<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
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)
March 5, 1999
(Date of Event which Requires Filing of this Statement)
<PAGE>
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(v)(3) or (4), check the following box [_].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*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).
<PAGE>
CUSIP No. 769 135 104
- ------------------------------------------------------------------------------
NAMES OF REPORTING PERSONS.
1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
JAMES M. FAIL
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC Use Only
3
- ------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
--
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 1,305,173
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,305,173
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 0
11
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES
12 (SEE INSTRUCTIONS)
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0%
13
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
14
IN
- ------------------------------------------------------------------------------
<PAGE>
CUSIP No. 769 135 104
- ------------------------------------------------------------------------------
NAMES OF REPORTING PERSONS.
1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
JAMES M. FAIL LIVING TRUST
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC Use Only
3
- ------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
--
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 1,305,173
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,305,173
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 0
11
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES
12 (SEE INSTRUCTIONS)
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0%
13
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
14
00
- ------------------------------------------------------------------------------
<PAGE>
CUSIP No. 769 135 104
- ------------------------------------------------------------------------------
NAMES OF REPORTING PERSONS.
1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY).
STONE HOLDINGS, INC.
75-2681508
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC Use Only
3
- ------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
--
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 1,305,173
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
-
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,305,173
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 0
11
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES
12 (SEE INSTRUCTIONS)
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0%
13
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
14
HC
- ------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 769 135 104 PAGE 1 OF __ PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Imagine Investments, Inc.
75-270944
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS* WC
4
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6 Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7 --
NUMBER OF
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8 1,305,173
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9 --
REPORTING
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10 1,305,173
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11 0
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13 0%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14 CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
Item 1. Security and Issuer
This statement relates to the common stock, par value $ .01 per share
(the "Shares"), of Riverside Group, Inc. (the "Corporation"), which is located
at 7800 Belfort Parkway, Jacksonville, Florida 32256.
Item 2. Identity and Background
This statement is filed by Imagine Investments, Inc., a Delaware
corporation, which is located at 8150 North Central Expressway, Suite 1901,
Dallas, Texas 75206. Imagine Investments, Inc. is a wholly-owned subsidiary of
Stone Investments, Inc., a wholly-owned subsidiary of Stone Capital, Inc., a
wholly-owned subsidiary of Stone Holdings, Inc., which is wholly owned by the
James M. Fail Living Trust dated December 18, 1996, which is exclusively
controlled by James M. Fail. All of these parties (the "Reporting Persons")
share the above address. The corporations do not engage in any business activity
other than holding the common stock of their subsidiaries. During the last five
years, none of these parties have been convicted in a criminal proceeding.
During the last five years, none of these parties have been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction or
been 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 a violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration:
The working capital of Imagine Investments, Inc. was used in making the
purchase.
<PAGE>
Item 4. Purpose of Transaction:
The transaction is solely for investment purposes.
Item 5. Interest in Securities of the Issuer:
(a) Imagine Investments, Inc. is the direct beneficial owner of
1,305,173 Shares, including an immediately exercisable option to
purchase 785,173 Shares, or approximately 24.7% of the Shares
outstanding on March 2, 1999. By virtue of the relationships
described under Item 2 of this statement, each of the other
Reporting Persons may be deemed to share indirect beneficial
ownership of the Shares directly beneficially owned by Imagine
Investments, Inc.
(b) Imagine Investments, Inc. has the direct power to vote and direct
the disposition of the Shares and the option held by it, but J.
Steven Wilson and Wilson Financial Corporation retain the direct
power to vote and direct the disposition of the Shares underlying
such option. By virtue of the relationships described in Item 2,
each of the Reporting Persons may be deemed to share the indirect
power to vote and direct the disposition of the Shares.
(c) On February 24, 1999, Imagine Investments, Inc. acquired an
immediately exercisable option to purchase 785,173 Shares from J.
Steven Wilson and Wilson Financial Corporation with an exercise
price of $1.75 per Share in exchange for the sum of $10,000. The
term of the option shall expire on December 31, 2001. Provided,
however, that Imagine Investments, Inc. may unilaterally extend the
term of the option until December 31, 2004, provided it also
extends the maturity date of a promissory note dated February 24,
1999 made by J. Steven Wilson and Wilson Financial Corporation
payable to Imagine Investments, Inc., if it has not already then
been paid. See "Exhibit F - Stock Option Agreement."
(d) Imagine Investments, Inc. has the power to receive and the right to
direct the proceeds from the sale of the Shares held by it.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understanding or Relationships With Respect to
Securities of the Issuer:
See Section A on page 1 of Exhibit A and Sections B.3 and B.4 on Page 4
of Exhibit A and Section 5.03 of Exhibit E.
Item 7. Material to be Filed as Exhibits:
A Letter Agreement of Imagine Investments, Inc.*
B Term Promissory Note*
-2-
<PAGE>
C Unconditional Guarantee Agreement*
D Stock Pledge Agreement*
E Stock Purchase Agreement*
F Stock Option Agreement
*Pursuant to Item 101(a)(2)(ii) of Regulation S-T, such exhibits are not
required to be refiled with this filing.
-3-
<PAGE>
SIGNATURE
After reasonable inquiry, and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
/s/ James M. Fail
----------------------
James M. Fail
Date: March 4, 1999
James M. Fail Living Trust
By:/s/ James M. Fail
-----------------------
Its: Trustee
Date: March 4, 1999
Stone Holdings, Inc.
By: /s/ James M. Fail
-----------------------
Its: Chief Executive Officer
Date: March 4, 1999
Imagine Investments, Inc.
By: /s/ Robert T. Shaw
-----------------------
Its: President
Date: March 4, 1999
LOU 217604-2
-4-
<PAGE>
EXHIBIT F
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered into as of
February __, 1999, by and among: (i) Wilson Financial Corporation, a Florida
corporation ("Wilson"), (ii) J. Steven Wilson, an individual of Jacksonville,
Florida ("Steven"), and (iii) Imagine Investments, Inc., a Delaware corporation
with principal office and place of business in Dallas, Texas ("Imagine").
Recitals:
A. Wilson and Steven both own shares of common stock of Riverside Group, Inc.,
a Florida corporation (the "Corporation").
B. Wilson and Steven are willing to grant to Imagine an option to purchase
785,173 shares (the "Shares") of the common stock of the Corporation, and
Imagine desires to acquire such option from Wilson and Steven, upon the terms
and provisions set forth herein.
C. The parties hereto recognize and represent that at the time this Agreement
was negotiated, the common stock of the Corporation was trading for less than
$1.75 per share on the NASDAQ SmallCap Stock Market.
Agreement:
Now, Therefore, the parties hereby agree as follows:
1. Option.
1.1 Grant of Option. In consideration of the payment by Imagine to
Wilson and Steven of the sum of $10,000, the receipt and sufficiency of which
they hereby acknowledge (the "Option Consideration"), Wilson and Steven hereby
jointly and severally grant to Imagine the exclusive right and option to
purchase the Shares (the "Option"). The purchase price for each Share shall be
$1.75 (the "Option Price"). The Option Consideration shall not apply against
the Option Price of the shares purchased by Imagine hereunder.
1.2 Term. The term of the Option shall commence on the date hereof and
shall expire on December 31, 2001 (the "Term"). Provided, however, that Imagine
may unilaterally extend the Term until December 31, 2004, upon written notice to
Wilson and Steven; provided, further, however, if that certain Promissory Note
in the face principal amount of Six Million Dollars ($6,000,000) made by Wilson
payable to the order of Imagine, of even date herewith (the "Note"), has not
been paid in full by the date of such extension by Imagine, then Imagine must
extend the maturity date of the Promissory Note until December 31, 2004 (or such
earlier date as Imagine may select in its sole discretion for both the Option
and the maturity date of such Promissory Note),
<PAGE>
with interest on such Note still being due and payable on a quarterly basis as
provided therein. If the Note has been paid prior to December 31, 2001, Imagine
may nevertheless extend the Option until December 31, 2004, and the payment by
Wilson of the Note prior to its extended maturity date shall not affect the
extended Term of the Option, which shall remain December 31, 2004 (or such
earlier date selected by Imagine).
1.3 Adjustments. Notwithstanding any provision to the contrary contained
in this Agreement, if, and whenever, prior to the delivery of Certificates
representing all of the Shares by Wilson and Steven to Imagine, the Corporation
shall effect a subdivision or consolidation or other capital readjustment with
respect to its stock, by stock split, stock combination or otherwise, or the
Corporation shall issue any additional shares by way of a stock dividend, or the
Corporation shall otherwise effect or become obligated to effect any other
increase in the number of shares outstanding without receiving the full fair
market value therefor in money, services or other property or shall effect a
reduction in the number of shares outstanding without the payment of money or
other property for the repurchase or redemption thereof, then the number of
shares remaining subject to the Option and the Purchase Price therefor shall be
proportionately adjusted, immediately following each such action, as follows:
(a) In the event of an increase in the number of outstanding shares as a
result of any such action, the number of Shares remaining subject to the Option
shall be proportionately increased, and the Option Price shall be
proportionately reduced, so that, upon exercise of the Option, Imagine shall be
entitled to receive the aggregate number of Shares which it would have been
entitled to receive upon exercise of such Option had Imagine exercised such
Option immediately prior to such event or, if earlier, immediately prior to the
record date for determining shareholders entitled to participate in such event
(if the Corporation has issued additional Shares or has become obligated to
issue additional Shares for some consideration but for less that the full fair
market value thereof, the adjustment in the number of Shares subject to the
Option and the Option Price per Share shall be made on an equitable pro rata
basis to the complete satisfaction of Imagine),
(b) In the event of a reduction in the number of outstanding shares of
the Corporation as a result of any such action, the number of Shares remaining
subject to the Option shall be proportionately reduced, and the Option Price per
Share shall be proportionately increased, in each case in accordance with the
change in the number of shares outstanding as a result of such action(s)
described in this Section,
(c) Simultaneously with any adjustment of the total number of Shares
purchased upon exercise of the Option, in accordance with Section 1.3(a) or (b)
above, the Purchase Price per Share shall be adjusted to equal the quotient
resulting by dividing the number of Shares (including fractional share
interests) covered by this
<PAGE>
Option immediately after such adjustment into the Option Price that would have
been paid upon the exercise of the Option as to all of the Shares then remaining
subject to the Option. The adjustments provided for in this Section 1.3(c) shall
become effective immediately after the opening of business on the day next
following (i) the record date of such dividends, (ii) the date upon such
subdivision, combination or reclassification shall become effective, or (iii)
the record date for any similar action contemplated by this Section 1.3.
1.4 Manner of Exercise.
(a) Imagine may exercise the Option as to any or all of the Shares at
any time on or prior to the expiration of the Term by delivery of written notice
of such exercise ("Notice") to Wilson and Steven. The Notice shall specify the
number of Shares to be purchased pursuant to exercise of the Option, and shall
be accompanied by a certified or cashier's check payable to Wilson and Steven or
wire of immediately available funds in an amount equal to (i) the Option Price,
multiplied by (ii) the total number of Shares then being purchased by Imagine
pursuant to exercise of the Option; provided, however, if the Note has not then
been paid in full, then the Option Price for all the Shares purchased upon such
exercise shall instead be applied against the Note.
(b) Upon exercise of the Option by Imagine and simultaneously with
delivery by Imagine of the applicable Option Price to Wilson and Steven, Wilson
and Steven shall deliver to Imagine the certificate(s), accompanied by duly
executed stock powers, evidencing the Shares being purchased pursuant to such
exercise of the Option, free and clear of all liens, claims, options, pledges,
security interests and the like and free of all restriction; provided, however,
that if any amount is owed under the Note, or the instruments securing the Note,
the entire amount of the applicable Option Price shall be applied directly by
Imagine on the Note or such other indebtedness owed to Imagine (except to the
extent of $1.35 per Share if necessary to be paid to Bank Boston, N.A. ("Bank
Boston") to have such Shares released from its lien) but, nevertheless, the
entire amount of such Option Price shall be deemed to have been paid to Wilson
and Steven, and thereupon, Imagine shall release such Shares so purchased by
Imagine from its lien that secures the Note.
2. Legend on Share Certificates. The following legend shall be placed upon
each Certificate representing the Shares (other than those still pledged to Bank
Boston) until such time as such Shares are placed in the name of Imagine:
A Stock Option Agreement dated as of February __, 1999 among Wilson
Financial Corporation and J. Steven Wilson, shareholders of the
Corporation, and Imagine Investments, Inc. ("Imagine"), has been delivered
to the Secretary of the Corporation to be kept on file at the Corporation's
registered office. That Agreement imposes various restrictions upon the
shares represented by this Certificate and subjects such shares to an
exclusive option in favor of Imagine to purchase such shares and certain
other rights and interests with respect to these
<PAGE>
shares.
3. Further Assurances. Each party shall execute such additional documents
and take such other actions as the other party shall reasonably request to
consummate the transactions contemplated hereby and otherwise as may be
necessary to effectively carry out the terms and provisions of this Agreement.
4. Representations, Warranties and Covenant of Wilson and Steven.
4.1 Representations and Warranties. Wilson and Steven hereby represent
and warrant to Imagine that (i) Wilson and Steven are the sole legal and
beneficial owners of the Shares, and that the Shares are free and clear of all
liens, claims, encumbrances, charges and restrictions of any nature whatsoever
except for prior liens in favor of Bank Boston, N.A. and Imagine; (ii) Wilson
and Steven have the sole right and authority to enter into and perform this
Agreement and transfer title to the Shares to Imagine; and (iii) the execution
and delivery of this Agreement and the sale of the Shares to Imagine pursuant to
the provisions hereof will not breach or constitute default under any contract
or agreement to which either Wilson or Steven is a party. Such representations
and warranties of Wilson and Steven shall survive the execution of this
Agreement.
4.2 Covenant. During the Term, Wilson and Steven shall not sell, convey,
further pledge or encumber, or otherwise transfer any Shares, except pursuant to
the laws of descent and distribution upon the death of Steven; provided that, in
the event of the death of Steven, the Shares shall remain subject to the terms
of this Agreement.
5. Indemnification. Wilson and Steven shall indemnify and hold Imagine
harmless against and in respect of:
(a) Any damage, deficiency, liability or costs resulting from any
misrepresentation, breach of warranty or nonfulfillment of any covenant or
agreement on the part of Wilson or Steven under this Agreement; and
(b) Any claim, action, suit, proceeding, demand, judgment, assessment,
cost and expense, including reasonable counsel fees, resulting from any
misrepresentation, breach of warranty or non-fulfillment of any covenant or
agreement on the part of Wilson or Steven under this Agreement.
6. Additional Agreements Regarding Shares. Wilson and Steven hereby assign
to Imagine all of the respective rights, titles and interests of Wilson and
Steven under any and all registration rights and similar agreements with respect
to the Shares of the Corporation, to the extent Imagine has from time to time
acquired or thereafter does acquire any of the Shares.
In addition, in the event Imagine has from time to time purchased or acquired
any of
<PAGE>
the Shares of the Corporation pursuant to the Option or otherwise, and if Wilson
and/or Steven shall, at any time and from time to time through December 31,
2009, agree to sell any of the stock of the Corporation owned by either of them,
or to otherwise transfer any of such stock, either directly or indirectly,
Wilson and/or Steven, and or either or both of them that are selling or
transferring such Shares, shall:
(i) Give written notice to Imagine 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 owned by Imagine (but
not greater than (a) the product determined by multiplying the number of
shares of stock of the Corporation involved in such sale by a fraction, the
numerator of which is the number of Shares subject to this Option plus the
number of shares of stock of the Corporation owned by Imagine and the
denominator of which is the number of shares of stock constituting the
numerator of such fraction plus the number of shares of stock of the
Corporation owned by Wilson and Steven at the time of such calculation (b)
plus the number of shares of stock of the Corporation that Imagine is
entitled to sell under the Loan Agreement of even date herewith pursuant to
which the Note has been issued) that are specified by Imagine in a written
notice to be given by Imagine to Wilson or Steven, as applicable, within ten
(10) days after Imagine'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 of stock as Wilson and/or Steven are selling such shares of stock of
the Corporation; and
(iii) Imagine shall bear its own legal expenses in connection with
participating in such sale or transfer, but Wilson and Steven shall pay all
other expenses of Lender in connection with such sale or transfer.
7. Proxy. Wilson and Steven hereby appoint Imagine as Wilson and Steven's
true and lawful proxy and attorney-in-fact to vote the Shares on any manner as
to which holders of common stock of the Corporation are otherwise entitled to
vote, but only as to the Shares as to which Imagine has exercised the Option.
The proxy granted by Wilson and Steven herein is coupled with an interest and
shall be irrevocable with respect to any Shares unexercised.
8. Miscellaneous.
8.1 Waiver. The failure of any party to enforce any provision of this
Agreement cannot be construed to be a waiver of such provision or of the right
hereafter to enforce the same, and no waiver of any breach shall be construed as
an agreement to waive any subsequent breach of the same or any other provision.
<PAGE>
8.2 Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the subject matter hereof, and no
prior or collateral promises or conditions in connection with or with respect to
the subject matter hereof not incorporated herein shall be binding upon the
parties hereto.
8.3 Amendment. No modification, extension, renewal, rescission,
termination or waiver of any of the provisions contained herein or any future
representation, promise or condition in connection with the subject matter
hereof shall be binding upon either of the parties unless made in writing and
duly executed by the parties or their authorized representatives.
8.4 Successors. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns, heirs
and legal and personal representa tives. Imagine may assign its rights under
this Agreement, in whole or in part, and from time to time, without the need for
consent from Wilson or Steven.
8.5 Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.6 Captions. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this document.
8.7 Governing Law. This Agreement is executed and delivered in, and
shall be construed and enforced in accordance with the laws of, the Commonwealth
of Kentucky.
In Witness Whereof, the parties have entered into this Agreement as of the
date first written above.
Wilson Financial Corporation
By:
Title:
("Wilson")
<PAGE>
J. Steven Wilson
("Steven")
Imagine Investments, Inc.
By:
Title:
("Imagine")
