CUSIP NO. 585165103 13D/A
(1) Representing 2000 units of 12% Convertible Notes due 2006 (the
"Recovery II Notes")owned and the right to acquire 400,000 shares of
Common Stock upon the conversion of the Recovery II Notes. Also
represents 666,666 shares of Common Stock owned. Voting and
dispositive power is exercised through its sole general partner, T.
Rowe Price Recovery Fund II Associates, LLC. See Item 5 below for
additional information.
CHANG7818/2.909508v3
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
___________
SCHEDULE 13D/A
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13d-
1(a) AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a)
(Amendment No. 1 )1
Altiva Financial Corporation
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
585165103
(CUSIP Number)
Hubert M. Stiles, Jr., President, T. Rowe Price Associates, Inc.
100 East Pratt Street, Baltimore, Maryland 21202
(410) 345-6703
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
August 31, 1999
(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 which 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: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-7(b) 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 the 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).
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
T. Rowe Price Recovery Fund II, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) o
(b) x
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
o
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF 0 shares
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 1,066,666 shares(1)
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0 shares
PERSON 10 SHARED DISPOSITIVE POWER
WITH 1,066,666 shares(1)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,066,666 shares(1)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
x
SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.3%
14 TYPE OF REPORTING PERSON *
PN
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
T. Rowe Price Recovery Fund II Associates, L.L.C.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
o (b) x
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
o
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Maryland
7 SOLE VOTING POWER
NUMBER OF 0 shares
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 1,066,666 shares(1)
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0 shares
PERSON 10 SHARED DISPOSITIVE POWER
WITH 1.066,666 shares(1)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,066,666 shares(1)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
x
SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.3%
14 TYPE OF REPORTING PERSON *
OO (Limited Liability Company)
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
T. Rowe Price Associates, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
x (b) x
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
o
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Maryland
7 SOLE VOTING POWER
NUMBER OF 0 shares
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 1,066,666 shares(1)
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0 shares
PERSON 10 SHARED DISPOSITIVE POWER
WITH 1,066,666 shares(1)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,066,666 shares(1)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
x
SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.3%
14 TYPE OF REPORTING PERSON *
CO
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Hubert M. Stiles, Jr.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)
o (b) x
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
o
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
7 SOLE VOTING POWER
NUMBER OF 7,912 shares
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 1,066,666 shares(1)
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 7,912 shares
PERSON 10 SHARED DISPOSITIVE POWER
WITH 1,066,666 shares(1)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,074,578 shares(1)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
x
SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.4%
14 TYPE OF REPORTING PERSON *
IN
This Schedule 13D Amendment No. 1 ("Amendment No. 1) is an
amendment to the Schedule 13D that was filed with the Securities
and Exchange Commission ("SEC") on July 10, 1998 (the "Original
13D") on behalf of T. Rowe Price Recovery Fund II, L.P. ("Recovery
II"), T. Rowe Price Recovery Fund II Associates, LLC (the "General
Partner"), T. Rowe Price Associates, Inc. (the "Manager"), and
Hubert M. Stiles, Jr.("Stiles").
Recovery II, the General Partner, the Manager, and Stiles are
sometimes collectively referred to herein as the "Reporting
Persons."
Altiva Financial Corporation, a Delaware corporation, is
referred to herein as the "Issuer."
Unless otherwise noted, the information contained in this
Amendment No. 1 amends and restates the items below as previously
disclosed in the Original 13D. Capitalized terms not defined in
this Amendment No. 1 shall have their respective meanings as set
forth in the Original 13D.
Item 3. Source and Amount of Funds or Other Consideration.
On June 29, 1998 Recovery II acquired 666,666 shares of the
Issuer's Common Stock for the total purchase price of $10,000,000.00.
The working capital of Recovery II was the source of funds for this
purchase.
On June 29, 1999, Stiles received options to purchase 3,500
shares of the Issuer's Common Stock in partial compensation of
services rendered as a director of the Issuer, of which options to
purchase 1,166 shares of the Issuer's Common Stock are exercisable
within 60 days of the date hereof.
On August 31, 1999, Recovery II acquired a 2000 units of the
Issuer's 12% Convertible Notes Due 2006 for an aggregate purchase of
$2,000,000. The working capital of Recovery II was the source of
funds for this purchase.
On August 31, 1999, Stiles received options to purchase 500
shares of the Issuer's Common Stock in partial compensation of
services rendered as a director of the Issuer.
On October 6, 1999, Stiles became entitled to receive 6,246
shares of the Issuer's Common Stock in satisfaction of directors fees
payable to Stiles for services rendered during the period September 1,
1998 through August 31, 1999, all of which are exercisable within 60
days of the date hereof.
Item 5. Interest in Securities of the Issuer.
(a) Recovery II is the record owner of (i) 666,666 shares of the
Common Stock of the Issuer (the "Recovery II Common Stock") and (ii)
2000 units of the Issuer's 12% Convertible Notes Due 2006 (the
"Recovery II Convertible Notes"). The Recovery II Convertible Notes
are convertible into 400,000 shares of the Issuer's Common Stock (the
"Recovery II Note Shares"). The Recovery II Common Stock and the Note
Shares are collectively referred to herein as the "Recovery II
Shares".
Stiles is the record owner of (i) 6,246 shares of the Issuer's
Common Stock (the "Stiles Common Stock") and (ii) options to purchase
4,000 shares of the Issuer's Common Stock, of which options to
purchase 1,666 shares of the Issuer's Common Stock are exercisable
within 60 days of the date hereof (the "Stiles Options"). The Stiles
Common Stock and the shares of the Issuer's Common Stock issuable upon
the exercise of the Stile Options are collectively referred to herein
as the "Stiles Shares".
As the sole general partner of Recovery II, the General Partner
may be deemed to own beneficially the Recovery II Shares. As the sole
manager of the General Partner, the Manager may be deemed to own
beneficially the Recovery II Shares. As the individual President of
the Manager, Stiles may be deemed to own beneficially the Recovery II
Shares and the Stiles Shares. The General Partner, the Manager and
Hubert M. Stiles each disclaim beneficial ownership of the Recovery II
Shares and the Stiles Shares, except with respect to its or his
pecuniary interest therein, if any. Recovery II disclaims beneficial
ownership of the Stiles Shares, except with respect to its pecuniary
interest therein, if any.
Recovery II, the General Partner and the Manager may each be
deemed to own beneficially 24.3% of the Common Stock, which percentage
is calculated based upon 3,995,347 shares of the Common Stock
disclosed by the Issuer as outstanding as of December 13, 1999
pursuant to its Form 10-K filed with the .Securities and Exchange
Commission on December 15, 1999. Stiles may be deemed to own
beneficially 24.4% of the Common Stock, which percentage is calculated
based upon 3,995,347 shares of the Common Stock disclosed by the
Issuer as outstanding as of December 13, 1999 pursuant to its Form 10-
K filed with the Securities and Exchange Commission on December 15,
1999.
(b) Number of Common Stock as to which each such person has
(i) Sole power to vote or direct the vote:
0 shares for Recovery II, the General Partner and the
Manager;
7,912 shares for Stiles;
(ii) Shared power to vote or direct the vote:
1,066,666 shares for each Reporting Person;
(iii) Sole power to dispose or to direct the
disposition:
0 shares for Recovery II, the General Partner and the
Manager;
7,912 shares for Stiles;
(iv) Shared power to dispose or to direct the disposition:
1,066,666 shares for each Reporting Person.
(c) Except as set forth above, none of the Reporting Persons has
effected any transaction in the Shares during the last 60 days.
(d) No other person is known to have the right to receive or the
power to direct the receipt of dividends from, or any proceeds from
the sale of, the Common Stock beneficially owned by any of the
Reporting Persons.
(e) Not applicable.
Item 6. Contracts, Arrangements, Undertakings or
Relationships with Respect to Securities of the Issuer.
Pursuant to the terms of a certain Common Stock Purchase
Agreement dated June 24, 1998 (the "Purchase Agreement," attached
hereto as Exhibit 7.2) by and between the Issuer and Recovery II,
Recovery II purchased 6,666,666 shares of the Common Stock.
Pursuant to the terms of the Registration Rights Agreement dated
as of June 29, 1998 by and between the Issuer and Friedman, Billings,
Ramsey & Co. on behalf of Recovery II (and certain other purchasers of
the Issuer's capital stock) the "Registration Rights Agreement",
attached hereto and filed as Exhibit 7.3, the Issuer has agreed to
grant certain registration rights to the Recovery II (and certain
other purchasers of the Issuer's capital stock).
Pursuant to the terms of a certain participation agreement dated
August 31, 1999 (the "Participation Agreement," attached hereto as
Exhibit 7.4) by and between Recovery II and Value Partners, Ltd.,
Recovery II purchased 2000 units of the Issuer's 12% Convertible Notes
Due 2006.
Pursuant to the terms of a certain election agreement dated
October 6, 1999 (the "Stiles Start-Up Director Election," attached
hereto as Exhibit 7.5), Stiles is entitled to receive 6,246 shares of
the Issuer's Common Stock in satisfaction of directors fees payable to
Stiles for services rendered during the period September 1, 1998
through August 31, 1999.
Item 7. Material to be Filed as Exhibits.
Exhibit 7.1 - Agreement regarding filing of joint Schedule
13D.
Exhibit 7.2 - Common Stock Purchase Agreement dated June
24, 1998 by and between the Issuer and Recovery II.
(previously filed as Exhibit 7.2 to the Original 13D and
incorporated by reference herein).
Exhibit 7.3 - Execution Copy of the Registration Rights Agreement
dated June 29, 1998 by and between the Issuer and
Friedman, Billings, Ramsey & Co. on behalf of Recovery II
(and certain other purchasers of the Issuer's capital
stock) (filed as Exhibit 7.3 to the Original 13D and
incorporated by reference herein).
Exhibit 7.4 - Participation Agreement dated August 31, 1999 by
and between Value Partners Ltd. and T. Rowe Price Recovery
Fund II L.P.
Exhibit 7.5 - Start-Up Director Election dated October 6, 1999.
Exhibit 7.6 - Secured Convertible Note Purchase Agreement between
the Issuer and Value Partners, Ltd., dated as of August
31, 1999 (filed as Exhibit 3 to Amendment No. 1 to the
Schedule 13D filed by Value Partners, Ltd. with the
Securities and Exchange Commission on December 2, 1999 and
incorporated by reference herein).
Exhibit 7.7 - 12% Secured Convertible Note Due 2006 issued and
sold by Issuer to Value Partners, Ltd. (filed as Exhibit 4
to Amendment No. 1 to the Schedule 13D filed by Value
Partners, Ltd. with the Securities and Exchange Commission
on December 2, 1999 and incorporated by reference herein).
SIGNATURE
After reasonable inquiry and to the best of their knowledge
and belief, the undersigned certify that the information set forth
in this statement is true, complete and correct.
Date: December 23, 1999
T. ROWE PRICE RECOVERY FUND II, L.P.
By: T. Rowe Price Recovery Fund II Associates, L.L.C.,
Its General Partner
By: T. Rowe Price Associates, Inc.,
Its Manager
By: /s/ Hubert M. Stiles, Jr.
Hubert M. Stiles, Jr.
President
T. ROWE PRICE RECOVERY FUND II ASSOCIATES, L.L.C.
By: T. Rowe Price Associates, Inc.,
Its Manager
By: /s/ Hubert M. Stiles, Jr.
Hubert M. Stiles
President
T. ROWE PRICE ASSOCIATES, INC.
By: /s/ Hubert M. Stiles, Jr.
Hubert M. Stiles, Jr.
Vice President
/s/ Hubert M. Stiles, Jr.
Hubert M. Stiles, Jr.
Individually
EXHIBIT 7.1
AGREEMENT
This agreement, dated as of February 16, 1999, is by and among
T. Rowe Price, Recovery Fund II, L.P., a Delaware limited
partnership, T. Rowe Price Recovery Fund II Associates, L.L.C., a
Delaware limited liability company, T. Rowe Price Associates, Inc.,
a Delaware corporation and Hubert M. Stiles, Jr., an individual.
Pursuant to Rule 13d-1(k)(1) promulgated under the Securities
Exchange Act of 1934, as amended, the parties hereby agree to file
a single statement on Schedule 13D/A on behalf of each of the
parties, and hereby further agree to file this Agreement as an
exhibit to such statement, as required by such rule.
Executed and delivered as of the date first above written.
T. ROWE PRICE RECOVERY FUND II, L.P.
By: T. Rowe Price Recovery Fund II Associates, L.L.C.,
Its General Partner
By: T. Rowe Price Associates, Inc.,
Its Manager
By: /s/ Hubert M. Stiles, Jr.
Hubert M. Stiles, Jr.
President
T. ROWE PRICE RECOVERY FUND II ASSOCIATES, L.L.C.
By: T. Rowe Price Associates, Inc.,
Its Manager
By: /s/ Hubert M. Stiles, Jr.
Hubert M. Stiles, Jr.
President
T. ROWE PRICE ASSOCIATES, INC.
By: /s/ Lucy B. Robins
Lucy B. Robins
Vice President
/s/Hubert M. Stiles, Jr.
Hubert M. Stiles, Jr.
Individually
EXHIBIT 7.4
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (this "Agreement') is made and
entered into as of August 31, 1999, by and between Value Partners,
LTD, a Texas limited partnership (the "Lead"), and T. Rowe Price
Recovery Fund 11, L.P., a Maryland limited partnership (the
"Participant").
Preliminary Statements
Altiva Financial Corporation, a Delaware corporation (the
"Borrower") and the Lead have entered into a Secured Convertible Note
Purchase Agreement of even date herewith (the "Note Purchase
Agreement") whereby the Lead has purchased from Borrower 12% Secured
Convertible Notes due 2006 (the "Notes") in the aggregate principal
amount of $7,000,000.
Participant desires to purchase, and the Lead desires to sell, an
undivided, participation interest in the Notes in the amount of
$2,000,000.
Agreements
NOW, THEREFORF,, for and in consideration of the premises and the
mutual promises hereinafter set forth, the Lead and the Participant
agree as follows-
1. Terms which are not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Note Purchase
Agreement and/or the Notes.
2. The Participant hereby agrees to purchase, and the Lead
hereby agrees to sell, without recourse on or warranty by the Lead and
upon the terms and conditions herein set forth, an undivided
participation interest in the Notes in the amount of $2,000,000 or
28.57% of the aggregate outstanding principal amount as of the date
hereof. Such percentage, as adjusted pursuant to the terms hereof,
shall be the Participant's 'Percentage of participation." As of the
date hereof, the Lead shall be deemed to have a 71.43% interest in the
aggregate outstanding principal amount of the Notes, which percentage
shall be adjusted to reflect any exercise of conversion or repurchase
rights pursuant to the Notes (the "Lead Interest"). 'The
Participant's Percentage of Participation in the Notes shall be
evidenced by a Participation Certificate in the form of Exhibit A,
attached hereto. In the event of any conflict between this Agreement
and such certificate, the provisions of this Agreement shall control.
3. The Lead shall allocate a portion of all principal and
interest payments it receives on the Notes and in an amount equal to
the Participant's Percentage of Participation multiplied by the amount
of such payment and shall remit the same to the Participant, via
wiring instructions provided by the Participant to the Lead, on the
Business Day that such payment is received by the Lead, provided that
if such payment is not received prior to 2:00 p.m. on a Business Day,
such remittance shall be made by the Lead on the following Business
Day. In addition, following application of such proceeds to the costs
or fees incurred by the Lead incident to collection thereof, the Lead
shall allocate and remit to the Participant its Percentage of
Participation of any recoveries or liquidation proceeds obtained by
the Lead incident to the liquidation of any Collateral, as defined in
the Security Agreement, securing the Notes or other collection efforts
undertaken by or on behalf of the Lead. Alternatively, at the request
of Participant by notice to the Lead, the Lead shall request the
Borrower to remit Participant's Percentage of Participation in
payments of principal and interest on the Notes directly to the
Participant. In the event the Participant requests that payments of
its Percentage of Participation be made directly to Participant, then
the Lead may assume that such Percentage of Participation payments are
actually received by the Participant unless the Participant provides
the Lead with notice to the contrary. The Lead's records and
allocations of payments against the Participant's Percentage of
Participation shall be controlling absent manifest error.
4. The Participant acknowledges that copies of the Note
Purchase Agreement and the Related Agreements have been provided to
the Participant. The purchase by the Participant and the sale by the
Lead of an interest in the Notes is not intended to be, and shall not
be construed as, a loan by the Participant to the Lead or as an
investment in any business enterprise.
5. Without the prior written consent of the Participant, the
Lead shall not:
(a) Renew or extend the Maturity Date of the Notes;
(b) Consent to any release, substitution or exchange of any of
the Collateral other than as permitted in the Security Agreement;
(c) Consent to any release or substitution of the Borrower, or
any guarantor, accommodation party or other obligor under the Note
Purchase Agreement or any of the Related Agreements;
(d) Decrease the stated rate of interest, the Redemption Price
or the Repurchase Price, or reduce, defer or eliminate any payment
obligations under the Notes;
(e) Impair the right the convert the Notes into Common Stock in
any material respect; or
(f) Increase the principal amount of the Notes.
In the event the Lead requests in writing that Participant
consent to any action which requires Participant's consent hereunder,
Participant shall not unreasonably withhold such consent. If
Participant fails to respond to Lead's request within two Business
Days after such request is given to Participant, then Participant's
consent shall be deemed to have been granted. If Participant is
unwilling to consent to any amendment, modification, release, waiver
or other action, the Lead shall have the right, but not the
obligation, to repurchase, Participant's Percentage of Participation
in the Notes and, in the event of such a repurchase, Participant
shall thereafter have no further rights to participate in any funds
received from Borrower pursuant to the Notes. In the event the Lead
chooses to exercise its right to repurchase the Participant's
Percentage of Participation in the Notes, the repurchase price
therefore shall be the amount equal to the Percentage of participation
multiplied by the unpaid principal amount outstanding on the Notes
plus accrued interest. Nothing herein shall affect Participant's
ability to convert its Percentage of Participation in the Notes or to
have the Borrower repurchase some or all of its Percentage of
Participation as described in paragraph 14, below.
6. All funds received by the Lead under the Credit Agreement
shall first be used to pay all expenses of the Lead as provided for in
the Note Purchase Agreement or any of the Related Agreements, then
paid to the Participant on a pro rata basis in accordance with
Participants Percentage of Participation.
7. Except as specifically provided for herein, all losses and
expenses in connection with the Note Purchase Agreement and the
Related Agreements shall be borne by the Participant on a pro rata
basis in accordance with its Percentage of Participation.
8. Upon the occurrence of an Event of Default under the Notes,
the Lead shall give to the Participant prompt notice of such default
(the "Borrower's Default"). The Lead shall reasonably attempt to
consult- with the Participant before taking any action on account of
said Borrower's Default. The Lead shall continue to provide
Participant with copies of all modifications, amendments and revisions
to the Notes, the Note Purchase Agreement and any of the Related
Agreements, and copies of all legal proceedings commenced to enforce
the rights of the Lead under the Notes, the Note Purchase Agreement
and any of the Related Agreements.
9. Should the Lead fail to perform any obligation imposed upon
it under this Agreement, or should the Lead become insolvent, dissolve
or terminate its existence, or should there be appointed for the Lead
a receiver, conservator or trustee, or should there be any assignment
of all or substantially all of the assets of the Lead (other than in
its usual course of business), or should any bankruptcy or insolvency
proceeding be taken by or against the Lead under federal or state law,
then the Participant shall have the right to an accounting for all
money and other property received by the Lead pursuant to the Notes or
any of the other Related Agreements. In addition, upon the occurrence
of any event referenced in the immediately preceding sentence, the
Participant shall have the right but not the obligation, to repurchase
the Lead Interest in the Notes and, in the event of such repurchase,
the Lead shall thereafter have no other rights to participate in any
funds received from Borrower pursuant to the Notes. In the event the
Participant chooses to exercise its right to repurchase the Lead
Interest in the Notes, the repurchase price therefore shall be the
amount equal to the Lead Interest multiplied by the unpaid principal
amount on the Notes plus accrued interest. Nothing herein shall
affect the Lead's ability to exercise its conversion or repurchase
rights pursuant to the terms of Articles VII and VIII, respectively,
of the Notes. Notwithstanding anything to the contrary herein, the
Participant's ability to exercise its repurchase rights hereunder
shall bc subject to the Participant's ability to satisfy all
requirements to be a pledgee in all of the collateral which is subject
to the Security Agreement.
10. The Lead shall provide to the Participant all available
information concerning the Borrower contained in its files as may
reasonably be requested by the Participant and as required by all
applicable law. The Participant acknowledges that it has,
independently and without reliance upon the Lead and based on the
financial and other information supplied by the Borrower and such
other documents and information as the Participant has deemed
appropriate, made its own credit analysis and decision to enter into
this Agreement. The Participant also acknowledges that it will,
independently and without reliance upon the Lead and based on such
financial statements and such other documents and information as the
Participant has deemed appropriate, perform and will continue to
perform its own analysis of the credit quality of and documentation
for the Notes, the Note Purchase Agreement and the Related Agreements
and related information on the Borrowers during the term hereof.
11. The Participant represents that it has acquired its interest
in the Notes for its own account and not with a view toward the sale
or further participation thereof.
12. The Participant's interest in the Notes may not be assigned,
participated, subdivided or transferred without the Leads prior
written consent which shall not be unreasonably withheld. All notices
hereunder need only be sent to Participant even if its interest is
assigned or otherwise transferred.
13. The Lead shall not be required to take any action hereunder
or to prosecute or defend any suit in respect of this Agreement, the
Note Purchase Agreement or any of the Related Agreements unless
indemnified to the Lead's satisfaction by the Participant, on a pro
rata basis consistent with its Percentage of Participation, against
loss, cost, liability and expense. If any indemnity furnished to the
Lead shall, in the Lead's reasonable opinion, become impaired, it may
call for additional indemnity And cease to do the acts indemnified
against until such additional indemnity is given. In addition, the
Participant agrees to indemnify the Lead, on a pro rata basis
consistent with its Percentage of Participation, (to the extent not
reimbursed by the Borrower) from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against the Lead in
any way relating to or arising out of this Agreement, the Note
Purchase Agreement or any of the Related Agreements for any action
taken or omitted by the Lead under this Agreement, the Note Purchase
Agreement or any of the Related Agreements, excluding claims arising
out of or resulting from the Lead's gross negligence, bad faith or
willful misconduct. Without limitation of the foregoing, the
Participant agrees to reimburse the Lead promptly upon demand for any
reasonable and necessary out-of-pocket expenses, on a pro rata basis
consistent with its Percentage of Participation (including reasonable
counsel fees and expenses) incurred by the Lead in connection with the
preparation, execution, administration or enforcement of, or legal
advice in respect of rights or responsibilities under this Agreement,
the Note Purchase Agreement or any of the Related Agreements, to the
extent that the Lead is not reimbursed for such expenses by the
Borrower. The provisions of this Section shall survive the
termination of this Agreement and/or the payment or assignment of any
interest in the Notes, the Note Purchase Agreement or any of the
Related Agreements. Notwithstanding anything herein to the contrary,
the Participant's indemnification obligations hereunder shall be
limited to liabilities arising, or as a result of events occurring,
during the time that Participant owns a Percentage of Participation in
the Notes,
14. The Participant shall be entitled to convert some or all of
its Percentage of Participation in the Notes to shares of Common Stock
in accordance with Article VII of the Notes and/or have some or all of
the Participant's Percentage of Participation in the Notes repurchased
in accordance with Article VIII of the Notes. The Lead agrees to
provide promptly to the Participant a copy of all notices received by
the Lead from the Borrower pursuant to the Notes, the Note Purchase
Agreement and any Related Agreement. In the event the Participant
wishes to exercise its conversion or repurchase privilege, it shall
provide written notice to the Lead in the form of Exhibit B hereto.
As promptly as practicable upon receipt of such notice from
Participant, the Lead shall take all necessary and appropriate action
to exercise such conversion or repurchase, as the case may be,
substantially in accordance with the terms of Article VII or Article
VIII of the Notes and the Participant's notice hereunder. In the
event of any conversion or repurchase, the Participant's Percentage of
Participation shall be adjusted to reflect the Participant's ownership
interest in the then outstanding aggregate principal amount of the
Notes in a manner consistent with Section 2 hereof.
15. Neither the Lead nor any of its officers, directors,
employees, agents, shareholders or attorneys (hereinafter called
"Associates") shall be liable for any mistakes or error of judgment or
for any action taken or omitted to be taken by the Lead or any of them
except for gross negligence, bad faith or willful misconduct. The
Lead does not and shall not under any circumstances have any fiduciary
relationship of any kind with the Participant under this Agreement or
with respect to the Note Purchase Agreement, any of the Related
Agreements or otherwise. Without limiting the generality of the
foregoing, neither the Lead nor any Associate shall be liable for any
action taken or omitted to be taken by it under this Agreement, the
Note Purchase Agreement or any of the Related Agreements in good faith
and reasonably believed by it to be within the discretion or power
conferred upon it by this Agreement, the Note Purchase Agreement or
any of the Related Agreements.
16. Participant represents and warrants to the Lead that (i)
Participant does not consider the acquisition of Participant's
Percentage of Participation in the Notes to constitute the "purchase"
or "We" of a "security" of, or issued by, the Lead within the meaning
of the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, or Rule l0b-5 promulgated thereunder, the Trust
Indenture Act of 1939, the Securities Act of the State of Texas, any
other applicable securities statute or law, or any rule or regulation
under any of the foregoing; (ii) Participant has no expectation that
it will derive profits from the efforts of the Lead or any third party
in respect of the acquisition of the Participant's Percentage of
Participation-, (iii) the purchase of Participant's Percentage of
Participation merely constitutes a commercial transaction by the
Participant with the Lead regarding the Participant's Percentage of
Participation in the Notes and does not represent an "investment" (as
that term is commonly understanding in the Lead; (iv) Participant is
purchasing the Participant's Percentage of Participation for its own
account in respect of a commercial transaction made in the ordinary
course of its commercial business; (v) Participant is engaged in the
business of entering into commercial transactions (including
transactions of the nature contemplated herein), can bear the economic
risk related to the purchase of the same, and has had access to all
information described by it in making its decision whether or not to
purchase the same; and (vi) Participant has the full and complete
authority and ability to enter into and perform its obligations under
this Agreement and has obtained any and all necessary consents for the
same.
17. Notices and other communications provided for herein shall
be given in writing and either delivered by messenger against receipt
therefor, mailed by registered or certified mail, return receipt
requested and postage paid, or by facsimile transmission with
confirmation, in each case addressed,
if to the Lead to:
Value Partners, LTD
4514 Cole Avenue, Suite 808
Dallas, Texas 75205
Attention: Timothy G. Ewing
Facsimile. (214) 522-2176
Telephone: (214) 522-2100
and if to the Participant, to:
T. Rowe Price Recovery Fund II, L.P. 100 E. Pratt Street
Baltimore, Maryland 21202
Attention: Hubert M. Stiles, Jr.
Facsimile: (410) 345-2304
Telephone- (410) 345-6840
or to such other address as either party may direct in writing. All
notices and other communications shall be deemed to have been
effectively given upon receipted acceptance, if given via registered
or certified U.S. mail, upon receipted delivery, if given via
overnight delivery or messenger service, or upon facsimile
confirmation of transmission if sent via facsimile.
18. This Agreement may be executed in any number of
counterparts. All of the separate counterparts of this Agreement
shall constitute but one and the same instrument. This Agreement
shall be binding upon the parties hereto and their respective
successors and assigns.
19. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas applicable to
agreements made and entirely to be performed within such jurisdiction.
20. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change,
waiver, discharge or termination is sought,
21. Neither the execution of this Agreement, nor the sale of the
participation interest in the Notes thereunder, nor any agreement to
share in profits or losses arising as a result of this transaction is
intended to be, nor shall it be construed to be, or to create, any
partnership, joint venture or other joint enterprise between the Lead
and the Participant.
22. This Agreement shall remain in full force and effect until
the final repayment in full of all of the Notes. As of the date
hereof, the Notes are due as of June 30, 2006, unless earlier
redeemed.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
VALUE PARTNERS, LTD
By: EWING & PARTNERS,
General Partner
By: /s/ Timothy G. Ewing
Name: Timothy G. Ewing
Title: Managing Partner
T. ROWE PRICE RECOVERY FUND II, L.P.
By: /s/ Hubert M. Stiles, Jr.
Name: Hubert M. Stiles, Jr.
Title: President
EXHIBIT A
CERTIFICATE OF PARTICIPATION
To: T. Rowe Price Recovery Fund II, L.P.
Attention: Hubert M. Stiles, Jr.
Date: August 31, 1999
This evidences your purchase and ownership as of the date hereof of a
$2,000,000 (28.57%) participation interest in the principal amount
outstanding from time to time and of the interest payable under the
12% Secured Convertible Notes due 2006 (the "Notes"), in the aggregate
face amount of $7,000,000 payable to Value Partners, LTD ("Value
Partners").
Your participation interest in the Notes is subject to the
Participation Agreement (the "Participation Agreement') dated August
31, 1999 by and between you and Value Partners, LTD and which Notes
are held by Value Partners on your behalf, without recourse to Value
Partners except as provided for in the Participation Agreement.
Value Partners agrees to account promptly for all payments received by
it in connection with the Notes and to distribute a portion of the
same to you as provided in the Participation Agreement.
This Certificate is subject to and governed by the terms and
provisions of the Participation Agreement. Transfer or conveyance of
this Certificate should not be effected without reference to the
Participation Agreement and is prohibited by the Participation
Agreement absent the express written consent of Value Partners, LTD.
WITNESS the due execution hereof as the date first above written.
VALUE PARTNERS, LTD
By: EWING & PARTNERS,
General Partner
By:
Name: Timothy G. Ewing
Title: Managing Partner
EXHIBIT B
CONVERSION NOTICE
To: VALUE PARTNERS, LTD
The undersigned owner (the "Participant") of a $2,000,000
(28.57%) participation interest in the 12% Secured Convertible Notes
due 2006 (the "Notes") of Altiva Financial Corporation hereby
irrevocably exercises the option to convert its Percentage of
Participation (as defined in the Participation Agreement
("Participation Agreement"), dated August 31, 1999, by and between the
undersigned and Value Partners, LTD (the "Lead") ) in the Notes, or
the portion hereof (which is $ 1,000 or an integral multiple thereof)
below designated, into shares of Common Stock of Altiva Financial
Corporation in accordance with the terms of the Notes and the
Participation Agreement, and directs that the shares issuable and
deliverable upon such conversion, together with any check in payment
for fractional shares, be registered in the Participant's name and
shall be issued and delivered to the undersigned Participant unless a
different name has been indicated below. In connection with the
issuance of shares to the undersigned, the undersigned will set forth
the appropriate information below and pay all transfer taxes payable
with respect thereto.
Date:
Signature (s)
Fill in for registration of shares of Common Stock to be issued:
(Name)
(Street Address)
(City, State and Zip Code)
Please print name and address
Principal amount to be converted (if less than all): $_________
Social Security or Other Taxpayer Identification Number
OPTION TO ELECT REPURCHASE
UPON A REPURCHASE EVENT
To. VALUE PARTNERS, LTD
The undersigned owner of a $2,000,000 (28.57%) participation
interest in the 12% Secured Convertible Notes due 2006 (the "Notes")
of Altiva Financial Corporation acknowledges that it has received a
copy of a notice by Altiva Financial Corporation (the "Company") as to
the occurrence of a Repurchase Event with respect to the Company and
requests and instructs Value Partners, LTD to take all necessary and
appropriate action on behalf of the undersigned in order to obtain
repayment of the undersigned's entire Percentage of Participation in
the Note, or the portion thereof (which is $ 1,000 or an integral
multiple thereof) below designated, in accordance with the terms of
the Note at the repurchase price, together with accrued interest to,
but excluding, such date, to the undersigned.
Date:
Signature (s)
Principal amount to be repurchased (if less @ all):
$_________________
Social Security or Other Taxpayer Identification Number
EXHIBIT 7.5
START-UP ELECTION FORM
DIRECTOR
ALTIVA FINANCIAL CORPORATION
1999 INCENTIVE STOCK PLAN (THE "PLAN-)
START-UP DIRECTOR ELECTION FORM
I, Herb Stiles, hereby elect that _____%1 of the compensation I
receive for my service as a Director for the two fiscal quarters
ending February 28, 1999, for the fiscal quarters ending May 31, 1999
and August 31, 1999, and for each future fiscal quarter be paid in
whole shares of Stock until I revoke this election2 I understand that
the value of any fractional share will be paid in cash to me.
This election is governed by the Plan, and all capitalized terms not
otherwise defined in this election form shall have the same meaning in
this election form as in the Plan, Please refer to the Plan for more
information.
DIRECTOR'S SIGNATURE /s/ Hubert M. Stiles, Jr. :
DATE: October 6, 1999
_______________________________
1 This percentage cannot be less than 60% or more than 100%.
2 If you elect 100% for the two fiscal quarters ending February 28,
1999 and for the fiscal quarters ending May 31, 1999 and August 31,
1999, you will got 2,400 shares of Stock for the two fiscal quarters
ending February 28, 1 999 based on a price per share of $6.25, 2,180
shares of Stock for the fiscal quarter ending May 31, 1999 based on a
price per share of $3.44, and 1,666 shares of Stock for the fiscal
quarter ending August 31, 1999 based on a price per share of $4.50.
