Exchange Agent Agreement

EXCHANGE AGENT AGREEMENT


This Exchange Agent Agreement (this "Agreement"), dated as of June 13, 1996, is between Liberte Investors Inc., a Delaware corporation (the "Company"), and KeyCorp Shareholder Services, Inc., a Delaware corporation (the "Exchange Agent").


RECITALS


WHEREAS, pursuant to a Plan of Reorganization (the "Plan of Reorganization"), dated as of April 1, 1996, between Liberte Investors, a Massachusetts business trust (the "Trust"), and the Company, the Trust will reorganize into the Company (the "Reorganization");


WHEREAS, in connection with the Reorganization, the registered shareholders of the Trust (the "Shareholders") will exchange their shares of beneficial interest in the Trust (the "Beneficial Shares") for shares of common stock in the Company, par value $.01 per share (the "Common Stock"), on a one-for-one basis; and


WHEREAS, the Company desires the Exchange Agent to act as the exchange agent for the exchange of the Beneficial Share certificates for the Common Stock certificates (the "Certificate Exchange"), and the Exchange Agent desires to act as such exchange agent, upon the terms and conditions set forth below.


AGREEMENT


NOW, THEREFORE, in consideration of the foregoing recitals and the terms and conditions of this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound by this Agreement, the Company and the Exchange Agent agree as follows:


I. EXCHANGE AGENT


SECTION 1.1 DESIGNATION. The Exchange Agent shall act as the exchange agent in the connection with the Certificate Exchange.


SECTION 1.2 FEES AND EXPENSES. The Company shall: (a) pay the Exchange Agent the fees described on Exhibit A, and (b) reimburse the Exchange Agent for its reasonable out-of-pocket expenses incurred in connection with the Certificate Exchange. The Exchange Agent shall submit to the Company monthly invoices detailing the fees earned and expenses incurred during the respective month. The Company shall pay these monthly invoices in the ordinary course after it receives them, provided that the Company may withhold payment of any amounts that it considers unreasonable or otherwise inappropriate.


SECTION 1.3 TERM. The term of this Agreement shall begin immediately following the Reorganization and end upon the Company's notification to the Exchange Agent that the Agreement is terminated, which notification the Company may deliver to the Exchange Agent any time after September 30, 1996. If the Shareholders fail to approve the Reorganization or the Reorganization otherwise fails to occur, this Agreement shall be null, void, and of no effect.


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SECTION 1.4 REPORTS. As of the end of each week during the term of this Agreement and otherwise upon the Company's request, the Exchange Agent shall report to the Company upon the status of the Certificate Exchange.


II. BALANCE CERTIFICATE


SECTION 2.1 STOCK CERTIFICATES. Promptly after the Reorganization, the Company shall cause the Trust to deliver to the Exchange Agent the Common Stock certificates that the Trust owns, which the Exchange Agent shall exchange for a balance certificate issued in the name of the Exchange Agent (the "Balance Certificate"). As the Exchange Agent subsequently exchanges Beneficial Share certificates for Common Stock certificates, the Exchange Agent shall exchange the Balance Certificate for certificates in the names of the exchanging Shareholders or their assignees and a new Balance Certificate representing the then current number of shares of Common Stock for which Shareholders have not presented Beneficial Share certificates for exchange.


SECTION 2.2 COMMON STOCK OWNED BY THE SHAREHOLDERS. At all times after the Reorganization, the Shareholders or their assignees shall be considered the owners of the shares of Common Stock that they will receive upon their submission of a properly completed Letter of Transmittal (as hereinafter defined) accompanied by their Beneficial Share certificates. Until a Shareholder or its assignee exchanges such Beneficial Share certificates for a Common Stock certificate, however, the Company shall pay any distributions with respect to the respective shares of Common Stock to the Exchange Agent. The Exchange Agent shall hold such distributions in a federally insured interest bearing account and then distribute them to the Shareholder or its assignee when such Shareholder exchanges the Beneficial Share certificates for a Common Stock certificate. From time to time, upon the Company's request the Exchange Agent shall distribute the interest on such distributions to the Company. In addition, with respect to any matters submitted to a vote of the Company's shareholders before completion of the Certificate Exchange, the Exchange Agent shall assist the Company in obtaining voting instructions with respect to the shares of Common Stock represented by the then current Balance Certificate from the Shareholders who have not exchanged their Beneficial Share certificates for Common Stock certificates.


III. EXCHANGE OF CERTIFICATES


SECTION 3.1 LETTER OF TRANSMITTAL. Promptly after the Reorganization, the Company shall cause the Trust to deliver to the Exchange Agent a list of the Shareholders as of the effective time of the Reorganization. Promptly after receiving this list, the Exchange Agent shall mail and otherwise make available to each Shareholder a Letter of Transmittal in the form of Exhibit B (the "Letter of Transmittal") and such other documents as the Company may request. Upon surrender to the Exchange Agent of a Beneficial Share certificate, together with a valid and properly completed Letter of Transmittal with respect to such certificate, the Exchange Agent shall cause the issuance of a Common Stock certificate to such Shareholder or its assignee for the number of shares of Common Stock equal to the number of Beneficial Shares represented by the surrendered certificate. The Exchange Agent shall then cancel the Beneficial Share certificate. If the Letter of Transmittal directs the Exchange Agent to issue the Common Stock certificate to an assignee of the Shareholder, a condition to the issuance of such certificate shall be that the assignee pays any transfer or other similar taxes imposed because of the issuance of the certificate to a person other than the Shareholder.


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SECTION 3.2 LOST CERTIFICATES. If a Shareholder notifies the Exchange Agent that such Shareholder has lost its Beneficial Share certificate, the Exchange Agent shall request such Shareholder to execute and deliver to it an affidavit concerning such loss and a bond payable to the Company in an amount no less than the product of the number of Beneficial Shares represented by the lost certificate multiplied by the then current market price of a share of Common Stock, each in form and substance satisfactory to the Company. Upon receiving such affidavit and bond, the Exchange Agent shall treat such lost certificate as surrendered.


SECTION 3.3 INVALID OR IMPROPER LETTERS OF TRANSMITTAL. If the Exchange Agent determines that any Letter of Transmittal submitted to it is invalid or improper, the Exchange Agent shall promptly return such Letter of Transmittal to the respective Shareholder, along with a letter explaining the deficiencies in the Letter of Transmittal.


SECTION 3.4 RECORD KEEPING. The Exchange Agent shall maintain reasonably detailed records concerning the performance of its duties under this Agreement, including records concerning: (a) the Letters of Transmittal and accompanying Beneficial Share certificates received, (b) the deficiency letters with respect to Letters of Transmittal that the Exchange Agent determined were invalid or improper, (c) the affidavits and bonds with respect to lost Beneficial Share certificates, and (d) the Common Stock certificates issued.


SECTION 3.5 TRANSFER OF DOCUMENTS. Upon the termination of this Agreement, the Exchange Agent shall deliver to the Company: (a) the then current Balance Certificate, (b) the records that the Exchange Agent maintained with respect to the Certificate Exchange, including all records that this Agreement requires the Exchange Agent to maintain, (c) the Beneficial Share certificates canceled, and (d) the affidavits and bonds received with respect to lost Beneficial Share certificates.


IV. LIABILITY


SECTION 4.1 RELIANCE. The Exchange Agent shall not be liable for accepting any Letter of Transmittal delivered to it that it reasonably believed to be valid and proper after the exercise of reasonable diligence.


SECTION 4.2 INDEMNIFICATION. The Company shall indemnify and hold the Exchange Agent harmless from and against any claim or expense that the Exchange Agent incurs in connection with its duties under this Agreement that is not the result of the Exchange Agent's willful misconduct or negligence.


V. GENERAL


SECTION 5.1 AMENDMENT. No amendment or modification of any of the provisions of this Agreement shall be effective unless in a writing signed by the Company and the Exchange Agent.


SECTION 5.2 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original agreement, but all of which shall constitute one and the same agreement. Either party to this Agreement may execute and deliver this Agreement by an executed signature page transmitted by a facsimile machine, provided that such party promptly thereafter delivers an originally executed signature page to the other party. Any failure to deliver such an originally


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executed signature page after delivering an executed signature page transmitted by a facsimile machine, however, shall not affect the validity, legality, or enforceability of this Agreement.


SECTION 5.3 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding between the Company and the Exchange Agent and supersedes all prior agreements and understandings, both written and oral, with respect to the subject matter of this Agreement.


SECTION 5.4 ESCHEAT STATUTES. The Exchange Agent shall notify the Company at least 30 days before the Exchange Agent delivers any Common Stock certificates to any public official pursuant to any applicable abandoned property, escheat, or similar law.


SECTION 5.5 FURTHER ASSURANCES. The Company and the Exchange Agent each covenant that it will execute and deliver to the other such certificates, documents, and instruments, and do such acts, as may be required to carry out the intent and purposes of this Agreement.


SECTION 5.6 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND INTERPRETED ACCORDING TO, AND GOVERNED BY, THE LAWS OF THE STATE OF TEXAS, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER THE APPLICABLE PRINCIPLES OF CONFLICTS OF LAW OF THE STATE OF TEXAS.


SECTION 5.7 HEADINGS. Article and section headings are used in this Agreement only as a matter of convenience, are not a part of this Agreement, and shall not have any effect upon the construction or interpretation of this Agreement.


SECTION 5.8 LETTERS OF TRANSMITTAL. Promptly after the Reorganization, the Company, at its sole cost and expense, shall cause the delivery of 3,000 Letters of Transmittal to the Exchange Agent for mailing to the Shareholders, along with any other documents that the Company requests the Exchange Agent to send with such Letters of Transmittal.


SECTION 5.9 NO ASSIGNMENT. Neither the Company nor the Exchange Agent may assign its benefits or delegate its duties under this Agreement without the prior written consent of the other. Any purported assignment or delegation without such consent shall be null, void, and of no effect.


SECTION 5.10 NOTICES. All notices and other communications in connection with this ...