UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC Form 8-K CURRENT REPORT Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 4, 2003 RIVERSIDE GROUP, INC. (Exact name of registrant as specified in its charter) Florida 0-9209 59-1144172 (State of other (Commission File No.) (IRS Employer jurisdiction of Identification incorporation number) Item 2. Acquisition or Disposition of Assets On April 4, 2003, Riverside Group, Inc (the "Company") transferred 2,797,743 shares of Wickes Inc. to Imagine Investments, Inc. ("Imagine"), pursuant to an Agreement for Conveyance of Shares of Wickes, Inc. in Lieu of Foreclosure and Bill of Sale. The transfer was in settlement of $13.9 million of debt owed to Imagine. The Company also granted Imagine an option to acquire an additional 53,700 Wickes shares in settlement of an additional $268,500 of debt owed to Imagine. The transfer price of $5.00 per share was determined based on negtiations with Imagine, which took into account the value used previously in 2001 when Imagine transferred shares it owned in Wickes to previous holders of the Riverside Secured Notes in exchange for the Notes. If Imagine sells or otherwise disposes of the Wickes shares in the next two years, Riverside will participate in 50% of any value realized for the exchanged shares over $5.00 per share plus yield accrued at the prime rate. The shares transferred to Imagine plus the option represent the entire ownership Riverside held in Wickes. Approximately 2.1 million of the shares transferred remain subject to a first lien with other Riverside creditors, which must be satisfied. Riverside continues to owe Imagine $2.2 million, secured by the remaining assets of the company. Riverside continues to hold its real estate and its Cybermax subsidiary. Wilson Financial Corporation, a company controlled by J. Steven Wilson, the Company's Chairman and Chief Executive Officer, which owns approximately 57% of the Company, continues to owe debt to Imagine. This debt is in default and has not been released or diminished in any way by the transaction between Imagine and the Company. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (c) Exhibits 2.1 Agreement for Conveyance of Shares of Wickes, Inc. in Lieu of Foreclosure and Bill of Sale dated April 4, 2003. Certain schedules and exhibits referenced in the Agreement for Conveyance of Shares have been omitted in accordance with Item 601(b)(2) of Regulation S-K. 2.2 Letter from Imagine Investments, Inc. to Riverside Group, Inc. dated April 4, 2003 regarding option granted to Imagine for additional 53,700 shares of Wickes, Inc. 99.1 Press Release issued by Riverside Group, Inc. on April 7, 2003 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. RIVERSIDE GROUP, INC. Date: April 21, 2003 By: /s/ Catherine J. Gray -------------------------------------- Catherine J. Gray Senior Vice President and Chief Financial Officer Exhibit 2.1 AGREEMENT FOR CONVEYANCE OF SHARES OF WICKES, INC. IN LIEU OF FORECLOSURE AND BILL OF SALE THIS AGREEMENT FOR CONVEYANCE OF SHARES OF WICKES, INC. IN LIEU OF FORECLOSURE AND BILL OF SALE (this "Agreement"), dated as of this 4th day of April, 2003, by and among (i) RIVERSIDE GROUP, INC., a Florida corporation having its principal office in Jacksonville, Florida ("Borrower"), (ii) J. STEVEN WILSON, an individual resident of Jacksonville, Florida ("Wilson"), (iii) WILSON FINANCIAL CORPORATION., a Florida corporation having its principal office in Jacksonville, Florida ("Wilson Financial"), and (iv) IMAGINE INVESTMENTS, INC., a Delaware corporation ("Lender"). PRELIMINARY STATEMENTS A. As of March 31, 2003, Borrower is indebted to Lender, including accrued interest, in the amount of $3,589,615.17 ("Riverside A-1 Debt"), as evidenced by those Promissory Notes listed on Exhibit A-1 (the "A-1 Notes"), and Borrower is indebted to Lender, including accrued interest, in the amount of $12,590,022.75 (together with interest accruing after that date, the "Riverside A-2 Debt" and, together with the A-1 Debt, hereinafter referred to as the "Riverside Debt"), as evidenced by those Promissory Notes listed on Exhibit A-2 (the "A-2 Notes" and, together with the A-1 Notes, hereinafter referred to as the "Riverside Notes"). B. Borrower is in default in the payment of the Riverside Debt and the Riverside Notes. C. The Riverside A-1 Debt and A-1 Notes are secured by the bona fide pledge of and encumbrance on various assets owned by Borrower (and its affiliates), including but not limited to the pledge of 758,155 shares (the "A-1 Pledged Shares") of the common capital stock of Wickes, Inc., a Delaware corporation ("Wickes). The Riverside A-2 Debt and A-2 Notes are secured by the bona fide pledge of and encumbrance on various assets owned by Borrower (and its affiliates), including but not limited to the pledge of 2,016,168 shares of the common capital stock of Wickes (the "A-2 Pledged Shares"). Borrower owns an additional 23,420 shares of Wickes common stock (the "Cantor Fitzgerald Wickes Shares" and, together with the A-1 Pledged Shares and the A-2 Pledged Shares, are hereinafter referred to as the "Wickes Shares") that are not pledged to anyone. D. Borrower has requested that Lender accept the absolute conveyance to Lender of all of the Wickes Shares in exchange for a portion of the Riverside Debt in the amount of $13,988,715. NOW, THEREFORE, in consideration of the premises, the mutual covenants herein contained and for other good and valuable consideration, the parties hereto hereby agree as follows: 1. Borrower hereby transfers, sells, sets over, grants and delivers to Lender the absolute ownership of all of the Wickes Shares, which constitute approximately 34.3% of all of the issued and outstanding common stock in Wickes. Borrower reiterates that this is an absolute transfer and sale and not a pledge, hypothecation, mortgage, or any similar manner of security interest. Borrower acknowledges that it has no rights to reacquire any of the Wickes Shares from Lender, and Lender is free to do whatever it pleases with the Wickes Shares. Such transfer of 717,923 of the A-1 Pledged Shares is in exchange for the deemed payment of $3,589,615.17 of the Riverside A-1 Debt and the A-1 Notes, and such transfer of 40,232 of the A-1 Pledged Shares, the Cantor Fitzgerald Wickes Shares, and the A-2 Pledged Shares is in exchange for the deemed payment of $10,399,099.83 of the Riverside A-2 Debt and the A-2 Notes. The Riverside Debt deemed paid as a result of such transfer is called the "Exchanged Debt." Borrower acknowledges that the conveyance of the Wickes Shares to Lender pursuant to this Agreement is in lieu of Lender's foreclosure on the Wickes Shares, which Borrower acknowledges and agrees Lender is entitled to effectuate as of the date hereof (except as to the Cantor Fitzgerald Wickes Shares). All interest on the A-1 Notes that accrues after March 31, 2003 shall be paid by Borrower at the same time as the Remaining Riverside Debt is due. The parties acknowledge and agree that the amount of the Exchanged Debt has been calculated solely, for the purposes of this Agreement, at the rate of $5.00 of Riverside Debt per Wickes Share, but the parties acknowledge that they believe that the fair market value of each such Wickes Share is substantially less than such amount. Lender represents and warrants that it is acquiring the Wickes Shares without a view toward distribution. Contemporaneously herewith, Borrower has delivered to Lender the certificates representing 758,155 of the Wickes Shares identified on Exhibit B attached hereto and made a part hereof. Borrower represents to Lender that 2,016,168 of the Wickes Shares (the "Pledged Shares") are owned by Borrower but have been pledged to the parties (the "Third Party Creditors") identified on Exhibit C attached hereto and made a part hereof, pursuant to the arrangements set forth on Exhibit C and securing the amount of debt identified on Exhibit C (the "Third Party Debt"). Notwithstanding that these Pledged Shares are pledged to the Third Party Creditors and the certificates for the same are held by the Third Party Creditors, Borrower nevertheless has absolutely sold, and hereby does absolutely sell, to Lender, all of the Wickes Shares, including the Pledged Shares. Borrower agrees to immediately give written notice to the Third Party Creditors that it has sold the Pledged Shares to Lender, by execution and delivery of the letter in the form of Exhibit D attached hereto and made a part hereof. Borrower agrees to pay and discharge the Third Party Debt in accordance with their respective terms and agrees not to increase the amount of the Third Party Debt, directly or indirectly, and not to default thereunder, and not to allow the Third Party Creditors to foreclose on the Pledged Shares and not to extend or modify the terms of the Third Party Debt in any manner whatsoever. Borrower agrees to pay the Third Party Debt by no later than September 30, 2003 and to cause the Third Party Creditors to deliver the certificates for all of the Pledged Shares to Lender, free and clear of all liens, pledges, security interests and other encumbrances, by no later than September 30, 2003. Further, Borrower represents to Lender that certificates representing 23,420 shares of the Wickes Shares were being held at Cantor Fitzgerald in the World Trade Center when it was destroyed (the "Cantor Fitzgerald Wickes Shares"), free and clear of all liens, security interests, pledges, encumbrances and the like. Notwithstanding that the certificates for the Cantor Fitzgerald Wickes Shares have not been delivered to the Lender contemporaneously herewith, Borrower nevertheless has absolutely sold, and hereby does absolutely sell to Lender, the Cantor Fitzgerald Wickes Shares. Borrower agrees to take all actions necessary to cause the transfer agent to issue replacement certificates for the Cantor Fitzgerald Wickes Shares in the name of the Lender and to deliver certificates for the same in the name of Imagine by no later than June 30, 2003, free and clear of all liens, security interests, pledges, encumbrances and the like. 2. Borrower represents and warrants to Lender as follows: (a) Attached hereto and made a part hereof as Exhibit E is the last audit report of Borrower through the year-ended December 31, 2001, and an interim set of financial statements of Borrower through September 30, 2002 (the "Financial Statements"). The Financial Statements are true and accurate and fairly present the financial condition of Borrower as of the respective dates indicated and have been prepared with generally accepted accounting principles, consistently applied. (b) Except as set forth on Schedule 2(b) hereof, Borrower does not have any other indebtedness for borrowed money, except that owed to Lender and that owed to the Third Party Creditors. (c) Borrower owns all of the Wickes Shares, free and clear of all liens, encumbrances, pledges and the like, other than the pledge to the Third Party Creditors. No other person or entity has any right or option to purchase any of the Wickes Shares. The Wickes Shares are all of the shares and interest in Wickes that Borrower owns, in whole or in part, except that Borrower owns an additional 53,700 shares of common stock in Wickes that are pledged to Liberty. Except as set forth on Schedule 2(c) hereof, neither Borrower nor Wilson nor Wilson Financial has any rights whatsoever to acquire any additional shares of stock in Wickes. (d) The Board of Directors of Borrower has approved the transactions contemplated by this Agreement, and shareholders who own 57% of the issued and outstanding common stock of Borrower have signed a letter stating that they are aware of the transactions contemplated by this Agreement and do not object to the same. Borrower has delivered copies of resolutions of such Board and such letter to Lender, and all of the same are true and accurate and in full force and effect as of the date hereof. All necessary corporate and shareholder actions required to make this Agreement fully enforceable have been taken. Ownership of all of the Wickes Shares has been transferred to the Lender. (e) Borrower is not in default under any of the Third Party Debt, except as a result of it being cross-defaulted to the Riverside Debt. (f) Borrower has received a current fairness opinion from TM Capital Corp. that the Wickes Shares are worth between $.42 and $.98 per Wickes Share. 3. Borrower acknowledges and agrees that if it does not deliver to Lender certificates for the Pledged Shares, free and clear of all liens, pledges, security interests and other encumbrances, by September 30, 2003, then an amount equal to the product of (i) $5.00 per share multiplied by (ii) the number of Wickes Shares as to which stock certificates for such Wickes Shares have not been delivered to Lender and duly transferred by such date, free and clear of all liens, pledges, security interests and other encumbrances, plus interest on such amount at the rate of ten percent (10%) per annum, from the date hereof through September 30, 2003, shall be deemed to be immediately due and owing by Borrower to Lender immediately and shall bear interest from such date at the highest default rate specified in the loan documents governing the Riverside Debt and shall be secured by all other security for the Riverside Debt, but nevertheless, Lender shall continue to be deemed the absolute owner of all the Wickes Shares including the Pledged Shares. If Borrower defaults with respect to any of the Third Party Debt, Borrower authorizes Lender (should it so choose in its sole discretion), to purchase and/or pay off any or all of the Third Party Debt; in such event, the entire amount so expended by Lender in connection therewith shall be immediately due and payable by Borrower to Lender and shall bear interest from such date at the highest default rate specified in the loan documents governing the Riverside Debt and shall be secured by all security for the Riverside Debt, and Lender shall be subrogated in all respects to the Third Party Debt and all collateral for the same. Borrower agrees to execute and deliver to Lender all instruments and documents requested by Lender to further document and perfect such encumbrances, pledges, security interests and the like, to secure such Third Party Debt and the Remaining Riverside Debt. 4. Borrower acknowledges that after consummation of this Agreement, Borrower continues to be indebted to Lender under the A-2 Notes in the amount of $2,190,922.90, which amount includes accrued interest through March 31, 2003 (the "Remaining Riverside Debt"), interest continues to accrue on the Remaining Riverside Debt at the rate(s) provided in the documents governing the same from and after March 31, 2003. The Remaining Riverside Debt shall continue to bear interest at the rates provided in the loan documents governing the same and shall be payable in accordance with the terms therein provided. The Remaining Riverside Debt (and all of Borrower's obligations under this Agreement) shall be secured by all of the collateral presently securing the Riverside Debt under the loan documents therefor, including specifically all collateral for the A-1 Notes, and Borrower hereby regrants a pledge of, security interest in and encumbrance on all of the collateral presently securing the A-1 Notes, to secure the Remaining Riverside Debt. Further Borrower shall execute and deliver to Lender all instruments and documents requested by Lender to further document and perfect such pledges and security interests. No collateral for the Riverside Debt, other than the Wickes Shares sold to Lender herewith, is released by Lender. Borrower has no defenses or offsets to the payment of the Remaining Riverside Debt. 5. Each of Borrower, Wilson and Wilson Financial, on behalf of themselves and their respective heirs, successors and assigns, subsidiaries and affiliated corporations, partnerships, limited liability companies and other legal entities, and their respective directors, officers, trustees, managers, members, shareholders, partners, assigns, attorneys, insurers, representatives, successors, agents and employees, does hereby release and discharge Lender, its subsidiaries and affiliated corporations, partnerships, limited liability companies and other legal entities, and their respective directors, officers, trustees, managers, members, shareholders, partners, assigns, attorneys, insurers, representatives, successors, agents and employees from any and all claims, demands, causes of action, damages, liabilities, actions and the like, whether under federal, state or local law, statute or ordinance, known or unknown, matured or unmatured, absolute or contingent, which any of them have or may have against Lender, arising out of or in connection with any matter occurring in whole or in part through and including the date of this Agreement. 6. Wilson and Wilson Financial do not object to the transactions contemplated by this Agreement and agree that their respective obligations to Lender under the loans to them and/or guarantees of such loans are not in any way released or diminished by this Agreement. 7. In the event that during the period commencing with the date hereof and ending two years after the date hereof (the "Period"), the Lender sells or otherwise disposes of all of the Wickes Shares or receives from Wickes in liquidation or in redemption for the Wickes Shares an amount (the "Excess") in excess of the "Threshold Amount," as hereinafter defined, Lender shall pay the Borrower fifty percent (50%) of such Excess above the Threshold Amount (the "Contingent Payment"), as additional consideration for the Wickes Shares, but only on the condition that the entire amount of the Remaining Riverside Debt has been paid in full to Lender prior to such date or is paid in full out of such Contingent Payment. The "Threshold Amount" means the sum of (i) the Exchanged Debt, plus (ii) yield computed as interest on the amount of the Exchanged Debt at the "prime rate" (defined as the "prime rate" as published in The Wall Street Journal from time to time), and adjusted on the first day of every calendar quarter) from and after the date hereof through the date of determination. Borrower hereby grants a security interest in the Contingent Payment to Lender, under the Uniform Commercial Code, as enacted in the Commonwealth of Kentucky (the "UCC"), to secure the Remaining Riverside Debt and any and all other indebtedness or obligations of any kind whatsoever that may now or hereafter in the future, including future advances, be owed by Borrower to Lender, and Lender shall have all of the rights of a secured party under the UCC in connection therewith. Borrower agrees to execute all UCC-1 Financing Statements and other agreements in connection with the grant of the foregoing security interest as Lender may request from time to time and further agrees to pay all filing and recording fees with respect thereto. Lender shall have absolutely no obligation to sell the Wickes Shares or to seek the sale, merger or liquidation of Wickes, and Borrower absolutely waives all claims whatsoever against Lender in connection with the Wickes Shares, regardless whether Lender does or does not sell such Wickes Shares and regardless whether Lender seeks the liquidation, sale or merger of Wickes. Borrower acknowledges and agrees that Lender has no obligation to seek any of the foregoing. If Lender receives the Excess after the expiration of the Period, Lender shall have no obligation whatsoever to make the Contingent Payment or to pay any other amount whatsoever to Borrower. 8. All notices, requests, demands and other communications required or permitted to be given or made under this Agreement shall be in writing and shall be deemed to have been given (a) on the date of personal delivery or transmission by telegram, cable, telex or facsimile transmission, or (b) three (3) days following the date of deposit in the United States mail, postage prepaid, by registered or certified mail, return receipt requested, or (c) one (1) day following the date of delivery to a nationally recognized overnight courier service, in each case, addressed as follows, or to such other address, person or entity as any party shall designate by notice to the others in accordance herewith: If to Borrower: Riverside Group, Inc. 7800 Belfort Parkway Suite 100 Jacksonville, FL 32256 Facsimile No.: 904/296-0584 Attn: President If to J. Steven Wilson: J. Steven Wilson 7800 Belfort Parkway Suite 100 Jacksonville, Florida 32256 Facsimile No.: 904/296-0584 If to Wilson Financial: Wilson Financial Corporation 7800 Belfort Parkway Suite 100 Jacksonville, Florida 32256 Facsimile No.: 904/296-0584 Attn: President If to Lender: Imagine Investments, Ind. 8150 North Central Expressway Suite 1901 Dallas, Texas 75206 Facsimile No.: 214/365-6905 Attn: Gary Goltz With copy to: Michael M. Fleishman Greenebaum Doll & McDonald PLLC 3300 National City Tower Louisville, Kentucky 40202 Facsimile No.: (502) 540-2106 9. No waiver by any party of compliance by the other with any term or condition of this Agreement shall be valid unless in writing and signed by the party against whom enforcement of such waiver is sought. No waiver by any party shall be construed to be a continuing waiver, nor a waiver of a similar or another provision. 10. Every provision of this Agreement is and shall be severable from all others. If any term, condition or provision is declared by any court of competent jurisdiction to be void, invalid or unenforceable, the remaining provisions of this Agreement shall not be affected and shall remain in full force and effect. 11. This Agreement constitutes the entire agreement between the parties concerning its subject matter and supersedes all prior written or oral agreements, excepting the various loan documents governing the Remaining Riverside Debt. No representations, inducement, promise or agreement not embodied in this Agreement or attached hereto was made by any party. Except as otherwise provided herein, no amendment of this Agreement shall be binding unless in writing and signed by all of the parties hereto. 12. This Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Kentucky. 13. This Agreement shall be binding upon, and inure to the benefit of, each of the parties hereto, and their respective heirs, personal representatives, successors and assigns. 14. No right or remedy conferred upon or reserved to any of the parties under the terms of this Agreement is intended to be, nor shall it be deemed, exclusive of any other right or remedy provided herein or by law or equity, but each shall be cumulative of every other right or remedy. 15. This Agreement may be executed in several counterparts, any of which shall be treated for all purposes as an original, and all of which shall be treated as one and the same. agreement. IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day, month and year first above written. RIVERSIDE GROUP, INC. By: /s/ J. Steven Wilson ----------------------------------------- Title: Chairman, President and CEO ----------------------------------------- ("Borrower") /s/ J. Steven Wilson ----------------------------------------- J. Steven Wilson ("Wilson") WILSON FINANCIAL CORPORATION By: /s/ J. Steven Wilson ----------------------------------------- Title: President ----------------------------------------- IMAGINE INVESTMENTS, INC. By: /s/ Robert T. Shaw ----------------------------------------- Title: President ----------------------------------------- ("Lender") LIST OF EXHIBITS Exhibit A-1 List of A-1 Notes Exhibit A-2 List A-2 Notes Exhibit B Certificates Evidencing 758,155 Shares of Wickes Stock Exhibit C List of Pledged Shares Exhibit D Letter to Third Party Creditors Exhibit E Borrower's Audit Report and Financial Statement Exhibit 2.2 IMAGINE INVESTMENTS, INC. 8150 NORTH CENTRAL EXPRESSWAY SUITE 1901 DALLAS, TEXAS 75206 April 4, 2003 Riverside Group, Inc. 7800 Belfort Parkway Jacksonville, FL 32256 Attn: J. Steven Wilson Gentlemen: Contemporaneously herewith, the undersigned and you (along with others) are entering that certain Agreement for Conveyance of Shares of Wickes, Inc. in Lieu of Foreclosure and Bill of Sale, of even date with the date of this letter, providing for the conveyance of 2,797,743 shares of the common capital stock of Wickes, Inc. by Riverside Group, Inc. ("Riverside") to Imagine Investments, Inc. ("Imagine") (the "Agreement"). All capitalized terms used in this letter and not otherwise defined herein shall have the same meaning as given them in the Agreement. In addition to the Wickes Shares sold and conveyed by Riverside to Imagine pursuant to the Agreement, Riverside owns an additional 53,700 shares of the common capital stock of Wickes, Inc. (the "Additional Wickes Shares"), that are pledged to Liberty Savings Bank to secure an indebtedness in the principal amount of $113,000 (the "Liberty Pledge"). In consideration of the Agreement, Riverside hereby grants to Imagine, the exclusive option to purchase all of the Additional Wickes Shares, free and clear of all liens, encumbrances, pledges, securing interests and the like (the "Option"). The term of the Option shall commence on the date hereof and shall terminate ten (10) days after the Remaining Riverside Debt (and all other amounts owed by Riverside to Imagine) has been paid in full. If Imagine elects to exercise the Option, Imagine will exchange an additional $268,500 of Riverside Debt owed on the Riverside Notes identified in the Agreement as the A-2 Notes as a "deemed payment" in exchange for the Additional Wickes Shares, in the same manner as set forth in the Agreement. Riverside agrees that it shall discharge the debt secured by the Liberty Pledge and to deliver certificates for the Additional Wickes Shares, together with blank stock powers with signatures guaranteed, to Imagine at c/o Gary Goltz, 8150 North Central Expressway, Suite 1901, Dallas, Texas 75206, within ten (10) business days after Imagine has given Riverside written notice that it has exercised the Option. At its sole option and without any obligation to do so, Imagine may pay the entire indebtedness secured by the Liberty Pledge, and all of the provisions of Paragraph 3 of the Agreement shall apply with respect thereto. Further, the undersigned hereby agree that if Imagine exercises the Option, all of the provisions of the Agreement are hereby incorporated by reference in this letter and shall apply to the Additional Wickes Shares, just as if the Additional Wickes Shares had been made the subject of the Agreement, in addition to the Wickes Shares. If the Holder of the Liberty Pledge forecloses on the Additional Shares, Riverside shall not be deemed to be in breach of this letter agreement but Riverside shall immediately give written notice to Imagine if any such foreclosure proceedings are initiated and shall keep it promptly advised regarding all developments in such foreclosure. Please sign this letter where indicated below to acknowledge your acceptance hereof as a legally binding contract on both your and our part. Very truly yours, Imagine Investments, Inc. By:/s/ Robert Shaw ----------------------------------------- Title: President Agreed to: Riverside Group, Inc. By: /s/ J. Steven Wilson ------------------------------------------------------ Title: Chairman, President and Chief Financial Officer Date: April 4, 2003 Exhibit 99.1 RIVERSIDE GROUP, INC. AT THE COMPANY Cathe Gray Shareholder Relations (904) 281-2200 cgray@cybermax.com ------------------------------------------------------------------------------- RIVERSIDE GROUP, INC. ANNOUNCES TRANSFER OF WICKES SHARES IN SETTLEMENT OF MAJOR DEBT Jacksonville, Florida, April 7, 2003...Riverside Group, Inc. (OTCBB:RSGI) announced today that it has transferred 2,797,743 shares of Wickes Inc. to Imagine Investments, Inc. ("Imagine"), in settlement of $13.9 million of debt owed to Imagine. The Company has also granted Imagine the option to acquire an additional 53,700 Wickes shares in settlement of an additional $268,500 of debt owed to Imagine. If Imagine sells or otherwise disposes of the Wickes shares in the next two years, Riverside will participate in 50% of any value realized for the exchanged shares over $5.00 per share plus yield accrued at the prime rate. The shares transferred to Imagine plus the option represent the entire ownership Riverside held in Wickes. Approximately 2.1 million of the shares transferred remain subject to a first lien with other Riverside creditors, which must be satisfied. Riverside continues to owe Imagine $2.2 million, secured by the remaining assets of the company. Riverside continues to hold its real estate and its Cybermax subsidiary. J. Steven Wilson, Chairman and CEO of Riverside, has served as the Chairman and CEO of Wickes since 1991, shortly after Riverside became a substantial shareholder of Wickes and was given Board representation. In light of Riverside disposing of its entire ownership interest in Wickes, Mr. Wilson has tendered his resignation from Wickes effective immediately. Mr. Wilson stated "I have enjoyed working with everyone connected with Wickes over the years including my fellow associates, the customers and the vendors and wish them the best success in the future". In light of these developments, Riverside is currently reviewing its previously announced proposal to merge with a company affiliated with Mr. Wilson in order to become a private company. Riverside Group is a holding company engaged in e-business solutions including e-commerce, e-learning, website development and multi-media presentations through its 100% owned subsidiary, Cybermax, Inc. For more information on Riverside and its subsidiaries, visit them online at www.rsgicorp.com and www.cybermax.com. Safe Harbor Statement Statements contained herein may be deemed forward-looking statements within the meaning of the Securities Act of 1933 and the Securities and Exchange Act of 1934 which are intended to be covered by the safe harbors created thereby. Forward-looking statements are subject to risks and uncertainties that could cause actual risks to differ materially from those expressed in the statements. A summary of risks and uncertainties which could cause the Company's actual results to differ materially from those included in, or inferred by, the forward-looking statements are detailed in the Company's Form 10K and Form 10Q which are on file with the Securities and Exchange Commission.

June 30, December 31, 2000 1999 -------------- -------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 289 $ 277 Accounts receivable, less allowance for doubtful accounts of $14 at 2000 and $3 at 1999 375 259 Investment in Greenleaf Technologies Corp. 6,747 1,253 Notes receivable 26 30 Prepaid expenses 117 19 -------------- -------------- Total current assets 7,554 1,838 Investment in Wickes Inc. 14,564 15,799 Investment in Buildscape Inc. (947) (947) Real Estate held for sale 7,387 8,996 Property, plant and equipment, net 259 340 Other assets (net of accumulated amortization of $59 in 2000 and $46 at 1999) 147 157 -------------- -------------- Total assets $ 28,964 $ 26,183 ============== ============== LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current debt and current maturities of long-term debt $ 11,806 $ 11,813 Accounts payable 477 430 Accrued liabilities 1,058 1,758 -------------- -------------- Total current liabilities 13,341 14,001 Long-term debt 268 469 Mortgage debt 11,345 11,345 Net liabilities of discontinued operations 20 21 Other long-term liabilities 84 83 -------------- -------------- Total liabilities 25,058 25,919 Commitments and contingencies (see Note 5) COMMON STOCKHOLDERS' EQUITY : Common stock, $.10 par value; 20,000,000 shares authorized; 477 477 4,767,123 issued and outstanding in 2000 and 1999 Additional paid in capital 16,468 16,468 Accumulated other comprehensive income 6,747 1,253 Retained earnings (deficit) (19,786) (17,934) -------------- -------------- Total common stockholders' equity 3,906 264 -------------- -------------- Total liabilities and common stockholders' equity $ 28,964 $ 26,183 ============== ==============

Three Months Ended June 30, Six Months Ended June 30, --------------------------- ------------------------- 2000 1999 2000 1999 ---- ---- ---- ---- REVENUES: Sales and service revenues $ 344 $ 270 $ 748 $ 751 Net investment loss (9) (7) (27) (36) Net realized investment gains 587 -- 1,163 -- Other operating income 44 24 47 49 --------- ---------- -------- --------- 966 287 1,931 764 --------- ---------- -------- --------- COSTS AND EXPENSES: Cost of sales 164 140 288 218 Provision for doubtful accounts 9 63 11 4 Depreciation, goodwill and trademark amortization 63 94 125 154 Selling, general and administrative expenses 665 1,732 1,145 3,316 Interest expense 723 650 1,334 1,303 --------- ---------- -------- --------- 1,624 2,679 2,903 4,995 --------- ---------- -------- --------- LOSS BEFORE EQUITY IN EARNINGS (LOSSES) OF RELATED PARTIES (658) (2,392) (972) (4,231) Equity in earnings (losses) of Wickes, Inc. 417 1,178 (880) (147) --------- ---------- --------- ---------- NET LOSS $ (241) $ (1,214) $ (1,852) $ (4,378) ========= ========== ========= ========== BASIC AND DILUTED LOSS PER COMMON SHARE: Loss per share $ (0.05) $ (0.23) $ (0.39) $ (0.84) Weighted average number of common shares used in computing earnings per share 4,759,123 5,213,186 4,759,123 5,213,186 See Accompanying Notes to Condensed Consolidated Financial Statements. 4

For the Six Months Ending June 30, ---------------------------------- 2000 1999 ----- ---- CASH FLOW FROM OPERATING ACTIVITIES Net loss $ (1,852) $ (4,378) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation expense 102 93 Amortization expense 23 321 Amortization of bond discount -- 113 Provision for doubtful accounts 11 (4) Net realized investment gains (1,058) -- Equity in earnings (losses) of unconsolidated subsidiaries 880 (113) Change in other assets and liabilities: Increase in accounts receivable (127) (8) Decrease in notes receivable 4 167 Increase in other assets (107) (230) Increase(decrease) in accounts payable and accrued liabilities (654) 1,082 Increase in discontinued operations, other liabilities and current income taxes -- (111) --------- --------- NET CASH USED IN OPERATING ACTIVITIES (2,778) (3,068) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments: Property, plant and equipment (17) (131) Investment in real estate -- -- Proceeds from sales of investments Investment in real estate 1,599 44 Securities of Greenleaf Technologies Corp. 977 -- Securities of Wickes Inc. 439 1,186 ---------- ---------- NET CASH PROVIDED BY INVESTING ACTIVITIES 2,998 1,099 ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Repayment of debt (208) (153) Increase in borrowings -- 2,032 ---------- ----------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (208) 1,879 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 12 (90) Cash and cash equivalents at beginning of period 277 509 ---------- ---------- Cash and cash equivalents at end of period $ 289 $ 419 ========== ========== SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION Non-cash compensation expense (Greenleaf Option) $ 105 $ --

Unrealized Total Gains on Comprehensive Securities Income ---------- ------------ Balance at December 31, 1999 $ 1,253 $ (1,425) Change during the first six months of 2000 5,494 3,642 ---------- ---------- Balance at June 30, 2000 $ 6,747 $ 2,217 ========== ==========

(unaudited) (audited) June 24, 2000 Dec. 25, 1999 ------------- ------------- Balance Sheet Data: Current assets $ 261,658 $ 241,835 Total assets 355,893 334,636 Current liabilities 73,176 79,312 Long-term debt and other long-term liabilities 253,451 224,505 Common stockholders' equity 29,266 30,819

Three Months Ended Six Months Ended ------------------ ---------------- (unaudited) (unaudited) (unaudited) (unaudited) June 24 June 26 June 24 June 26 2000 1999 2000 1999 ---- ---- ---- ---- Income Statement Data: Net sales $ 279,703 $ 288,764 $ 495,479 $ 479,934 Cost of sales 210,386 222,425 372,467 367,628 Gross profit 69,317 66,339 123,012 112,306 Selling, general & administrative 59,290 54,810 110,746 99,480 Other expenses 8,171 7,532 16,104 14,714 Other income (917) (2,187) (1,703) (3,043) Income(loss) before income tax 2,773 6,184 (2,135) 1,155 Net income (loss) 1,532 3,587 (1,667) 311

(unaudited) (audited) June 30, 2000 December 30, 1999 ------------- ----------------- Balance Sheet Data: Current assets $ 6,860 $ 2,677 Total assets 8,691 3,587 Current liabilities 1,818 1,592 Common stockholders' equity 6,873 1,995

Three Months Ended Six Months Ended ------------------ ---------------- (unaudited) (unaudited) June 30, June 30, June 30, June 30, 2000 1999 2000 1999 ---- ---- ---- ---- Income Statement Data: Net sales $ 122 $ 114 $ 249 $ 179 Cost of goods 91 91 196 123 Gross profit 31 23 53 56 Selling, general & administrative 3,054 1,262 4,948 2,365 Other expenses 175 85 299 135 Other income (54) -- (72) -- Loss before income tax (3,144) (1,324) (5,122) (2,444) Net loss (3,144) (1,324) (5,122) (2,444)

LONG-TERM DEBT Collateralized Notes $ 9,805 Other 2,269 Less: current maturities (11,806) ----------- Total Company long-term debt less current maturities $ 268 MORTGAGE DEBT Mortgage debt, non-recourse $ 11,345 ----------- Total long-term and mortgage debt less current maturities $ 11,613 ===========

Three Months Ended Six Months Ended ------------------ ---------------- (unaudited) (unaudited) June 30, June 30, June 30, June 30, 2000 1999 2000 1999 ---- ---- ---- ---- Earnings(loss) before income taxes, and equity in related parties(1)(2) $ (658) $ (2,392) $ (972) $ (4,231) Income tax (benefit) expense -- -- Equity in earnings (losses) of Wickes Inc.(3) 417 1,178 (880) (147) ---------- ----------- ---------- ---------- Net loss $ (241) $ (1,214) $ (1,852) $ (4,378) ========== =========== ========== ==========

Three Months Ended Six Months Ended ------------------ ---------------- June 30, June 30, June 30, June 30, 2000 1999 2000 1999 ---- ---- ---- ---- (in thousands) (in thousands) SALES: Buildscape(1) $ -- $ 114 $ -- $ 179 Cybermax 344 143 748 543 Wickes(2) -- -- -- -- Parent Group -- 13 -- 29 ------------ ---------- ------------ ----------- Total $ 344 $ 270 $ 748 $ 751 ============ =========== ============ ========== COST OF SALES: Buildscape(1) $ -- $ 91 $ -- $ 123 Cybermax 164 48 288 91 Wickes(2) -- -- -- -- Parent Group -- 1 -- 4 ------------ ----------- ---------- ------------ Total $ 164 $ 140 $ 288 $ 218 ============ =========== =========== ============ OTHER OPERATING INCOME: Buildscape(1) $ -- $ -- $ -- $ -- Cybermax 9 -- 12 1 Wickes(2) -- -- -- -- Parent Group 35 24 35 48 ------------ ----------- ---------- ---------- Total $ 44 $ 24 $ 47 $ 49 ============ =========== ========== ========= INVESTMENT INCOME AND REALIZED GAINS/(LOSSES): Buildscape(1) $ -- $ -- $ -- $ -- Cybermax -- -- -- -- Wickes(2) 36 -- 84 -- Parent Group 542 (7) 1,052 (36) ----------- ----------- ---------- ----------- Total $ 578 $ (7) $ 1,136 $ (36) =========== =========== ========== =========== 18 Three Months Ended Six Months Ended ------------------ ---------------- June 30, June 30, June 30, June 30, 2000 1999 2000 1999 ---- ---- ---- ---- (in thousands) (in thousands) EXPENSES: Buildscape(1) $ -- $ 1,301 $ -- $ 2,417 Cybermax 430 445 884 998 Wickes(2) -- -- -- -- Parent Group 307 143 397 59 ----------- ------------ ---------- ----------- Total $ 737 $ 1,889 $ 1,281 $ 3,474 =========== ============ ========== =========== INTEREST EXPENSE: Buildscape(1) $ -- $ 46 $ -- $ 83 Cybermax -- 1 -- 2 Wickes (2) 374 382 648 763 Parent Group 349 221 686 455 ----------- ------------ ---------- ----------- Total $ 723 $ 650 $ 1,334 $ 1,303 =========== ============ ========== =========== EARNINGS(LOSS) BEFORE INCOME TAXES, EQUITY IN RELATED PARTIES AND MINORITY INTEREST: Buildscape(1) $ -- $ (1,324) $ -- $ (2,444) Cybermax (241) (351) (412) (547) Wickes(2) (338) (382) (564) (763) Parent Group (79) (335) 4 (477) ----------- ------------ ---------- ---------- Total $ (658) $ (2,392) $ (972) $ (4,231) =========== ============ ========== ========== IDENTIFIABLE ASSETS: Buildscape(1) $ (947) 713 $ (947) $ 713 Cybermax 558 569 558 569 Wickes(2) 14,564 13,405 14,564 13,405 Parent Group 14,789 10,043 14,789 10,043 ----------- ------------ ---------- ----------- Total $ 28,964 $ 24,730 $ 28,964 $ 24,730 =========== =========== ========== ===========

Three Months Ended Six Months Ended ------------------ ---------------- (unaudited) (unaudited) June 30, June 30, June 30, June 30, 2000 1999 2000 1999 ---- ---- ---- ---- Sales $ 122 $ 114 $ 249 $ 179 Cost of sales 91 91 196 123 ---------- ---------- ---------- ---------- Net profit 31 23 53 56 Selling, general and administrative 3,054 1,262 4,948 2,365 Depreciation and amortization 165 39 289 52 Interest expense 10 46 10 83 ---------- ---------- ----------- ---------- Total expenses 3,229 1,347 5,247 2,500 Other income 54 -- 72 -- ---------- ---------- ---------- ---------- Net loss $ (3,144) $ (1,324) $ (5,122) $ (2,444) ========== ========== ========== ==========

Three Months Ended Six Months Ended ------------------ ---------------- (unaudited) (unaudited) June 30, June 30, June 30, June 30, 2000 1999 2000 1999 ---- ---- ---- ---- Sales $ 344 $ 143 $ 748 $ 543 Cost of sales 164 48 288 91 ------- -------- --------- -------- Net profit 180 95 460 452 Selling, general and administrative 384 414 792 943 Depreciation and amortization 46 31 92 53 Interest expense -- 1 -- 2 -------- -------- --------- -------- Total expenses 430 446 884 999 Other operating income 9 -- 12 1 -------- -------- -------- -------- Net loss $ (241) $ (351) $ (412) $ (547) ======== ======== ======= ========

Three Months Ended Six Months Ended ------------------ ---------------- (unaudited) (unaudited) June 24, June 26 June 24, June 26, 2000 1999 2000 1999 -------- -------- -------- ------- Net sales 100.0% 100.0% 100.0% 100.0% Gross profit 24.8% 23.0% 24.8% 23.4% Selling, general and administrative expense 21.2% 19.0% 22.4% 20.7% Depreciation, goodwill and trademark amortization 0.7% 0.6% 0.7% 0.6% Provision for doubtful accounts 0.0% 0.0% 0.1% 0.1% Other operating income (0.3)% (0.8)% (0.3)% (0.6)% Income from operations 3.2% 4.2% 2.0% 2.6%

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