 1998, by and between WILSON FINANCIAL CORPORATION ("Borrower"), a Florida corporation and IMAGINE INVESTMENTS, INC. ("Lender"), a Delaware corporation having its principal office in Dallas, Texas. RECITALS: A. Pursuant to the terms of that certain Promissory Note of even date herewith executed by Borrower in favor of Lender in the original principal amount of Four Hundred Forty-Four Thousand Three Hundred Eighty-Eight Dollars ($444,388.00), as the same may hereafter be amended or otherwise modified from time to time in writing by the parties thereto (the "Note"), Lender has agreed to make a loan (the "Loan") to Borrower in such amount as evidenced by the Note. B. In order to induce Lender to make the loan evidenced by the Note, without which inducement Lender would be unwilling to do so, Borrower has agreed to pledge 160,000 shares of the issued and outstanding common capital stock (the "Stock") of Riverside Group, Inc. (the "Corporation") to Lender, to secure the payment of the Loan. AGREEMENT: NOW, THEREFORE, the parties hereby agree as follows: 1. PLEDGE AND DEPOSIT OF SHARES. Borrower hereby pledges, assigns and grants a security interest to Lender in 160,000 shares of the Stock, as represented by Certificate Nos. _____ and _____ now standing in Borrower's name, which certificates have been delivered herewith by Borrower to Lender, together with duly executed blank stock powers attached thereto, all as collateral security for the full and punctual payment and due performance by Borrower of (i) the Note and (ii) all other liabilities, obligations and indebtedness of whatever kind of Borrower to Lender, whether created directly or acquired by Lender by assignment or otherwise, whether now existing or hereafter created, arising or acquired, absolute or contingent, joint or several, due or to become due, and including, but not limited to, future advances by Lender to Borrower. All of the foregoing are referred to collectively herein as the "Secured Obligations." 1.1 Further Pledge and Deliveries. The certificates or other instruments evidencing all new shares of capital stock and all other securities, rights, warrants, options and the like hereafter created in respect of the Stock, whether by stock split, stock dividend, merger, consolidation or otherwise, shall be delivered by Borrower to, and shall be held by, Lender under the terms and conditions of this Stock Pledge Agreement and subject to the pledge and security interest herein granted, and the term "Stock" as used herein shall be deemed to include all such new shares, securities, rights, warrants, options and the like. At its sole option, Lender may transfer the shares of Stock into its own name. 2. COVENANTS. During the period the Stock is being held as security hereunder, Borrower shall not, without the prior written consent of Lender, allow the Corporation to (i) issue any additional capital stock or other equity securities of any kind or options, subscription rights, warrants or other instruments with respect thereto or any other instruments convertible into shares of its capital stock, or sell or issue any treasury stock, (ii) merge into or with or consolidate with any other corporation or business or otherwise participate in any reorganization or sell or lease to others all or substantially all of its assets, (iii) amend its Articles of Incorporation or By-Laws in any manner that would have a material adverse effect on Lender's rights with respect to the Stock, or liquidate or dissolve or take any steps to effect same, or (iv) effect a recapitalization or alter its capital structure. 3. VOTING RIGHTS; DIVIDENDS, ETC. So long as no Event of Default shall have occurred Borrower shall be entitled to exercise any and all voting and/or consensual rights and powers relating or pertaining to the Stock or any part thereof for any purpose not inconsistent with the terms of this Stock Pledge Agreement. 3.1 Upon Default. Notwithstanding anything to the contrary contained herein, immediately upon the occurrence of any "Event of Default", as hereinafter defined, Lender shall be entitled to exercise all voting rights and privileges whatsoever with respect to the Stock, and to that end Borrower hereby constitutes Lender as its proxy and attorney-in-fact for all purposes of voting the Stock, and this appointment shall be deemed coupled with an interest and is and shall be irrevocable until the Indebtedness has been fully paid and this Security Agreement terminated, and all persons whatsoever shall be conclusively entitled to rely upon Lender's verbal or written certification that it is entitled to vote the Stock hereunder. Borrower shall execute and deliver to Lender any and all additional proxies and powers of attorney that Lender may desire in order to vote more effectively the Stock in its own name. Upon any Event of Default hereunder, Lender may vote the Stock to remove the directors and officers of the Corporation and to elect new such officers and directors who shall thereafter manage the affairs of the Corporation, operate any of its properties and carry on any business and otherwise take any action with respect thereto as they shall deem necessary and appropriate and may also liquidate the Corporation and its business, and may authorize the borrowing of money in the name of the Corporations and the pledge of their assets to secure such borrowing. 4. STATUS OF THE STOCK. Borrower hereby represents and warrants to Lender that (a) the Stock is validly issued and outstanding, fully paid and non-assessable and constitutes approximately ____% of the issued and outstanding capital stock of the Corporation, (b) Borrower is the registered and absolute beneficial owner of approximately forty-eight percent (48%) of the issued and outstanding capital stock of the Corporation, (c) all of the Stock is free and clear of liens, charges and encumbrances in favor of persons other than Lender, (d) Borrower has the full power and authority to pledge the Stock to Lender pursuant to this Stock Pledge Agreement and (e) that the Corporation is a corporation validly existing under the law of the State of Florida. No part of the Stock shall be sold, transferred or assigned by Borrower without the prior written consent of Lender, which consent may be arbitrarily withheld so long as this Stock Pledge Agreement is in effect. 4.1 Status of the Stock. Borrower represents and warrants that (i) the stock was acquired from the Corporation more than three (3) years ago and is fully paid and non-assessable for more than three (3) years and (ii) Borrower is an affiliate of the Corporation. Borrower covenants and agrees that, during any period of sale or liquidation of the Stock by Lender, Borrower shall not sell any other stock of the Corporation if such sale would restrict or limit Lender's sale of the Stock under S.E.C. Rule 144 or if such sale by Borrower would cause or contribute to a decline in the share price of the Stock. Borrower further agrees in the event of any such sale or liquidation by Lender, to execute any and all forms, including but not limited to Forms 144 and 2 customary broker's and seller's representation letters, to enable Lender to effect the sale of the Stock. 4.2 Further Steps. Borrower shall further take all necessary actions to remove any restrictive legend affecting the Stock and to assist in the effectuation of the sale of the Stock including, at Borrower's expense, the supplying of opinions of counsel customarily required to effect such sales. 5. MAINTENANCE OF PRIORITY OF PLEDGE. Borrower shall be liable for and shall from time to time pay and discharge all taxes, assessments and governmental charges imposed upon the Stock by any federal, state or local authority, the liens of which would or might be held prior to the right of Lender in and to the Stock or which are imposed on the holders and/or registered owners of the Stock. Borrower shall not, at any time while this Stock Pledge Agreement is in effect, do or suffer any act or thing whereby the rights of Lender in the Stock would or might be materially impaired or diminished. Borrower shall execute and deliver such further documents and take such further actions as may be required to confirm the rights of Lender in and to the Stock or otherwise to effectuate the intention of this Stock Pledge Agreement. Borrower shall perform all terms of the indebtedness and obligations to Bank of Boston secured by the first priority pledge of and security interest in any portion of capital stock of the Corporation pledged to Bank of Boston and shall pay all of such indebtedness and related obligations according to their terms. 6. EVENTS OF DEFAULT. Each of the following shall be deemed an "Event of Default" hereunder: 6.1 Cross Default. The occurrence of any Event of Default under the Note or any "Security Document," as such term is defined in the Note, or under any other related instrument or agreement or any default by Borrower in the payment of any other obligation to Lender or to Robert T. Shaw; 6.2 Default Hereunder. The occurrence of any default of any kind whatsoever under the terms, covenants and conditions of this Stock Pledge Agreement; or 6.3 Breach of Covenants, Etc. If any covenant, representation or warranty made in this Stock Pledge Agreement or in any other Security Document or related instruments or agreements executed by Borrower in connection with the loan secured hereby shall prove to be untrue and misleading in any respect. 6.4 Default Under Other Financing. If Borrower is in default or breach of its obligations to Bank of Boston beyond any applicable period of grace or for cure of such default or breach. 7. REMEDIES UPON DEFAULT. Upon the occurrence of any Event of Default referred to in Section 6 above, Lender shall have all rights and remedies in and against the Stock and otherwise of a secured party under the Uniform Commercial Code as enacted in the Commonwealth of Kentucky and the State of Florida (the "UCC") and all other applicable laws and shall also have all of the rights provided herein, in the Note and in all other Security Documents, all of which rights and remedies shall be cumulative to the fullest extent permitted by law. In connection with the foregoing, Lender shall have the right: 3 7.1 Right of Sale. To declare the Note and the other Indebtedness immediately due and payable in full, and to sell the Stock in one or more lots, and from time to time, upon ten (10) business days' prior to written notice to Borrower of the time and place of sale (which notice Borrower hereby conclusively agrees is commercially reasonable), for cash or upon credit or for future delivery, Borrower hereby waiving all rights, if any, of marshaling the Stock and any other security for the payment of the Note and other Indebtedness, and at the option and in the sole discretion of Lender, to either: 7.2 Public Sale. Sell the Stock at a public sale or sales, including a sale at or on any broker's board or stock exchange; or 7.3 Private Sale. Sell the Stock at a private sale or sales. 7.4 Lender May Purchase. Lender may bid for and acquire the Stock or any portion thereof at any public sale, free from any redemption rights of Borrower, and in lieu of paying cash therefor, may make settlement for the selling price of the Stock or any part thereof by crediting the net selling price of the Stock against the Note and other Indebtedness, after deducting all of Lender's costs and expenses of every kind and nature therefrom, including Lender's attorneys' fees incurred in connection realizing upon the Stock, provided the same is not prohibited by the laws of the Commonwealth of Kentucky. 7.5 Postponement. From time to time Lender may, but shall not be obligated to, postpone the time of any proposed sale of any of the Stock which has been the subject of a notice as provided above, and also, upon ten (10) days' prior written notice to Borrower (which notice Borrower conclusively agrees is commercially reasonable), may change the time and/or place of such sale. 7.6 Tender. In the case of any sale by Lender of the Stock or any portion thereof on credit or for future delivery, which may be elected at the option and in the sole discretion of Lender, the Stock so sold may, at the sole option of Lender, either be delivered to the purchaser or retained by Lender until the selling price is paid by the purchaser, but in either event Lender shall incur no liability, to Borrower or otherwise, in case of failure of the purchaser to take up and pay for the Stock so sold. In case of any such failure, such Stock may be sold again by Lender in the manner provided in this Section 7. 7.7 Costs and Expenses. After deducting all of Lender's costs and expenses of every kind, including, but not limited to, legal fees and registration (Securities and Exchange Commission and other) fees and expenses, if any, incurred in connection with the sale of the Stock, Lender shall apply the residue of the proceeds of any sale or sales of the Stock against Indebtedness, in the order of priority elected by Lender. Lender shall not incur any liability to Borrower or otherwise as a result of the sale of the Stock at any private sale or sales, and Borrower hereby waives any claims arising by reason of (i) the fact that the price or prices for which the Stock or any portion thereof is sold at such private sale or sales is less than the price which would have been obtained at a public sale or sales or is less than the amount due under the Note and other obligations secured hereby, even if Lender accepts the first offer received and does not offer the Stock or any portion thereof to more than one offeree, (ii) any delay by Lender in selling the Stock following an Event of Default hereunder, even if the price of the Stock thereafter declines, or (iii) the immediate sale of the Stock upon the occurrence of an Event of Default hereunder, the applicable grace or cure period having 4 been duly observed prior thereto, even if the price of the Stock should thereafter increase. Borrower shall remain liable for any deficiency remaining due under the Note, this Stock Pledge Agreement, and any related documents or instruments. 8. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given (i) upon being delivered personally (or by confirmed telefax or other electronic delivery method; or (ii) four (4) days after being mailed by certified mail, return receipt requested, postage prepaid, or (iii) one (1) day after being sent by Federal Express or other reputable overnight delivery service providing delivery confirmation, for next day delivery, in each case to the parties at the following address (or at such other address for a party as shall be specified by like notice): If to the Borrower: Wilson Financial Corporation 7800 Belfort Parkway Jacksonville, Florida 32256 Attention: J. Steven Wilson With a copy to: Holland & Knight One Independent Drive, Suite 2000 Post Office Box 1559 Jacksonville, Florida 32201-1559 (32202 for street address) Attention: Malcolm Graham If to Lender, to: Imagine Investments, Inc. 8150 No. Central Expressway, Suite 1901 Dallas, Texas 75206 With a copy to: Michael M. Fleishman, Esq. Greenebaum Doll & McDonald PLLC 3300 National City Tower Louisville, Kentucky 40202 9. MISCELLANEOUS. 9.1 Future Advances. This Stock Pledge Agreement also secures all additional loans and/or future advances that may be made hereafter or at any time by Lender. 9.2 Governing Law. The laws of the Commonwealth of Kentucky shall govern the construction of this Stock Pledge Agreement and the rights, remedies and duties of the parties hereunder. 9.3 Successors and Assigns. This Stock Pledge Agreement shall bind Borrower, and its successors and assigns, and inure to the benefit of Lender and its successors and assigns. 9.4 Time of Essence. Time shall be of the essence in the performance of Borrower's obligations hereunder. 5 9.5 Captions. The several captions, headings, sections and subsections of this Stock Pledge Agreement are inserted for convenience only and shall be ignored in interpreting the provisions of this Stock Pledge Agreement. 9.6 Modifications. This Stock Pledge Agreement may be modified or amended only by written agreement executed by all of the parties hereto. 9.7 Lender's Expenses. Borrower agrees that it shall be responsible for and shall pay Lender's expenses incurred in effecting the Loan, including Lender's attorneys fees which, at Lender's option, may be deducted from the proceeds of the Loan and paid to Lender's counsel, but shall nevertheless be deemed disbursed to Borrower. 10. TERMINATION. This Pledge Agreement shall terminate when the Secured Obligations has been paid in full, at which time Lender shall reassign and redeliver, without recourse upon or warranty by Lender and at the expense of Borrower (or cause to be so reassigned and redelivered to Borrower or to such person or persons as Borrower shall designate), against receipt, such of the Stock (if any) as shall not have been sold or otherwise applied by Lender pursuant to the terms hereof and shall still be held by it hereunder, together with appropriate instruments of reassignment and release. IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first written above. WILSON FINANCIAL CORPORATION illegible /s/ J. Steven Wilson ______________________________________ By: _________________________________ Witness President, CEO Title: __________________________ ("Borrower") IMAGINE INVESTMENTS, INC. /s/ Gary M. Goltz /s/ B. Kent Hill ______________________________________ By: _________________________________ Witness Vice President Title: __________________________ ("Lender") The foregoing is hereby consented to: /s/ J. Steven Wilson ______________________________________ J. Steven Wilson Date: November 24, 1998 6 EX-7.10 6 dex710.txt LOAN AGREEMENT EXHIBIT 7.10 LOAN AGREEMENT THIS LOAN AGREEMENT is entered into and effective as of the 24th day of February, 1999, by and among: (i) IMAGINE INVESTMENTS, INC., a Delaware corporation with principal place of business in Dallas, Texas (the "Lender"), (ii) WILSON FINANCIAL CORPORATION, a Florida corporation with principal place of business in Jacksonville, Florida (the "Borrower"), and (iii) J. STEVEN WILSON, an individual of Jacksonville, Florida (the "Guarantor"). RECITALS: A. Borrower desires to obtain from Lender a term loan in the amount of Six Million Dollars ($6,000,000.00), which will be used by Borrower to pay various obligations as and when the same are due and payable ("Term Loan"). B. In order to induce Lender to enter into this Loan Agreement and to extend the Term Loan hereunder, without which inducement Lender would be unwilling to take such actions, and in consideration of the benefits he will receive therefrom, Guarantor is willing and desires to guaranty the obligations of Borrower under this Loan Agreement and to make the agreements as set forth herein. AGREEMENT: NOW, THEREFORE, the parties hereby agree as follows: 1. TERM LOAN. Subject to the terms and conditions contained herein, Lender hereby agrees to make the Term Loan to Borrower, in accordance with the following provisions: 1.1 Amount, Purpose and Term. The amount of the Term Loan shall be Six Million Dollars ($6,000,000.00). The Tenor Loan is evidenced by and shall be payable and otherwise be made on the terms set forth in the "Term Note" made by Borrower to Lender of even date herewith and on the terms established in this Loan Agreement. All payments on the Term Note shall be made in immediately available funds at the principal office of Lender on each date as specified in the Term Note and/or this Loan Agreement. The Term Note shall bear interest at the rate of ten percent (10%) per annum. The proceeds of the Term Loan shall be used by Borrower to pay principal and interest payments on Borrower's obligations to Bank Boston, N.A. (the "Bank Boston") and Compass Bank as set forth on Exhibit A attached hereto and made a part hereof and to pay the other outstanding obligations as set forth on Exhibit B attached hereto and made a part hereof. 1.2 Disbursements. Contemporaneously with the execution of this Loan Agreement and the fulfillment of all conditions precedent to the disbursement of the proceeds of the Term Loan, Lender has disbursed funds by wire transfer to Borrower or for Borrower's benefit in the amounts shown on Exhibit C attached hereto and made a part hereof and, as hereby instructed by Borrower, has paid Borrower's obligations to Lender and to Robert T. Shaw as listed on Exhibit B hereto and has paid Lender's legal fees in connection with the Term Loan. Lender shall make additional disbursements of principal on the Term Loan to Borrower as hereinafter requested by Borrower upon ten (10) business days prior written notice from time to time to Lender in accordance with the schedules respectively set forth on Exhibit A and 1 Exhibit B hereto. The Term Loan is not a revolving loan, and amounts disbursed thereunder may not be paid down and subsequently reborrowed by Borrower. 1.3 No Prepayment. No portion of the principal balance of the Term Note, nor any accrued interest thereon, may be prepaid at any time, in whole or in part, without the written consent of Lender. 1.4 Maturity Date. The maturity date of the Term Note, at which time all outstanding principal and accrued interest on the Term Note shall be due and payable in full, is December 31, 2001. 1.5 Fee. Borrower agrees to pay a fee to Lender in the amount of $10,000 for agreeing to make the Term Loan and hereby instructs Lender to immediately pay such fee out of the proceeds of the Term Loan. 2. SECURITY FOR THE INDEBTEDNESS. The Term Note, and any and all other obligations and liabilities owed by Borrower or Guarantor to Lender (collectively, the "Indebtedness"), is and shall be secured by and entitled to the benefits of all the following (all of the following are sometimes hereinafter collectively referred to as the "Security Instruments"; the Security Instruments and this Loan Agreement are sometimes hereinafter collectively referred to as the "Loan Documents"): 2.1 Stock Pledge Agreement Pertaining to Riverside. That certain Stock Pledge Agreement between Borrower, Guarantor and Lender of even date herewith pursuant to which 2,617,243 shares of stock (the "Stock") of Riverside Group, Inc., a Florida corporation (the "Corporation") have been pledged by Borrower and Guarantor to Lender, together with the appropriate blank stock powers and the delivery of the original stock certificates for 392,282 shares of such Stock to Lender (the remainder of such Shares are being held by Bank Boston as agent for Lender to perfect Lender's security interest therein). 2.2 Stock Pledge Agreement Pertaining to Borrower. That certain Stock Pledge Agreement between Guarantor and Lender of even date herewith, pursuant to which certain of the outstanding shares of stock of Borrower have been pledged by Guarantor to Lender, together with appropriate blank stock powers and the delivery of the original stock certificates to Lender. 2.3 Guaranty. The unconditional personal guaranty agreement of Guarantor pursuant to Section 10 hereunder, and pursuant to the Guaranty Agreement attached to the Term Note. 2.4 Other Security. Other security and instruments, if any, granted by Borrower and/or Guarantor to Lender, whether of even date herewith or hereafter or heretofore granted, to secure the Term Note and/or any other Indebtedness. 3. CONDITIONS PRECEDENT. Lender's obligations under this Loan Agreement, including each disbursement of any proceeds of the Term Loan, shall be subject to the fulfillment to Lender's satisfaction of each of the following conditions precedent, unless such condition or conditions shall be waived by Lender in writing, in the sole discretion of Lender: 2 3.1 Resolutions and Approvals. Borrower shall furnish certified copies of all consents, resolutions and approvals as may be required by Lender, evidencing approval of the execution of the Loan Documents, all in form and substance acceptable to Lender. 3.2 Legal Opinion. Lender shall have received a favorable written opinion of counsel for Borrower and Guarantor (i.e. Holland & Knight), dated and effective as of the date on which the Loan Documents are executed and delivered, addressed to Lender and satisfactory in form and substance to Lender, with only such modifications, exceptions, assumptions and qualifications as shall be acceptable to Lender and its counsel. 3.3 Loan Documents. All the Loan Documents, and such other documents or instruments as Lender may reasonably require, all in form and substance acceptable to Lender, shall have been duly executed and delivered to Lender, and, where appropriate, duly recorded in the proper public offices. 3.4 Representations, Warranties and Covenants. All representations and warranties of Borrower and Guarantor contained herein shall be true and correct, and Borrower and Guarantor shall be in compliance with all covenants contained in this Loan Agreement and in the Security Instruments. 3.5 Consents of Third Parties. Such third party consents, estoppels or agreements as Lender may require, including, but not limited to, the consent and agreement of Bank Boston to the Stock Pledge Agreement described in Section 2.1 hereof, all of which shall be in form and content satisfactory to Lender in its sole discretion. 3.6 Corporate Matters. Lender shall have been provided with true and correct copies of all articles of incorporation, by-laws and corporate minutes of Borrower and shall have been provided such further information as shall have been requested by Lender with regard to the business, properties and finances and operations of Borrower and Guarantor. 3.7 Stock Option. Borrower and Guarantor shall have executed and delivered a Stock Option Agreement in favor of Lender, of even date herewith (the "Option Agreement"), pursuant to which Borrower and Guarantor shall have granted Lender the exclusive right and option to purchase 785,173 shares of the common stock of the Corporation for a purchase price of $1.75 per share, for a term through December 31, 2001 (subject to extension as therein provided) (the "Option"). 3.8 No Event of Default. No "Event of Default" and no event which would constitute an Event of Default with the giving of notice, passage of time, or both (a "Possible Default") shall have occurred. 4. AFFIRMATIVE COVENANTS. Borrower and Guarantor jointly and severally agree that until the principal of and all interest on the Term Note and all the other Indebtedness shall have been paid in full and this Loan Agreement terminated, Borrower and Guarantor, as applicable, shall perform and observe all of the following terms and provisions: 4.1 Money Obligations. Each of Borrower and Guarantor shall pay in full: (a) Prior in each case to the date when penalties would attach, all taxes, assessments and governmental charges and levies hereafter due by Borrower and/or Guarantor (except only those so long as and to the extent that the same shall be contested in good faith by 3 appropriate and timely legal proceedings and for which a bond staying execution or enforcement thereof shall have been posted to the satisfaction of the Lender); and (b) All its and his respective debts, obligations and liabilities incurred after the date hereof, on or prior to their respective due dates, for which it or he may be or become liable or to which any or all of its or his properties may be or become subject. 4.2 Financial Statements. (a) Borrower shall furnish to Lender, within thirty (30) days after the end of each calendar quarter, an income statement of Borrower for that quarter and for the period from the beginning of the applicable fiscal year of the Borrower to the end of such quarter and a balance sheet of Borrower as of the end of each such quarter, certified by the president or Chief Financial Officer of Borrower to be true, correct and accurate. (b) Borrower shall furnish to the Lender, within ninety (90) days after the end of each fiscal year of Borrower, (i) a complete financial report, consisting of balance sheet, statement of profit and loss, application of funds, change in financial position and the like, prepared or reviewed by a firm of independent public accountants of recognized standing acceptable to Lender, and (ii) the annual audit report of the Corporation, together with the opinion of the accounting firm that prepared such audit report, that said report presents fairly the financial position of the Corporation as of the date of the audit and the results of the Corporation's operations and its cash flows for the year, without qualification. (c) Borrower shall furnish to Lender, immediately upon Lender's written request, such other information about the financial condition, properties and operations of Borrower and the Corporation as Lender may from time to time reasonably request. (d) Guarantor shall furnish to Lender, (i) on or before January 31 of each year, financial statements of Guarantor, in a form approved by Lender, as of the preceding December 31, certified as true and correct by Guarantor, (ii) a copy of Guarantor's signed federal tax return within five (5) business days of the filing of such return with the Internal Revenue Service, and (iii) promptly on demand of Lender, such other financial information concerning Guarantor as Lender may request from time to time; (e) All financial statements specified in Section 4.2(a), (b), and (c) above shall be furnished to Lender with comparative figures for the corresponding period in the preceding fiscal year; and all financial statements referred to in Section 4.2(a), (b), and (c) above shall be prepared on the accrual basis of accounting, in accordance with GAAP applied on a basis consistent with prior years of Borrower and the Corporation, on a consolidated (and consolidating) basis and shall be accompanied by a certificate of the President of Borrower: (1) stating that there exists no Event of Default or Possible Default hereunder; or (2) describing with particularity any Event of Default or Possible Default, stating the nature thereof, the period of existence thereof and what action Borrower, its subsidiaries and/or Guarantor have taken or propose to take with respect thereto. 4 (f) Borrower shall furnish to Lender, prompt written notice of any condition or event which has resulted in or might result in: (1) a material adverse change in the consolidated condition (financial or otherwise) or operations of Borrower, the Corporation or Guarantor; or (2) a breach of or noncompliance with any term, condition or covenant contained herein or in any document delivered pursuant hereto; or (3) a material breach of, or noncompliance with, any term, condition or covenant of any material contract to which Borrower and/or any of its subsidiaries or the Corporation and/or any of its subsidiaries or the Guarantor are a party or by which they or their property may be bound. (g) Borrower and Guarantor shall furnish to Lender prompt written notice of any claims, proceedings or disputes (whether or not purportedly on behalf of Borrower or Guarantor) against, or to the knowledge of Borrower or Guarantor, threatened or affecting Borrower or Guarantor which, if adversely determined, would have a material adverse effect on the business, properties or condition (financial or otherwise) of Borrower or any subsidiaries or Guarantor or any labor controversy resulting in or threatening to result in a strike against Borrower or Guarantor, or of any proposal by any public authority to acquire any of the material assets or business of Borrower. 4.3 Financial Records. Borrower and Guarantor, as applicable, shall: (a) At all times keep true and complete financial records in accordance with GAAP consistently applied (as to Guarantor, on the cash method); (b) At all reasonable times, permit Lender to examine any or all of its or his financial and other records and to make excerpts therefrom and transcripts thereof; (c) Maintain its books and records at its and his current principal office at 7800 Belfort Parkway, Suite 100, Jacksonville, Florida 32256; and (d) Maintain its and his current fiscal year. 4.4 Existence and Licenses. Borrower shall preserve its corporate existence in good standing and will be and remain qualified to do business in good standing in all states in which it is required to be so qualified, and will maintain all permits, licenses and other similar matters necessary or appropriate for its business. 4.5 Notice. Guarantor and Borrower (acting by and through the President or another duly authorized officer of the Borrower) shall notify Lender in writing, within no more than twenty-four (24) hours (and without the benefit of any grace period afforded in any provision of thus Loan Agreement or any Security Instrument) after Guarantor or Borrower or any of Borrower's officers or directors learns of any of the following: (a) the existence or occurrence of any Event of Default or Possible Default under this Loan Agreement, or any default under the Term Note or any of the Security Instruments; or 5 (b) any representation or warranty made herein, or in any related writing, not being or ceasing to be, for any reason, in any material respect, true and complete and not misleading; or (c) the institution of, or adverse determination in, any litigation, arbitration or governmental proceeding (including but not limited to an audit or examination by the Internal Revenue Service) which could have a material and adverse effect upon Borrower, the Corporation or Guarantor, which notification shall describe the nature thereof, what happened with respect thereto and what steps are being taken by Borrower, the Corporation or Guarantor, as the case may be, with respect thereto. 4.6 Agreements. Borrower and Guarantor shall and shall cause the Corporation to comply timely with all their respective agreements and valid obligations to and with all parties, and shall not commit or permit to be committed any default thereunder. 4.7 Stock. Borrower shall instruct its Secretary and stock transfer agent not to issue any additional capital stock, warrants, options or rights with respect thereto or instruments convertible into Borrower's capital stock, and Borrower shall not issue any additional capital stock, warrants, options or rights with respect thereto, or instruments convertible into Borrower's capital stock, unless the same is directly pledged and delivered to Lender as security for the Term Note pursuant to the Stock Pledge Agreement referred to in Section 2.2 hereof. 4.8 Compliance with Laws and Agreements. Each of Borrower and Guarantor shall, and shall cause the Corporation at all times to, comply with the applicable statutes, regulations, ordinances and other laws applicable to its and his operations and activities. 4.9 Subordination. Borrower and Guarantor hereby agree that all current and future debts of Borrower and/or any of its subsidiaries to Guarantor or any other stockholder or director of Borrower or any of their spouses, in laws, or blood relatives shall, and are hereby declared to be, fully subordinated to the prior repayment of all the Indebtedness, including the Term Note, and, no payments of principal or interest on such other debts shall be made, without the prior written consent of Lender, until the Indebtedness, including the Term Note, has been paid in full. 4.10 Payment of Term Note and Other Indebtedness. Borrower shall timely pay the Term Note and all the other Indebtedness in accordance with their respective terms. All payments on the Term Note and the other Indebtedness shall be made to Lender in immediately available funds at Lender's principal office on the date due by no later than 2:00 p.m. Lender's local time. Funds received by Lender after that time shall be deemed to be received by Lender on the following business day. 5. NEGATIVE COVENANTS. Borrower and Guarantor jointly and severally agree that, until the principal of and all interest on the Term Note and all the other Indebtedness shall have been paid in full and this Loan Agreement terminated, Borrower and Guarantor, as applicable, shall observe and comply with each of the following provisions: 5.1 Material Adverse Changes. Borrower shall not permit a "material adverse change" (as hereinafter defined) to occur. A "material adverse change" shall be deemed to have occurred upon any of the following: (a) The operating income of Wickes, Inc. for each fiscal four quarter period in fiscal year 1999 and each fiscal year thereafter is less than 89% of the amount thereof for the 6 corresponding period in fiscal year 1998. This calculation will be made on a cumulative basis (operating income in 1998 was approximately $30,000,000, and operating income is expected to range between $38,000,000 and $42,000,000 in 1999). (b) Any real estate of the Corporation is sold for less than 90% of the amount shown on the Corporation's Collateral Analysis Schedule, a copy of which will be provided to Lender within 30 days of the loan closing and updated quarterly (the "Collateral Analysis Schedule"); or in the event there are no sales, future values (as reflected on any future Collateral Analysis Schedule or, if lower, appraisals secured as provided in Section 5.2(b) below) of such real estate diminish more than 15% in the aggregate from their present value reflected on the initial Collateral Analysis Schedule. (c) The operating revenues and cash flows from Cybermax, Inc., an affiliate of the Corporation, at the end of any fiscal quarter in 1999 (on a cumulative basis) is less than 90% of those recorded for the same period in 1998 or if the negative cash flow from Cybermax, Inc. is more than $1,000,000 at any time during 1999. (d) During fiscal year 2000 and 2001 of Cybermax, Inc., following approval of the Executive Committee (consisting of Harry Carneal, Robert Shaw and Guarantor) of Cybermax, Inc.'s business plan, if on a cumulative basis, the gross profits of Cybermax, Inc. are less than 75% of amounts projected in such business plan, or expenses are more than 10% above amounts projected in such business plan. (e) The Corporation's investment in Greenleaf, Inc. results in a material negative cash effect on the Corporation. Examples of a negative effect associated with this investment would be if the Corporation incurs any substantial negative cash flow or is involved in material litigation in connection with Greenleaf, Inc. (f) Following approval of the Executive Committee (consisting of Harry Carneal, Robert Shaw and Guarantor) of BuildScape, Inc.'s business plan, and provided significant outside capital is not invested in BuildScape, Inc., if on a cumulative basis, the gross profits of BuildScape, Inc. are less than 75% of amounts projected in such business plan, expenses are more than 10% above amounts projected in such business plan, or the stages of completion of the basic infrastructure of BuildScape, Inc. are more than six (6) weeks delinquent. If significant outside capital is invested in BuildScape, Inc., the foregoing business plan shall be modified to reflect such investment and submitted to the Executive Committee (and whose members must be as stated above), for approval and if such modified business plan is not approved by the Executive Committee within 20 days after such capital infusion, that shall be deemed a material adverse change; if such modified business plan is approved by such Executive Committee; and if gross profits and expenses of BuildScape, Inc. are within 25% of those projected in such modified business plan that has been approved by such Executive Committee, no material adverse change will be deemed to have occurred under this clause, but otherwise a material adverse change under this clause will be deemed to have occurred. Each of the foregoing items will be considered not individually but rather in the aggregate, such that if an individual item has occurred but there is a positive offset with respect to another item, Lender will consider the net effect when making its determination as to whether a "material adverse change" has occurred, but the Lender shall be entitled to make such determination in its sole and unfettered discretion. As an example, in the event the Corporation's investment in Greenleaf, Inc. ultimately results in the realization of clear value (i.e. 7 cash), then this will be taken into consideration in evaluating the progress or results of any of the other items. 5.2 Minimum Tangible Net Worth. Borrower and Guarantor shall not permit either Borrower or the Corporation to fail to meet the following tests: (a) Borrower shall maintain a minimum. GAAP net worth of $250,000, and at no tine will the calculated net realizable value of Borrower's assets be less than $2,000,000 in excess of Borrower's liabilities. The calculated net realizable value will be computed at the end of each calendar quarter. The calculated net realizable value of Borrower's assets will be based upon the agreed upon calculations for Borrower's interest in the Corporation plus the net current assets and less all liabilities of the Borrower calculated on a GAAP basis. If within 15 days following the end of any calendar quarter, Borrower and Lender cannot agree as to the value of Borrower's interest in the Corporation, then Borrower and Lender shall promptly and, in all events, within 15 days select an appraiser to establish that value. If they have not agreed on an appraiser within the 15 days, then Lender, acting alone, may select as the appraiser any nationally recognized public certified accounting firm, except for any firms then employed by the Lender. (b) The Corporation shall maintain a minimum GAAP net worth of $1,000,000, and at no time will the calculated net realizable value of the assets of the Corporation be less than $10,000,000 in excess of the Corporation's liabilities. The calculated net realizable value of the assets will be computed at the end of each calendar quarter. The calculated net realizable value of the assets will be based upon the market price of the Wickes, Inc. shares owned by the Corporation (which shall be the average closing price of the Wickes, Inc. stock over the last 20 trading days of the calendar quarter), the net realizable value of any real estate (determined as set forth below), the estimated value of BuildScape (as determined by Lender in its sole discretion), plus the net current assets and less all liabilities (adjusted for any amounts included in the calculations above) of the Corporation. For purposes of this Section 5.2, the net realizable value of the real estate shall be as reflected on the Collateral Analysis Schedule prepared by the Corporation's Real Estate Manager using comparable sales figures and updated for past sales. The Lender reserves the right, at its sole discretion, to request a third party appraisal no more than once in a twelve month period. If the Lender exercises this right, then the minimum net realizable value of any given piece of real estate for the twelve months following receipt of the appraisal shall not be greater than the amount shown on the appraisal. As used herein, the term GAAP refers to generally accepted accounting principals in effect in the United States of America from tune to time and applied in a manner consistent with past practices. 5.3 Executive Compensation of Guarantor. Unless approved by Riverside's Compensation Committee, one of whose members must be Harry Carneal or Robert T. Shaw, the aggregate amount of compensation and fees (including bonuses) payable to Guarantor by Borrower, the Corporation, and their subsidiaries and affiliates (other than Wickes, Inc.) shall not be increased by more than 5% per annum over the annual rate in effect during fiscal year 1998. 5.4 Advances, Repayment of Debts and Dividends. Without the prior written consent of Lender, Borrower shall not make any advances or make any payment of principal or interest on any debt owed to Guarantor, and shall not pay any actual or constructive dividends 8 in cash, stock or other property, and shall not make any other distributions whatsoever with respect to any of its capital stock, or set aside any funds for any of such purposes. 5.5 Repurchase of Stock. Without the prior written consent of Lender, neither Borrower nor any of its subsidiaries nor Guarantor shall purchase, acquire, redeem or retire any of Borrower's capital stock or rights with respect thereto, nor shall Borrower liquidate or dissolve or take any action with a view towards same. 5.6 Mergers, Sales and Transfers. Without the prior written consent of Lender, neither the Borrower nor any of its subsidiaries (for the purposes of Sections 5.6, 5.7, 5.9, 5.11 and 5.12, Wickes, Inc. shall not be deemed a subsidiary of the Corporation or the Borrower) (whether in one transaction or in a series of transactions) shall: (a) Be or become a party to any consolidation, reorganization or merger; (b) Sell all or substantially all of its assets; (c) Purchase all or a substantial part of the assets of any other corporation, partner-ship, limited liability company or other business enterprise; or (d) Effect any change in its capital structure, or amend its Articles of Incorporation. 5.7 Subsidiaries. Without the prior written consent of Lender, neither Borrower nor any of its subsidiaries shall create any new subsidiaries or acquire any capital stock or other securities or interests in another corporation, limited liability company, entity, partnership, joint venture or business. Borrower shall not transfer, assign or lend any money or other property to any subsidiary or affiliate. 5.8 New Business. Borrower shall not change materially the nature of its business in any manner. 5.9 Capital Contributions. Without the prior written consent of Lender, neither Borrower nor any of its subsidiaries shall make any capital contribution to, or investment in, any subsidiary or purchase or commit to purchase any additional stock or securities of any kind from any subsidiary. 5.10 Prepayment of Other Debts. Neither Borrower nor the Guarantor shall not prepay prior to their respective presently existing maturities any debts or liabilities. 5.11 Indebtedness. Without the prior written consent of Lender, neither Borrower nor any of its subsidiaries nor Guarantor shall incur any indebtedness for borrowed money whatsoever or guaranty or become directly or contingently liable on any note or other evidence of indebtedness, letter of credit or contract of any kind, or enter any contract or agreement requiring it or him to make payments regardless of the performance by the other party or that has the effect of constituting a guaranty (and Borrower and Guarantor shall not make any guaranty for any affiliate), except only for trade payables incurred by Borrower in the ordinary course of business, and capital leases and equipment purchases of $100,000 or less in the aggregate per annum. 9 5.12 Loans. Neither Borrower nor any of its subsidiaries nor Guarantor shall make any loans other than the creation of accounts receivable in the ordinary course of business, or advance any funds whatsoever, without the prior written consent of Lender. 6. ADDITIONAL AGREEMENTS REGARDING STOCK. As additional security for the Term Loan, and also in connection with the Option, Borrower and Guarantor hereby assign to Lender all of the respective rights, titles and interests of Borrower and Guarantor under any and all registration rights and similar agreements with respect to the stock of the Corporation, to the extent Lender has from time to time foreclosed upon or otherwise acquired or thereafter does foreclose or otherwise acquire any of the stock of the Corporation, including any stock purchased pursuant to the exercise of the Option, as defined in Section 3.7 hereof, or as to which Lender has exercised such Option. In addition, in the event Lender has from time to time foreclosed upon or otherwise purchased or acquired any of the stock of the Corporation (or of Borrower) pursuant to the Option or otherwise, and if Borrower and/or Guarantor shall, at any time and from time to time through December 31, 2009, agree to sell any of the stock of the Corporation (or of Borrower) owned by either of them, or to otherwise transfer any of such stock, either directly or indirectly, Borrower and Guarantor, and or either or both of them that are selling or transferring such stock, shall: (i) Give written notice to Lender by certified or registered mail (return receipt requested) or by hand delivery (with a return receipt) as promptly as practicable (but in no event less than fifteen (15) days prior to such sale or transfer) of all the details, price and terms of such sale or transfer and the identity of the party (the "Buyer") to whom such stock is to be sold or transferred; and (ii) Require as a condition of such sale or transfer that the Buyer include in such sale or transfer the number of shares of the stock owned by Lender that have been acquired by Lender through foreclosure or in lieu of foreclosure that is specified by Lender in a written notice to be given by Lender to Borrower or Guarantor, as applicable, within ten (10) days after Lender's receipt of the notice provided for in subparagraph (i) above, all on the same terms and conditions and at the same price per share as Borrower and/or Guarantor are selling such stock; and (iii) Lender shall bear its own legal expenses in connection with participating in such sale or transfer, but Borrower and Guarantor shall pay all other expenses of Lender in connection with such sale or transfer. All of the foregoing provisions of this Section 6 shall survive payment in full of the Term Loan and termination of this Loan Agreement, and Lender (and its assigns) shall be entitled to the benefits of this Section 6 both under this Loan Agreement and in connection with the Option and any Stock acquired by Lender pursuant to the Option. 7. EVENTS OF DEFAULT. The occurrence of any or all of the following events constitute an "Event of Default" under this Loan Agreement: 7.1 Payments. If any installment of principal or interest on any of the Indebtedness, including, but not limited to the Term Note, shall not be paid in full punctually when due and payable, except if it is "impractical" for Borrower and Guarantor to pay such interest as such term is used in the Term Note. 10 7.2 Defaults Under Loan Documents. If any default or Event of Default occurs under any Loan Document. 7.3 Covenants and Agreements. If Borrower or Guarantor shall violate or fail to perform or observe any covenant, agreement, condition, representation, warranty, or other provision (other than as governed by Section 7.1 or 7.2 hereof contained or referred to in any of the Loan Documents (or the Option Agreement) and such failure or omission shall not have been fully corrected to the complete satisfaction of Lender within 15 days (or such shorter grace period as may be provided in the particular Loan Document (or the Option Agreement) for the particular default) after Lender has given written notice thereof to Borrower and Guarantor. 7.4 Failure to Pay Other Indebtedness. If Borrower or any of its subsidiaries shall fail to pay or perform any other obligation it may have or be subject to with respect to any party within any applicable grace period. 7.5 Accuracy of Statements. If any representation or warranty or other statement of fact contained herein or in any of the Security Instruments or in any writing, certificate, report or statement at any time furnished by or for Borrower and/or Guarantor to Lender pursuant to or in connection with this Loan Agreement or otherwise in connection with the transactions contemplated hereby shall be false or misleading in any material respect or shall omit to state a material fact required to be stated therein in order to make the statements contained therein, in light of the circumstances under which made, not misleading, on the date as of which made, whether or not made with knowledge of same. 7.6 Solvency and Other Matters. If Borrower or any of its subsidiaries or Guarantor shall: (a) discontinue business; or (b) make a general assignment for the benefit of creditors; or (c) apply for or consent to the appointment of a custodian, receiver, trustee or liquidator of all or a substantial part of its, his or their assets; or (d) be adjudicated a bankrupt or insolvent; or (e) file a voluntary petition in bankruptcy or file a petition or an answer seeking a composition, reorganization or an arrangement with creditors or seeking to take advantage of any other law (whether federal or state) relating to relief for debtors, or admit (by answer, default or otherwise) the material allegations of any petition filed against them in any bankruptcy, reorganization, composition, insolvency or other proceeding (whether federal or state) relating to relief for debtors; or (f) suffer or permit to continue unstayed and in effect for thirty (30) consecutive days any judgment, decree or order entered by a court or governmental agency of competent jurisdiction, which assumes control of Borrower (or Guarantor) or approves a petition seeking a reorganization, composition or arrangement of Borrower (or Guarantor) or any other judicial modification of the rights of any of its (or Guarantor's) respective creditors, or appoints a custodian, receiver, trustee or liquidator for Borrower or Guarantor or for all or a substantial part of any of their business or assets; or 11 (g) not be paying its or his debts as they become due; or (h) be enjoined or restrained from conducting all or a material pan of any of its or his businesses as now conducted and the same is not dismissed and dissolved within thirty (30) days after the entry thereof. 7.7 Other Defaults. If any of the following shall occur: (a) Any lien, garnishment, levy, attachment or encumbrance of any kind is placed against any property which serves as collateral for the Term Note; (b) The issuance of any tax lien or levy against Borrower or Guarantor or any of its or his property or Borrower's or Guarantor's failure to pay, withhold, collect or remit any tax when assessed or due; (c) There shall hereafter occur any material and adverse change in the business operations and condition, financial or otherwise, of Borrower or Guarantor or in the value of the collateral securing payment of the Term Note; and (d) If a final judgment or judgments for the payment of money in the aggregate in excess of $10,000.00 shall be rendered against Borrower or Guarantor and such judgment(s) shall remain unsatisfied or unstayed for a period of thirty (30) days. 8. REMEDIES UPON DEFAULT. Notwithstanding any contrary provision or inference herein or elsewhere Lender shall have the following rights and remedies: 8.1 Optional Acceleration. It any Event of Default referred to in Sections 7.1 through 7.5 hereof shall occur, Lender, in its absolute discretion, without further notice to the Borrower or Guarantor, may declare all or any of the Indebtedness, including, but not limited to, the Term Note, to be, whereupon the same shall be, accelerated and immediately due and payable in full, all without any presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by Borrower and Guarantor. 8.2 Automatic Acceleration. If any Event of Default referred to in Section 7.6 hereof shall occur, all of the Indebtedness, including the Term Note, shall thereupon become accelerated and immediately due and payable in full, all without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by Borrower and Guarantor. 8.3 Offsets. If any Event of Default or Possible Default shall occur or begin to exist, Lender shall have the right then, or at any time thereafter, to set off against, and to appropriate and apply toward the payment of the Indebtedness (in such order as Lender may select in its sole discretion), including but not limited to the indebtedness evidenced by the Term Note, whether or not such indebtedness shall then have matured or be due and payable and whether or not Lender has declared the Term Note and/or other Indebtedness to be in default and immediately due, any and all deposit balances and other sums and indebtedness and other property then held or owed by the Lender to or for the credit or account of Borrower and/or Guarantor, and in and on all of which Borrower and Guarantor hereby grant Lender a first security interest and lien to secure all the Indebtedness, all without notice to or demand upon Borrower or Guarantor all such notices and demands being hereby expressly waived. 12 8.4 Termination of Disbursements. Upon the occurrence of any Possible Default, Lender may immediately cease making disbursements under this Loan Agreement, while any Possible Default exists. Upon the occurrence of any Event of Default, Lender shall thereafter have no obligation under any circumstances to make any further disbursements under, this Loan Agreement, even if the Event of Default is subsequently cured, and, in such event, Lender may pursue all other remedies available to Lender hereunder or in connection herewith. 8.5 Rights Under Security Instruments. If any Event of Default shall occur, Lender shall also have all rights and remedies granted it under any and all of the Security Instruments or other Loan Documents securing or intended to secure the Indebtedness. 8.6 Rights Cumulative. All of the rights and remedies of Lender upon occurrence of an Event of Default or Possible Default hereunder shall be cumulative to the greatest extent permitted by law and shall be in addition to all those rights and remedies afforded Lender at law or equity. 9. NOTICES. 9.1 Giving of Notices. All notices, requests, consents, approvals, waivers, demands and other communications hereunder (collectively, "Notices") shall be deemed to have been given if in writing and (1) personally delivered against a written receipt, or (2) sent by confirmed telephonic facsimile, or (3) delivered to a reputable express messenger service (such as Federal Express, DHL Courier and United Parcel Service) for overnight delivery, addressed as follows (or to such other address as a party shall have given Notice to the other): If to Lender: Imagine Investments, Inc. 8150 North Central Expressway Suite 1901 Dallas, Texas 75206 Attn: Gary Goltz, General Counsel Telephone: (214) 365-1905 Fax: (214) 365-6905 cc: Michael M. Fleishman, Esq. Greenebaum Doll & McDonald PLLC 3300 National City Tower Louisville, Kentucky 40202 Telephone: (502) 587-3530 Fax: (502) 540-2131 If to Borrower: Wilson Financial Corporation 7800 Belfort Parkway, Suite 100 Jacksonville, FL 32256 Attn: J. Steven Wilson Telephone: (904) 281-2200 Fax: (904) 296-0584 13 cc: Malcolm Graham, Esq. Holland & Knight One Independent Drive, Suite 2000 Post Office Box 1559 Jacksonville, Florida 32201-1559 (32202 street address) Telephone: (904) 354-4141 Fax: (904) 358-2199 If to Guarantor: J. Steven Wilson 7800 Belfort Parkway, Suite 100 Jacksonville, Florida 32256 Telephone: (904) 281-2200 Fax: (904) 296-0584 cc: Malcolm Graham, Esq. Holland & Knight One Independent Drive, Suite 2000 Post Office Box 1559 Jacksonville, Florida 32201-1559 (32202 street address) Telephone: (904) 354-4141 Fax: (904) 358-2199 9.2 Time Notices Deemed Given. All Notices shall be effective upon being properly personally delivered, or upon confirmation of a telephonic facsimile, or upon the delivery to a reputable express messenger service. The period in which a response to any such notice must be given shall commence to run from the date on the receipt of a personally delivered notice, or the date of confirmation of a telephonic facsimile or two days following the proper delivery of the Notice to a reputable express messenger service, as the case may be. 10. GUARANTY OF GUARANTOR. Guarantor unconditionally guarantees each and every covenant, agreement, warranty, representation and obligation of Borrower under this Loan Agreement and consents to all the terms hereof and thereof, and hereby waives all suretyship and guarantors' defenses generally. All obligations of Borrower and Guarantor under this Loan Agreement shall be joint and several. 11. FEES AND EXPENSES. Borrower and Guarantor agree that they shall be responsible for and shall pay Lender's expenses incurred in negotiating and effecting the Term Loan and the Loan Documents, including Lender's attorneys' fees which, at Lender's option, may be deducted from the proceeds of the Term Loan and paid to Lender's counsel, but shall nevertheless be deemed disbursed directly to Borrower, and evidenced by the Term Note. Further, in the event of any default under this Loan Agreement, the Term Note or any of the Security Instruments or any related instruments, Borrower and Guarantor will pay to Lender, to the extent allowable by applicable law, such further amounts as shall be sufficient to reimburse fully the Lender for all of its costs and expenses of enforcing its rights and remedies under this Loan Agreement, the Term Note and the Security Instruments, and in protecting or preserving any security for the Indebtedness including without limitation, Lender's reasonable attorneys', appraisers' and accountants' fees, court costs, security costs and maintenance costs, and the same shall be deemed evidenced by the Term Note and secured by all the 14 Security Instruments. All obligations provided for in this Section shall survive termination or cancellation of this Loan Agreement for any reason whatsoever. 12. IN-KIND NOTE. Pursuant to Section 3 of the Terms Note, Borrower may elect to pay the first year's interest by the execution of an in-kind note in the form shown on Exhibit D attached hereto and made a part hereof (the "In-Kind Note"). The In-Kind Note, if executed, shall constitute Indebtedness as that term is defined in this Loan Agreement and shall be secured by and entitled to the benefits of all of the Security Instruments. 13. MISCELLANEOUS PROVISIONS. This Loan Agreement shall be subject to the following miscellaneous provisions: 13.1 Construction. The parties have participated jointly in the negotiation and drafting of this Loan Agreement. In the event an ambiguity or question of intent or interpretation arises, this Loan Agreement shall be construed as if drafted jointly by the parties and no presumption of burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Loan Agreement. Unless the context clearly states otherwise, the use of the singular or plural in this Loan Agreement shall include the other and the use of any gender shall include all others. All references to "Section" or "Sections" refer to the corresponding Section or Sections of this Loan Agreement. Unless otherwise expressly provided, the word "including" does not limit the preceding words or terms. 13.2 Counterparts. This Loan Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original copy of this Loan Agreement and all of which, when taken together, shall be deemed to constitute one and the same agreement. 13.3 Entire Agreement. This Loan Agreement embodies the entire agreement and understanding of the parties hereto with respect to the subject matter herein contained, and supersedes all prior agreements, correspondence, arrangements and understandings relating to the subject matter hereof. 13.4 Further Assurances. Borrower and Guarantor agree (a) to furnish upon Lender's request such further information, (b) to execute and deliver such other documents, and (c) to do such other acts and things, all as Lender may reasonably request for the purpose of carrying out the intent of this Loan Agreement and the documents referred to in this Loan Agreement. 13.5 Governing Law. This Loan Agreement and all other Loan Documents are executed and delivered in, and shall be governed by the laws of, the Commonwealth of Kentucky, without giving effect to any conflict of law rule or principle that might require the application of the laws of another jurisdiction. 13.6 Headings. The headings in this Loan Agreement are included for purposes of convenience only and shall not be considered a part of this Loan Agreement in construing or interpreting any provision hereof. 13.7 Invalidity of Provisions; Severability. If any provision of this Loan Agreement or the application thereof to any person or circumstance shall to any extent be held in any proceeding to be invalid, illegal or unenforceable, the remainder of this Loan Agreement, or the application of such provision to persons or circumstances other than those to which it was held to be invalid, illegal or unenforceable, shall not be affected thereby, and shall be valid, legal and 15 enforceable to the fullest extent permitted by law, but only if and to the extent such enforcement would not materially and adversely frustrate the parties' essential objectives as expressed herein. Notwithstanding the foregoing, each party hereto agrees that it has reviewed the provisions of this Loan Agreement, and that the same, taken as a whole, are fair and reasonable. 13.8 Limitation on Interest. It is the intention of the parties hereto to conform strictly to applicable usury laws. Accordingly, all agreements between Borrower and Lender with respect to the Term Note and the Loan Documents are hereby expressly limited so that in no event, whether by reason of acceleration of maturity or otherwise, shall the amount paid or agreed to be paid to Lender or charged by Lender for the use, forbearance or detention of the money to be lent hereunder or otherwise, exceed the maximum amount allowed by law. If the Term Loan would be usurious under applicable law, then, notwithstanding anything to the contrary in the Term Note or in the Loan Documents: (a) the aggregate of all consideration which constitutes interest under applicable law that is contracted for, taken, reserved, charged or received under the Term Note or the Loan Documents shall under no circumstances exceed the maximum amount of interest allowed by applicable law, and any excess shall be credited on the Term Note by the holder thereof or, at Lender's option, refunded to Borrower, and (b) of maturity is accelerated by reason of an election by Lender, or in the event of a prepayment, then any consideration which constitutes interest may never include more than the maximum amount allowed by applicable law. In such case, excess interest, if any provided for in the Term Note, the Loan Documents or otherwise, to the extent permitted by applicable law, shall be amortized, prorated, allocated and spread from the date of advance until payment in full so that the actual rate of interest is uniform through the term hereof. If such amortization, proration, allocation and spreading is not permitted under applicable law, then such excess interest shall be canceled automatically as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited on the Term Note or, at Lender's option, refunded to Borrower. The terms and provisions of this Section shall control and supersede every other provision of the Term Note and Loan Documents. The Term Note is a contract made under and shall be construed in accordance with and governed by the laws of Kentucky, except that if at any time the laws of the United States America permit Lender to contract for, take, reserve, charge or receive a higher rate of interest than is allowed by the laws of Kentucky (whether such federal laws directly so provide or refer to the law of any state), then such federal laws shall to such extent govern as to the rate of interest which Lender may contract for, take, reserve, charge or receive under the Term Note. 13.9 Binding Effect. The provisions of this Loan Agreement shall bind and benefit Borrower, Guarantor and Lender and their respective successors, heirs, personal representatives and assigns, including each subsequent holder, if any, of the Term Note or any other Indebtedness. 13.10 Modifications. This Loan Agreement may be modified only in writing executed by Lender and Borrower, and Guarantor shall automatically be bound by all such modifications even though he does not join therein or consent thereto, Guarantor hereby agreeing that Borrower's execution thereof shall be irrevocably and conclusively deemed Guarantor's consent thereto as Guarantor's irrevocable attorney-in-fact, even though it does not so state. 13.11 Time of Essence. Time is of the essence in the performance by Borrower and Guarantor of all the obligations set forth in this Loan Agreement and in all of the other Loan Documents. 16 13.12 Waiver. The rights and remedies of Lender hereunder are cumulative and not alternative. Neither the failure nor any delay by Lender in exercising any right, power, or privilege under this Loan Agreement or the documents referred to in this Loan Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. Each such right, power, remedy or privilege may be exercised by Lender, either independently or concurrently with others, and as often and in such order as Lender may deem expedient. To the maximum extent permitted by applicable law, no waiver that may be given by a party will be applicable except in the specific instance for which it is given. No waiver or consent granted by Lender with respect to this Loan Agreement, the Indebtedness or any Security Instrument or related writing shall be binding upon Lender, unless specifically granted in writing by a duly authorized officer of Lender, which writing shall be strictly construed. 13.13 Interpretation. The parties hereto hereby agree that this Loan Agreement shall be so interpreted to give effect and validity to all the provisions hereof to the fullest extent permitted by law. 13.14 Assignment. Neither the Borrower nor Guarantor may assign any of their rights under the Loan Agreement or any of the Loan Documents to any other party. Lender may assign its rights and obligations under this Loan Agreement and the other Loan Documents, in whole or in part, without the need for consent from Borrower or Guarantor, and such assignee shall be entitled to the benefits of Lender's rights hereunder. 13.15 Survival of Covenants, Agreements, Warranties and Representations. All covenants, agreements, warranties and representations made by Borrower and Guarantor herein shall survive the making of the Term Loan and delivery of the Term Note, this Loan Agreement and any and all Security Instruments for the Term Note and other Indebtedness, and shall be deemed to be continuing covenants, agreements, representations and warranties at all times while any portion of the Indebtedness, including the Term Note, remains unpaid. 13.16 Bank Boston's Interest in Stock. Notwithstanding any terms or provisions herein, the rights and interests of Lender in any of the Stock pledged by Borrower to Bank Boston shall be subject to Bank Boston's rights and interests in the Stock, as set forth in agreements executed in connection with Borrower's indebtedness to Bank Boston and in the Letter Agreement between Bank Boston, Borrower and Lender, the form of which is attached hereto and made a part hereof as Exhibit E. 14. JURY TRIAL WAIVER. BORROWER AND GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION OR ANY OTHER PROCEEDING BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OUT OF ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER WRITTEN OR ORAL) OR ACTIONS OF THE BORROWER, GUARANTOR OR LENDER. 17 IN WITNESS WHEREOF, the parties have entered into this Loan Agreement as of the date first written above. IMAGINE INVESTMENTS, INC. /s/ Charles L. Greiner By:_______________________________ Vice President Title:____________________________ ("Lender") WILSON FINANCIAL CORPORATION /s/ J. Steven Wilson By:_______________________________ President Title:____________________________ "Borrower") /s/ J. Steven Wilson __________________________________ J. STEVEN WILSON ("Guarantor") 18 LIST OF EXHIBITS Exhibit A Schedule of Borrower's Obligations to Bank Boston N.A. and Compass Bank Exhibit B Other Outstanding Obligations of Borrower Exhibit C Schedules of Disbursements of Term Loan Proceeds Exhibit D In-Kind Note EX-7.11 7 dex711.txt TERM PROMISSORY NOTE Exhibit 7.11 TERM PROMISSORY NOTE $6,000,000.00 Louisville, Kentucky February __ , 1999 FOR VALUE RECEIVED, WILSON FINANCIAL CORPORATION, a Florida corporation with principal office and place of business in Jacksonville, Florida ("Maker"), promises and agrees to pay to the order of IMAGINE INVESTMENTS, INC., a Delaware corporation, or to any holder of this Note ("Payee"), the principal sum of SIX MILLION DOLLARS ($6,000,000.00), together with interest upon such principal balance at the rate provided below, in legal tender of the United States of America. The unpaid principal balance of, and all accrued interest on, this Note shall be due and payable in full on December 31, 2001, which date shall be the final maturity date of this Note. 1. Interest Rate. The principal balance of this Note shall bear interest at the rate of ten percent (10%) per annum. All parties hereto hereby specifically agree that this Note has been delivered in the Commonwealth of Kentucky and that the laws of the Commonwealth of Kentucky shall govern this Note. 2. Disbursements of Principal. Payee may make periodic disbursements of principal to Maker as hereinafter requested by Maker in writing from time to time, pursuant to a Loan Agreement among Maker, Payee and J. Steven Wilson ("Guarantor"), of even date herewith (the "Loan Agreement"). This is not a revolving note, and amounts disbursed hereunder may not be paid down and subsequently reborrowed by Maker. 3. Payment of Interest. All accrued interest on the principal balance of this Note shall be paid quarterly on the first day of each calendar quarter, commencing April 1, 1999, and at the maturity of this Note. All interest on the principal balance of this Note shall be computed on the basis of the actual number of days elapsed over an assumed year of 360 days. Payee agrees that if it is "impractical" for Maker to make quarterly interest payments at any time hereunder, Payee will not be entitled to foreclose on the stock pledged to Payee pursuant to the "Security Documents" (as hereinafter defined), nor will Payee be entitled to accelerate this Note; provided, however, that such interest shall remain due and payable on a quarterly basis. The term, "impractical," as used in the preceding sentence, shall not include Maker's payment(s) of other obligations in lieu of payment of interest hereunder - i.e., Maker's election to pay other obligations shall not be sufficient to relieve Maker of its obligation to make quarterly payments of interest hereunder. 4. Repayment of Principal. The principal balance of this Note shall be paid in full at the maturity date or earlier acceleration of this Note. No portion of the principal balance of this Note, nor any accrued interest thereon, may be prepaid at any time, in whole or in part, without the written consent of Payee. 5. Application of Payments. Payments made under this Note shall be applied, at the holder's sole option, first to any expenses or sums advanced by Payee in respect of and in accordance with the terms of this Note or the Loan Agreement or under the terms of any document or instrument securing the repayment of this Note; second, to accrued but unpaid interest upon the principal balance of this Note; and then to the principal balance of this Note. 6. Overdue Payments; Default Rate. All overdue payments of principal or interest on this Note shall bear additional interest until paid in full at the rate per annum (calculated on the basis of an assumed year of 360 days as aforesaid) of five percent (5%) per annum in excess of the rate otherwise payable under the terms of this Note or the highest rate allowed by applicable law, whichever is lower, and shall be due and payable on demand of the holder hereof. All payments under this Note shall be paid to Payee at 8150 North Central Expressway, Suite 1901, Dallas, Texas 75206, or to such other person or at such other place as may be designated in writing by Payee or any subsequent holder of this Note. 7. Security. This Note is secured by: (i) a lien upon, and security interest in, certain shares of stock of Riverside Group, Inc., owned by Maker, pursuant to a Stock Pledge Agreement of even date herewith between Maker and Payee, (ii) the personal guaranty of Guarantor pursuant to the Unconditional Guaranty Agreement of even date herewith, and (iii) a lien upon, and security interest in, all of the shares of stock of Maker pursuant to a Stock Pledge Agreement of even date herewith between Guarantor and Payee. This Note has been issued pursuant to the Loan Agreement (such Loan Agreement and the foregoing Stock Pledge Agreements and Unconditional Guaranty Agreement are hereinafter collectively referred to as the "Security Documents"), and is entitled to all the benefits of the Security Documents. 8. Events of Default. Each of the following events shall constitute an event of default under this Note, the occurrence of any of which shall entitle the holder hereof to declare the entire principal balance of this Note, together with all accrued interest and all other liabilities, indebtedness and obligations of Maker and/or Guarantor to Payee, whether now existing or hereafter created, to be immediately due and payable, and to take any and all action allowed Payee by law or equity, under the terms of this Note, under the terms of any of the Security Documents, and under the terms of any other agreements between Maker and/or Guarantor and Payee: (a) The failure of Maker to make any payment of principal or interest provided for in this Note on the date upon which it is due; (b) The occurrence of an Event of Default as described in this Note or any Security Document; (c) The failure of Maker or Guarantor to perform or the breach by Maker or Guarantor of any of the agreements, covenants and warranties and agreements set forth in this Note or in the Security Documents or any other agreement between Maker and/or Guarantor and Payee, whether now existing or hereafter entered into; (d) Any lien, garnishment, levy, attachment or encumbrance of any kind is placed against any property which serves as collateral for this Note; 2 (e) The holder of this Note determining that any representation, warranty, statement, report, or application made or provided by Maker or Guarantor to Payee or the holder hereof is or was at the time made untrue or materially misleading; (f) The issuance of any tax lien or levy against Maker or Guarantor or any of its or his property or Maker's or Guarantor's failure to pay, withhold, collect or remit any tax when assessed or due; (g) If any representation, warranty or other statement of fact made by Maker or Guarantor in any Security Document shall be false or misleading; (h) Maker or Guarantor shall (i) become insolvent, (ii) become generally unable to pay its or his respective debts as they come due, (iii) make an assignment for the benefit of creditors, (iv) call a meeting of creditors for the composition of debts, or (v) have filed against it or him a petition in bankruptcy or for reorganization or for the appointment of a custodian, receiver or trustee or the equivalent which is not removed or dismissed within thirty (30) days thereafter; (i) There shall hereafter occur any material and adverse change in the business operations and condition, financial or otherwise, of Maker or Guarantor or in the value of the collateral securing repayment of this Note; and (j) If a final judgment or judgments for the payment of money in the aggregate in excess of $10,000.00 shall be rendered against Maker or Guarantor and such judgment(s) shall remain unsatisfied or unstayed for a period of thirty (30) days. 9. No Waiver, Cumulative Remedies. The failure of Payee to exercise any of its rights and remedies shall not constitute a waiver of the right to exercise them at that or any other time. All rights and remedies of Payee in the event of a default shall be cumulative to the greatest extent permitted by law. 10. Expenses. If there is any default under this Note or any Security Document and this Note is placed in the hands of any attorney for collection or is collected through any court including any bankruptcy court, Maker promises and agrees to pay to Payee its attorneys fees, court costs, and all other expenses incurred in collecting or attempting to collect or securing or attempting to secure this Note as provided by the laws of the Commonwealth of Kentucky, or any other state where the collateral or any part of it is situated. This section shall be deemed supplemental to, and not to be in substitution for, that section of any Security Document dealing with the reimbursement of expenses. 11. Waivers. Maker waives (a) presentment, demand, notice of dishonor, protest, notice of protest and non-payment, and (b) all exemptions to which Maker may now or hereafter be entitled under the laws of the Commonwealth of Kentucky, of any other state, or of the United States, and 3 agrees that Payee shall have the right (i) to grant Maker or any guarantor of this Note any extension of time for payment of this Note or any other indulgence or forbearance whatsoever, and (ii) to release any security for or guarantor of payment of this Note, without in any way affecting the liability of Maker under this Note or the Guarantor under the Security Documents, and without waiving any rights Payee may have under this Note or by virtue of the laws of the Commonwealth of Kentucky, or any other state of the United States. 12. Time of Essence. Time is of the essence in the payment and performance of all of Maker's obligations under this Note, the Security Documents and all documents securing this Note or relating hereto. 13. Venue and Jurisdiction. Maker further agrees that in the event of any litigation for collection of or relating to this note, jurisdiction and venue shall be proper and appropriate in any court sitting in Louisville or Jefferson County Kentucky, and Maker hereby consents to such jurisdiction and venue. 14. Waiver of Jury Trial. MAKER VOLUNTARILY AND INTENTIONALLY WAIVES AND SHALL NOT ASSERT ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING FROM OR CONNECTED WITH THIS NOTE, THE SECURITY DOCUMENTS OR ANY AGREEMENT MADE OR CONTEMPLATED TO BE MADE IN CONNECTION THEREWITH, OR ANY COURSE OF DEALING, COURSE OF CONDUCT, STATEMENT OR ACTIONS OF ANY PARTY IN CONNECTION WITH THIS NOTE. 15. Partial Invalidity. If any one or more of the provisions of this Note, or the applicability of any such provision to a specific situation, shall be held invalid or unenforceable, such provision shall be modified to the minimum extent necessary to make it or its application valid and enforceable, and the validity and enforceability of all other provisions of this Note and all other applications of any such provision shall not be affected thereby. In the event such provision(s) cannot be modified to make it or them enforceable, the invalidity or unenforceability of any such provision(s) of this Note shall not impair the validity or enforceability of any other provision of this Note. 16. Binding Effect. This Note shall bind the successors and assigns of Maker and shall inure to the benefit of Payee and its successors and assigns. Maker shall not assign or allow the assumption of its rights and obligations hereunder without Payee's prior written consent. 4 IN WITNESS WHEREOF, the undersigned Maker has executed this Note as of the date first above written. WILSON FINANCIAL CORPORATION illegible By: /s/ J. Steven Wilson - --------------------------------- ------------------------------ Witness Title: President ------------------------------ /s/ Catherine J. Gray ("Maker") - --------------------------------- Witness 5 UNCONDITIONAL GUARANTY AGREEMENT -------------------------------- In consideration of the loan evidenced by the Term Promissory Note made by Wilson Financial Corporation ("Maker") in favor of Imagine Investments, Inc. ("Payee") dated February ___, 1999, in the original principal sum of $6,000,000.00 (the "Note"), the undersigned unconditionally guarantees the prompt payment of (i) the entire principal balance of the Note, (ii) all accrued interest upon the principal balance hereof, (iii) late fees and (iv) all attorneys' fees and costs and expenses of collection incurred by Payee, together with the costs and expenses of maintaining and securing collateral pursuant to all documents and instruments securing repayment of this Note, when due, whether by acceleration or otherwise regardless of the genuineness, validity or enforceability of this Note. The undersigned consents and agrees to be bound by all of the terms of this Note (as the same may be extended or renewed). The undersigned waives all rights and subrogation with respect to this Note or any collateral securing its payment and all rights of recourse or indemnity until this Note and all other obligations of Maker to Payee shall have been fully paid. If any payment made by Maker to Payee later deemed to be a preference or otherwise required to be repaid or returned, the amount of such return or repayment shall continue to be covered by this Guaranty. THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THE UNDERSIGNED MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN EVIDENCED BY THIS NOTE OR ANY RELATED LOAN OR LENDING TRANSACTION OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION THEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR PAYEE MAKING THE LOAN EVIDENCED BY THIS NOTE. THE UNDERSIGNED AGREES THAT THIS GUARANTY SHALL BE AND IS DEEMED TO BE INCORPORATED INTO AND MADE A PART OF THIS NOTE AS THOUGH A PART THEREOF. The liability of the undersigned shall in no way be affected by any renewal or extension of time of payment of the Note and any other instrument, indebtedness or liability, or by any release or surrender of other security or collateral or guaranty for the Note, or by delay in enforcement of payment of the principal or interest or of any security in connection therewith, or by any other indulgence Payee may grant Maker. The undersigned hereby declares to and covenants with Payee, its successors or assigns, that the undersigned has no defense whatever to any action, suit or other proceedings, at law or otherwise, that may be instituted under or on account of this Guaranty, including all questions as to the validity, regularity or enforceability of the obligation of Maker. Notwithstanding the death of the undersigned, this instrument shall be binding on the estate of the decedent as to any obligation incurred either before or after or extended after such death. Payee shall not be bound to exhaust its recourse against or upon the security or collateral it may hold or against any other person before being entitled to payment from the undersigned or of the amount hereby guaranteed. This Guaranty Agreement constitutes a guaranty of payment and not of collection. 6 Payee is hereby authorized and empowered, at its option to appropriate and apply to the payment and extinguishment of the liability of the undersigned under this Guaranty Agreement at any time after such liability shall become payable, any and all monies or other property of the undersigned and the proceeds thereof (including safekeeping or pledge) for this or any other liability of the undersigned to the Payee, and including any balance on deposit or otherwise for the account of, or to the credit of, or belonging to, the undersigned. Payee is hereby authorized and empowered, at its option, at any time after the liability created by the foregoing guaranty becomes payable, to sell assign and deliver any securities or property at any time given unto or left in the possession or custody of Payee for any purpose (including safekeeping or pledge) for this or any other liability of the undersigned or in which any of the undersigned may have an interest, at public or private sale, for cash, upon credit, or for future delivery, all at the option of Payee or any of its officers, without demand, advertisement, or notice, all of which are hereby expressly waived. Upon any sale or sales at public or private sale, above provided for, Payee, its successors or assigns, may bid for and/or purchase the whole or any part of such securities or property free from any right of redemption, which is hereby waived and released. In case of any sale by Payee of any of said securities or property on credit or for future delivery, the securities and property sold may be retained by Payee until the selling price is paid by the purchaser and Payee shall incur no liability in case of failure of the purchaser to take up and pay for the securities or property so sold. In case of any such failure the securities or property may be again sold. - -------------------------------- ----------------------------- Witness J. STEVEN WILSON ("Guarantor") - ------------------------------- Witness 7 EX-7.12 8 dex712.txt STOCK PLEDGE AGREEMENT EXHIBIT 7.12 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT is entered into and effective as of February 24, 1999, by and between: (i) WILSON FINANCIAL CORPORATION, a Florida corporation having its principal office in Jacksonville, Florida ("Wilson"), (ii) J. STEVEN WILSON, an individual of Jacksonville, Florida ("Steven") (Wilson and Steven are sometimes collectively referred to herein as "Borrower," and the term "Borrower" also means each of Wilson and/or Steven), and (iii) IMAGINE INVESTMENTS, INC., a Delaware corporation having its principal office in Dallas, Texas ("Lender"). RECITALS: A. Pursuant to the terms of that certain Loan Agreement of even date herewith among Wilson, Lender and Steven, and that certain Term Promissory Note of even date herewith, executed by Wilson in favor of Lender in the face principal amount of Six Million Dollars ($6,000,000.00) (the "Note"), and that has been guaranteed by Steven, as the same may hereafter be amended or otherwise modified from time to time in writing by the parties thereto, Lender has agreed to extend a term loan to Wilson in the amount of Six Million Dollars ($6,000,000) (the "Term Loan"). B. In order to induce Lender to make the Term Loan, without which inducement Lender would be unwilling to do so, Borrower has agreed to pledge all of the shares of the issued and outstanding common capital stock of Riverside Group, Inc. (the "Corporation") owned by Borrower to Lender, to secure the payment of the Term Loan and all other obligations of Borrower to Lender, including without limitation, the In-Kind Note referred to in Section 12 of the Loan Agreement. AGREEMENT: NOW, THEREFORE, the parties hereby agree as follows: 1. PLEDGE AND DEPOSIT OF SHARES. Borrower hereby pledges, assigns and grants a security interest to Lender in 2,617,243 shares of the stock of Riverside Group, Inc., a Florida corporation (the "Stock"), as represented by the Certificates now listed on Exhibit A attached hereto and made a part hereof, now standing in Borrower's name and constituting approximately forty-eight percent (48%) of the issued and outstanding capital stock of the Corporation, all as collateral security for the full and punctual payment and due performance by Borrower of (i) the Note, and (ii) all other liabilities, obligations and indebtedness of whatever kind of Borrower to Lender, whether created directly or acquired by Lender by assignment or otherwise, whether now existing or hereafter created, arising or acquired, absolute or contingent, joint or several, due or to become due, and including, but not limited to, future advances by Lender to Borrower. All of the foregoing are referred to collectively herein as the "Secured Obligations." 2. CERTIFICATES AND PRIOR PLEDGE. The Certificates listed on Exhibit B attached hereto and made a part hereof, representing 392,282 shares of the Stock in the aggregate (the "First Priority Stock"), have been delivered herewith by Borrower to Lender, together with duly executed blank stock powers attached thereto. The Certificates listed on Exhibit C attached hereto and made a part hereof, representing 2,224,961 shares of the Stock (the "Second Priority Stock"), is currently in the possession of Bank Boston, N.A. (the "Prior 1 Lender"), and such 2,224,961 shares of the Stock have been previously pledged by Borrower to Prior Lender, to secure payment of Borrower's obligations to Prior Lender (the "Prior Lender's Loan"). Borrower agrees and acknowledges that Lender has a first lien on and security interest in the First Priority Stock and, at present, a second lien on and security interest in the Second Priority Stock, which will automatically become a first lien on and security interest when the Prior Lender releases such Stock. Notwithstanding any provision herein, the Lender's rights with respect to the Second Priority Stock shall be subject to the Prior Lender's rights in the Second Priority Stock. Borrower agrees to cause Prior Lender to release portions of the 2,224,961 shares of the Second Priority Stock referred to above from the lien and security interest in favor of Prior Lender, as and when Borrower makes principal payments on the Prior Lender Loan, on a pro rata basis, such that the ratio of the number of shares of Second Priority Stock pledged to the Prior Lender to the outstanding principal loan balance of the Prior Lender Loan shall remain constant. As of the date hereof, the outstanding principal balance of the Prior Lender Loan is Three Million Dollars ($3,000,000.00), so the ratio is 1.3483 (3,000,000 / 2,224,961 = 1.3483). In other words, Borrower shall cause Prior Lender to release one (1) share of the Second Priority Stock pledged to Prior Lender for each $1.35 of reduction of principal in the Prior Lender Loan. For example, upon a principal reduction in the amount of $500,000, Borrower shall cause Prior Lender to release 370,370 shares of Second Priority Stock (500,000 / 1.35 = 370,370) and shall cause the Prior Lender to deliver original Certificates representing such released shares directly to Lender, and Borrower acknowledges and agrees that immediately upon release of such shares by Prior Lender, Lender shall have a first lien on and security interest in such shares, and such shares shall automatically then be deemed to be First Priority Stock. 3. FURTHER PLEDGE AND DELIVERIES. The certificates or other instruments evidencing all new shares of capital stock and all other securities, rights, warrants, options and the like hereafter created in respect of the Stock, whether by stock split, stock dividend, merger, consolidation or otherwise, shall be delivered by Borrower to, and shall be held by, Lender under the terms and conditions of this Stock Pledge Agreement and subject to the pledge and security interest herein granted (subject, however, to the rights of the Prior Lender with respect to the Second Priority Stock), and the term, "Stock," as used herein, shall be deemed to include all such new shares, securities, rights, warrants, options and the like. At its sole option, Lender may transfer the shares of Stock into its own name. 4. COVENANTS. During the period the Stock is being held as security hereunder, Borrower shall not, without the prior written consent of Lender, allow the Corporation to (i) issue any additional capital stock or other equity securities of any kind or options, subscription rights, warrants or other instruments with respect thereto or any other instruments convertible into shares of its capital stock, or sell or issue any treasury stock, (ii) merge into or with or consolidate with any other corporation or business or otherwise participate in any reorganization or sell or lease to others all or substantially all of its assets, (iii) amend its Articles of Incorporation or By-Laws in any manner that would have a material adverse effect on Lender's rights with respect to the Stock, or liquidate or dissolve or take any steps to effect same, or (iv) effect a recapitalization or alter its capital structure. 5. VOTING RIGHTS; DIVIDENDS, ETC. So long as no Event of Default shall have occurred, Borrower shall be entitled to exercise any and all voting and/or consensual rights and powers relating or pertaining to the Stock or any part thereof for any purpose not inconsistent with the terms of this Stock Pledge Agreement. All dividends and distributions, regardless whether in cash, stock, rights, options or other property, and all stock splits, stock dividends and 2 the like and the proceeds of all redemptions and liquidations that are made, paid or declared with respect to the Stock shall be paid directly to Lender, and shall, at Lender's sole election, either be applied as a payment on the Secured Obligations or held by Lender as additional security for the Secured Obligations (and Borrower shall execute all instruments in connection therewith as are requested by Lender). 6. STATUS OF THE STOCK. Borrower hereby represents and warrants to Lender that (a) the Stock is validly issued and outstanding, fully paid and non-assessable, and constitutes approximately forty-eight percent (48%) of the issued and outstanding capital stock of the Corporation; (b) Borrower is the registered and absolute beneficial owner of approximately forty-eight percent (48%) of the issued and outstanding capital stock of the Corporation; (c) except for the prior pledge of 2,224,961 shares of the Stock to Prior Lender as described in Section 2, all the Stock is free and clear of liens, charges and encumbrances in favor of persons other than Lender; (d) subject to the rights of the Prior Lender, Borrower has the full power and authority to pledge the Stock to Lender pursuant to this Stock Pledge Agreement; and (e) the Corporation is a corporation validly existing under the law of the State of Florida. No part of the Stock shall be sold, transferred or further assigned by Borrower without the prior written consent of Lender, which consent may be arbitrarily withheld so long as this Stock Pledge Agreement is in effect. 7. MAINTENANCE OF PRIORITY OF PLEDGE. Borrower shall be liable for and shall from time to time pay and discharge all taxes, assessments and governmental charges imposed upon the Stock by any federal, state or local authority, the liens of which would or might be held prior to the right of Lender in and to the Stock or which are imposed on the holders and/or registered owners of the Stock. Borrower shall not, at any time while this Stock Pledge Agreement is in effect, do or suffer any act or thing whereby the rights of Lender in the Stock would or might be materially impaired or diminished. Borrower shall execute and deliver such further documents and take such further actions as may be required to confirm the rights of Lender in and to the Stock or otherwise to effectuate the intention of this Stock Pledge Agreement. Borrower shall perform all terms of its indebtedness and obligations to Prior Lender, and shall pay all of such indebtedness and related obligations according to their terms. 8. EVENTS OF DEFAULT. Each of the following shall be deemed an "Event of Default" hereunder: 8.1 Cross Default. The occurrence of any Event of Default under the Note or any "Security Document," as such term is defined in the Note, or under any other related instrument or agreement; or 8.2 Default Hereunder. The occurrence of any default of any kind whatsoever under the terms, covenants and conditions of this Stock Pledge Agreement; or 8.3 Breach of Covenants. If any covenant, representation or warranty made in this Stock Pledge Agreement or in any other Security Document or related instruments or agreements executed by Borrower in connection with the Term Loan shall prove to be untrue and misleading in any respect; or 8.4 Default Under Other Financing. If Borrower is in default or breach of its obligations to Prior Lender beyond any applicable period of grace for cure of such default or breach. 3 9. REMEDIES UPON DEFAULT. Upon the occurrence of any Event of Default referred to in Section 8 above, Lender shall have all rights and remedies in and against the Stock and otherwise of a secured party under the Uniform Commercial Code as enacted in the Commonwealth of Kentucky and the State of Florida (the "UCC") and all other applicable laws, and shall also have all of the rights provided herein, in the Note and in all other Security Documents, all of which rights and remedies shall be cumulative to the fullest extent permitted by law. In connection with the foregoing, Lender shall have the right: 9.1 Voting Rights. To exercise all voting rights and privileges whatsoever with respect to the Stock, and to that end Borrower hereby constitutes Lender as its proxy and attorney-in-fact for all purposes of voting the Stock, and this appointment shall be deemed coupled with an interest and is and shall be irrevocable until the Secured Obligations have been fully paid and this Stock Pledge Agreement terminated, and all persons whatsoever shall be conclusively entitled to rely upon Lender's verbal or written certification that it is entitled to vote the Stock hereunder. Borrower shall execute and deliver to Lender any and all additional proxies and powers of attorney that Lender may desire in order to vote more effectively the Stock in its own name. Upon any Event of Default hereunder, Lender may vote the Stock to remove the directors and officers of the Corporation and to elect new such officers and directors who shall thereafter manage the affairs of the Corporation, operate any of its properties, carry on any business, and otherwise take any action with respect thereto as they shall deem necessary and appropriate, and may also liquidate the Corporation and its business, and may authorize the borrowing of money in the name of the Corporation and the pledge of its assets to secure such borrowing. 9.2 Right of Sale. To declare the Note and the other Secured Obligations immediately due and payable in full, and to sell the Stock in one or more lots, and from time to time, upon ten (10) business days prior to written notice to Borrower of the time and place of sale (which notice Borrower hereby conclusively agrees is commercially reasonable), for cash or upon credit or for future delivery, Borrower hereby waiving all rights, if any, of marshaling the Stock and any other security for the payment of the Note and other Secured Obligations, and at the option and in the sole discretion of Lender, to either: (i) Sell the Stock at a public sale or sales, including a sale at or on any broker's board or stock exchange; or (ii) Sell the Stock at a private sale or sales. Lender may bid for and acquire the Stock or any portion thereof at any public sale, free from any redemption rights of Borrower, and in lieu of paying cash therefor, may make settlement for the selling price of the Stock or any part thereof by crediting the net selling price of the Stock against the Note and other Secured Obligations, after deducting all of Lender's costs and expenses of every kind and nature therefrom, including Lender's attorneys' fees incurred in connection with realizing upon the Stock and enforcing the Security Documents and the Note, provided the same is not prohibited by the laws of the Commonwealth of Kentucky. From time to time Lender may, but shall not be obligated to, postpone the time of any proposed sale of any of the Stock which has been the subject of a notice as provided above, and also, upon ten (10) days' prior written notice to Borrower (which notice Borrower conclusively agrees is commercially reasonable), may change the time and/or place of such sale. 4 In the case of any sale by Lender of the Stock or any portion thereof on credit or for future delivery, which may be elected at the option and in the sole discretion of Lender, the Stock so sold may, at the sole option of Lender, either be delivered to the purchaser or retained by Lender until the selling price is paid by the purchaser, but in either event Lender shall incur no liability, to Borrower or otherwise, in case of failure of the purchaser to take up and pay for the Stock so sold. In case of any such failure, such Stock may be sold again by Lender in the manner provided in this Section 9. Borrower covenants and agrees that, during any period of sale or liquidation of the Stock by Lender, Borrower shall not sell any other stock of the Corporation if such sale would restrict or limit Lender's sale of the Stock under Rule 144 or other Rule of the Securities and Exchange Commission or if such sale by Borrower would cause or contribute to a decline in the share price of the Stock. Borrower further agrees in the event of any such sale or liquidation by Lender, to execute any and all forms, including, but not limited to, Forms 144 and customary broker's and seller's representation letters, to enable Lender to effect the sale of the Stock. Borrower shall further take and shall cause the Corporation to take all necessary actions to remove any restrictive legend affecting the Stock, and to assist in the effectuation of the sale of the Stock including, at Borrower's expense, the supplying of opinions of counsel customarily required to effect such sales. 9.3 Costs and Expenses. After deducting all of Lender's costs and expenses of every kind, including, but not limited to, legal fees and registration (Securities and Exchange Commission and other) fees and expenses, if any, incurred in connection with the sale of the Stock, Lender shall apply the residue of the proceeds of any sale or sales of the Stock against the Note and the other Secured Obligations, in the order of priority elected by Lender. Lender shall not incur any liability to Borrower or otherwise as a result of the sale of the Stock at any private sale or sales, and Borrower hereby waives any claim arising by reason of (i) the fact that the price or prices for which the Stock or any portion thereof is sold at such private sale or sales is less than the price which would have been obtained at a public sale or sales or is less than the amount due under the Note and other obligations secured hereby, even if Lender accepts the first offer received and does not offer the Stock or any portion thereof to more than one offeree, (ii) any delay by Lender in selling the Stock following an Event of Default hereunder, even if the price of the Stock thereafter declines, or (iii) the immediate sale of the Stock upon the occurrence of an Event of Default hereunder, even if the price of the Stock should thereafter increase. Borrower shall remain liable for any deficiency remaining due under the Note, this Stock Pledge Agreement, any of the other Security Documents or any related documents or instruments. 10. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given (i) upon being delivered personally (or by confirmed telefax or other electronic delivery method; or (ii) four (4) days after being mailed by certified mail, return receipt requested, postage prepaid, or (iii) one (1) day after being sent by Federal Express or other reputable overnight delivery service providing delivery confirmation, for next day delivery, in each case to the parties at the following address (or at such other address for a party as shall be specified by like notice): If to Borrower: Wilson Financial Corporation 7800 Belfort Parkway, Suite 100 Jacksonville, Florida 32256 Attention: J. Steven Wilson 5 Mr. J. Steven Wilson 7800 Belfort Parkway, Suite 100 Jacksonville, Florida 32256 With a copy to: Holland & Knight One Independent Drive, Suite 2000 Post Office Box 1559 Jacksonville, Florida 32201-1559 (32202 for street address) Attention: Malcolm Graham, Esq. If to Lender, to: Imagine Investments, Inc. 8150 No. Central Expressway Suite 1901 Dallas, Texas 75206 Attention: Gary Goltz. General Counsel With a copy to: Michael M. Fleishman, Esq. Greenebaurn Doll &. McDonald PLLC 3300 National City Tower Louisville, Kentucky 40202 11. MISCELLANEOUS. 11.1 Future Advances. This Stock Pledge Agreement also secures all additional loans and/or future advances that may be made hereafter at any time by Lender to Borrower. 11.2 Governing Law. The laws of the Commonwealth of Kentucky shall govern the construction of this Stock Pledge Agreement and the rights, remedies and duties of the parties hereunder. 11.3 Successors and Assigns. This Stock Pledge Agreement shall bind Borrower and its successors and assigns, and shall inure to the benefit of Lender and its successors and assigns. 11.4 Time of Essence. Time shall be of the essence in the performance of Borrower's obligations hereunder. 11.5 Captions. The several captions, headings, sections and subsections of this Stock Pledge Agreement are inserted for convenience only and shall be ignored in interpreting the provisions of this Stock Pledge Agreement. 11.6 Modifications. This Stock Pledge Agreement may be modified or amended only by written agreement executed by all of the parties hereto. 12. TERMINATION. This Pledge Agreement shall terminate when the Note and all the other Secured Obligations have been paid in full, at which time Lender shall reassign and redeliver, without recourse upon or warranty by Lender and at the expense of Borrower (or cause to be so reassigned and redelivered to Borrower or to such person or persons as Borrower shall designate), against receipt, such of the Stock (if any) as shall not have been sold 6 or otherwise applied by Lender pursuant to the terms hereof and shall still be held by it hereunder, together with appropriate instruments of reassignment and release. IN WITNESS WHEREOF, the parties have entered into this Stock Pledge Agreement as of the date first written above. WILSON FINANCIAL CORPORATION illegible /s/ J. Steven Wilson _________________________________ By: _______________________________ Witness President Title: ____________________________ ("Wilson") /s/ Catherine J. Gray /s/ J. Steven Wilson _________________________________ ____________________________________ Witness J. STEVEN WILSON ("Steven") (collectively, "Borrower") IMAGINE INVESTMENTS, INC. illegible /s/ Charles L. Greiner _________________________________ By: ________________________________ Witness Vice President Title: _____________________________ ("Lender") 7 EX-7.13 9 dex713.txt UNCONDITIONAL GUARANTY AGREEMENT Exhibit 7.13 UNCONDITIONAL GUARANTY AGREEMENT In consideration of the loan evidenced by the Term Promissory Note made by Wilson Financial Corporation ("Maker") in favor of Imagine Investments, Inc. ("Payee") dated February ___, 1999, in the original principal sum of $6,000,000.00 (the "Note"), the undersigned unconditionally guarantees the prompt payment of (i) the entire principal balance of the Note, (ii) all accrued interest upon the principal balance hereof, (iii) late fees, (iv) the amounts, if any, due pursuant to the In-Kind Note referred to in Section 12 of the Loan Agreement between Maker, Payee and Guarantor, dated on even date herewith, and (v) all attorneys' fees and costs and expenses of collection incurred by Payee, together with the costs and expenses of maintaining and securing collateral pursuant to all documents and instruments securing repayment of this Note, when due, whether by acceleration or otherwise regardless of the genuineness, validity or enforceability of this Note. The undersigned consents and agrees to be bound by all of the terms of this Note (as the same may be extended or renewed). The undersigned waives all rights and subrogation with respect to this Note or any collateral securing its payment and all rights of recourse or indemnity until this Note and all other obligations of Maker to Payee shall have been fully paid. If any payment made by Maker to Payee later deemed to be a preference or otherwise required to be repaid or returned, the amount of such return or repayment shall continue to be covered by this Guaranty. THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THE UNDERSIGNED MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN EVIDENCED BY THIS NOTE OR ANY RELATED LOAN OR LENDING TRANSACTION OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION THEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR PAYEE MAKING THE LOAN EVIDENCED BY THIS NOTE. THE UNDERSIGNED AGREES THAT THIS GUARANTY SHALL BE AND IS DEEMED TO BE INCORPORATED INTO AND MADE A PART OF THIS NOTE AS THOUGH A PART THEREOF. The liability of the undersigned shall in no way be affected by any renewal or extension of time of payment of the Note and any other instrument, indebtedness or liability, or by any release or surrender of other security or collateral or guaranty for the Note, or by delay in enforcement of payment of the principal or interest or of any security in connection therewith, or by any other indulgence Payee may grant Maker. The undersigned hereby declares to and covenants with Payee, its successors or assigns, that the undersigned has no defense whatever to any action, suit or other proceedings, at law or otherwise, that may be instituted under or on account of this Guaranty, including all questions as to the validity, regularity or enforceability of the obligation of Maker. Notwithstanding the death of the undersigned, this instrument shall be binding on the estate of the decedent as to any obligation incurred either before or after or extended after such death. Payee shall not be bound to exhaust its recourse against or upon the security or collateral it may hold or against any other person before being entitled to payment from the undersigned or of the amount hereby guaranteed. This Guaranty Agreement constitutes a guaranty of payment and not of collection. 1 Payee is hereby authorized and empowered, at its option to appropriate and apply to the payment and extinguishment of the liability of the undersigned under this Guaranty Agreement at any time after such liability shall become payable, any and all monies or other property of the undersigned and the proceeds thereof (including safekeeping or pledge) for this or any other liability of the undersigned to the Payee, and including any balance on deposit or otherwise for the account of, or to the credit of, or belonging to, the undersigned. Payee is hereby authorized and empowered, at its option, at any time after the liability created by the foregoing guaranty becomes payable, to sell assign and deliver any securities or property at any time given unto or left in the possession or custody of Payee for any purpose (including safekeeping or pledge) for this or any other liability of the undersigned or in which any of the undersigned may have an interest, at public or private sale, for cash, upon credit, or for future delivery, all at the option of Payee or any of its officers, without demand, advertisement, or notice, all of which are hereby expressly waived. Upon any sale or sales at public or private sale, above provided for, Payee, its successors or assigns, may bid for and/or purchase the whole or any part of such securities or property free from any right of redemption, which is hereby waived and released. In case of any sale by Payee of any of said securities or property on credit or for future delivery, the securities and property sold may be retained by Payee until the selling price is paid by the purchaser and Payee shall incur no liability in case of failure of the purchaser to take up and pay for the securities or property so sold. In case of any such failure the securities or property may be again sold. Notwithstanding any provisions of this Guaranty to the contrary, the maximum amount which Guarantor shall be required to pay hereunder, shall be the total and aggregate sum of $9,000,000 in U.S. Dollars. Notwithstanding the foregoing maximum liability of Guarantor, Guarantor guarantees payment of interest on the indebtedness incurred pursuant to this Guaranty and all fees, charges and costs of collecting the indebtedness, including reasonable attorneys' fees. This Guaranty shall terminate on December 31, 2005 ("Termination Date"). Said Termination Date shall not affect the liability of the Guarantor with respect to (a) obligations created or incurred prior to the Termination Date; or (b) extensions or renewals of, interest accruing on, or fees, costs or expenses incurred with respect to the obligations on or after the Termination Date. Guarantor agrees that in the event of any litigation for collection of or relating to this Guaranty, jurisdiction and venue shall be proper and appropriate in any court sitting in Louisville or Jefferson County Kentucky, and Guarantor hereby consents to such jurisdiction and venue. 2 IN WITNESS WHEREOF, the undersigned Guarantor has executed this Unconditional Guaranty Agreement as of the date first above written. illegible /s/ J. Steven Wilson ________________________________ ___________________________________ Witness J. STEVEN WILSON ("Guarantor") /s/ Catherine J. Gray ________________________________ Witness 3 EX-7.14 10 dex714.txt STOCK PLEDGE AGREEMENT EXHIBIT 7.14 STOCK PLEDGE AGREEMENT THIS STOCK PLEDGE AGREEMENT is entered into and effective as of February 24, 1999, by and among: (i) J. STEVEN WILSON, an individual of Jacksonville, Florida ("Guarantor"`), (ii) WILSON FINANCIAL CORPORATION, a Florida corporation having its principal office in Jacksonville, Florida ("Borrower"), and (iii) IMAGINE INVESTMENTS, INC., a Delaware corporation having its principal office in Dallas, Texas ("Lender"). RECITALS: A. Pursuant to the terms of that certain Loan Agreement of even date herewith among Borrower, Lender and Guarantor (the "Loan Agreement"), and that certain Term Promissory Note of even date herewith, executed by Borrower in favor of Lender in the face principal amount of Six Million Dollars ($6,000,000.00) (the "Note"), as the same may hereafter be amended or otherwise modified from time to time in writing by the parties thereto, Lender has agreed to extend a term loan to Borrower in the amount of Six Million Dollars ($6,000,000) (the "Term Loan"). B. Guarantor has personally guaranteed the obligations of Borrower to Lender pursuant to the Note, the Term Loan and the In-Kind Note as defined in Section 12 of the Loan Agreement. C. Guarantor currently owns 100% of the issued and outstanding preferred capital stock of Borrower and 59.8 % of the issued and outstanding common capital stock of Borrower. D. In order to induce Lender to make the Term Loan, without which inducement Lender would be unwilling to do so, Guarantor has agreed to pledge all of the shares of the issued and outstanding common and preferred capital stock of Borrower owned by Guarantor to Lender, to secure the payment of the Term Loan and the other obligations of Borrower to Lender, including, without limitation, the In-Kind Note. AGREEMENT: NOW, THEREFORE, the parties hereby agree as follows 1. PLEDGE AND DEPOSIT OF SHARES. Guarantor hereby pledges, assigns and grants a security interest to Lender in 598 shares of the common stock of Borrower and 336 shares of the preferred stock of Borrower (collectively, the "Stock"), as represented by Certificate Nos. 2 and 20 with respect to the common stock and Certificate Nos. 2 and 3 with respect to the preferred stock, now standing in Guarantor's name and constituting 59.8% of the issued and outstanding common capital stock of Borrower and 100% of the issued and outstanding preferred capital stock of Borrower, all as collateral security for the full and punctual payment and due performance by Borrower and Guarantor of (i) the Note and Guarantor's guaranty of the Note, and (ii) all other liabilities, obligations and indebtedness of whatever kind of Borrower and Guarantor to Lender, whether created directly or acquired by Lender by assignment or otherwise, whether now existing or hereafter created, arising or acquired, absolute or contingent, joint or several, due or to become due, and including, but not limited to, future advances by Lender to Borrower and Guarantor. All of the foregoing are referred to collectively herein as the "Secured Obligations." 1 2. FURTHER PLEDGE AND DELIVERIES. The certificates or other instruments evidencing all new shares of capital stock and all other securities, rights, warrants, options and the like hereafter created in respect of the Stock, whether by stock split, stock dividend, merger, consolidation or otherwise, shall be delivered by Guarantor to, and shall be held by, Lender under the terms and conditions of this Stock Pledge Agreement and subject to the pledge and security interest herein granted and the term "Stock," as used herein, shall be deemed to include all such new shares, securities, rights, warrants, options and the like. At its sole option, Lender may transfer the shares of Stock into its own name. 3. COVENANTS. During the period the Stock is being held as security hereunder, Guarantor shall not, without the prior written consent of Lender, allow Borrower to (i) issue any additional capital stock or other equity securities of any kind or options, subscription rights, warrants or other instruments with respect thereto or any other instruments convertible into shares of its capital stock, or sell or issue any treasury stock, (ii) merge into or with or consolidate with any other corporation or business or otherwise participate in any reorganization or sell or lease to others all or substantially all of its assets, (iii) amend its Articles of Incorporation or By-Laws in any manner that would have a material adverse effect on Lender's rights with respect to the Stock, or liquidate or dissolve or take any steps to effect same, or (iv) effect a recapitalization or alter its capital structure. 4. VOTING RIGHTS; DIVIDENDS, ETC. So long as no Event of Default shall have occurred, Guarantor shall be entitled to exercise any and all voting and/or consensual rights and powers relating or pertaining to the Stock or any part thereof for any purpose not inconsistent with the terms of this Stock Pledge Agreement. All dividends and distributions, regardless whether in cash, stock, rights, options or other property, and all stock splits, stock dividends and the like and the proceeds of all redemptions and liquidations that are made, paid or declared with respect to the Stock shall be paid directly to Lender, and shall, at Lender's sole election, either be applied as a payment on the Secured Obligations or held by Lender as additional security for the Secured Obligations (and Borrower shall execute all instruments in connection therewith as are requested by Lender). 5. STATUS OF THE STOCK. Guarantor hereby represents and warrants to Lender that (a) the Stock is validly issued and outstanding, fully paid and non-assessable; and (b) Guarantor is the registered and absolute beneficial owner of 59.8% of the issued and outstanding common capital stock of Borrower and 100% of the issued and outstanding preferred capital stock of Borrower; (c) the Stock is free and clear of liens, charges and encumbrances in favor of persons other than Lender; (d) Guarantor has the full power and authority to pledge the Stock to Lender pursuant to this Stock Pledge Agreement; and (e) Borrower is a corporation validly existing under the laws of the State of Florida. No part of the Stock shall be sold, transferred or further assigned by Guarantor without the prior written consent of Lender, which consent may be arbitrarily withheld so long as this Stock Pledge Agreement is in effect. 6. MAINTENANCE OF PRIORITY OF PLEDGE. Guarantor shall be liable for and shall from time to time pay and discharge all taxes, assessments and governmental charges imposed upon the Stock by any federal, state or local authority, the liens of which would or might be held prior to the right of Lender in and to the Stock or which are imposed on the holders and/or registered owners of the Stock. Guarantor shall not, at any time while this Stock Pledge Agreement is in effect, do or suffer any act or thing whereby the rights of Lender in the Stock would or might be materially impaired or diminished. Guarantor shall execute and deliver such further documents and take such further actions as may be required to confirm the rights 2 of Lender in and to the Stock or otherwise to effectuate the intention of this Stock Pledge Agreement. 7. EVENTS OF DEFAULT. Each of the following shall be deemed an "Event of Default" hereunder: 7.1 Cross Default. The occurrence of any Event of Default under the Note or any "Security Document," as such term is defined in the Note, or under any other related instrument or agreement; or 7.2 Default Hereunder. The occurrence of any default of any kind whatsoever under the terms, covenants and conditions of this Stock Pledge Agreement; or 7.3 Breach of Covenants. If any covenant, representation or warranty made in this Stock Pledge Agreement or in any other Security Document or related instruments or agreements executed by Guarantor or Borrower in connection with the Term Loan shall prove to be untrue and misleading in any respect; or 8. REMEDIES UPON DEFAULT. Upon the occurrence of any Event of Default referred to in Section 7 above, Lender shall have all rights and remedies in and against the Stock and otherwise of a secured party under the Uniform Commercial Code as enacted in the Commonwealth of Kentucky and the State of Florida (the "UCC") and all other applicable laws, and shall also have all of the rights provided herein in the Note and in all other Security Documents, all of which rights and remedies shall be cumulative to the fullest extent permitted by law. In connection with the foregoing, Lender shall have the right: 8.1 Voting Rights. To exercise all voting rights and privileges whatsoever respect to the Stock, and to that end Guarantor hereby constitutes Lender as his proxy and attorney-in-fact for all purposes of voting the Stock, and this appointment shall be deemed coupled with an interest and is and shall be irrevocable until the Secured Obligations have been fully paid and this Stock Pledge Agreement terminated, and all persons whatsoever shall be conclusively entitled to rely upon Lender's verbal or written certification that it is entitled to vote the Stock hereunder. Guarantor shall execute and deliver to Lender any and all additional proxies and powers of attorney that Lender may desire in order to vote more effectively the Stock in its own name. Upon any Event of Default hereunder, Lender may vote the Stock to remove the directors and officers of Borrower and to elect new such officers and directors who shall thereafter manage the affairs of Borrower, operate any of its properties, carry on any business, and otherwise take any action with respect thereto as they shall deem necessary and appropriate, and may also liquidate Borrower and its business, and may authorize the borrowing of money in the name of Borrower and the pledge of its assets to secure such borrowing. 8.2 Right of Sale. To declare the Note and the other Secured Obligations immediately due and payable in full, and to sell the Stock in one or more lots, and from time to time, upon ten (10) business days' prior to written notice to Guarantor of the time and place of sale (which notice Guarantor hereby conclusively agrees is commercially reasonable), for cash or upon credit or for future delivery, Guarantor hereby waiving all rights, if any, of marshaling the Stock and any other security for the payment of the Note and other Secured Obligations, and at the option and in the sole discretion of Lender, to either: (i) Sell the Stock at a public sale or sales, including a sale at or on any broker's board or stock exchange; or 3 (ii) Sell the Stock at a private sale or sales. Lender may bid for and acquire the Stock or any portion thereof at any public sale, free from any redemption rights of Guarantor, and in lieu of paying cash therefor, may make settlement for the selling price of the Stock or any part thereof by crediting the net selling price of the Stock against the Note and other Secured Obligations, after deducting all of Lender's costs and expenses of every kind and nature therefrom, including Lender's attorneys' fees incurred in connection with realizing upon the Stock and enforcing the Security Documents and the Note, provided the same is not prohibited by the laws of the Commonwealth of Kentucky. From time to time Lender may, but shall not be obligated to, postpone the time of any proposed sale of any of the Stock which has been the subject of a notice as provided above, and also, upon ten (10) days' prior written notice to Guarantor (which notice Guarantor conclusively agrees is commercially reasonable), may change the time and/or place of such sale. In the case of any sale by Lender of the Stock or any portion thereof on credit or for future delivery, which may be elected at the option and in the sole discretion of Lender, the Stock so sold may, at the sole option of Lender, either be delivered to the purchaser or retained by Lender until the selling price is paid by the purchaser, but in either event Lender shall incur no liability, to Guarantor or otherwise, in case of failure of the purchaser to take up and pay for the Stock so sold. In case of any such failure, such Stock may be sold again by Lender in the manner provided in this Section 8. Guarantor covenants and agrees that, during any period of sale or liquidation of the Stock by Lender, Guarantor shall not sell any other stock of Borrower if such sale would restrict or limit Lender's sale of the Stock under Rule 144 or other Rule of the Securities and Exchange Commission or if such sale by Guarantor would cause or contribute to a decline in the share price of the Stock. Guarantor further agrees in the event of any such sale or liquidation by Lender to execute any and all forms, including, but not limited to, Forms 144 and customary broker's and seller's representation letters, to enable Lender to effect the sale of the Stock. Guarantor shall further take and shall cause Borrower to take all necessary actions to remove any restrictive legend affecting the Stock, and to assist in the effectuation of the sale of the Stock including, at Guarantor's expense, the supplying of opinions of counsel customarily required to effect such sales. 8.3 Costs and Expenses. After deducting all of Lender's costs and expenses of every kind, including, but not limited to, legal fees and registration (Securities and Exchange Commission and other) fees and expenses, if any, incurred in connection with the sale of the Stock, Lender shall apply the residue of the proceeds of any sale or sales of the Stock against the Note and the other Secured Obligations, in the order of priority elected by Lender. Lender shall not incur any liability to Guarantor or otherwise as a result of the sale of the Stock at any private sale or sales, and Guarantor hereby waives any claim arising by reason of (i) the fact that the price or prices for which the Stock or any portion thereof is sold at such private sale or sales is less than the price which would have been obtained at a public sale or sales or is less than the amount due under the Note and other obligations secured hereby, even if Lender accepts the first offer received and does not offer the Stock or any portion thereof to more than one offeree, (ii) any delay by Lender in selling the Stock following an Event of Default hereunder, even if the price of the Stock thereafter declines, or (iii) the immediate sale of the 4 Stock upon the occurrence of an Event of Default hereunder, even if the price of the Stock should thereafter increase. Guarantor shall remain liable for any deficiency remaining due under the Note, this Stock Pledge Agreement, any of the other Security Documents or any related documents or instruments. 9. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given (i) upon being delivered personally (or by confirmed telefax or other electronic delivery method; or (ii) four (4) days after being mailed by certified mail, return receipt requested, postage prepaid, or (iii) one (1) day after being sent by Federal Express or other reputable overnight delivery service providing delivery confirmation, for next day delivery, in each case to the parties at the following address (or at such other address, for a party as shall be specified by like notice): If to Guarantor: J. Steven Wilson Wilson Financial Corporation 7800 Belfort Parkway, Suite 100 Jacksonville, Florida 32256 With a copy to: Holland &. Knight One Independent Drive, Suite 2000 Post Office Box 1559 Jacksonville, Florida 32201-1559 (32202 for street address) Attention: Malcolm Graham, Esq. If to Borrower: Wilson Financial Corporation 7800 Belfort Parkway, Suite 100 Jacksonville, Florida 32256 Attention: J. Steven Wilson With a copy to: Holland & Knight One Independent Drive, Suite 2000 Post Office Box 1559 Jacksonville, Florida 32201-1559 (32202 for street address) Attention: Malcolm Graham, Esq. If to Lender, to: Imagine Investments, Inc. 8150 No. Central Expressway Suite 1901 Dallas, Texas 75206 Attention: Gary Goltz, General Counsel With a copy to: Michael M. Fleishman, Esq. Greenebaum Doll & McDonald PLLC 3300 National City Tower Louisville, Kentucky 40202 5 10. MISCELLANEOUS. 10.1 Future Advances. This Stock Pledge Agreement also secures all additional loans and/or future advances that may be made hereafter at any time by Lender to Borrower and/or Guarantor. 10.2 Governing Law. The laws of the Commonwealth of Kentucky shall govern the construction of this Stock Pledge Agreement and the rights, remedies and duties of the parties hereunder. 10.3 Successors and Assigns. This Stock Pledge Agreement shall bind Guarantor and his successors and assigns, and shall inure to the benefit of Lender and its successors and assigns. 10.4 Time of Essence. Time shall be of the essence in the performance of Guarantor's obligations hereunder. 10.5 Captions. The several captions, headings, sections and subsections of this Stock Pledge Agreement are inserted for convenience only and shall be ignored in interpreting the provisions of this Stock Pledge Agreement. 10.6 Modifications. This Stock Pledge Agreement may be modified or amended only by written agreement executed by all of the parties hereto. 11. TERMINATION. This Stock Pledge Agreement shall terminate when the Note and all the other Secured Obligations have been paid in full, at which time Lender shall reassign and redeliver, without recourse upon or warranty by Lender and at the expense of Guarantor (or cause to be so reassigned and redelivered to Guarantor or to such person or persons as Guarantor shall designate), against receipt, such of the Stock (if any) as shall not have been sold or otherwise applied by Lender pursuant to the terms hereof and shall still be held by it hereunder, together with appropriate instruments of reassignment and release. IN WITNESS WHEREOF, the parties have entered into this Stock Pledge Agreement as of the date first written above. illegible /s/ J. Steven Wilson _________________________ ____________________________________ Witness J. STEVEN WILSON ("Guarantor") WILSON FINANCIAL CORPORATION Catherine J. Gray /s/ J. Steven Wilson _________________________ By:_________________________________ Witness President Title:______________________________ ("Borrower") 6 IMAGINE INVESTMENTS, INC. illegible By: /s/ Charles L. Greiner - --------------------------------- --------------------------------- Witness Title: Vice President ------------------------------ ("Lender") 7 EX-7.15 11 dex715.txt IN-KIND NOTE EXHIBIT 7.15 IN-KIND NOTE $375,548.93 Camden, Georgia February 28, 2000 FOR VALUE RECEIVED, Wilson Financial Corporation, a Florida corporation with principal office and place of business in Jacksonville, Florida ("Maker"), promises and agrees to pay the order of Imagine Investments, Inc., a Delaware corporation, or to any holder of this Note ("Payee"), the principal sum of $375,548.93, together with interest upon such principal balance at the rate provided below, in legal tender of the United States of America. The unpaid principal balance of, and all accrued interest on, this Note shall be due and payable in full on February 28, 2001, which date shall be the final maturity date of this Note. 1. Interest Rate. The principal balance of this Note shall bear interest at the rate of twelve percent (12%) per annum. All parties hereto hereby specifically agree that this Note has been delivered in the Commonwealth of Kentucky and that the laws of the Commonwealth of Kentucky shall govern this Note. All payment under this Note shall be paid to Payee at 8150 North Central Expressway, Suite 1901, Dallas, Texas 75206, or to such other person or at such offer place as may be designated in writing by Payee or any subsequent holder of this Note. 2. Payment of Interest. All accrued interest on the principal balance of this Note shall be paid at maturity. All interest on the principal balance of this Note shall be computed on the basis of the actual number of days elapsed over an assumed year of 360 days. 3. Repayment of Principal. The principal balance of this Note shall be paid in full at the maturity date or earlier acceleration of this Note. This Note may be prepaid in whole or in part at any time and from time to time without premium or penalty. 4. Overdue Payments; Default Rate. All overdue payments of principal or interest on this Note shall bear additional interest until paid in full at the rate per annum (calculated on the basis of an assumed year of 360 days as aforesaid) of five percent (5%) per annum in excess of the rate otherwise payable under the terms of this Note or the highest rate allowed by applicable law, whichever is lower, and shall be due and payable on demand of the holder hereof. 5. Security. This Note is secured by: (i) a lien upon, and security interest in, certain shares of stock of Riverside Group, Inc., owned by Maker, pursuant to a Stock Pledge Agreement of even date herewith between Maker and Payee, (ii) the personal guaranty of Guarantor pursuant to the Unconditional Guaranty Agreement of even date herewith, and (iii) a lien upon, and security interest in, certain shares of stock of Maker pursuant to a Stock Pledge Agreement of even date herewith between Guarantor and Payee. This Note has been issued pursuant to the Loan Agreement (such Loan Agreement and the foregoing Stock Pledge Agreements and Unconditional Guaranty Agreement are hereinafter collectively referred to as the "Security Documents"), and is entitled to all the benefits of the Security Documents. 6. Events of Default. Each of the following events shall constitute an event of default under this Note, the occurrence of any of which shall entitle the holder hereof to declare the entire principal balance of this Note, together with all accrued interest and all other liabilities, indebtedness and obligations of Maker and/or Guarantor to Payee, whether now existing or hereafter created, to be immediately due and payable, and to take any and all action allowed Payee by law or equity, under the terms of this Note, under the terms of any of the Security Documents, and under the terms of any other agreements between Maker and/or Guarantor and Payee. (a) The failure of Maker to make any payment of principal or interest provided for in this Note on the date upon which it is due; or (b) The occurrence of an Even of Default as described in this Note or any Security Document; 7. No Waiver, Cumulative Remedies. The failure of Payee to exercise any of its rights and remedies shall not constitute a waiver of the right to exercise them at that or any other time. All rights and remedies of Payee in the event of a default shall be cumulative to the greatest extent permitted by law. 8. Expenses. If there is any default under this Note or any Security Document and this Note is placed in the hands of any attorney for collection or is collected through any court including any bankruptcy court, Maker promises and agrees to pay to Payee its attorneys fees, court costs, and all other expenses incurred in collecting or attempting to collect or securing or attempting to secure this Note as provided by the laws of the Commonwealth of Kentucky, or any other state where the collateral or any part of it is situated. This section shall be deemed supplemental to, and not to be in substitution for, that section of any Security Document dealing with the reimbursement of expenses. 9. Waivers. Maker waives (a) presentment, demand, notice of dishonor, protest, notice of protest and non-payment, and (b) all exemptions to which Maker may now or hereafter be entitled under the laws of the Commonwealth of Kentucky, of any other state, or of the United States, and agrees that Payee shall have the right (i) to grant Maker or any guarantor of this Note any extension of time for payment of this Note or any other indulgence or forbearance whatsoever, and (ii) to release any security for or guarantor of payment of this Note, without in any way affecting the liability of Maker under this Note or the Guarantor under the Security Documents, and without waiving any rights Payee may have under this Net or by virtue of the laws of the commonwealth of Kentucky, or any other state of the United States. 10. Time of Essence. Time is of the essence in the payment and performance of all of Maker's obligations under this Note, the Security Documents and all documents securing this Note or relating hereto. 11. Venue and Jurisdiction. Maker further agrees that in the event of any litigation for collection of or relating to this note, ,jurisdiction and venue shall be proper and appropriate in any court sitting in Louisville or Jefferson County Kentucky, and Maker hereby consents to such jurisdiction and venue. 12. Waiver of Jury Trial. MAKER VOLUNTARILY AND INTENTIONALLY WAIVES AND SHALL NOT ASSERT ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING FROM OR CONNECTED WITH THIS NOTE, THE SECURITY DOCUMENTS OR ANY AGREEMENT MADE OR CONTEMPLATED TO BE MADE IN CONNECTION THEREWITH, OR ANY COURSE OF DEALING, COURSE OF CONDUCT, STATEMENT OR ACTIONS OF ANY PARTY IN CONNECTION WITH THIS NOTE. 13. Limitation on Interest. It is the intention of the parties hereto to conform strictly to applicable usury laws. Accordingly, all agreements between Maker and Payee with respect to this Note and the Loan Documents, as defined in the Loan Agreement, are hereby expressly limited so that in no event, whether by reason of acceleration of maturity or otherwise, shall the amount paid or agreed to be paid to Payee or charged by Payee for the use, forbearance of detention of the money to be lent hereunder or otherwise, exceed the maximum amount allowed by law. If this loan would be usurious under applicable law, then notwithstanding anything to the contrary in this Note or in the loan Document: (a) the aggregate of all consideration which constitutes interest under applicable law that is contracted for, taken, reserved, charged or received under this Note or the Loan Documents shall under no circumstances exceed the maximum amount of interest allowed by applicable law, and any excess shall be credited on this Note by the holder thereof, or, at Payee's option, refunded to Maker, and (b) if maturity is consideration which constitutes interest may never include more than the maximum amount allowed by applicable law, and any excess shall be credited on this Note by the holder thereof, or at Payee's option, refunded to Maker; and (b) if maturity is accelerated by reason of an election by Payee, or in the event of an prepayment, then any consideration which constitutes interest may never include more than the maximum amount allowed by applicable law. In such case, excess interest, if any provided for in this Note, the Loan Documents or otherwise, to the extent permitted by applicable law, shall be amortized, prorated, allocated and spread from the date of advance until payment in full so that the actual rate of interest is uniform through the term hereof. If such amortization, proration, allocation and spreading is not permitted under applicable law, then such excess interest shall be canceled automatically as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited on this Note, or, at Payee's option, refunded to Maker. The terms and provisions of this Section shall control and supersede every other provision of this Note and the Loan Documents. This Note is a contract made under and shall be construed in accordance with and governed by the laws of Kentucky, except that if at any time the laws of the United States America permit Payee to contract for, take, reserve, charge or receive a higher rate of interest than is allowed by the laws of Kentucky (whether such federal laws directly so provide or refer to the law of any state), then such federal laws shall to such extent govern as to the rate of interest which Payee may contract for, take, reserve, charge or receive under this Note. 14. Partial Invalidity. If any one or more of the provisions of this Note, or the applicability of any such provision to a specific situation, shall be held invalid or unenforceable, such provision shall be modified to the minimum extent necessary to make it or its application valid and enforceable, and the validity and enforceability of all other provisions of this Note and all other applications of any such provision shall not be affected thereby. In the event such provision(s) cannot be modified to make it or them enforceable, the invalidity or enforceability of any such provision(s) cannot be modified to make it or them unenforceable, the invalidity or unenforceability of any such provision(s) of this Note shall not impair the validity or enforceability of any other provision of this Note. 15. Binding Effect. This Note shall bind the successors and assigns of Maker and shall inure to the benefit of Payee and its successors and assigns. Maker shall not assign or allow the assumption of its rights and obligations hereunder without Payee's prior written consent. [Remainder of page intentionally left blank. Signature page follows.] In Witness Whereof, the undersigned Maker has executed this Note as of the date first above written. WILSON FINANCIAL CORPORATION illegible By: /s/ Catherine J. Gray - ----------------------------------- --------------------------------- Witness Title: V.P. ------------------------------ - ----------------------------------- ("Maker") Witness EX-7.16 12 dex716.txt UNCONDITIONAL GUARANTY AGREEMENT EXHIBIT 7.16 UNCONDITIONAL GUARANTY AGREEMENT In consideration of the loan evidenced by the Term Promissory Note made by Wilson Financial Corporation ("Maker") in favor of Imagine Investments, Inc. ("Payee") dated February 28, 2000, in the original principal sum of $375,548.93 (the "Note"), the undersigned unconditionally guarantees the prompt payment of (i) the entire principal balance of the Note, (ii) all accrued interest upon the principal balance hereof, (iii) late fees and (iv) all attorneys' fees and costs and expenses of collection incurred by Payee, together with the costs and expenses of maintaining and securing collateral pursuant to all documents and instruments securing repayment of this Note, when due, whether by acceleration or otherwise regardless of the genuineness, validity or enforceability of this Note. The undersigned consents and agrees to be bound by all of the terms of this Note (as the same may be extended or renewed). The undersigned waives all rights and subrogation with respect to this Note or any collateral securing its payment and all rights of recourse or indemnity until this Note and all other obligations of Maker to Payee shall have been fully paid. If any payment made by Maker to Payee later deemed to be a preference or otherwise required to be repaid or returned, the amount of such return or repayment shall or otherwise required to be repaid or returned, the amount of such return or repayment shall continue to be covered by this Guaranty. THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THE UNDERSIGNED MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN EVIDENCED BY THIS NOTE OR ANY RELATED LOAN OR LENDING TRANSACTION OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION THEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR PAYEE MAKING THE LOAN EVIDENCED BY THIS NOTE. THE UNDERSIGNED AGREES THAT THIS GUARANTY SHALL BE AND IS DEEMED TO BE INCORPORATED INTO AND MADE A PART OF THIS NOTE AS THOUGH A PART THEREOF. The liability of the undersigned shall in no way be affected by any renewal or extension of time of payment of the Note and any other instrument, indebtedness or liability, or by any release or surrender of other security or collateral or guaranty for the Note, or by delay in enforcement of payment of the principal or interest or of any security in connection therewith, or by any other indulgence Payee may grant Maker. The undersigned hereby declares to and convenants with Payee, its successors or assigns, that the undersigned has no defense whatever to any action, suit or other proceedings, at law or otherwise, that may be instituted under or on account of this Guaranty, including all questions as to the validity, regularity or enforceability of the obligation of Maker. Notwithstanding the death of the undersigned, this instrument shall be binding on the estate of the decedent as to any obligation incurred either before or after or extended after such death. Payee shall not be bound to exhaust its recourse against or upon the security or collateral it may hold or against any other person before being entitled to payment from the undersigned or of the amount hereby guaranteed. The Guaranty Agreement constitutes a guaranty of payment and not of collection. Payee is hereby authorized and empowered, at its option, at any time after the liability created by the foregoing guaranty becomes payable, to sell assign and deliver any securities or property at any time given unto or left in the possession or custody of Payee for any purpose (including safekeeping or pledge) for this or any other liability of the undersigned or in which any of the undersigned may have an interest, at public or private sale, for cash upon credit or for future delivery, all at the option of Payee or any of its officers, without demand, advertisement, or notice, all of which are hereby expressly waived. Upon any sale or sales at public or private sale, above provided for, Payee, its successors or assigns, may bid for and/or any part of such securities or property free from any right of redemption, which is hereby waived and released. In case of any sale by Payee of any of said securities and property on credit or for future delivery, the securities and property sold may be retained by Payee until the selling price is paid by the purchaser and Payee shall incur no liability is case of failure of the purchaser to take up and pay for the securities or property so sold. In case of any such failure the securities or property may be again sold. illegible /s/ J. Steven Wilson - ------------------------------- ----------------------------------- Witness J. Steven Wilson ("Guarantor") /s/ Catherine J. Gray - ------------------------------- Witness EX-7.17 13 dex717.txt LETTER AGREEMENT DATED FEBRUARY 24, 1999 EXHIBIT 7.17 BANK BOSTON, N.A. February 24, 1999 Imagine Investments, Inc. 8150 North Central Expressway, Suite 1901 Dallas, Texas 75206 Attn: Gary Goltz, General Counsel Wilson Financial Corporation 7800 Belfort Parkway Jacksonville, Florida 32256 Attn: J. Steven Wilson, President Re: Release of Collateral for Loan from Bank Boston, NA. to Wilson Financial Corporation Gentlemen: The purpose of this letter is to confirm the understanding and agreement of Bank Boston, N.A. (the "Bank"), concerning (i) the release of certain stock pledged as collateral for payment of the indebtedness owed by Wilson Financial Corporation, a Florida corporation (the "Borrower") to the Bank, and (ii) the grant by the Borrower to Imagine Investments, Inc., a Delaware corporation ("Imagine"), of a second lien on, and security interest in, the "Stock," as hereinafter defined. As of the date hereof, the Bank represents to Imagine that the Borrower has pledged a total of 2,224,961 shares of stock (the "Stock") of Riverside Group, Inc., a Florida corporation, owed by the Borrower to the Bank, as collateral for payment of the indebtedness owed by the Borrower to the Bank (the "Bank Boston Indebtedness"), the current outstanding principal balance of which is $3,000,000 as of the date hereof. The Bank agrees not to increase the outstanding principal balance of the Bank Boston Indebtedness and not to make any other loan to Borrower or to J. Steven Wilson ("Steven") and not to accept any guaranty from either of them that would be secured by a pledge of or lien on the Stock. The Borrower has advised the Bank that it intends to obtain a loan from Imagine in the amount of $6,000,000 (the "Imagine Loan"), which Loan will enable the Borrower to make its regularly scheduled payments of principal and interest on the Bank Boston Indebtedness, as well as to pay other obligations of the Borrower. The Borrower and Imagine have further advised the Bank that Imagine is not willing to make the Imagine Loan unless Imagine obtains a lien on and security interest in all of the Stock and other stock owned by the Borrower, and unless the Bank agrees to the pledge by the Borrower of all the stock of the Corporation owned by Borrower (of which the Stock is a part) and agrees to release portions of the Stock on a pro-rata basis, as principal reductions in the Bank Boston Indebtedness are made by the Borrower. The Bank hereby irrevocably consents to (i) the grant by Borrower and Steven of an option in favor of Imagine for Imagine to purchase 785,173 shares of the Stock (and/or other Imagine Investments, Inc. Wilson Financial Corporation - ---------------------------- Page 2 shares of stock of the Corporation) and (ii) also the exercise of such option by Imagine, so long as $1,430,977.70 (785,173 shares x $1.35) of the purchase proceeds are applied to the Bank Boston Indebtedness, if it has not already then been paid off, at which time the Bank shall release its lien on the subject shares. The Bank hereby irrevocably consents to the making of the Imagine Loan to Borrower and the grant by the Borrower in favor of Imagine of a lien on, and security interest in, all of the Stock to secure the Imagine Loan (it being agreed and understood, that such lien on and security interest in the Stock in favor of Imagine shall be junior to the lien of the Bank on the Stock until such Stock is released by the Bank). The Bank further irrevocably agrees that upon its receipt of any payment of the principal of the Bank Boston Indebtedness (from whatever source), the Bank shall release portions of the Stock from the lien and security interest of the Bank thereon, based on the release of one (1) share of the Stock for each $1.35 of payment of principal of the Bank Boston Indebtedness; however, upon the final payment of principal of the Bank Boston Indebtedness, the Bank shall only release the remaining shares of Stock that it holds, upon the payment of the principal balance, plus accrued interest and the Bank's out of pocket costs. The Bank irrevocably agrees that upon its release of portions of the Stock from time to time as contemplated above, the Bank will obtain and deliver directly to Imagine at its address listed above, or to such other address as Imagine may notify the Bank in writing from time to time hereafter, original certificates representing such released shares of the Stock. Borrower and Imagine recognize that at the time the Bank is to release shares of the Stock to Imagine, the Bank may not be in possession of original certificates representing the exact number of shares to be released. If that is the case, the Bank agrees to promptly send to the transfer agent one or more certificates, representing shares aggregating not less than the number the Bank is to release to Imagine, and request that the certificates be divided into two or more certificates, one of which will be for the number of shares the Bank is to release to Imagine. The Bank will request of the transfer agent that it send the released shares directly to Imagine; however, if the transfer agent sends the certificate for the released shares back to the Bank, the Bank will immediately upon receipt forward same to Imagine. At the time the Bank sends shares to Imagine or to the transfer agent, the Bank will, under separate cover, send Imagine an executed blank stock power, if after doing so, the Bank will still have adequate powers for its own needs. Notwithstanding anything herein to the contrary, the Bank shall at all times, prior to the termination of the Agreement for Additional Compensation between the Bank and the Borrower, dated November 30, 1994, a copy of which is attached hereto as Exhibit A and incorporated herein for reference (the "Agreement"), hold at least 150,000 shares of the Stock, adjusted for dilution as provided in the Agreement (the "Base Shares"). Despite the Bank's option to purchase all or any portion of the Base Shares, as set forth in the Agreement, Imagine shall retain its lien in the Base Shares. If the Bank exercises its option to purchase the Base Stock, Imagine's lien thereon shall terminate and the Bank Shall forward such portion of the purchase proceeds, if any, as would otherwise go to the Borrower, to Imagine. Notwithstanding anything herein to the contrary, in the event of a default of the Bank Boston Indebtedness, the Bank may exercise all remedies available to it under the various instruments and agreements evidencing and governing the Bank Boston Indebtedness, Imagine Investments, Inc. Wilson Financial Corporation - ---------------------------- Page 3 provided, the Bank first gives five (5) business days notice (the "Notice") to Imagine and Borrower of its intent to exercise such remedies. The Bank shall give Notice in writing and have it (1) personally delivered against a written receipt, (2) sent by confirmed telephonic facsimile, or (3) delivered to a reputable express messenger service (such as Federal Express, DHL Courier and United Parcel Service) for overnight delivery, addressed as follows: To Borrower: Wilson Financial Corporation 7800 Belfort Parkway Jacksonville, FL 32256 Attn: J. Steven Wilson Telephone: (904) 231-2200 Fax: (904) 296-0584 To Imagine: Imagine Investments, Inc. 8150 North Central Expressway Suite 1901 Dallas, Texas 75206 Attn: Gary Goltz, General Counsel Telephone: (214) 365-1905 Fax: (214) 365-6905 cc: Michael M. Fleishman, Esq. Greenebaum Doll & McDonald PLLC 3300 National City Tower Louisville, Kentucky 40202 Telephone: (502) 587-3530 Fax: (502) 540-2131 With respect to any payments received by the Bank during the five (5) business day Notice period, the release provision set forth above shall remain in full force and effect, and therefore, subject to our rights to retain shares for purposes of the Agreement, with respect of any payment received by the Bank during that period, the Bank shall release one (1) share of the Stock for each $1.35 of payment of principal that the Bank Boston Indebtedness received. Without including any amounts due as a result of the acceleration of the Bank Boston Indebtedness, if the payment referenced in this paragraph is sufficient to cure the default of the Bank Boston Indebtedness, the default shall be deemed cured. If the Bank Boston lndebtedness was accelerated, it shall be restored to the same position as if there had been no acceleration. If the Borrower defaults on the Bank Boston Indebtedness, the Bank hereby grants Imagine the right to purchase, in its entirety, but not in part, the Bank Boston Indebtedness at par plus accrued interest and the Bank's out of pocket costs, in which event, all of the loan documents, notes, collateral (including, but not limited to the Stock and associated stock powers) and other instruments or documents evidencing or securing the indebtedness then held by the Bank will be assigned to Imagine without recourse and without representations and warranties of any kind, except as to the amounts, including accrued interest, due and payable to the Bank. Following such assignment, all documents assigned shall be promptly delivered to Imagine Investments, Inc. Wilson Financial Corporation - ---------------------------- Page 4 Imagine. The original certificates of stock shall be accompanied by whatever stock powers Bank Boston now holds. Further, the Bank agrees that it is holding all of the Stock as agent for Imagine to perfect Imagine's lien on and security interest in the Stock, and that it will not increase the amount of the Bank Boston Indebtedness. The Bank has no affirmative duties as agent other than the duty to hold the Stock for Imagine and to perform its other obligations set forth in this letter agreement. The Bank shall not be held liable to imagine or Borrower, their successors and/or assigns, for actions taken in its capacity as agent which result in damages, losses or expenses relating to the Stock, unless the same shall be caused by the gross negligence or willful misconduct of the Bank. The Bank agrees that all of its agreements under this letter are and shall be irrevocable, even if the Bank Boston Indebtedness is in default and even if the Borrower becomes insolvent and/or is involved as the debtor in a bankruptcy proceeding. Notwithstanding the foregoing, with respect to any shares of the Stock that the Bank is entitled to retain following the five (5) business day Notice period, the Bank shall have the absolute right, to exercise all remedies provided for in, and to sell such shares in accordance with, the governing loan documents. The sale of the shares shall be free and clear of Imagine's interests in the Stock, except that Imagine shall be entitled to receive net proceeds from the sale, if any, after payment of the Bank Boston Indebtedness at par, accrued interest thereon and the Bank's out of pocket costs. Imagine is not hereby waiving the Bank's duty and obligation to sell the Stock in a commercially reasonable manner. Imagine agrees that if the Borrower defaults on the loan made by Imagine to Borrower, Imagine shall not foreclose on its second lien without first paying off the Bank Boston Indebtedness. The Bank acknowledges that Imagine is relying upon this letter in agreeing to make the Imagine Loan, without which it would not agree to make the Imagine Loan. Borrower and Imagine acknowledge that the Bank is relying upon this letter in consenting to a second lien being placed on, and a security interest in, the Stock, without which it would not agree to such additional encumbrances. Sincerely, BANK BOSTON, N.A. By: illegible ------------------------------- Title: Managing Director ---------------------------- Imagine Investments, Inc. Wilson Financial Corporation - ---------------------------- Page 5 Agreed to: Wilson Financial Corporation By: /s/ J. Steven Wilson ---------------------------------- Title: President ---------------------------------- Date: February 24, 1999 ---------------------------------- Agreed to: Imagine Investments, Inc. By: /s/ Charles L. Greiner ---------------------------------- Title: Vice President ---------------------------------- Date: February 24, 1999 ---------------------------------- EX-7.18 14 dex718.txt AGREEMENT DATED OCTOBER 15, 1999 Exhibit 7.18 AGREEMENT BY AND AMONG IMAGINE INVESTMENTS, INC., RIVERSIDE GROUP, INC., CYBERMAX, INC., CYBERMAX TECH, INC. AND BUILDSCAPE, INC. October 15, 1999 TABLE OF CONTENTS
Section Page - ------- ---- 1. CERTAIN TRANSACTION TO OCCUR PRIOR TO OR SIMULTANEOUSLY WITH CLOSING. ................... 1 1.1. Assumption of Buildscape Loans ................................................... 1 1.2. Liquidation of CMT ............................................................... 1 1.3. Distribution to Riverside ........................................................ 2 2. ACQUISITION BY IMAGINE OF BUILDSCAPE COMMON. ............................................ 2 2.1. Exercise of Options .............................................................. 2 2.2. Exchange ......................................................................... 2 2.3. Calculation of Number of Riverside Shares ........................................ 2 2.4. Option to Pay Cash for Buildscape Shares ......................................... 3 3. CLOSING ................................................................................. 3 4. REPRESENTATIONS AND WARRANTIES OF THE RIVERSIDE PARTIES ................................. 3 4.1. Authority; Consents; Enforcement; Noncontravention. .............................. 3 4.2. Ownership of Capital Stock ....................................................... 4 4.3. Corporate Status ................................................................. 4 4.4. Qualification in Other States .................................................... 4 4.5. Capitalization, Stock Ownership and Rights. ...................................... 4 4.6. Financial Statements ............................................................. 5 4.7. Absence of Undisclosed Liabilities ............................................... 5 4.8. Absence of Certain Events ........................................................ 5 4.9. Accounts Receivable .............................................................. 7 4.10. Books of Account, Records and Minute Books ....................................... 7 4.11. Compliance With Legal Requirements ............................................... 8 4.12. Computer Systems; Software. ...................................................... 8 4.13. Sufficiency of Assets ............................................................ 10 4.14. Contracts ........................................................................ 10 4.15. Employee Benefits. ............................................................... 11 4.16. Employees. ....................................................................... 13 4.17. Environmental Matters. ........................................................... 14 4.18. Intellectual Property. ........................................................... 16 4.19. Litigation; Orders. .............................................................. 16 4.20. No Agent, Finder or Broker ....................................................... 17 4.21. Similar Business Ownership ....................................................... 17 4.22. Taxes; Tax Returns; Tax Elections. ............................................... 17 4.23. Title to Properties .............................................................. 18 4.24. Completeness of Statement; Effect of Representations and Warranties .............. 18 4.25. Securities Representations ....................................................... 18 5. REPRESENTATIONS AND WARRANTIES OF IMAGINE ............................................... 19 5.1. Corporate Status ................................................................. 19 5.2. Authority; Consents; Enforcement; Noncontravention. .............................. 19 5.3. No Agent, Finder or Broker ....................................................... 19
-i- 5.4. Investment Intent .......................................................... 19 5.5. Completeness of Statement; Effect of Representations and Warranties ........ 19 6. COVENANTS OF THE PARTIES. ........................................................... 19 6.1. Covenant of Imagine ........................................................ 19 6.2. Legends .................................................................... 20 6.3. Removal of Legend and Transfer Restrictions ................................ 20 6.4. Actions of the Parties. .................................................... 20 6.5. Compliance With Conditions ................................................. 20 6.6. Rights of First Offer. ..................................................... 21 6.7. Certain Voting Provisions .................................................. 21 6.8. Certain Remedies ........................................................... 22 6.9. Shared Services Agreement .................................................. 22 7. CONDITIONS TO CLOSING. .............................................................. 22 7.1. Conditions to Obligations of Imagine ....................................... 22 7.2. Conditions to Obligations of Riverside Parties ............................. 23 8. TERMINATION. ........................................................................ 24 8.1. Termination of Agreement ................................................... 24 8.2. Effect of Termination ...................................................... 25 9. INDEMNIFICATION; REMEDIES. .......................................................... 25 9.1. Survival; Right to Indemnification Not Affected by Knowledge ............... 25 9.2. Indemnification By Riverside Parties ....................................... 25 9.3. Indemnification By Imagine ................................................. 26 9.4. Indemnity Claims. .......................................................... 26 9.5. No Liability of Buildscape ................................................. 27 9.6. Limitation on Indemnification .............................................. 28 10. MISCELLANEOUS PROVISIONS. ........................................................... 28 10.1. Construction ............................................................... 28 10.2. Entire Agreement ........................................................... 28 10.3. Exhibits and Schedules ..................................................... 28 10.4. Expenses ................................................................... 29 10.5. Further Assurances ......................................................... 29 10.6. Governing Law .............................................................. 29 10.7. Headings ................................................................... 29 10.8. Definition of Knowledge .................................................... 29 10.9. Invalidity of Provisions; Severability ..................................... 29 10.10. No Public Announcement ..................................................... 30 10.11. No Third Party Beneficiaries 30 10.12. Notices. ................................................................... 30 10.13. Successors and Assigns. .................................................... 31 10.14. Time of Essence ............................................................ 31 10.15. Waiver ..................................................................... 31
-ii- EXHIBITS Exhibit Description Section - ------- ----------- ------- A Shared Services Agreement .............................. 6.9 B Opinion from Counsel for Sellers ....................... 7.1(h)
SCHEDULES Description Schedule - ----------- -------- Articles of Incorporation and Bylaws of the Company ................................. 4.3 Qualification as Foreign Corporation ................................................ 4.4 Capitalization ...................................................................... 4.5 Financial Statements ................................................................ 4.6 Absence of Undisclosed Liabilities .................................................. 4.7 Absence of Certain Events ........................................................... 4.8 Receivables ......................................................................... 4.9 Compliance with Legal Requirements .................................................. 4.11 Contracts ........................................................................... 4.14 Employee Benefit Plans .............................................................. 4.15(a) Employee Benefit Plans Liability .................................................... 4.15(b) Compliance of Benefit Plans With ERISA and Code ..................................... 4.15(c) Agreements With Employees ........................................................... 4.16 Litigation .......................................................................... 4.19 No Agent ............................................................................ 4.20 Tax Agreements ...................................................................... 4.22(d) Title to Properties ................................................................. 4.23 Facts Relating To Representations and Warranties - Seller ........................... 4.24
-iii- GLOSSARY OF DEFINED TERMS
Defined Term Section - ------------ ------- Adverse Effect ............................................... 4.4 Affiliate .................................................... 9.2 Agreement .................................................... 10.2 August Option ................................................ Recital Benefit Plans ................................................ 4.15(a) Best Efforts ................................................. 4.8(t) Breach ....................................................... 6.4(a) Buildscape ................................................... Introduction Buildscape Agreement ......................................... 2.3 Buildscape Common ............................................ Recital Buildscape Loans ............................................. Recital Buildscape Loan Agreements ................................... Recital Buildscape Preferred ......................................... 2.3 Buildscape Shares ............................................ 6.6 Claim ........................................................ 9.4(a) Claim Notice ................................................. 9.4(a) Cleanup ...................................................... 4.17(d)(2)(C) Closing ...................................................... 3 Closing Date ................................................. 3 CM ........................................................... Introduction CMT .......................................................... Introduction Code ......................................................... 4.15(a) Compensation Plans ........................................... 4.15(a) Computers .................................................... 4.12(a) Contemplated Transactions .................................... 4.1(a) Copyrights ................................................... 4.18(a) DB Plan ...................................................... 4.15(b) Damages ...................................................... 9.1 ERISA ........................................................ 4.15(a) ERISA Affiliate .............................................. 4.15(a) Encumbrances ................................................. 2.1 Environment .................................................. 4.17(d) Environmental Law ............................................ 4.17(d) Fairness Opinion ............................................. 2.3 Financial Statements ......................................... 4.6 First Offer Shares ........................................... 6.6(b) GAAP ......................................................... 4.6 Governmental Body ............................................ 4.1(a) Imagine ...................................................... Introduction Imagine Indemnitees .......................................... 9.2 Indemnitee ................................................... 9.4(a) Indemnifying Party ........................................... 9.4(a) Intellectual Property ........................................ 4.18 Interim Balance Sheet ........................................ 4.6 Interim Period ............................................... 4.6 Knowledge .................................................... 10.8
-iv- Legal Requirement ............................................... 4.1(b) Liability ....................................................... 4.7 Liquidation of CMT .............................................. 1.2 March Option .................................................... Recital Marks ........................................................... 4.18(a) Multiemployer Plans ............................................. 4.15(a) Notices ......................................................... 10.12 Offer ........................................................... 6.6(b) Options ......................................................... Recital Optionee ........................................................ 6.6(b) Option Price .................................................... 2.1 Option Shares ................................................... 2.1 Order ........................................................... 4.17(d) Ordinary Course of Business ..................................... 4.7 Patents ......................................................... 4.18(a) Payless ......................................................... 2.3 PBGC ............................................................ 4.15(b) Pension Plans ................................................... 4.15(a) Person .......................................................... 4.1(b) Plan Sponsor .................................................... 4.15(a) Proceeding ...................................................... 4.15(c) Proprietary Rights Agreement .................................... 4.16(c) Receivables ..................................................... 4.9 Rights in Mask Works ............................................ 4.18(a) Riverside ....................................................... Introduction Riverside Indemnitees ........................................... 9.3 Riverside Party or Parties ...................................... 2.3 Riverside Shares ................................................ 2.2 Software ........................................................ 4.12(b) Tax ............................................................. 4.22(a) Tax Returns ..................................................... 4.22(a) Third Party Claim ............................................... 9.4(b) Threatened ...................................................... 4.15(c) Trade Secrets ................................................... 4.18(a) Undisclosed Liabilities ......................................... 4.7 VEBA ............................................................ 4.15(a) Voting Agreement ................................................ 6.2(c) Welfare Plans ................................................... 4.15(a) Wickes .......................................................... 2.3
-v- AGREEMENT THIS AGREEMENT ("Agreement") is made this 15" day of October, 1999, by and among IMAGINE INVESTMENTS, INC., a Delaware corporation ("Imagine"), RIVERSIDE GROUP, INC., a Florida corporation ("Riverside"), CYBERMAX, INC., a Florida corporation ("CM"), CYBERMAX TECH, INC., a Florida corporation ("CMT"), and BUILDSCAPE, INC., a Florida corporation ("Buildscape"). RECITALS: A. CM, CMT and Buildscape are direct or indirect wholly-owned subsidiaries of Riverside. B. CMT owns 5,000,000 shares of Common Stock, $.01 par value per share, of Buildscape ("Buildscape Common") (after giving effect to a 5,000 to 1 split of outstanding shares of Buildscape Common to be effected by Buildscape on or prior to the Closing Date with the consent of Imagine). Pursuant to the terms of that certain Stock Option Agreement, dated March 12, 1999, as amended by that certain Amendment to Stock Option Agreement by and among CMT, Imagine and Buildscape, CMT granted Imagine the right and option to acquire 1,000,000 shares of Buildscape Common owned by CMT (collectively, the "March Option"). Additionally, pursuant to the terms of that certain Stock Option Agreement, dated August 12, 1999, by and among CMT, Imagine and Buildscape, CMT granted Imagine the right and option to acquire an additional 500,000 shares of Buildscape Common owned by CMT (the "August Option") (the March Option and the August Option are collectively referred to as the "Options"). C. Pursuant to that certain Loan Agreement, dated March 12, 1999, that certain Amendment to Loan Agreement, dated May 20, 1999, and that certain Loan Agreement, dated August 12, 1999, each among Imagine, Buildscape, Riverside, CM and CMT, and all documents and agreements (including promissory notes) executed in connection with the foregoing, and that certain Promissory Note in the principal amount of $135,000 dated October 13, 1999, made by Buildscape to Imagine (collectively, the "Buildscape Loan Agreements"), Imagine has loaned to Buildscape the aggregate amount of $3,485,000 ("Buildscape Loans"). D. Imagine has heretofore invested substantial sums of money in Riverside and Buildscape and now desires to increase its investment in Buildscape through the transactions described in this Agreement. AGREEMENT: NOW, THEREFORE, the parties hereby agree as follows: 1. CERTAIN TRANSACTION TO OCCUR PRIOR TO OR SIMULTANEOUSLY WITH CLOSING. 1.1. Assumption of Buildscape Loans. Prior to the Closing (as hereafter defined), CMT will execute such documents and agreements necessary or appropriate, reasonably acceptable to Imagine, to assume Buildscape's obligations arising under the Buildscape Loan Agreements with respect to payment of $3,000,000 of the outstanding principal amount thereof. 1.2. Liquidation of CMT. Prior to the Closing, CM shall cause CMT to be dissolved and liquidated into CM (the "Liquidation"), and in connection with such Liquidation, CM shall acquire all of CMT's assets (including, without limitation, the shares of Buildscape Common owned by CMT), and CM will assume the obligations assumed by CMT under the Buildscape Loan Agreements pursuant to Section 1.1 and CMT's obligations under the Options. 1.3. Distribution to Riverside. At or prior to the Closing, CM shall distribute to Riverside, as a dividend on the shares of common stock of CM owned by Riverside, 3,119,067 shares of the Buildscape Common acquired by CM in connection with the Liquidation. 2. ACQUISITION BY IMAGINE OF BUILDSCAPE COMMON. 2.1. Exercise of Options. At the Closing, Imagine shall exercise the March Option, in full, and the August Option with respect to 250,000 shares of Buildscape Common, for a total of 1,250,000 shares of Buildscape Common ("Option Shares"). The purchase price for each Option Share shall be $2.40, for a total price for all of the Option Shares of $3,000,000 ("Option Price"). The parties agree that the Option Price is equal to 80% of the fair market value of such Option Shares and, solely with respect to the Option Shares, is either equal to, or otherwise amends the provisions related to computation of, the "Option Price," as provided in each of the agreements granting the March Option and August Option. At the Closing, Imagine shall pay the Option Price to CM (as successor in interest to CMT) by cancellation of $3,000,000 of the principal amount of the Buildscape Loans, and CM shall deliver to Imagine certificates representing the Option Shares, free and clear of all "Encumbrances" (which, for purposes of this Agreement, means any charge, claim, condition, equitable interest, lien, option, pledge, security interest, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership, except for restrictions on voting and transfer expressly provided for in this Agreement). Upon consummation of transactions described in this Section 2.1, the August Option shall be terminated. 2.2. Exchange. At the Closing, Imagine and CM agree that CM shall deliver to Imagine 630,933 shares of Buildscape Common owned by CM and that, in exchange therefor, Imagine shall deliver that number of shares of common stock, $.10 par value per share of Riverside ("Riverside Shares") owned by Imagine as shall be determined pursuant to Section 2.3. At the Closing, each of Imagine and CM will deliver to the other certificates representing the shares exchanged, duly endorsed for transfer on the books of the issuer, free and clear of all Encumbrances. Imagine hereby consents to the transfer by CM to Riverside of such Riverside Shares as a dividend on the shares of common stock of CM owned by Riverside. 2.3. Calculation of Number of Riverside Shares. Prior to the Closing, Riverside, on behalf of itself, CM, CMT, and Buildscape (each a "Riverside Party" and collectively, the "Riverside Parties"), shall obtain the opinion of a respectable investment banking firm (the "Fairness Opinion") with respect to the fairness, from a financial point of view, of the transactions described in this Agreement and in that certain Buildscape, Inc. Series A Cumulative Convertible Preferred Stock ("Buildscape Preferred") Purchase Agreement, of even date herewith ("Buildscape Agreement"), by and among Riverside, Buildscape and Imagine. Such Fairness Opinion shall, among other things, contain such investment banking firm's opinion as to the value or range of values of the Riverside Shares. For purposes of calculating the number of Riverside shares to be exchanged pursuant to Section 2.2, such value (or if a range of values is contained in the Fairness Opinion, the highest such value) shall be used to calculate the per share value of the Riverside Shares to be exchanged for Buildscape Common pursuant to Section 2.2, and the number of Riverside Shares to be exchanged shall be an amount equal to $1,892,800 (i.e., 630,933 shares of Buildscape Common at $3.00 per share, which the parties agree is the fair market value of each Buildscape Common Share) divided by the value of each Riverside Share; provided, however, that in the event such Fairness Opinion determines that the value of a Riverside Share is less than $3.64, then Imagine, in its sole discretion, may elect either (i) to terminate this Agreement, upon notice to Riverside given within 2 days following delivery of the Fairness Opinion to Imagine, in which event the parties will have no liability or further obligations herein, or (ii) deliver to CM Riverside Shares and cash having an aggregate value of $1,892,800.00. 2.4. Option to Pay Cash for Buildscape Shares. Notwithstanding the foregoing provisions of this Section 2, in lieu of the exchange described in Sections 2.2 and 2.3, Imagine, in its sole discretion, may elect to purchase from CM that number (as Imagine shall elect) of the Buildscape Common shares at a purchase price of $3.00 each. In such event, at the Closing, Imagine shall deliver the aggregate purchase price for such purchased shares of Buildscape Common by delivery of immediately available funds, and CM shall sell such number of Buildscape Common shares to Imagine and deliver to Imagine certificates therefor, duly endorsed for transfer on the books of Buildscape, free and clear of all Encumbrances. 3. CLOSING. The closing ("Closing") shall take place at the offices of Greenebaum Doll &. McDonald, PLLC, 3300 National City Tower, Louisville, Kentucky, at 10:00 a.m., local time. The Closing shall occur on October 15, 1999, or on such other date as the parties may agree, provided that the date of Closing ("Closing Date") shall in no event be later than October 18, 1990. 4. REPRESENTATIONS AND WARRANTIES OFTHE RIVERSIDE PARTIES. The Riverside Parties, jointly and severally, hereby represent and warrant to Imagine as follows (provided, such representations and warranties are qualified in their entirety by the provisions of (i) the Buildscape Agreement and the agreements executed and delivered in connection therewith; and (ii) Buildscape Loan Agreements): 4.1. Authority; Consents; Enforcement; Noncontravention. (a) Authority; Enforcement. This Agreement has been duly executed by the Riverside Parties and constitutes the legal, valid and binding obligation of Riverside Parties, enforceable against them in accordance with its terms. Riverside Parties have the absolute and unrestricted corporate right, power, authority and capacity to execute and deliver this Agreement. No Riverside Party needs to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any "Governmental Body" (as hereafter defined) in order to consummate the transactions contemplated by this Agreement (the "Contemplated Transactions"), other than filings with the Florida Secretary of State and with the Securities and Exchange Commission required by the rules and regulations thereof in connection with the Buildscape Agreement or the Contemplated Transactions. As used in this Agreement, "Governmental Body" means any (a) nation, state, county, city, town, village, district, or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign, or other government; (c) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal); (d) multi-national organization or body; or (e) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature. (b) Non contravention. Neither the execution and the delivery of this Agreement, nor the compliance with, or the fulfillment of, the terms, conditions and provisions hereof, will, except in such respects as would not have a material "Adverse Effect" (as hereafter defined) on the Riverside Parties taken as a whole or on Buildscape individually (a) violate any "Legal Requirement" (which, as used in this Agreement, shall mean any federal, state, local, municipal, foreign, international, multinational or other administrative order, constitution, law, ordinance, principle of common law, regulation, statute or treaty) applicable to any of the Riverside Parties or any provision of their Articles of Incorporation or bylaws; or (b) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or result in the imposition of or creation of any Encumbrance upon or with respect to any of the assets or properties owned or used by any of the Riverside Parties; or (c) require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which any Riverside Party is a party or by which it is bound or to which any of its assets or properties are subject; or (d) except as set forth in Section 4.1 (a) and except for any consent of Imagine required under any agreement between Imagine and any of the Riverside Parties or their affiliates, which consent is hereby given, require the approval, consent, authorization or act of, or the making by any Riverside Party of any declaration, filing or registration with, any "Person" (which, for the purposes of this Agreement, shall mean any individual, entity, organization, labor union or other entity or Governmental Body. 4.2. Ownership of Capital Stock. Riverside is the sole record and beneficial owner of all the issued and outstanding capital stock of CM; CM is the sole record and beneficial owner of all the issued and outstanding capital stock of CMT; and, except for the Options, CMT is the sole record and beneficial owner of all the issued and outstanding capital stock of Buildscape. 4.3. Corporate Status. Each Riverside Party is a corporation duly incorporated and existing, and in good standing, under the laws of the State of Florida, and has, and at all times has had, full corporate power and authority to own and lease its properties as such properties are now owned and leased and to conduct its business as and where such business has and is now being conducted. Set forth on Schedule 4.3 are true and complete copies of the Articles of Incorporation and Bylaws of each Riverside Party, as amended to the date hereof. 4.4. Qualification in Other States. Neither the nature of the business of, nor the character and location of the properties owned or leased by, Buildscape makes qualification of it as a foreign corporation necessary under the laws of any jurisdiction other than as set forth on Schedule 4.4, which are the only jurisdictions in which the character of its properties or the nature of its business requires qualification, or, if not qualified, the failure to so qualify would not have an a material "Adverse Effect" (as defined below in this Section 4.4), other than the obligation to pay nominal filing fees and penalties in order to be qualified therein. As used in this Agreement, the term "Adverse Effect" shall mean, with respect to any Riverside Party, any adverse change, circumstance or effect that, individually or in the aggregate with all other adverse changes, circumstances and effects, is or is reasonably likely to be adverse to the business, operations, assets, liabilities (including contingent liabilities), properties, financial condition, results of operations or prospects of such Riverside Party and no event has occurred or circumstance exists that may result in such an adverse change, circumstance or effect. 4.5. Capitalization, Stock Ownership and Rights. (a) Capitalization. Schedule 4.5(a) sets forth the authorized capital stock of Buildscape as of the Closing Date. (b) No Outstanding Rights. There are no, nor is there any agreement, commitment or arrangement not yet fully performed which would result in any, outstanding agreements, arrangements, subscriptions, options, warrants, calls, rights or other commitments of any character relating to the issuance, sale, purchase or redemption of any capital stock of Buildscape (except for (i) options for 926,100 shares of Buildscape Common issued pursuant to Buildscape's employee Stock Option Plan, (ii) shares of Buildscape Common issuable to Mozart, Inc. pursuant to the Agreement dated May 21, 1999 between Mozart, Inc. and The Riverside Group, and (iii) the transactions contemplated by the Buildscape Agreement). 4.6. Financial Statements. Schedule 4.6 contains Buildscape' s unaudited balance sheet and statement of income, change in stockholders' equity and cash flow for the year ended December 31, 1998, and Buildscape's unaudited balance sheet ("Interim Balance Sheet") and statement of income, change in stockholders' equity and cash flow for the eight months ended August 31, 1999 (the "Interim Period"), (collectively the "`Financial Statements.") The Financial Statements represent actual, bona fide transactions, and were prepared in accordance with "GAAP," (which, for purposes of this agreement, means generally accepted United States accounting principles, applied on a basis consistent with the basis on which all of the financial statements referred to herein were prepared), present fairly the financial condition of Buildscape as of the respective dates of the Financial Statements, and the results of operations, changes in stockholders' equity and cash flows of Buildscape for such periods, are consistent with the books and records of each of Buildscape, and do not contain any items of special or nonrecurring nature, provided the Financial Statements for the Interim Period are subject to normal year-end adjustments, which shall not be material, individually or in the aggregate, and the Financial Statements lack footnotes and other presentation items (that, if presented, would not differ materially from those included in the balance sheets contained therein). No financial statement of any Person other than the other Riverside Parties is required by GAAP to be included in the Financial Statements of Buildscape. 4.7. Absence of Undisclosed Liabilities. Buildscape has no material debts, obligations or liabilities of any nature, whether known or unknown, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, whether matured or unmatured, whether asserted or unasserted and whether due or to become due (collectively, "Liability"), except as shown (and in the amounts shown) on the face of the Interim Balance Sheet or as shown on Schedule 4.7. From the date of the Interim Balance Sheet to the date hereof, except as shown on Schedule 4.7, Buildscape has not incurred or become subject to any material Liability, other than Liabilities incurred in the "Ordinary Course of Business" (as defined below in this Section 4.7) all of which have been paid in full in the Ordinary Course of Business or are reflected on their regular books of account and none of which (a) is inconsistent with the representations, warranties and covenants of the Riverside Parties contained herein or with any other provisions of this Agreement or (b) has or may be expected to have a material Adverse Effect. Any Liabilities not disclosed pursuant to this Section 4.7 are referred to as "Undisclosed Liabilities." As used in this Agreement, the term "Ordinary Course of Business" shall mean an action which is consistent with the past practices Buildscape and is taken in the ordinary course of its normal day-to-day operations, is not required to be authorized by the board of directors of Buildscape and is similar in nature and magnitude to actions customarily taken, without any authorization by the board of directors of a corporation in the ordinary course of the normal day-to-day operations of other businesses that are in the same line of business as Buildscape. 4.8. Absence of Certain Events. Since August 31, 1999, Buildscape has not, except as set forth on Schedule 4.8 or as contemplated by this Agreement: (b) issued, sold, purchased or redeemed any stock, bonds, debentures, notes or other corporate securities, or issued, sold or granted any option, warrant or right to acquire any thereof; (c) waived or released any debts, claims, rights of value or suffered any extraordinary loss or written down the value of any inventories or other assets or written down or off any receivable in excess of $10,000; (d) made any capital expenditures or capital commitments in excess of $7,500 for any single one or series of related transactions or in excess of $50,000 in the aggregate; (e) made any change in the business or operations or the manner of conducting its business or operations, other than changes in the Ordinary Course of Business, none of which has, and which in the aggregate have not had, a material Adverse Effect; (f) suffered any casualty, damage, destruction or loss to any of its properties in excess of 55,000 for any one event or in excess of S 15,000 in the aggregate; (g) declared, set aside or paid any dividends or distributions in respect of shares of its capital stock; (h) paid or obligated itself to pay any bonuses or extraordinary compensation to, or made any increase (except increases in the Ordinary Course of Business) in the compensation payable (or to become payable by it) to, any of its directors, officers, employees, agents or other representatives; (i) terminated or amended or suffered the termination or amendment of any material contract, lease, agreement, license or other instrument to which it is or was a party; (j) adopted, modified or amended any plan or agreement listed on Schedule 4.15 so as to increase the benefits due its employees under any such plan or agreement; (k) made any loan or advance to any Person (except a normal travel or other reasonable expense advance to its officers and employees); (l) suffered a material Adverse Effect; (m) subjected any of its assets or properties to any Encumbrances or to any other similar charge of any nature whatsoever; (n) paid any funds to any of its officers or directors, or to any family member of any of them, or any Person in which any of the foregoing have any direct or indirect interest, except for the payment of installments of annual salaries and the bonuses accrued at June 30, 1999, and except for advances and reimbursements for travel and other expenses incurred in the Ordinary Course of Business. (n) disposed of or encumbered, or agreed to dispose of or encumber, any of its properties or assets other than in the Ordinary Course of Business, consistent with past practices; (o) entered into any transactions other than in the Ordinary Course of Business; (p) made any change in accounting principles, methods car practices; (q) entered into any agreement, contract, lease or license for series of-related agreements, contracts, leases or licenses) not listed on Schedule 4.14 hereto either involving more than $50,000 or made outside the Ordinary Course of Business; (r) been a party to and, other occurrence, event, incident, action, failure to act, or transaction outside the Ordinary Course of Business; or (s) entered into any agreement or commitment (whether or not in writing) to do any of the above; and Buildscape has: (t) used its "Best Efforts" (as hereafter defined to preserve its business and organization, and to keep available, without entering into any binding agreement, the services of its employees, and to preserve the goodwill of its customers and others having business relationships with it (as used in this Agreement, the term "Best Efforts" shall be the efforts that a prudent Person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved as expeditiously as possible; provided, however, that an obligation to use Best Efforts under any agreement does not require the Person subject to that obligation to take actions that would result in a materially adverse change in the benefits to such Person of such agreement and the transactions described therein); and (u) continued its business and maintained its operations and equipment, books of account, records and files in the Ordinary Course of Business. 4.9 Accounts Receivable. All accounts receivable of Buildscape reflected in its Interim Balance Sheet or on its accounting records (the "Receivables") represent (a) valid and bona fide obligations arising from sales actually made or services actually rendered by Buildscape in the Ordinary Course of Business and (b) are correct as to amount, legally enforceable according to their terms and (c) have no right of defense, counter claims or set-off against them. Unless paid prior to the Closing Date, such Receivables are or will be as of the Closing Date current and collectible net of the respective reserves shown on the Interim Balance Sheet or on the accounting records of Buildscape as of the Closing Date (which reserves are adequate and calculated consistent with past practice and, in the case of the reserve as of the Closing Date, will not represent a greater percentage of the Receivables as of the Closing Date than the reserve reflected therein and will not represent a material adverse change in the composition of such Receivables in terms of aging). 4.10. Books of Account, Records and Minute Books. Prior to the execution of this Agreement, Buildscape made available to Imagine for its examination the books of account, records and minute books of Buildscape. Such books of account and records are true and complete in all material respects, have been maintained in accordance with sound business practices and the requisite requirements of section l3(b)(2) of the Securities Exchange Act of 1934, as amended (regardless of whether Buildscape is subject to such section) including the maintenance of an adequate system of internal controls. The minute books of Buildscape contain accurate and complete records of all meetings held of, and corporate action taken by the stockholders, the board of directors and the committees of the board of directors of Buildscape, and no meeting of any such stockholders, board of directors or committee has been held for which minutes have not been prepared and are not contained in such minute books. No changes or additions to such books and records of Buildscape have been made from the date such books and records were first made available to Imagine and nothing which should be set forth in said books and records, if prepared in the usual and customary manner of Buildscape, has occurred from the date such books and records were first made available to Imagine, except for such changes, additions or events which have been made or have occurred, as the case may be, in the Ordinary Course of Business. 4.11. Compliance With Legal Requirements. Except as set forth in Schedule 4.11: (a) Buildscape is, and at all times has been, in full compliance with each Legal Requirement that is or was applicable to it or to the conduct or operation of its business or the ownership or use of any of its assets, except to the extent that any non-compliance would not result in a material Adverse Effect; (b) no event has occurred, nor does any circumstance exist, that (with or without notice or lapse of time) (A) may constitute or result in a violation by either Buildscape of, or a failure to comply with, any Legal Requirement, or (B) may give rise to any obligation on the part of Buildscape to undertake, or to bear all or any portion of the cost of, any remedial action of any nature, except in such respects as would not result in a material Adverse Effect; and (c) Buildscape has not received any notice or other communication (whether oral or written) from any Person regarding (A) any actual, alleged, possible or potential violation of, or failure to comply with, any Legal Requirement, or (B) any actual. alleged, possible or potential obligation to undertake, or to bear all or any portion of the cost of, any remedial action of any nature. 4.12. Computer Systems; Software. (a) Condition of Computers. Except in such respects as would not result in a material Adverse Effect, all computers and computer systems owned, leased or used by Buildscape (including software, communication links and storage media) (collectively, "Computers"): (1) are in full operating order and fulfill, in an efficient manner without material downtime or errors, the purposes for which they were acquired, established and are currently used; (2) have adequate capacity for the present needs of Buildscape, as applicable, and (taking into account the extent to which the computer systems are expandable) foreseeable future needs; (3) have adequate security, back-ups, duplication, hardware and software support and maintenance (including emergency cover) and trained personnel to ensure: (A) that breaches of security, errors and breakdowns are kept to a minimum; and (B) that no material disruption will be caused or any material part thereof in the event of a breach of security, error or breakdown; (4) are properly established and documented by written technical descriptions and manuals so as to enable them to be used and operated by any reasonably qualified personnel; (5) except as described in the "Shared Services Agreement" (as hereafter defined), are under the sole control of Buildscape, are not shared with, used by or on behalf of or accessible by any other Person and, except for software properly licensed, are owned by Buildscape; (6) are not obsolete and are not likely to be in need of replacement or material upgrading within two years alter the date hereof, and (7) comply with and are used in accordance with all Legal Requirements. (b) Condition of Software. Except in such respects as would not result in a material Adverse Effect, all software used on or stored or resident in the Computers of Buildscape ("Software"): (1) performs efficiently in accordance with its specifications and does not contain any defect or feature which may have an Adverse Effect on its performance or the performance of any other software in the future (providing such future software is otherwise compatible); (2) is lawfully held and used and does not infringe the intellectual property rights of any Person and all copies held have been lawfully made; and (3) as to copyrights in connection with the Software: (A) Software written or commissioned by Buildscape is owned exclusively by it, no other person has the rights therein or rights to the use or copies of the Software or source codes, and complete written listings and written copies of the source codes for the Software are in the possession of Buildscape, as applicable; and (B) all other Software is licensed to Buildscape on an express or implied license which does not require any further payments, is not terminable and which imposes no material restrictions except as to copying on the use or transfer of the Software. (c) Ownership of Software. No Software owned by or licensed to Buildscape is used by or licensed or sublicensed to any other Person. (d) Operation of Computers. No person is in a position, by virtue of its or his rights in the Computers, to prevent or impair the proper and efficient functioning of the Computers or to demand any payment for services rendered (except for normal salaries and wages due Buildscape employees in the ordinary course of business or as otherwise disclosed pursuant hereto), or to impose any onerous condition, in order to preserve the proper and efficient functioning of the Computers in the future. Buildscape's employees are adequately trained to enable them to use and operate Buildscape's Computers to the full extent of the capabilities of the Computers without Material assistance from any other Person. All Data and Records stored by electronic means are capable of ready access through the Computers. The Contemplated Transactions will not cause any license agreements referred to in this Section 4.12 to be terminated or the terms varied or any rates or royalties payable to be increased. (e) Year 2000. All Software owned, leased or licensed to Buildscape, presently used or proposed to be used in its business, will, except in such respect as would not result in a material Adverse Effect (i) accurately process date-related information before, during and after January 1, 2000, including accepting the date input, providing the date out-put, and performing calculations on dates or portions of dates; (ii) function without interruption before, during and after January 1, 2000 without any changes in operations; (iii) respond to the word-digit date input in a way that resolves any ambiguity as to century in a defined manner; and (iv) store and provide output date information in ways that are unambiguous as to century. 4.13. Sufficiency of Assets. Buildscape owns or leases all buildings, machinery, equipment, and other tangible property necessary for the conduct of its business as presently conducted and as presently proposed to be conducted. 4.14. Contracts. Schedule 4.14 contains a complete and accurate list of the following types and forms of contracts and other agreements to which Buildscape is a party: (a) any agreement (or group of related agreements), written or oral, for the lease of personal property to or from any Person providing for lease payments in excess of $5,000 per annum or which may not be terminated by Buildscape without penalty or payment on 30 days, or less, notice; (b) any agreement (or group of related agreements) for the purchase or sale of raw materials, commodities, supplies, products, or other personal property, or for the furnishing or receipt of services, the performance of which shall extend over a period of more than one year, or involve consideration in excess of $5,000; (c) any agreement concerning a partnership or limited partnership, joint venture, limited liability company or limited liability partnership, including any agreement with such an organization which provides for a sharing of profits, losses, costs or liabilities with any other Person; (d) any agreement granting a power of attorney to any Person; (e) any agreement involving a written warranty or guaranty and any other similar understanding with respect to contractual performance extended by Buildscape other trail in the Ordinary Course of Business; (f) any agreement (or group of related agreements) under which it has created, incurred, assumed, or guaranteed any indebtedness for borrowed money, or any capitalized lease obligation, in excess of $6,000 or under which it has imposed an Encumbrance on any of its assets, tangible or intangible; (g) any contract, arrangement or commitment containing covenants by Buildscape not-to-compete in any line of business with any Person or restricting the customers from whom, or the area in which, Buildscape may solicit or conduct business or any contract, arrangement or commitment involving a covenant of confidentiality; (h) any agreement under which it has advanced or lent any amount of money or property to any of its directors, officers, and employees outside of the Ordinary Course of Business; (i) any agreement under which the consequences of a default or termination could have a material Adverse Effect; or (j) any other agreement (or group of related agreements) the performance of which involves consideration in excess of $25,000. Buildscape has delivered to Imagine a correct and complete copy of each written agreement listed in Schedule 4.14 (as amended to the date hereof) and a written summary setting forth the terms and conditions of each oral agreement referred to in Schedule 4.14. With respect to each such agreement: (A) the agreement is legal, valid, binding, enforceable and in full force and effect; (B) the agreement shall continue to be legal, valid, binding, enforceable and in full force and effect on identical terms following the consummation of the Contemplated Transactions; (C) no party is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default, or permit termination, modification, or acceleration, under the agreement; and (D) no party has repudiated any provision of the agreement. 4.15. Employee Benefits. (a) Benefit Plans. Except as set forth on Schedule 4.15(a), Buildscape is not, nor has been, a "Plan Sponsor" (as defined in section 3(16)(B) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or an "ERISA Affiliate" (which shall mean, with respect to Buildscape, any other Person that, together with Buildscape, would be treated as a single employer under section 414 of the Internal Revenue Code of 1986, as amended ("Code")), nor has either Buildscape or an ERISA Affiliate, and neither Buildscape nor an ERISA Affiliate does now, contribute to any "employee pension benefit plans" ("Pension Plans") or "employee welfare benefit plans" ("Welfare Plans") (as described in section 3(2) and (1), respectively, of ERISA), or to any "multiemployer plan" ("Multiemployer Plans") (as defined in either section 3(37) of ERISA or section 414(f) of the Code). Except as set forth on Schedule 4.15(a), neither Buildscape nor an ERISA Affiliate has, nor has either Buildscape or an ERISA Affiliate had at any time, any obligation, arrangement, practice, plan or agreement to provide present or future benefits, other than salary, as compensation for services rendered, to any of its present or former employees, officers, directors, agents or representatives, nor any voluntary employees' beneficiary association under section 501(c)(9) of the Code ("VEBA") whose members include employees of either Buildscape or an ERISA Affiliate, nor any obligation, arrangement, practice, ,plan or agreement providing stock options, stock purchase, deferred compensation, severance, "fringe benefits" (as described in section 132 of the Code), or any other employee benefits of any nature whatsoever ("Compensation Plans"). Welfare Plans, Pension Plans and Compensation Plans are collectively referred to as "Benefit Plans." Except as set forth on Schedule 4.15(a), the consummation of the Contemplated Transactions shall not result in the payment, vesting or acceleration of any benefit or right under any Benefit Plan. (b) Funding Method for Pension Plans. The funding method used in each of the Pension Plans subject to Title 1, Subtitle B, Part 3 of ERISA ("DB Plan") is acceptable under ERISA, there is no accumulated funding deficiency, whether or not waived, with respect to any DB Plan, and no event has occurred or circumstance exists that may result in any accumulated funding deficiency as of the last day of the current plan year of any DB Plan. All minimum funding standards have been met, and all contributions required, under section 302 of ERISA and section 412 of the Code, have been made. If each DB Plan identified on Schedule 4.15(a) were terminated as of the Closing Date, it would have sufficient assets so as to be terminated in a "standard termination" (as described in section 4041(b) of ERISA). There is no liability for any contributions or excise taxes due and unpaid under any Pension Plans as of the date hereof. There is no Liability, and there are no circumstances which may arise which would give rise to any such Liability, of Buildscape to the Pension Benefit Guaranty Corporation ("PBGC") under Title IV of ERISA. (c) Compliance of Benefit Plans With ERISA and Code. Buildscape has performed all of its obligations under all Benefit Plans and has made appropriate entries in its financial records and statements for all Liabilities under all Benefit Plans that have accrued but are not due. All of the Benefit Plans and any related trust agreements or annuity contracts (or any funding instrument) comply currently, and have complied in the past, with the provisions of ERISA and the Code, where required in order to be a qualified plan under section 401(a) of the Code and tax exempt under section 501 of the Code, and all other Legal Requirements, and any applicable collective bargaining agreements. No event has occurred or circumstance exists that will or could give rise to disqualification or loss of tax exempt status of any such Plan or trust. Neither Buildscape nor any Person who is a fiduciary or otherwise has a relationship to a Benefit Plan has any liability to the Internal Revenue Service ("IRS") or the PBGC with respect to a Benefit Plan, or any Liability under sections 502 or 4071 of ERISA. All contributions and payments made or accrued with respect to all Benefit Plans are deductible under sections 162 or 404 of the Code. No amount, or any asset of any Benefit Plan, is subject to tax as unrelated business taxable income. All filings required by ERISA and the Code as to each Benefit Plan have been timely filed, and all notices and disclosures to participants required by either ERISA or the Code have been timely provided. Other than routine claims for benefits submitted by participants or beneficiaries in the ordinary course, no claim against, or "Proceeding" (as defined below in this Section 4.15(c)) involving any Benefit Plan is pending or, "Threatened" (as defined below in this Section 4.15(c)). As used herein, the term "Proceeding" shall mean any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, investigative or informal) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Body or arbitrator and the term "Threatened" shall mean that a claim, Proceeding, dispute action or other matter shall have been Threatened if any demand or statement has been made (orally or in writing) or any notice has been given (orally or in writing), or if any other event has occurred or any other circumstances exist, that would lead a prudent Person to conclude that such a claim, Proceeding, dispute, action or other matter is likely to be asserted, commenced, taken or otherwise pursued in the future. (d) Post-Retirement Benefits. Buildscape does not provide health or welfare benefits for any retired or former employee nor is it obligated to provide any health or welfare benefits to any active employee following such employee's retirement or other termination of service. (e) Administration and Cost of Plans. Each of the Welfare Plans and Pension Plans has been administered in compliance with the requirements of the Code and ERISA and all reports required by any governmental agency with respect to each such Plan have been timely filed, except as identified on Schedule 4.15(c). No statement, either written or oral, has been made to any Person with regard to any Benefit Plan that was not in accordance with the Benefit Plan. Each Benefit Plan, other than a DB Plan, can be terminated within 30 days without payment of any additional contribution or amount and without the vesting or acceleration of any benefits promised by such Plan. No event has occurred or circumstance exists that could result in a material increase in premium costs of Benefit Plans that are insured, or a material increase in benefit costs of such Plans that are self insured. (f) No Prohibited Transactions. Neither Buildscape nor any of its directors, officers or employees who are fiduciaries, nor any other fiduciary of any of the Pension Plans or welfare Plans, has engaged in any transaction in violation of section 406 of ERISA (for which no exemption exists under section 408 of ERISA) or any "prohibited transaction" (as defined in section 4975(c)(1) of the Code) for which no exemption exists under sections 4975(c)(2) or 4975(d) of the Code. 4.16. Employees. (a) Compensation. Buildscape has not, because of past practices or previous commitments with respect to its officers or employees, established any rights or expectations on the part of such officers or employees to receive additional compensation inconsistent with past practices with respect to any period after the date hereof, other than their present salaries, except as set forth on Schedule 4.16. (b) Agreements With Employees. Except as described in Schedule 4.16, Buildscape is not a party to or bound by any oral or written: (1) employee collective bargaining agreement, employment agreement other than employment agreements terminable without premium or penalty on notice of 30 days or less under which the only monetary obligation is to make current wage or salary payments and provide current employee benefits), consulting, advisory or service agreement, deferred compensation agreement, confidentiality agreement or covenant not to compete; or (2) contract or agreement with any agent, officer or employee (other than employment agreements disclosed in response to clause (1) or excluded from the scope of clause (1)). (c) Confidentiality and Noncompetition Agreements. No officer, employee or director of Buildscape is a party to, or is otherwise bound by, any agreement or arrangement, including any confidentiality, noncompetition, or proprietary rights agreement, between such officer, employee or director and any other Person ("Proprietary Rights Agreement") that in any way adversely affects or will affect (i) the performance of his or her duties as an officer, employee or director of Buildscape, or (ii) the ability of Buildscape to conduct its business. 4.17. Environmental Matters. (a) Compliance with Environmental Laws. Buildscape is, and at all times has been, in full compliance with, and has not been and is not in violation of or liable under, any "Environmental Law" (as defined in Section 4.17(4)). Buildscape has no basis to expect, nor has it or any other Person for whose conduct it is or may be held to be responsible received, any actual or Threatened "Order" (as defined in Section 4.17(4)), notice, or other communication from any Person, of any actual or potential violation or failure to comply with any Environmental Law, or of any actual or Threatened obligation to undertake or bear the cost of any "Environmental, Health, and Safety Liabilities" (as defined in Section 4.17(4)). (b) No Claims. There are no pending or Threatened claims, Encumbrances, or other restrictions of any nature, resulting from any Environmental, Health, and Safety Liabilities or arising under or pursuant to any Environmental Law, with respect to or affecting any of the properties and assets (whether real, personal, or mixed) in which Buildscape has or had an interest. (c) No Environmental Liabilities. Neither Buildscape, nor any other Person for whose conduct it is or may be held responsible, has any Environmental, Health, and Safety Liabilities with respect to any properties and assets (whether real, personal, or mixed) in which Buildscape (or any predecessor) has or had an interest. (d) Environmental Definitions. The following terms pertaining to environmental matters shall have the meaning set forth below: (1) Environment. Soil, land surface or subsurface strata, surface waters (including navigable waters, ocean waters, streams, ponds, drainage basins, and wetlands), groundwaters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life, and any other environmental medium or natural resource. (2) Environmental, Health, and Safety Liabilities. Any cost, damages, expense, liability, obligation, or other responsibility arising from or Under Environmental Law or Occupational Safety and Health Law and consisting of or relating to: (A) any environmental, health, or safety matters or conditions (including on-site or off-site contamination, occupational safety and health, and regulation of chemical substances or products); (B) fines, penalties, judgments, awards, settlements, legal or administrative Proceedings, damages, losses, claims, demands and response, investigative, remedial, or inspection costs and expenses arising under Environmental Law or Occupational Safety and Health Law; (C) financial responsibility under Environmental Law or Occupational Safety and Health Law for cleanup costs or corrective action, including any investigation, cleanup, removal, containment, or other remediation or response actions ("Cleanup") required by applicable Environmental Law or Occupational Safety and Health Law (whether or not such Cleanup has been required or requested by any Governmental Body or any other Person) and for any natural resource damages; or (D) any other compliance, corrective, investigative, or remedial measures required under Environmental Law or Occupational Safety and Health Law. (3) Environmental Law. Any Legal Requirement that requires or relates to: (A) advising appropriate authorities, employees, and the public of intended or actual releases of pollutants or hazardous substances or materials, violations of discharge limits, or other prohibitions and of the commencements of activities, such as resource extraction or construction, that could have significant impact on the Environment; (B) preventing or reducing to acceptable levels the release of pollutants or hazardous substances or materials into the Environment; (C) reducing the quantities, preventing the release, or minimizing the hazardous characteristics of wastes that are generated; (D) assuring that products are designed, formulated, packaged, and used so that they do not present unreasonable risks to human health or the Environment when used or disposed of; (E) protecting resources, species, or ecological amenities; (F) reducing to acceptable levels the risks inherent in the transportation of hazardous substances, pollutants, oil, or other potentially harmful substances; (G) cleaning up pollutants that have been released, preventing the threat of release, or paying the costs of such clean up or prevention, or (H) making responsible parties pay private parties, or groups of them, for damages done to their health or the Environment, or permitting self-appointed representatives of the public interest to recover for injuries done to public assets. (4) Occupational Safety and Health Law. Any Legal Requirements designed to provide safe and healthful working conditions and to reduce occupational safety and health hazards, and any program, whether governmental or private (including those promulgated or sponsored by Industry associations and insurance companies), designed to provide safe and healthful working conditions. (5) Order. Any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Body or by any arbitrator. 4.18. Intellectual Property. (a) Definition of Intellectual Property. The term "Intellectual Property" as used in this Agreement shall mean and include all of the following: (1) the name "Buildscape," registered and unregistered trademarks, service marks, domain names and applications (collectively, "Marks"); (2) all patents, patent applications, and inventions and discoveries that may be patentable (collectively, "Patents"); (3) all copyrights in both published works and unpublished works (collectively, "Copyrights"); (4) all rights in mask works (collectively, "Rights in Mask Works"); and (5) all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans, drawings. and blue prints (collectively, "Trade Secrets"). (b) Ownership of Intellectual Property. Buildscape owns or has the right to use all of the Intellectual Property necessary for the operation of its business as currently conducted and proposed to be conducted. Buildscape owns all right, title, and interest in and to all of its Intellectual Property, free and clear of all liens, security interests, charges, encumbrances, equities, and other adverse claims, and has the right to use all of such Intellectual Property without payment to a third party. (c) No Infringement; Royalties. To the "Knowledge" (as defined in Section 10.8) of the Riverside Parties, the use by Buildscape of its Intellectual Property does not infringe upon proprietary rights of any other Person, and Buildscape is not aware of any infringement by any other Person with respect to either Buildscape's Intellectual Property rights. Except as set forth in Schedule 4.14 hereto, no royalties are paid by or to Buildscape with respect to its Intellectual Property. (d) Employee Agreements. All current employees of Buildscape have executed written agreements that assign to Buildscape, all rights to any inventions, improvements, discoveries, or information relating to their respective businesses. 4.19. Litigation; Orders. (a) Proceedings. There is no Proceeding pending or, to the Knowledge of the Riverside Parties, Threatened, against or relating to Buildscape or its property or assets. None of the Riverside Parties knows or have any reasonable grounds to know of any basis or alleged basis for any such Proceedings or of any governmental investigation relative to Buildscape of its property or assets, and no event has occurred, nor does any circumstance exist that may give rise to or serve as a basis for the commencement of any such Proceedings. Buildscape is in full compliance with all its contracts and all Legal Requirements and Orders applicable to it. (b) Orders. There is no "Governmental Order" (as defined at the end of this Section 4.19(b)) to which Buildscape, or any of its assets is subject; none of the Riverside Parties is subject to any Governmental Order that relates to the business of, or any of the assets owned or used by, Buildscape; and no officer, director, agent, or employee of Buildscape is subject to any Governmental Order that prohibits such officer, director, agent, or employee from engaging in or continuing any conduct, activity, or practice relating to the business of Buildscape. As used in this Agreement, the term "Governmental Order" shall mean any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court. administrative agency, or other Governmental Body or by any arbitrator. 4.20. No Agent, Finder or Broker. Except as set forth on Schedule 4.20, none of the Riverside Parties has any Liability or obligation, contingent or otherwise, to pay any fees or commissions to any agent, broker or finder with respect to the Contemplated Transactions. 4.21. Similar Business Ownership. None of the Riverside Parties, nor, to the knowledge of the Riverside Parties, any of their officers or directors, nor any family member of any of them, owns, directly or indirectly, any interest in, or is an officer, director or principal of, any corporation, partnership, proprietorship, association or other entity (other than the Riverside Parties or Wickes, Inc.) which is engaged in a business similar to that of Buildscape, which has conducted any business of any type whatsoever with Buildscape, or which is a party to any contract or agreement to which Buildscape is a party or to which it may be bound. 4.22. Taxes; Tax Returns; Tax Elections. (a) Definition of Tax and Tax Return. The term "Tax" as used herein shall mean any taxes, however denominated, including income tax, capital gains tax, value-added tax, sales tax, property tax, gift tax, estate tax, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, sales, use, transfer, registration, alternative or add-on minimum, estimated, or other tax of any kind whatsoever and any related charge or amount (including any fine, penalty, interest or addition to tax), imposed, assessed or collected by or under the authority of any Governmental Body or payable pursuant to any tax-sharing agreement or any other arrangement relating to the sharing or payment of any such tax, levy, assessment, tariff, duty, deficiency or fee, including any interest, penalty, or addition thereto, whether disputed or not. The term "Tax Returns" as used herein shall mean any return (including any information return), report, declaration of estimated Taxes, statement, schedule, notice, form, or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any Legal Requirement relating to any Tax. (b) Tax Returns. Buildscape has prepared, signed and filed all Tax Returns required to be filed prior to the date hereof. All Tax Returns were correct and complete in all material respects, and all Taxes or installments thereof of every kind and nature whatsoever which were due and owing on Tax Returns or which were or are otherwise due and owing under all applicable laws and regulations for any periods for which Tax Returns were due, whether or not reflected on the Tax Returns, were timely paid. The provisions for Taxes in the Interim Balance Sheet of Buildscape are sufficient for the payment of all Taxes attributable to all periods ended on or before June 30, 1999, and adequate accruals have been made for all liabilities for Taxes accruing since June 30, 1999. There are no Proceedings, investigations or claims now pending, nor, to the Knowledge of the Riverside Parties, proposed against Buildscape, nor are there any matters under discussion with the Internal Revenue Service, or other governmental authority, relating to any Taxes or assessments, or any claims or deficiencies with respect thereto. (c) Withholdings. Buildscape has withheld proper and accurate amounts from its employees in full and complete compliance with the tax withholding provisions of the Code and other applicable Legal Requirements, and has filed proper and accurate federal, foreign, state and local Tax Returns and reports for all years and periods (and portions thereof) for which any Tax Returns were due with respect to employee income, income tax withholding, withholding taxes, social security taxes and unemployment taxes. All payments due on account of employee tax withholdings, including income tax withholdings, social security taxes or unemployment taxes in respect to years and periods (and portions thereof) ended on or prior to the date hereof were paid prior to such date on or before their due date. (d) Tax Agreements. Except asset forth on Schedule 4.22(d), Buildscape is not, nor has it ever been, a party to any tax allocation or sharing agreement; has not been a member of an affiliated group filing a consolidated federal income tax return; or has (or will have following the Closing) any liability for the Taxes of any corporation or other entity (including any other of the Riverside Parties), including, without limitation, liability for Taxes under Treas. Reg.ss. 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise. 4.23. Title to Properties. Except as set forth on Schedule 4.23, Buildscape has good and marketable title to all of its properties, interests in properties and assets, tangible and intangible, owned or used by it in its business (excluding leased properties), all such properties, interest in properties and assets are free and clear of all Encumbrances, except the lien for current ad valorem taxes not yet due and payable and except for such Encumbrances as would not have a material Adverse Effect on Buildscape or adversely, affect Buildscape's use of such properties and interests. 4.24. Completeness of Statement; Effect of Representations and Warranties. No representation or warranty of the Riverside Parties in this Agreement contains any untrue statement of a material fact, omits any material fact necessary to make such representation or warranty, under the circumstances which it was made, not misleading, or contains any misstatement of a material fact. All representations and warranties contained in Section 4 are correct and complete as of the date hereof and shall be correct and complete as of the Closing Date as though made then with the Closing Date being substituted for the date hereof throughout this Section 4. Nothing in the Schedules shall be deemed adequate to disclose an exception to a representation or warranty made in this Agreement, unless the Schedule identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail. Without limiting the generality of the foregoing, the mere listing (or inclusion of a copy) of a document or other item shall not be deemed adequate to disclose an exception to a representation or warranty made in this Agreement (unless the representation or warranty has to do with the existence of the document or other item itself). All of the representations and warranties made by the Riverside Parties are made with the knowledge, expectation, understanding and desire that Buyer place complete reliance thereon. 4.25. Securities Representations. All outstanding shares of Buildscape Common are (and upon the transfer to Imagine of shares of Buildscape Common pursuant to the provisions of Section 2.1, they will be), free and clear of all Encumbrances and have been validly issued and are fully paid and nonassessable. 5. REPRESENTATIONS AND WARRANTIES OF IMAGINE. Imagine hereby represents and warrants to the Riverside Parties as follows: 5.1. Corporate Status. Imagine is a corporation duly incorporated and existing, and is in good standing under the laws of the State of Delaware. Imagine has full corporate power and authority to own and lease its properties as such properties are now owned and leased and to conduct its business as and where such businesses have and are now being conducted. 5.2. Authority; Consents; Enforcement; Noncontravention. (a) Authority of Imagine. This Agreement constitutes the legal, valid and binding obligation of Imagine, enforceable against Imagine in accordance with its terms. Imagine has the absolute and unrestricted corporate right, power, authority, and capacity to execute and deliver this Agreement and to perform its obligations under this Agreement. Imagine does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Body in order to consummate the Contemplated Transactions. (b) Enforcement. This Agreement has been duly executed and delivered by Imagine and constitutes the legal, valid and binding obligation of Imagine, enforceable in accordance with its terms. (c) Noncontravention. Neither the execution and the delivery of this Agreement, nor the compliance with, or the fulfillment of, the terms, conditions and provisions hereof or thereof, will (a) violate any Legal Requirement of Imagine, any provision of its certificate of incorporation or bylaws; or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Imagine is a party or by which it is bound or to which any of its assets or properties are subject; or (d) require the approval, consent, authorization or act of, or the making by Imagine of any declaration, filing or registration with, any Person. 5.3. No Agent, Finder or Broker. Imagine has no Liability or obligation, contingent or otherwise, to pay any fees or commissions to any agent, broker or finder with respect to the Contemplated Transactions. 5.4. Investment Intent. Imagine is acquiring the shares of Buildscape Common solely for its own account for investment purposes, and not with a view to the public distribution thereof. 5.5. Completeness of Statement; Effect of Representations and Warranties. The representations and warranties of Imagine contained in this Section 5.5 are true and complete in all respects as of the date hereof. No representation or warranty of Imagine in this Agreement contains any untrue statement of a material fact, omits any material fact necessary to make such representation or warranty, under the circumstances which it was made, not misleading, or contains any misstatement of a material fact. All of the representations and warranties made by Imagine are made with the knowledge, expectation, understanding and desire that the Riverside Parties place complete reliance thereon. 6. COVENANTS OF THE PARTIES. 6.1. Covenant of Imagine. Imagine hereby covenants that it will not dispose of any of the Buildscape Common (other than in conjunction with an effective registration statement for the Buildscape Common under the Securities Act, in compliance with Rule 144 promulgated under the Securities Act or in compliance with another exemption from applicable securities laws, as reasonably determined by counsel to the Company) unless and until Imagine shall have furnished Buildscape with an opinion of counsel (satisfactory to counsel for Buildscape) to the effect that (i) such disposition will not require registration under the Securities Act and (ii) appropriate action necessary for compliance with the Securities Act and other applicable state, local or foreign law has been taken. 6.2. Legends. Each certificate representing shares of Buildscape Common shall be endorsed with the following legends: (a) Federal Legend. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT (i) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT; OR (ii) IN COMPLIANCE WITH RULE 144; or (iii) PURSUANT TO AN OPINION OF COUNSEL THAT SUCH REGISTRATION OR COMPLIANCE IS NOT REQUIRED AS TO SAID SALE, OFFER OR DISTRIBUTION. (b) Other Legends. Any other legends required by applicable state blue sky laws. (c) Voting Agreement. Certificates of shares of Buildscape Common to be distributed to Riverside pursuant to the provisions of Section 1.3 shall contain a legend to the effect that voting of the shares represented by such certificate or certificates is subject to the Voting Agreement contained in Section 6.7 ("Voting Agreement"). 6.3. Removal of Legend and Transfer Restrictions. Any legend endorsed on a certificate pursuant to Section 6.2(a) or 6.2(b) and the stop transfer instructions with respect to such legended certificate shall be removed, and Buildscape shall issue a certificate without such legend to the holder of such certificate if such shares of Buildscape Common are registered under the Securities Act and a prospectus meeting the requirements of Section 10 of the Securities Act is available or if such holder satisfies the requirements of Rule 144(k). 6.4. Actions of the Parties. (a) No Actions Constituting a Breach. From the date hereof through the Closing Date, neither Imagine nor any of the Riverside Parties will take or knowingly permit to be done anything which would constitute a "Breach" (as defined in Section 9.2 of this Agreement) and each of the parties hereto shall cause the deliveries for which such party is responsible at the Closing to be duly and timely made. 6.5. Compliance With Conditions. Each party hereto agrees to cooperate fully with each other party, and shall use its reasonable best efforts to cause the conditions precedent for which such party is responsible to be fulfilled. Each party hereto further agrees to use its reasonable best efforts, and act in good faith, to consummate this Agreement and the Contemplated Transactions as promptly as possible. 6.6. Rights of First Offer. (a) Restrictions on Transfer. Until the occurrence of the closing of an underwritten public offering pursuant to an effective registration statement under the Securities Act covering the offering and sale to the public of Buildscape Common on behalf of Buildscape ("IPO"), neither Imagine nor Riverside (each a "Transferor") shall transfer any of its shares of Buildscape Common or Buildscape Preferred (the "Buildscape Shares"), except as provided by the terms of this Section 6.6. For purposes of this Agreement, the term "transfer" shall mean any voluntary sale, transfer, assignment, gift, Encumbrance and all other kinds of voluntary transfers. (b) Transfer Offer. If a Transferor desires to transfer any of its Buildscape Shares, it shall first offer ("Offer") to transfer such shares to the other ("Optionee"). The Offer shall contain the terms and conditions upon which the Transferor desires to transfer such First Offer Shares, including the number of Buildscape Shares to be transferred ("First Offer Shares") and the purchase price therefor. (c) Option of Optionee. For 21 days following receipt of the Offer, the Optionee shall have the option to purchase all of the First Offer Shares that the Transferor desires to transfer at the purchase price and other terms and conditions set forth in the Offer. If the Optionee desires to purchase such First Offer Shares, it shall give notice to the Transferor within such 21-day period. (d) Right to Transfer. The Optionee shall have the right to purchase all, and not less than all, of the First Offer Shares. If the Optionee fails to accept the Offer in full within 21 days after receipt of the Offer, then the Transferor shall thereafter be free to transfer the First Offer Shares on such terms and conditions as it may elect, provided that the purchase price at which the Transferor subsequently transfers the First Offer Shares shall not be less than the price contained in the Offer. (e) Exceptions. Notwithstanding the foregoing provisions of this Section 6.6, each of Imagine and Riverside may pledge any of its Buildscape Shares as collateral security, or otherwise transfer its Buildscape Shares to its respective Affiliates, so long as the pledgee and Affiliate, as the case may be, (i) agree to be bound by the provisions of the Voting Agreement, and (ii) agree that any subsequent transfers of Buildscape Shares are subject to the foregoing provisions of this Section 6.6. 6.7. Certain Voting Provisions. As a material inducement and as a condition for Imagine to enter into and perform this Agreement, Riverside hereby agrees as follows: (a) Voting Agreement. Following the Closing, and until the earlier to occur of (i) the expiration of the two year period following the Closing or (ii) the closing of an IPO (the "Term"), Riverside hereby agrees that, except as set forth in Section 6.7(c), below, it shall vote all of its Buildscape Shares (whether owned as of the Closing or acquired at any time thereafter during the Term) on all matters which Riverside would otherwise be entitled to vote such Buildscape Shares solely in conformance with the directions and instructions of Imagine, at Imagine's sole discretion. (b) Grant of Proxy. In order to secure Riverside's compliance with the covenants set forth in Section 6.7(a) above, Riverside hereby appoints Imagine as Riverside's true and lawful attorney and proxy, with full power of substitution for and in the name, place and stead of Riverside, to vote all of Riverside's Buildscape Shares consistent with Riverside's agreements contained in Section 6.7(a) above. The foregoing proxy shall be deemed coupled with an interest and irrevocable for the Term. (c) Change in Control. The provisions of Section 6.7(a) and 6.7(b) shall not be applicable to (and Riverside retains all rights to vote its Buildscape Shares with respect to) any required approval by the shareholders of Buildscape with respect to (i) a merger or consolidation of Buildscape if Buildscape is not the surviving corporation in such merger or consolidation (or if it is the surviving corporation, Imagine and Buildscape do not own in the aggregate a majority of the outstanding voting stock of such corporation on a fully diluted basis), (ii) the sale of all or substantially all of Buildscape's assets to another Person, (iii) any liquidation or dissolution of Buildscape, or (iv) any other matter related to a proposal that Would result in Imagine and Riverside not owning in the aggregate a majority of the outstanding voting stock of Buildscape on a fully diluted basis. 6.8. Certain Remedies. Without limiting any other remedy which may be available to either Imagine or Buildscape in the event of a breach or threatened breach by the other of the provisions of Section 6.6 or 6.7 or in the event of a breach or threatened breach of any other provision of this Agreement, Riverside and Imagine agree that the provisions of Section 6.6 and 6.7 may be enforced through any equitable remedy, including specific enforcement and injunction, and the party against whom such equitable enforcement is sought hereby waives any claim or defense that the enforcing party has an adequate remedy at law. 6.9. Shared Services Agreement. At the Closing, Buildscape and Riverside shall enter into a Shared Services Agreement in the form of Exhibit A attached hereto. 7. CONDITIONS TO CLOSING. 7.1. Conditions to Obligations of Imagine. The obligation of Imagine to take the actions required to be taken by Imagine at the Closing is subject to the satisfaction at or prior to the Closing of each of the following conditions, any one or more of which Imagine may waive in whole or in part at or prior to the Closing: (a) Representations True. The representations and warranties of the Riverside Parties contained in this Agreement (considered collectively) and each of these representations and warranties (considered individually) must have been true and correct as of the date hereof, and must be true and correct in all material respects on and as of the Closing Date (including those representations and warranties which specifically speak as of the date hereof) with the same effect as though such representations and warranties had been made and this Agreement had been delivered on and as of the Closing Date, without giving effect to any supplement to the Schedules. (b) Covenants Performed. All of the covenants, agreements and conditions of the Riverside Parties to be performed or complied with at or prior to the Closing pursuant to the terms of this Agreement must have been duly performed and complied with in all material respects. (c) Necessary Consents Received. The Riverside Parties shall have received consents, permits and waivers in form and substance reasonably satisfactory to Imagine, necessary or appropriate for consummation of the Contemplated Transactions. (d) Compliance Certificate. Each of the Riverside Parties shall have delivered to Imagine a certificate, executed on behalf of each of them by their respective Presidents or Vice-Presidents, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in subsections (a) and (b) of this Section 7.1. (e) Secretary's Certificate of Buildscape. Buildscape shall have delivered a certificate, executed on behalf of Buildscape by its Secretary, dated as of the Closing Date, certifying the Board of Directors resolutions approving this Agreement and the Contemplated Transactions and certifying the current versions of the Articles of Incorporation and Bylaws and the composition of the Board of Directors of Buildscape upon Closing. (f) Secretary's Certificate of CM. CM shall have delivered a certificate, executed on behalf of CM by its Secretary, dated as of the Closing Date, certifying the Board of Directors resolutions approving this Agreement and the Contemplated Transactions. (g) Secretary's Certificate of Riverside. Riverside shall have delivered a certificate, executed on behalf of Riverside by its Secretary or Assistant Secretary, dated as of the Closing Date, certifying the Board of Directors or Executive Committee resolutions approving this Agreement and the Contemplated Transactions. (h) Opinion of Counsel. Imagine shall have received an opinion from Holland & Knight LLP satisfactory in form to special counsel for Imagine, substantially in the form attached hereto as Exhibit B. (i) Compliance with Laws. The purchase and exchange described in Section 1.3 and 4 hereof by Imagine shall be legally permitted by all laws and regulations to which Imagine or CMT are subject. (j) Fairness Opinion. The Riverside Parties shall have received the Fairness Opinion and such Fairness Opinion shall be satisfactory to Imagine. (k) Buildscape Agreement. All of the transactions contemplated by the Buildscape Agreement shall have been consummated. 7.2. Conditions to Obligations of Riverside Parties. The obligation of the Riverside Parties to take the actions required to be taken by them at the Closing is subject to the satisfaction at or prior to the Closing of each of the following conditions, any one or more of which the Riverside Parties may waive in whole or in part at or prior to the Closing: (a) Representations True. The representations and warranties of Imagine contained in this Agreement (considered collectively) and each of the representations and warranties (considered individually) must have been true and correct as of the date hereof, and must be true and correct in all material respects on and as of the Closing Date (including those representations and warranties which speak specifically as of the date hereof) with the same effect as though such representations and warranties had been made and this Agreement had been delivered on and as of the Closing Date. (b) Covenants Performed. All of the covenants, agreements and conditions of Imagine to be performed or complied with at or prior to the Closing pursuant to the terms of this Agreement must have been duly performed and complied with in all material respects. (c) Secretary's Certificate. Imagine shall have delivered a Certificate executed on behalf of Imagine by its Secretary or an Assistant Secretary, dated as of the Closing Date, certifying the approval of this Agreement by Imagine's Board of' Directors. (d) Compliance Certificate. Imagine shall have delivered to CMT a certificate, executed by its President or a Vice President, dated as of the Closing Date certifying as to the fulfillment of the conditions specified in Section (a) and (b) of this Section 7.2. (e) Fairness Opinion. The Riverside Parties shall have received the Fairness Opinion which shall state that the Contemplated Transactions are fair to the Riverside Parties and their shareholders from a financial point of view. (f) Buildscape Agreement. All of the transactions contemplated by the Buildscape Agreement shall have been consummated. 8. TERMINATION. 8.1. Termination of Agreement. This Agreement may, by notice given at or prior to the Closing, be terminated as follows: (a) Mutual Consent. The parties may terminate this Agreement by mutual consent. (b) Conditions Not Satisfied. (1) Imagine may terminate this Agreement if any of the conditions in Section 7.1 have not been satisfied as of the Closing Date or if satisfaction of such a condition is or becomes impossible (other than through the failure of Imagine to comply with its obligations under this Agreement) and Imagine has not waived such condition at or prior to the Closing. (2) The Riverside Parties (by their unanimous vote) may terminate this Agreement if any of the conditions in Section 7.2 have not been satisfied as of the Closing Date or if satisfaction of such a condition is or becomes impossible (other than through the failure of any of the Riverside Parties to comply with their obligations under this Agreement) and such condition has not been waived at or prior to the Closing. (c) Breach by a Party. Any party may terminate this Agreement if a material Breach of any provisions of this Agreement has been committed by another party and such Breach has not been waived at or prior to the Closing. (d) Closing Did Not Timely Occur. Any party may terminate this Agreement if the Closing has not occurred (other than through the failure of any party seeking to terminate this Agreement to comply fully with its obligations under this Agreement) on or before October 15, 1999, or such later date as the parties may agree upon. 8.2. Effect of Termination. Each party's right of termination under Section 8.1 is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election of remedies. If this Agreement is terminated pursuant to Section 8.1, all further obligations of the parties under this Agreement will terminate, except that the obligations in Section 10.10 will survive; provided, that if this Agreement is terminated by a party because of the Breach of the Agreement by another party or parties or because one or more of the conditions to the terminating party's obligations under this Agreement is not satisfied as a result of another party's failure to comply with its obligations under this Agreement, the terminating party's right to pursue all legal remedies will survive such termination unimpaired. 9. INDEMNIFICATION; REMEDIES. 9.1. Survival; Right to Indemnification Not Affected by Knowledge. All representations, warranties, covenants and obligations in this Agreement, the Schedules, the certificates delivered pursuant to Sections 7.1 and 7.2, and any other certificate or document delivered pursuant to this Agreement will survive the Closing, provided that the representations and warranties of the Riverside Parties contained in Section 4 shall expire on the second anniversary of the Closing, other than the representations and warranties contained in Sections 4.1(a) (Authority), 4.5 (Capitalization), 4.15(b) (Employee Benefit Plans), 4.17 (Environmental) and 4.22 (Taxes), which shall not expire. The right to indemnification, payment of "Damages" (as defined in Section 9.2) or other remedy based on such representations, warranties, covenants and obligations will not be affected by any investigation conducted with respect to, or any Knowledge acquired at any time, whether before or after the execution and delivery of this Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant or obligation. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification, payment of Damages or other remedy based on such representations, warranties, covenants and obligations. 9.2. Indemnification By Riverside Parties. Each of the Riverside Parties, jointly and severally, shall indemnify and hold Imagine, and its directors, officers, shareholders, Affiliates successors and assigns ("Imagine Indemnitees") harmless for, and shall pay to the Imagine Indemnitees the amount of, all debts, obligations, losses, claims, damages (including incidental and consequential damages), liabilities, deficiencies, Proceedings, demands, assessments, orders, judgments, writs, decrees, costs and other expenses (including costs of investigation and defense and reasonable attorneys' fees) or diminution of value, whether or not Involving a third-party claim, of any nature and of any kind whatsoever ("Damages"), arising, directly or indirectly, from or in connection with: (a) any "Breach" (as defined below in this Section 9.2) of any representation or warranty made by any of the Riverside Parties (without giving effect to any supplement to the Schedules) in this Agreement; (b) any Breach of any representation or warranty made by any of the Riverside Parties in this Agreement as if such representation or warranty were made on and as of the Closing Date without giving effect to any supplement to the Schedules, other than any such Breach that is disclosed in a supplement to the Schedules and is expressly identified in the Certificate delivered pursuant to Section 7.1 as having caused the conditions specified in Section 7.1 not to be satisfied; or (c) any Breach by any of the Riverside Parties of any covenant, agreement or obligation of any of the Riverside Parties in this Agreement; The remedies provided in this Section 9.2 shall be the exclusive remedies of Imagine Indemnitees solely with respect to any Breaches of the representations and warranties of the Riverside Parties contained in Section 4. As used in this Agreement, the term "Affiliate" shall mean any Person controlled by, controlling or under common control with such Person. For the purposes of this definition, "control" of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person, whether by ownership of securities, contract, law or otherwise, and the terms "controlling" and "controlled" shall have meanings correlative to the foregoing. As used in this Agreement, a "Breach" of a representation, warranty, covenant, obligation or other provision of this Agreement or any instrument delivered pursuant to this Agreement will be deemed to have occurred if there is or has been (x) any inaccuracy in or breach of, or any failure to perform or comply with, such representation, warranty, covenant, obligation or other provision, or (y) any claim (by any Person) or other occurrence or circumstance that is or was inconsistent with such representation, warranty, covenant, obligation or other provision, and the term "Breach" means any such inaccuracy, breach, failure, claim, occurrence or circumstance. 9.3. Indemnification By Imagine. Imagine shall indemnify and hold the Riverside Parties and their directors, officers, shareholders, Affiliates, successors and assigns ("Riverside Indemnitees") harmless for, and will pay to the Riverside Indemnitees the amount of, all Damages arising directly or indirectly from or in connection with: (a) any Breach of any representation or warranty made by Imagine in this Agreement; (b) any Breach of any representation or warranty made by Imagine in this Agreement as if such representation or warranty were made on and as of the Closing Date, other than any such Breach that is expressly identified in the Certificate delivered pursuant to Section 7.2 as having caused the condition specified in Section 7.2 not to be satisfied; or (c) any Breach by Imagine of any covenant, agreement or obligation of Imagine in this Agreement. The remedies provided in this Section 9.3 shall be the exclusive remedies of the Riverside Indemnitees solely with respect to Breaches of any representations and warranties of Imagine contained in Section 5. 9.4. Indemnity Claims. (a) Notification of Claims. In the event that any claim ("Claim") is hereafter asserted by a party hereto as to which such party may be entitled to indemnification hereunder, such party ("Indemnitee") shall notify the party required by the terms of this Agreement to indemnify the Indemnitee ("Indemnifying Party") thereof ("Claims Notice") within 30 days after (1) receipt of "Notice" (as defined in Section 10.12) of commencement of any third-party litigation against such Indemnitee, (2) receipt by such Indemnitee of written notice of any third-party claim pursuant to an invoice, notice of claim or assessment, against such Indemnitee, or (3) such Indemnitee becomes aware of the existence of any other event in respect of which indemnification may be sought from the Indemnifying Party. The Claims Notice shall describe the Claim and the specific facts and circumstances in reasonable detail, shall include a copy of the Notice referred to in (1) and (2), above, shall indicate the amount, if known, or an estimate, if possible, of Damages that have been or may be incurred or suffered. (b) Defense of Third Party Claim by Indemnifying Party. The Indemnifying Party may elect to defend or compromise any Claim by a third party ("Third Party Claim"), at its or his own expense and by its or his own counsel, who shall be reasonably acceptable to the Indemnitee. The election by the Indemnifying Party to defend or compromise a claim shall constitute an avowal by the Indemnifying Party that the Indemnifying Party is obligated to indemnify the Indemnitee with respect to such claim. The Indemnitee may participate, at its or his own expense, in the defense of any Claim assumed by the Indemnifying Party. Without the approval of the Indemnitee, which approval shall not be unreasonably withheld or delayed, the Indemnifying Party shall not agree to any compromise of a Claim defended by the Indemnifying Party which would require the Indemnitee to perform or take any action or to refrain from performing or taking any action. (c) Assumption of Defense by Indemnitee. Notwithstanding the foregoing, if an Indemnitee determines in good faith that there is a reasonable probability that a Proceeding may adversely affect it or its Affiliates other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the Indemnitee may, by notice to the Indemnifying Party, assume the exclusive right to defend, compromise, or settle such Proceeding, but the Indemnifying Party will not be bound by any determination of a Proceeding so defended or any compromise or settlement effected without its consent (which may not be unreasonably withheld or delayed). (d) Defense of Claim by Indemnitee. If, within 30 days of the Indemnifying Party's receipt of a Claim Notice involving a Third Party Claim, the Indemnifying Party shall not have notified the Indemnitee of its or his election to assume the defense, the Indemnitee shall have the right to assume control of the defense or compromise of such Claim, and the costs and expenses of such defense, including costs of investigation and reasonable attorneys' fees, shall be added to the Claim. The Indemnitee shall have the right to compromise such Claim upon Notice to, but without the consent of, the Indemnifying Party. (e) Cooperation of Parties. The party assuming the defense of any Claim shall keep the other party reasonably informed at all times of the progress and development of the party's defense of and compromise efforts with respect to such Claim and shall furnish the other party with copies of all relevant pleading, correspondence and other papers. In addition, the parties to this Agreement shall cooperate with each other, and make available to each other and their representatives all available relevant records or other materials required by them for their use in defending, compromising or contesting any Claim. The failure to timely notify the Indemnifying Party of the commencement of such actions in accordance with Section 9.4(a) shall relieve the Indemnifying Party from the obligation to indemnify under Section 9.2 or 9.3, as the case may be, but only to the extent the Indemnifying Party establishes by competent evidence that it is has been materially and adversely prejudiced thereby. 9.5. No Liability of Buildscape. In the event any Imagine Indemnitee, at its election, makes a Claim against Riverside or CM (and not against Buildscape) for Imagine's Damages, neither Riverside nor CM shall, nor shall they be entitled to, maintain, assert or make a claim against Buildscape, or its directors, officers, Affiliates, successor or assigns, for contribution, indemnity or for any other recovery. 9.6. Limitation on Indemnification. No Indemnitee shall be entitled to indemnification for Damages pursuant to this Section 9 until such time as the amount of such Damages incurred by such Indemnitee equals $50,000, after which time such Indemnitee shall be entitled to indemnification for the entire amount of such Damages incurred by such Indemnitee. 10. MISCELLANEOUS PROVISIONS. 10.1. Construction. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any Legal Requirement shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. Nothing in the Schedules shall be deemed adequate to disclose an exception to a representation or warranty made herein unless the Schedule identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail. In the event of any inconsistency between the statements in the body of this Agreement and those in the Schedules (other than an exception expressly set forth as such in the Schedules with respect to a specifically identified representation or warranty), the statements in the body of this Agreement will control. Without limiting the generality of the foregoing, the mere listing (or inclusion of a copy) of a document or other item shall not be deemed adequate to disclose an exception to a representation or warranty made herein (unless the representation or warranty has to do with the existence of the document or other item itself). The parties intend that each representation, warranty, covenant and obligation contained herein shall have independent significance. If any party has breached any representation, warranty, covenant or obligation contained herein in any respect, the fact that there exists another representation, warranty, covenant or obligation relating to the same subject matter (regardless of the relative levels of specificity) which the party has not breached shall not detract from or mitigate the fact that the party is in breach of the first representation, warranty, covenant or obligation. Unless the context clearly states otherwise, the use of the singular or plural in this Agreement shall include the other and the use of any gender shall include all others. All references to "Section" or "Sections" refer to the corresponding Section or Sections of this Agreement. Unless otherwise expressly provided, the word "including" does not limit the preceding words or terms. 10.2. Entire Agreement. As used herein, the term "Agreement" shall mean this Agreement and the documents and Schedules to be delivered in connection herewith, all written statements (including Financial statements and information) and all certificates, documents and instruments which are identified herein as having been or to be furnished to Imagine. This Agreement embodies the entire agreement and understanding of the parties hereto with respect to the subject matter herein contained, and supersedes all prior agreements, correspondence, arrangements and understandings relating to the subject matter hereof. This Agreement may be amended, modified, superseded, or canceled only by a written instrument signed by all of the parties hereto, and any of the terms, provisions, and conditions hereof may be waived, only by a written instrument signed by the waiving party. 10.3. Exhibits and Schedules. All Exhibits to this Agreement and the Schedules hereto shall constitute part of this Agreement and shall be deemed to be incorporated herein by reference, in their entirety and made a part hereof, as if set out in full at the point where they first are mentioned. References in this Agreement to a specific Schedule shall refer solely to such Schedule and shall not be deemed to include material included in any other Schedule, unless the Schedule specifically states that the material is to be included in another specified Schedule. 10.4. Expenses. Each party to this Agreement will bear its respective expenses incurred in connection with the preparation, execution and performance of this Agreement and the transactions contemplated herein, including all fees and expenses of agents. representatives, counsel and accountants. 10.5. Further Assurances. The parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as any other party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement. 10.6. Governing Law. This Agreement is executed and delivered in, and shall be governed by the laws of, the state of Delaware, without giving effect to any conflict of law rule or principle that might require the application of the laws of another jurisdiction. 10.7. Headings. The headings in this Agreement are included for purposes of convenience only and shall not be considered a part of this Agreement in construing or interpreting any provision hereof. 10.8. Definition of Knowledge. An individual will be deemed to have "Knowledge" of a particular fact or other matter if: (a) such individual is actually aware of such fact or other matter; or (b) a prudent individual could be expected to discover or otherwise become aware of such fact or other matter in the course of conducting a reasonably comprehensive investigation concerning the existence of such fact or other matter. A Person (other than an individual) will be deemed to have "Knowledge" of a particular fact or other matter if any individual who is serving, or who has at any time served, as a director, officer, partner, executor, or trustee of such Person (or in any similar capacity) has, or at any time had, Knowledge of such fact or other matter. 10.9. Invalidity of Provisions; Severability. If any provision of this Agreement or the application thereof to any Person or circumstance shall to any extent be held in any Proceeding to be invalid, illegal or unenforceable, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those to which it was held to be invalid, illegal or unenforceable, shall not be affected thereby, and shall be valid, legal and enforceable to the fullest extent permitted by law, but only if and to the extent such enforcement would not materially and adversely frustrate the parties' essential objectives as expressed herein. Notwithstanding the foregoing, each party hereto agrees that it has reviewed the provisions of this Agreement, and that the same, taken as a whole, are fair and reasonable. The parties hereto shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. 10.10. No Public Announcement. Neither Imagine, nor any of the Riverside Parties shall, without the approval of the other, make any press release or other public announcement concerning the contemplated transactions, except as and to the extent that any such party shall be so obligated by law or the rules of any stock exchange, in which case the other parties shall be advised and the parties shall use their Reasonable Best Efforts to cause a mutually agreeable release or announcement to be issued; provided, the foregoing shall not preclude communications or disclosures necessary to implement the provisions of this Agreement or to comply with the accounting and Securities and Exchange Commission disclosure obligations. 10.11. No Third Party Beneficiaries. This Agreement is not intended to, and shall not be construed to, confer upon any third Person any right, remedy or benefit nor is it intended to be enforceable by any third Person, and shall only be enforceable by the parties hereto, and their respective successors, permitted assigns, heirs and personal representatives. 10.12. Notices. (a) Giving of Notices. All notices, requests, consents, approvals, waivers, demands and other communications hereunder (collectively, "Notices") shall be deemed to have been given if in writing and (1) personally delivered against a written receipt, or (2) sent by confirmed telephonic facsimile, or (3) delivered to a reputable express messenger service (such as Federal Express, DHL Courier and United Parcel Service) for overnight delivery, addressed as follows (or to such other address as a party shall have given Notice to the other): If to the Riverside Parties: Steven Wilson Riverside Group, Inc. 7800 Belfort Parkway, Suite 100 Jacksonville, FL 32245 Fax: (904) 296-9584 With a copy (which shall not T. Malcolm Graham, Esq. constitute notice) to: Holland & Knight LLP 50 North Laura Street, Suite 3900 Jacksonville, Florida 32202 Fax: (904) 358-1872 If to Imagine: Gary Goltz, Esq. Imagine Investments, Inc. 8510 North Central Expressway, Suite 1901 Dallas, Texas 75206 Fax: (214) 365-690; With a copy (which shall not Michael M. Fleishman, Esq. constitute notice) to: Greenebaum Doll &. McDonald PLLC 3300 National City Tower Louisville, Kentucky 40202 Fax: (502) 587-3695
(b) Time Notices Deemed Given. All Notices shall be effective upon being properly personally delivered, or upon confirmation of a telephonic facsimile, or upon the delivery to a reputable express messenger service. The period in which a response to any such notice must be given shall commence to run from the date on the receipt of a personally delivered notice, or the date of confirmation of a telephonic facsimile or two days following the proper delivery of the Notice to a reputable express messenger service, as the case may be. 10.13. Successors and Assigns. (a) Assignment. The rights of any party under this Agreement shall not be assignable by such party hereto prior to the Closing without the consent of the others. (b) Successors. All of the terms, provisions and conditions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their successors and permitted assigns, heirs and personal representatives. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties and their successor and permitted assigns. 10.14. Time of Essence. Time is of the essence to the performance of the obligations set forth in this Agreement. 10.15. Waiver. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver or such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party, (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given, and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written. IMAGINE INVESTMENTS, INC. /s/ Harry T. Carneal By: _______________________________ Executive Vice President Title: ________________________ ("imagine") RIVERSIDE GROUP, INC. illegible By: _______________________________ Title: ________________________ ("Riverside") CYBERMAX, INC. illegible By: ____________________________________ Title: _____________________________ ("CM") CYBERMAX TECH, INC. illegible By: ____________________________________ Title: _____________________________ ("CMT") BUILDSCAPE INC. illegible By: ____________________________________ Title: _____________________________ ("Buildscape") EX-7.19 15 dex719.txt AMENDMENT TO LOAN AGREEMENT Exhibit 7.19 AMENDMENT TO LOAN AGREEMENT --------------------------- AND NOTES --------- THIS AMENDMENT TO LOAN AGREEMENT AND NOTES ("Amendment") entered into on June 25, 2002 (the "Amendment Date"), by and between Imagine Investments, Inc., a Delaware corporation ("Lender"), whose address is 8150 North Central Expressway, Suite 1901, Dallas, Texas 75206 and Wilson Financial Corporation, a Florida corporation ("Borrower"), whose address is 7800 Belfort Parkway, Suite 100, Jacksonville, Florida 32256. WHEREAS, On February 24, 1999, Borrower and Lender entered into that certain Loan Agreement (the "Loan Agreement") pursuant to which Borrower borrowed the aggregate sum of Six Million Dollars ($6,000,000) from Lender as further evidenced by that certain Term Promissory Note dated February 24, 1999 made by Borrower payable to the order of Lender (the "Term Note"); WHEREAS, pursuant to the terms of the Term Note, on February 28, 2000 Borrower executed and delivered to Lender that certain In Kind Note in the principal amount of Three Hundred Seventy-Five Thousand Five Hundred Forty-Eight and 93/100 Dollars ($375,548.93) (the "In Kind Note") in lieu of paying interest on the interest that accrued under and during the first year of the Term Note (the Term Note and the In Kind Note are collectively referred to herein as the "Notes" and each individually as a "Note"); WHEREAS, Borrower has requested and, subject to the terms and conditions of this Amendment, Lender has agreed, to extend the maturity of the indebtedness, liabilities and obligations evidenced by the Notes and the other Loan Documents (the "Indebtedness") to September 30, 2002. NOW, THEREFORE, notwithstanding anything to the contrary contained in the Notes or any of the other Loan Documents, Borrower and Lender agree as follows: 1. Defined Terms. All terms used herein and not otherwise defined herein shall have the meanings given to them in the Loan Agreement. 2. Reaffirmation of Indebtedness. Borrower and Lender hereby acknowledge and confirm that: (a) the outstanding principal balance of each Note as of the Amendment Date is equal to the amount listed beside such Note on Exhibit A hereto, (b) Borrower's obligation to repay the outstanding principal balance of each Note and all other Indebtedness is unconditional and not subject to any offsets, defenses or counterclaims, and (c) by entering into this Amendment, Lender does not waive or release any term or condition of the Notes or the other Loan Documents or any of its rights or remedies under such Loan Documents, or applicable law, except as set forth herein. 3. Interest. (a) with respect to the Indebtedness not relating to the In Kind Note, effective as of December 31, 2001, notwithstanding anything to the contrary contained in the Term Note or the other Loan Documents, the interest on the unpaid principal of the Indebtedness that does note relate to the In Kind Note is hereby amended to accrue at the rate of ten percent (10%) per annum until all of such Indebtedness (including, without limitation, principal and interest) is indefeasibly paid in full and (b) with respect to the Indebtedness relating to the In Kind Note, effective as of February 28, 2001, notwithstanding anything to the contrary contained in the In Kind Note or the other Loan Documents, the interest on the unpaid principal of the Indebtedness that relates to the In Kind Note is hereby amended to accrue at the rate of twelve percent (12%) per annum until all of such Indebtedness (including, without limitation, principal and interest) is indefeasibly paid in full. 4. Payment of Principal and Interest on the Indebtedness. (a) with respect to the Indebtedness not relating to the In Kind Note, effective as of December 31, 2001 and (b) with respect to the Indebtedness relating to the In Kind Note, effective as of February 28, 2001, each of the Notes and the other Loan Documents are hereby amended to extend the maturity date of the Indebtedness (regardless of the stated date of the maturity of the Indebtedness for such Note or Loan Document) to September 30, 2002, at which time all Indebtedness (including, without limitation, principal and interest) shall be due and payable in full. 5. Reinstatement of Notes and Loan Documents. Lender, without prejudice to or waiver of any right or remedy available to it by reason of the occurrence subsequent to the date hereof of any event or condition constituting a Possible Default or Event of Default or any other default or event of default that has occurred and is continuing under any of the Notes or the other Loan Documents hereby agrees to take no action with respect to any such Possible Default or Event of Default or any other default or event of default that has occurred and is continuing under any of the Notes or the other Loan Documents which heretofore has occurred. Borrower and Lender hereby agree that the Notes and the Loan Documents are fully reinstated in accordance with their terms and conditions, as amended, by this Amendment, as if no Possible Default or Event of Default or any other default or event of default that has occurred and is continuing under any of the Notes or the other Loan Documents had occurred in the payment of the Indebtedness prior to the date of this Agreement. It is expressly understood that Lender will and does hereafter require full performance of any and all terms, conditions and requirements of all Loan Documents, as amended by this Amendment. It is further understood and agreed that the validity and perfection of the liens and security interests granted under the Loan Documents are not diminished or impaired in any way by this Amendment. Borrower agrees to perform and/or observe the terms and provisions of the Loan Documents to which it is a party, as amended by this Amendment. 6. No Commitment to Make Further Advances. Notwithstanding anything to the contrary contained herein or in any other Loan Document (including, without limitation, the Loan Agreement) any and all commitments of Lender to advance funds or issue letters of credit to, or on behalf of, Borrower are hereby terminated and Lender shall have no further obligation to advance funds or issue letters of credit to, or on behalf of, Borrower. 7. Expenses. All expenses incurred by Borrower or Lender in connection with this transaction, including, but not limited to, attorneys' fees, shall be borne by Borrower and to the extent Lender's expenses are not paid by Borrower within 10 days of Lender submitting an invoice therefor to Borrower, the amount of such expenses shall be added to the outstanding principal amount of the Indebtedness and shall accrue interest in accordance with subclause (a) of Paragraph 3 hereof. 8. Ratification of Prior Instruments and Priorities. Except as herein expressly amended, each and every term, condition, warranty and provision of the Notes and the other Loan Documents shall remain in full force and effect and such Notes and other Loan Documents are hereby ratified, confirmed and approved by the parties hereto. Nothing herein shall be construed to alter or affect the priority of the liens, security interests or title created by the Loan Documents. Any provision herein that might otherwise be construed to conflict with the desire of Lender that the liens, security interests and title of the Loan Documents be maintained and preserved prior to any and all encumbrances affecting the Collateral arising subsequent to the execution of the Loan Documents shall, at Lender's option, be void and of no force and effect; it being the expressly declared intention of the parties hereto that no novation of the Loan Documents be created hereby. Any promissory note or other indebtedness described in the Loan Documents as the obligation secured thereby shall hereafter mean the Notes as modified by this Agreement and the Indebtedness. The Loan Documents as modified and amended hereby are hereby ratified and confirmed in all respects. 9. Representations and Warranties. Borrower hereby represents and warrants that: (a) Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida; (b) Borrower has all requisite power and authority and all necessary consents, approvals, licenses, permits and other authorizations (i) to own and operate the Collateral, (ii) to execute and deliver this Amendment and all other documents and agreements to be executed by Borrower in connection herewith, and (iii) to carry out and comply with the terms of the Notes and the other Loan Documents, as amended by this Amendment; (c) the Notes and the other Loan Documents remain in full force and effect and constitute, and upon the execution and delivery of this Amendment will continue to constitute, the legal, valid and binding obligations of Borrower enforceable in accordance with their terms; (f) Borrower is the sole legal and beneficial owner of the Collateral; and (g) neither the execution and delivery of this Amendment nor the consummation of the transactions contemplated herein nor compliance by Borrower with the provisions of the Loan Documents, as amended by this Amendment, will conflict with or result in a breach of, or constitute a default under, any of the terms, conditions or provisions of any law, rule, regulation, order, writ, injunction or decree of any court or governmental authority to which Borrower is subject, or of the articles of incorporation, bylaws or any other organizational document of Borrower, or of any indenture, mortgage, deed of trust, promissory note, loan agreement or any other agreement or undertaking to which Borrower is a party or by which Borrower or its properties may be bound or subject. 10. Conditions to Effectiveness of this Amendment. This Amendment shall not become effective until, and shall become effective when, each and every one of the following conditions shall have been satisfied: a. executed counterparts of this Amendment, duly executed by Borrower and Lender, shall have been delivered to Lender; b. Lender shall have received a copy of the resolutions of the Board of Directors of Borrower authorizing the execution, delivery and performance by Borrower of this Amendment and any and all documents relating thereto, certified by Borrowers' Secretary or an Assistant Secretary; c. the representations and warranties of Borrower set forth herein are true and correct on and with respect to the date hereof; and d. J. Steven Wilson shall have executed the Ratification of Guaranty attached hereto. 11. Defenses. Borrower covenants and warrants that there are no defenses, counterclaims or offsets to any of the Notes, the other Loan Documents or the Indebtedness, and Borrower hereby waives any defense, claim or counterclaim against Lender. 12. Further Assurances. Borrower, upon request from Lender, agrees to execute such other and further documents as may be reasonably necessary or appropriate to consummate the transactions contemplated herein or to perfect the liens and security interests intended to secure the payment of the Indebtedness. 13. Business and Financial Information. Borrower will promptly furnish to Lender from time to time such information regarding the Collateral and/or the business and affairs and financial condition of Borrower as Lender may reasonably request, and will furnish such items Lender. 14. Descriptive Headings. Descriptive headings are inserted for convenience and reference only and do not in any way limit or amplify the terms and provisions hereof. 15. Default. If Borrower shall fail to perform or observe any of the covenants or agreements contained herein or if any statement, representation or warranty contained herein is false, misleading or erroneous in any material respect, an Event of Default shall be deemed to have occurred and Lender shall be entitled at its option to exercise any and all of the rights and remedies granted pursuant to any of the Loan Document or which Lender may otherwise be entitled, whether at law or in equity. 16. FINAL AGREEMENT. THE NOTES AND THE OTHER LOAN DOCUMENTS, AS AMENDED HEREBY REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO RELATED TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO. IN WITNESS WHEREOF, the parties hereto have each executed this Amendment as of June __, 2002. LENDER: IMAGINE INVESTMENTS, INC., a Delaware corporation By: /s/ Gary M. Goltz --------------------------------------- Name: Gary M. Goltz ------------------------------------- Title: V.P. ------------------------------------ BORROWER: WILSON FINANCIAL CORPORATION, a Florida corporation By: /s/ J. Steven Wilson --------------------------------------- Name: J. Steven Wilson ------------------------------------- Title: President ------------------------------------ EXHIBIT A Amount of Notes Note Face Amount 6/__/02 6/__/02 6/__/02 Principal Interest Total Term Note $6,000,000.00 $___________ $__________ $___________ In Kind Note 375,548.93 $___________ $__________ $___________ Ratification of Guaranty ------------------------ The undersigned Guarantor hereby joins in this Amendment to (i) evidence his consent to execution by Borrower of this Amendment and acknowledges that without such consent and confirmation Lender would not execute this Amendment, (ii) confirms that each Loan Document (including, without limitation the Unconditional Guaranty Agreement and the Stock Pledge Agreement) now or previously executed by the undersigned continues to be valid and enforceable and remains in full force and effect, and (iii) confirms that the amendments contained herein shall fully amend any Loan Documents (including, without limitation the Unconditional Guaranty Agreement and the Stock Pledge Agreement) to which the undersigned is a party. GUARANTOR: /s/ J. Steven Wilson --------------------------------------- J. Steven Wilson -----END PRIVACY-ENHANCED MESSAGE-----