Document:

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                                                                    EXHIBIT 10.3

                              AMENDED AND RESTATED
                          REGISTRATION RIGHTS AGREEMENT

         Amended and Restated Registration Rights Agreement (the "Agreement"),
dated as of February 29, 2000, by and among Altiva Financial Corporation, a
Delaware corporation (the "Company"), and Holders (as defined herein) of the
Company's Amended and Restated 12% Secured Convertible Senior Notes due 2006
(the "Notes").

         WHEREAS, the Company has issued to Holders $14,000,000 principal amount
of the Notes; and

         WHEREAS, based on the conversion exercise price in effect on the date
hereof, the Notes are convertible, subject to certain conditions, into 7,865,168
shares of the common stock of the Company, par value $0.01 (the "Common Stock")
(such shares, subject to adjustment in accordance with the terms of the Notes,
including an adjustment resulting in a reduction in the conversion exercise
price to be $0.98 upon mandatory conversion of $6,428,000 principal amount of
12% Secured Convertible Senior Notes due 2006 issued by the Company in exchange
for 12 1/2% Subordinated Notes due 2001 previously issued by the Company, are
herein after referred to as the "Securities"); and

         WHEREAS, the Company and the Holders have entered into a Registration
Rights Agreement, dated as of August 31, 1999, as amended by Amendment No. 1 to
the Registration Rights Agreement, dated as of December 13, 1999, Amendment No.
2 to the Registration Rights Agreement, dated as of December 30, 1999, Amendment
No. 3 to the Registration Agreement, dated as of February 2, 2000, and Amendment
No. 4 to the Registration Rights Agreement, dated as of February 11, 2000
(collectively, the "Existing Agreement"); and

         WHEREAS, the Company and the Holders desire to amend and restate the
Existing Agreement to reflect that the aggregate principal amount of Notes
issued and sold by the Company to the Purchaser has increased from $10,000,000
to $14,000,000, that the number of shares of Common Stock that the Notes are
convertible into has increased from 2,000,000 shares to 7,865,168 shares and to
otherwise amend the agreements of the parties; and

         WHEREAS, as an inducement to Holders to purchase the Notes, the Company
agreed to register the Securities into which the Notes are convertible;

         NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are acknowledged by
all parties hereto, the

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parties, intending to be legally obligated, hereby agree as follows:

SECTION 1. DEFINITIONS

         As used in this Agreement, the following capitalized terms shall have
the following meanings:

         "Act": The Securities Act of 1933, as amended.

         "Broker-Dealer": Any broker or dealer registered as such under the
Exchange Act.

         "Closing Date": The date of this Agreement.

         "Commission" or "SEC": The United States Securities and Exchange
Commission.

         "DTC": The Depository Trust Company.

         "Effectiveness Target Date": As defined in Section 3 hereof.

         "Exchange Act": The Securities Exchange Act of 1934, as amended.

         "Holders": As defined in Section 2(b) hereof.

         "Indemnified Holder": As defined in Section 7(a) hereof

         "NASD": National Association of Securities Dealers, Inc.

         "Person": An individual, partnership, corporation, trust or
unincorporated organization, or a government or an agency, authority or
political subdivision thereof.

         "Prospectus": The prospectus included in a Resale Registration
Statement, as amended or supplemented, including post-effective amendments,
thereto.

         "Registration Default": As defined in Section 4 hereof.

         "Resale Registration Statement": As defined in Section 3 hereof.

         "Securities": As defined in the preamble hereto.

         "Transfer Restricted Securities": Each Security, until the earliest to
occur of (a) the date on which such Security has been effectively registered
under the Act and disposed of in accordance with a Resale Registration Statement
or other applicable registration statement and (b) the date on which such
Security is distributed to the public pursuant to Rule 144 under the
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Act or may be sold to the public without compliance with such rule.

         "Underwritten Registration" or "Underwritten Offering": An offering in
which securities of the Company are sold to an underwriter for reoffering to the
public pursuant to an effective registration statement filed with the
Commission.

SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT

         (A)      TRANSFER RESTRICTED SECURITIES. The Transfer Restricted
Securities are subject to the terms of this Agreement and may be sold in
accordance with the provisions hereof.

         (B)      HOLDERS OF TRANSFER RESTRICTED SECURITIES. A Person is deemed
to be a holder of Transfer Restricted Securities (each, a "Holder") whenever
such Person owns (i) Notes, directly or indirectly through a participation
interest therein, or (ii) Securities prior to (A) the resale of Securities in
accordance with the terms hereof or (B) the time that such Securities are no
longer considered to be Transfer Restricted Securities.

SECTION 3. RESALE REGISTRATION STATEMENT

         (A)      REGISTRATION. The Company shall cause to be filed with the
Commission promptly after the Closing Date, but in no event later than April 15,
2000, one or more registration statements on Form S-1, S-2 or S-3, or other
applicable form (each a "Resale Registration Statement"), and use its reasonable
best efforts to cause such Resale Registration Statement to be declared
effective by the Commission promptly, but in no event later than June 15, 2000
(the "Effectiveness Target Date"). In connection with the foregoing, the Company
shall (A) file all pre-effective amendments to such Resale Registration
Statement as may be necessary in order to cause such Resale Registration
Statement to become effective, (B) if applicable, file a post-effective
amendment to such Resale Registration Statement pursuant to Rule 430A under the
Securities Act and (C) cause all necessary filings in connection with the
registration and qualification of the Securities to be made under the state
securities and Blue Sky laws of such jurisdictions as are necessary. Subject to
the provisions of Section 5(c) hereof, the Company shall use its reasonable best
efforts to keep such Resale Registration Statement continuously effective,
supplemented and amended to the extent necessary to ensure that it is available
for resales of Securities by the Holders of Transfer Restricted Securities
entitled to the benefit of this Section 3(a), and to ensure that it conforms
with the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, and all state
securities or Blue Sky laws until the earlier of (i) the sale of all Securities
in accordance with a Resale Registration Statement or (ii) the date on which all
Transfer Restricted Securities may be sold without restriction pursuant to Rule
144 under the Act.

         (B)      PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH
THE SHELF REGISTRATION Statement. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Resale Registration
Statement pursuant to this Agreement

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unless and until such Holder furnishes to the Company in writing, within twenty
(20) business days after receipt of a request therefor, such information as the
Company may reasonably request for use in connection with any Resale
Registration Statement or Prospectus or preliminary Prospectus included therein.
No Holder of Transfer Restricted Securities shall be entitled to Liquidated
Damages pursuant to Section 4 hereof unless and until such Holder shall have
used its reasonable best efforts to provide all such reasonably requested
information. Each Holder as to which any Resale Registration Statement is being
effected agrees to promptly furnish to the Company any and all information
required to be disclosed in order to make the information previously furnished
to the Company by such Holder not materially misleading.

SECTION 4.  LIQUIDATED DAMAGES

          The parties hereto agree and acknowledge that under the terms of the
Existing Agreement the Holders of the Notes are entitled to payment of an
aggregate of $6,595 as liquidated damages (the "Old Liquidated Damages"). If (a)
the Company shall not have filed the Resale Registration Statement with the
Commission on or prior to April 15, 2000, (b) the Resale Registration Statement
shall not have been declared effective by the SEC by the Effectiveness Target
Date or (c) the Resale Registration Statement is filed and declared effective
but shall thereafter cease to be effective or fail to be usable for its intended
purpose without being succeeded within ten (10) business days by a
post-effective amendment that cures such failure and that is itself declared
effective within thirty (30) business days (each such event referred to in
clauses (a) through (c), a "Registration Default"), additional cash interest
("New Liquidated Damages") shall accrue to each Holder of the Notes commencing
upon the occurrence of such Registration Default in an amount equal to $0.05 per
week per $1,000 principal amount of the Notes held by such Holder during the
ninety (90) day period following the occurrence of such Registration Default.
The amount of New Liquidated Damages will increase by an additional $0.05 per
week per $1,000 principal amount of the Notes with respect to each subsequent
90-day period until all Registration Defaults have been cured, up to a maximum
amount of New Liquidated Damages for all Registration Defaults of $0.50 per week
per $1,000 principal amount of Notes. The Old Liquidated Damages and the new
Liquidated Damages are (collectively referred to as "Liquidated Damages"). All
accrued Liquidated Damages shall be paid to Holders by the Company in the same
manner as interest is paid pursuant to the Notes. Following the cure of all
Registration Defaults relating to any particular Transfer Restricted Securities,
the accrual of New Liquidated Damages with respect to such Transfer Restricted
Securities will cease.

         All obligations of the Company set forth in the preceding paragraph
that are outstanding with respect to any Transfer Restricted Security at the
time such Security ceases to be a Transfer Restricted Security shall survive
until such time as all such obligations with respect to such Security shall have
been satisfied in full.

SECTION 5.  REGISTRATION PROCEDURES

         (A)      RESALE REGISTRATION STATEMENT. In connection with each Resale
Registration Statement, the Company shall comply with all the provisions of
Section 5(b) below and shall file

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and use its reasonable best efforts to effect such registration to permit the
sale of the Transfer Restricted Securities in accordance with the terms of this
Agreement.

         (B)      GENERAL PROVISIONS. In connection with any Resale Registration
Statement and any Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities (including, without limitation, any
Registration Statement and the related Prospectus required to permit resales of
the Securities by Broker-Dealers), the Company shall:

                  (i)      use its reasonable best efforts to keep such Resale
         Registration Statement continuously effective and provide all requisite
         financial statements during the period specified in Section 3 of this
         Agreement, and upon the occurrence of any event that would cause any
         such Resale Registration Statement or the Prospectus contained therein
         (A) to contain a material misstatement or omission or (B) not to be
         effective and usable for resale of Transfer Restricted Securities
         during the period required by this Agreement, the Company shall file
         promptly, and as appropriate, an amendment or supplement to such Resale
         Registration Statement, in the case of clause (A), correcting any such
         misstatement or omission, and, in the case of either clause (A) or (B),
         use its reasonable best efforts to cause such amendment to be declared
         effective and such Resale Registration Statement and the related
         Prospectus to become usable for their intended purpose(s) as soon as
         practicable thereafter;

                  (ii)     prepare and file with the Commission such amendments
         and post-effective amendments to the Resale Registration Statement as
         may be necessary to keep the Resale Registration Statement effective
         for the applicable period set forth in Section 3 hereof or such shorter
         period as will terminate when all Transfer Restricted Securities
         covered by such Resale Registration Statement cease to be Transfer
         Restricted Securities; cause the Prospectus to be supplemented by any
         required Prospectus supplement, and as so supplemented to be filed
         pursuant to Rule 424 under the Act in a timely manner; and reasonably
         assist Holders in complying with the provisions of the Act with respect
         to the disposition of all Securities covered by such Resale
         Registration Statement during the applicable period in accordance with
         the intended method or methods of distribution by the sellers thereof
         set forth in such Resale Registration Statement or supplement to the
         Prospectus;

                  (iii)    advise the underwriter(s), if any, and selling
         Holders promptly and, if requested by such Persons in writing, to
         confirm such advice in writing, (A) when the Prospectus or any
         Prospectus supplement or post-effective amendment has been filed, and,
         with respect to any Resale Registration Statement or any post-effective
         amendment thereto, when the same has become effective, (B) of any
         request by the Commission for amendments to the Resale Registration
         Statement or amendments or supplements to the Prospectus or for
         additional information relating thereto, (C) of the issuance by the
         Commission of any stop order or other order or action suspending the
         effectiveness of the Resale Registration Statement under the Act or of
         the suspension by any state securities or Blue Sky commission of the
         exemption, qualification or registration of the Transfer

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         Restricted Securities for offering or sale in any jurisdiction, or the
         initiation of any proceeding for any of the preceding purposes, or (D)
         of the existence of any fact or the happening of any event that makes
         any statement of a material fact made in the Resale Registration
         Statement, the Prospectus, any amendment or supplement thereto, or any
         document incorporated by reference therein untrue, or that requires the
         making of any additions to or changes in the Resale Registration
         Statement or the Prospectus in order to make the statements therein, in
         light of the circumstances under which they were made, not misleading.
         If at any time the Commission shall issue any stop order or other order
         or take other action suspending the effectiveness of the Resale
         Registration Statement, or any state securities commission or other
         regulatory authority shall issue an order suspending the exemption,
         qualification or registration of the Transfer Restricted Securities
         under state securities or Blue Sky laws, the Company shall use its
         reasonable best efforts to obtain the withdrawal or lifting of such
         order at the earliest possible time;

                  (iv)     furnish to each of the selling Holders and each of
         the underwriter(s), if any, before filing with the Commission, copies
         of any Resale Registration Statement or any Prospectus included therein
         or any amendments or supplements to any such Resale Registration
         Statement or Prospectus (including all documents incorporated by
         reference after the initial filing of such Resale Registration
         Statement), which documents will be subject to the review of such
         Holders and underwriter(s), if any, for a period of at least five (5)
         business days, and the Company will not file any such Resale
         Registration Statement or Prospectus or any amendment or supplement to
         any such Resale Registration Statement or Prospectus (including all
         such documents incorporated by reference) to which a selling Holder of
         Transfer Restricted Securities covered by such Resale Registration
         Statement or the underwriter(s), if any, shall reasonably object within
         five (5) business days after the receipt thereof. A selling Holder or
         underwriter, if any, shall be deemed to have reasonably objected to
         such filing if such Resale Registration Statement, amendment,
         Prospectus or supplement, as applicable, as proposed to be filed,
         contains a material misstatement or omission;

                  (v)      make available at reasonable times and upon
         reasonable notice for inspection by the selling Holders, any
         underwriter participating in any disposition pursuant to such Resale
         Registration Statement and any attorney or accountant retained by such
         selling Holders or any of the underwriter(s), all financial and other
         records, pertinent corporate documents and properties of the Company
         and cause the Company's' officers, directors and employees to supply
         all information reasonably requested by any such Holder, underwriter,
         attorney or accountant in connection with such Resale Registration
         Statement subsequent to the filing thereof and prior to its
         effectiveness;

                  (vi)     if requested by any selling Holders or the
         underwriter(s), if any, promptly incorporate in any Resale Registration
         Statement or Prospectus, pursuant to a supplement or post-effective
         amendment, if necessary, such information as such selling Holders and
         underwriter(s), if any, may reasonably request to have included
         therein, provided such information is usual and customary in such a
         document, including, without limitation,

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         information relating to the "Plan of Distribution" of the Transfer
         Restricted Securities, information with respect to the Transfer
         Restricted Securities being sold to such underwriter(s) and any other
         terms of the offering of the Transfer Restricted Securities to be sold
         in such offering, and make all required filings of such Prospectus
         supplement or post-effective amendment as soon as practicable after the
         Company is notified of the matters to be incorporated in such
         Prospectus supplement or post-effective amendment;

                  (vii)    furnish to each selling Holder and each of the
         underwriter(s), if any, without charge, one copy of the Resale
         Registration Statement, as first filed with the Commission, and of each
         amendment thereto, including all documents incorporated by reference
         therein and all exhibits;

                  (viii)   deliver to each selling Holder and each of the
         underwriter(s), if any, without charge, as many copies of the
         Prospectus (including each preliminary Prospectus) and any amendment or
         supplement thereto as such Persons reasonably may request; and the
         Company hereby consents to the use of the Prospectus and any amendment
         or supplement thereto (other than in those states or jurisdictions in
         which the Company has not complied with or satisfied the requirements
         of the relevant securities or Blue Sky laws) by each of the selling
         Holders and each of the underwriter(s), if any, in connection with the
         offering and the sale of the Transfer Restricted Securities covered by
         the Prospectus or any amendment or supplement thereto;

                  (ix)     enter into such agreements (including an underwriting
         agreement), and make such representations and warranties and take all
         such other actions in connection therewith in order to expedite or
         facilitate the disposition of the Transfer Restricted Securities
         pursuant to any Resale Registration Statement contemplated by this
         Agreement, all to the extent customary in offerings of the type
         contemplated hereby and as may be reasonably requested by any Holder of
         Transfer Restricted Securities or underwriter in connection with any
         sale or resale pursuant to any Resale Registration Statement
         contemplated by this Agreement; and if the registration is an
         Underwritten Registration, the Company shall:

                           (A)      furnish to each selling Holder and each
                  underwriter, if any, in such substance and scope as they may
                  request and as are customarily made by issuers to underwriters
                  in primary underwritten offerings, upon the date of the
                  effectiveness of the Resale Resale Registration Statement:

                                    (1)      a certificate, dated the date of
                           effectiveness of the Resale Resale Registration
                           Statement, signed by (i) the President or any Vice
                           President and (ii) a principal financial or
                           accounting officer of the Company, confirming, as of
                           the date thereof, that the representations and
                           warranties of the Company in the underwriting
                           agreement, if applicable, are true and correct in all
                           material respects as of such date and such other
                           matters as such parties may reasonably request;

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                                    (2)      an opinion, dated the date of
                           effectiveness of the Resale Resale Registration
                           Statement, of counsel for the Company to the effect
                           that the shares covered by the Resale Resale
                           Registration Statement shall be validly issued and
                           non-assessable, and such opinion shall include a
                           statement to the effect that such counsel has
                           participated in conferences with officers and other
                           representatives of the Company, representatives of
                           the independent public accountants for the Company,
                           the underwriters' representatives and the
                           underwriters' counsel in connection with the
                           preparation of such Resale Registration Statement and
                           the related Prospectus and have considered the
                           matters required to be stated therein and the
                           statements contained therein, although such counsel
                           has not independently verified the accuracy,
                           completeness or fairness of such statements; and that
                           such counsel advises that, on the basis of the
                           foregoing, no facts came to such counsel's attention
                           that caused such counsel to believe that the
                           applicable Resale Registration Statement, at the time
                           such Resale Registration Statement or any
                           post-effective amendment thereto became effective,
                           contained an untrue statement of a material fact or
                           omitted to state a material fact required to be
                           stated therein or necessary to make the statements
                           therein not misleading, or that the Prospectus
                           contained in such Resale Registration Statement, as
                           of its date, contained an untrue statement of a
                           material fact or omitted to state a material fact
                           necessary in order to make the statements therein, in
                           light of the circumstances under which they were
                           made, not misleading. Without limiting the foregoing,
                           such counsel may state further that such counsel
                           assumes no responsibility for, and has not
                           independently verified, the accuracy, completeness or
                           fairness of the financial statements, notes and
                           schedules and other financial data included in any
                           Resale Registration Statement contemplated by this
                           Agreement or the related Prospectus; and

                                    (3)      a customary comfort letter, dated
                           as of the date of effectiveness of the Resale
                           Registration Statement, from the Company's
                           independent public accountants, in the customary form
                           and covering matters of the type customarily covered
                           in comfort letters by underwriters in connection with
                           primary underwritten offerings;

                           (B)      set forth in full or incorporate by
                  reference in the Underwriting Agreement, if any, the
                  indemnification provisions and procedures of Section 7 hereof
                  with respect to all parties to be indemnified pursuant to said
                  Section; and

                           (C)      deliver such other documents and
                  certificates as may be reasonably requested by such parties to
                  evidence compliance with clause (A) above and with any
                  customary conditions contained in the underwriting agreement
                  or other agreement entered into by the Company pursuant to
                  this clause (ix), if any.

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         If at any time the representations of the Company contemplated in
clause (A)(1) above cease to be true and correct, the Company shall so advise
the underwriter(s), if any, and each selling Holder promptly and, if requested
by such Persons, shall confirm such advice in writing;

         (x)      prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if any, and
their respective counsel in connection with the registration and qualification
of the Transfer Restricted Securities under the securities or Blue Sky laws of
such jurisdictions as the selling Holders or underwriter(s) may reasonably
request and do any and all other acts or things necessary or advisable to enable
the disposition in such jurisdictions of the Transfer Restricted Securities
covered by the Resale Registration Statement; provided that the Company shall
not be required to register or qualify as a foreign corporation where it is not
now so qualified or to take any action that would subject it to the service of
process in suits or to taxation, other than as to matters and transactions
relating to the Resale Registration Statement, in any jurisdiction where it is
not now so subject;

         (xi)     cooperate with the selling Holders and the underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and enable such Securities to be in such denominations and
registered in such names as the Holders or the underwriter(s), if any, may
reasonably request at least two (2) business days prior to any sale of Transfer
Restricted Securities made by such underwriter(s) or selling Holders;

         (xii)    use its reasonable best efforts to cause the Transfer
Restricted Securities covered by the Resale Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the seller or sellers thereof or the
underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the provisions contained in paragraph (x)
above;

         (xiii)   if any fact or event contemplated by paragraph (b)(iii)(D)
above shall exist or have occurred, prepare a supplement or post-effective
amendment to the Resale Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer Restricted
Securities, the Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein
not misleading;

         (xiv)    provide a CUSP number for all Transfer Restricted Securities
not later than the effective date of the Resale Registration Statement;

         (xv)     cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter that is required to be retained in accordance with the rules and
regulations of the NASD, and use its reasonable best efforts to cause such
filings to become effective and approved by such governmental agencies or

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authorities as may be necessary to enable the Holders selling Transfer
Restricted Securities to consummate the disposition of such Transfer Restricted
Securities;

         (xvi)    otherwise comply with all applicable rules and regulations of
the Commission, and make generally available to its security holders, as soon as
practicable, a consolidated earnings statement meeting the requirements of Rule
158 under the Act (which need not be audited) for the twelve-month period (A)
commencing at the end of any fiscal quarter in which Transfer Restricted
Securities are sold to underwriters in a firm commitment or best efforts
Underwritten Offering or (B) if not sold to underwriters in such an offering,
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of the Resale Registration Statement;

         (xvi)    cause all shares of Transfer Restricted Securities covered by
the Resale Registration Statement to be listed on each securities exchange or
market, if applicable, on which similar securities issued by the Company are
then listed; and

         (xvii)   provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 or Section
15 of the Exchange Act.

         (C)      BLACKOUT. Each Holder agrees by acquisition of a Transfer
Restricted Security that, upon receipt of any notice from the Company of the
existence of any fact of the kind described in Section 5(b)(iii)(D) hereof, such
Holder will forthwith discontinue disposition of Transfer Restricted Securities
pursuant to the Resale Registration Statement until such Holder's receipt of the
copies of the supplemented or amended Prospectus as contemplated by section
5(b)(xiii) hereof, or until it is advised in writing (the "Advice") by the
Company that the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings that are incorporated by reference in
the Prospectus. If so directed by the Company, each Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such Transfer
Restricted Securities that was current immediately prior to the time of receipt
of such notice. In the event the Company shall give any such notice, the time
period regarding the effectiveness of such Resale Registration Statement or any
post-effective amendment thereto set forth in Section 3 shall be extended by the
number of days during the period from and including the date of the giving of
such notice pursuant to Section 5(b)(iii)(D) hereof to and including the date
when each selling Holder covered by such Resale Registration Statement shall
have received the copies of the supplemented or amended Prospectus as
contemplated by section 5(b)(xiii) hereof or shall have received the Advice,
provided that, notwithstanding the foregoing, such time period may be extended
in any given calendar year only one time for a maximum of (30) business days.

SECTION 6. REGISTRATION EXPENSES

         All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless whether a Resale
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses

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(including filings made by any Holder with the NASD (and, if applicable, the
fees and expenses of any "qualified independent underwriter" and its counsel
that may be required by the NASD)); (ii) all fees and expenses of compliance
with federal securities, foreign securities and state Blue Sky or securities
laws; (iii) all expenses of printing (including the printing of Prospectuses and
new certificates representing Securities), messenger and delivery services and
telephone expenses incurred by the Company; (iv) all fees and disbursements of
counsel for the Company; (v) all application and filing fees in connection with
listing the Securities on a national securities exchange or automated quotation
system pursuant to the requirements hereof; and (vi) all fees and disbursements
of independent certified public accountants of the Company (including the
expenses of any special audit and comfort letters required by or incident to
such performance).

         The Company will, in any event, bear its internal expense (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit, all
trustee and rating agency fees and charges and the fees and expenses of any
person, including special experts, retained by the Company.

         Each Holder shall pay all expenses of its counsel, underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder's Transfer Restricted Securities pursuant to a Resale
Registration Statement.

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SECTION 7.  INDEMNIFICATION

         (a)      The Company shall indemnify and hold harmless (i) each Holder,
(ii) each person, if any, who controls (within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act) any Holder (any of the persons referred
to in this clause (ii) being hereinafter referred to as a "Controlling Person")
and (iii) the respective officers, directors, partners, employees,
representatives and agents of any Holder or any Controlling Person (any person
referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an
"Indemnified Holder"), to the fullest extent lawful, from and against any and
all losses, claims, damages, liabilities, judgments, actions and expenses, joint
or several (including without limitation, reimbursement of all reasonable costs
of investigating, preparing, pursuing or defending any claim or action,
investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and charges of counsel directly or
indirectly caused by, related to, based upon, arising out of or in connection
with any untrue statement or alleged untrue statement of a material fact
contained in (A) any Resale Registration Statement or Prospectus (or any
amendment or supplement thereto) or (B) any state securities or Blue Sky
application or other document prepared or executed by the Company (or based upon
any information furnished by the Company) for the purpose of qualifying any of
the Securities under the securities or Blue Sky laws of any state or other
jurisdiction (any such application, document or information hereinafter is
referred to as a "Blue Sky Application") or any omission or alleged omission to
state in any Resale Registration Statement or Prospectus (or any amendment or
supplement thereto) or in any Blue Sky Application a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, except insofar as such
losses, claims, damages, liabilities or expenses are caused by an untrue
statement or omission or alleged untrue statement or omission that is made in
reliance upon and in conformity with information relating to any of the Holders
furnished in writing to the Company by any of the Holders or counsel or agents
of Holders expressly for use therein. The foregoing indemnification is in
addition to any liability which the Company may otherwise have to any
Indemnified Holder.

         (b)      Each Holder agrees, severally and not jointly, to indemnify
and hold harmless (i) the Company, (ii) each person who controls (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company
and (iii) the respective officers, directors, partners, employees,
representatives and agents of the Company and any such controlling person to the
same extent as the foregoing indemnity from the Company to each of the
Indemnified Holders, but only with respect to claims and actions based on
information relating to such Holder furnished in writing by such Holder
expressly for use in any Resale Registration Statement. The foregoing
indemnification is in addition to any liability which any Holder may otherwise
have to any of the foregoing indemnified persons.

         (c)      Promptly after receipt by an indemnified party under this
Section 7 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the claim or the commencement of that action; provided,

                                       12
<PAGE>   13

however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 7 except to the extent
it has been materially prejudiced by such failure and, provided further, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 7 (except to the extent so provided in any such other obligation). If
any such claim or action shall be brought against an indemnified party, and it
shall have notified the indemnifying thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such action, the indemnifying party shall not be liable to the
indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation, provided, however, that
the indemnified party shall have the right to employ separate counsel to
represent jointly the indemnified party and those other Indemnified Holders and
their respective officers, employees and controlling persons who may be subject
to liability arising out of any claim in respect of which indemnity may be
sought by Indemnified Holders against the indemnifying party under this Section
7, but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless, (i) the employment thereof has been specifically
authorized by the indemnifying party in writing, (ii) such indemnified party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party and in the reasonable judgment of such
counsel it is advisable for such indemnified party to employ separate counsel or
(iii) the indemnifying party has failed to assume the defense of such action and
employ counsel reasonably satisfactory to the indemnified party, in which case,
if such indemnified party notifies the indemnifying party in writing that it
elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party. In no event shall the indemnifying parties
be liable for the fees and expenses of more than one counsel (in addition to
local counsel). Each indemnified party, as a condition of the indemnity
agreements contained in this Section 7, shall use its reasonable best efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall (i) without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding or (ii) be liable for any
settlement of any such action, compromise of any action or any judgment with
respect to any action effected without its written consent, but if settled with
its written consent or if there be a final judgment of the plaintiff in any such
action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party, to the extent set forth herein, from and against any loss or
liability by reason of such settlement or judgment.

                                       13
<PAGE>   14

         (d)      If the indemnification provided for in this Section 7 shall
for any reason be unavailable to (except for a reason expressly provided herein)
or insufficient to hold harmless an indemnified party under Section 7(a) or 7(b)
in respect of any loss, claim, damage or liability, or any action in respect
thereof, referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, in such proportion as shall be appropriate to reflect
the relative fault of the Company on the one hand and the Holders on the other
hand with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to whether the untrue or alleged statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Holders, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Holders agree that it would not
be just and equitable if contributions pursuant to this Section 7(d) were to be
determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this Section
7(d) shall be deemed to include, for purposes of this Section 7(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7(d), no Indemnified Holder shall be required to
contribute any amount in excess of the amount by which proceeds received by such
Indemnified Holder from an offering of the Securities exceeds the amount of any
damages which such Indemnified Holder has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Indemnified Holders'
obligations to contribute as provided in this Section 7(d) are several and not
joint.

SECTION 8. RULE 144 AND RULE 144A

         The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to use its reasonable best efforts to
make and keep public information available as is required by Rules 144 and 144A
under the Act to permit sales of Transfer Restricted Securities pursuant to such
rules, including, without limitation, complying with the requirements of Rule
144A(d)(4), and to furnish to each Holder promptly upon request a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144 and Rule 144A under the Act.

SECTION 9.  PARTICIPATION IN UNDERWRITTEN REGISTRATIONS

         No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in

                                       14
<PAGE>   15

any underwriting arrangements provided by the Persons entitled hereunder to
approve such arrangements and (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents required under the terms of such
underwriting arrangements.

SECTION 10.  SELECTION OF UNDERWRITERS

         The Holders of Transfer Restricted Securities covered by the Resale
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority of the
Transfer Restricted Securities included in such offering; provided, that such
investment bankers and managers must be reasonably satisfactory to the Company.

SECTION 11.  MISCELLANEOUS

         (A)      REMEDIES. The Company agrees that monetary damages (including
the Liquidated Damages contemplated hereby) would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.

         (B)      NO INCONSISTENT AGREEMENTS. The Company will not on or after
the date of this Agreement enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Holders hereunder do not in any way breach or conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any agreement in effect on the date hereof.

         (C)      AMENDMENTS AND WAIVERS. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless the Company has
obtained the written consent of Holders of a majority of the outstanding
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose Transfer Restricted Securities are being resold pursuant
to the Resale Registration Statement and that does not affect directly or
indirectly the rights of other Holders whose Transfer Restricted Securities are
not reselling pursuant to such Resale Registration Statement may be given by the
Holders of a majority of the outstanding Transfer Restricted Securities being
resold pursuant to such Resale Registration Statement.

         (D)      NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class or
certified mail, telex, telecopier or reliable overnight delivery service:

                                       15
<PAGE>   16

                  (i)      if to a Holder, initially at the address set forth
         below its name on the signature page hereto, and thereafter at such
         other address notice of which is given in accordance with this Section
         11(d); and

                  (ii)     if to the Company:

                                    Altiva Financial Corporation
                                    Sixth Floor
                                    1000 Parkwood Circle
                                    Atlanta, Georgia 30339
                                    Telecopier No.: (770) 937-9576
                                    Attention: Edward B. Meyercord

                           With a copy to:

                                    King & Spalding
                                    191 Peachtree Street
                                    Atlanta, GA 30303
                                    Telecopier No.: (404) 572-5100
                                    Attention: John D. Capers, Jr., Esq.

         All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five (5) business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if sent via a reliable overnight delivery service.

         (E)      SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities.

         (F)      COUNTERPARTS. This Agreement may be executed in any number of
counterparts, by the parties hereto, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.

         (G)      HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.

         (H)      GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.

         (I)      SEVERABILITY. In the event that any one or more of the
provisions contained herein or the application thereof, in any circumstances, is
held invalid, illegal or unenforceable, the

                                       16
<PAGE>   17

validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be affected
or impaired thereby.

         (J)      ENTIRE AGREEMENT. This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter hereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                           ALTIVA FINANCIAL CORPORATION

                           By: /s/ EDWARD B. MEYERCORD
                               -------------------------------------------------
                                  Name:  Edward B. Meyercord
                                  Title: Chairman and Chief Executive Officer

                           VALUE PARTNERS, LTD

                           By:  EWING & PARTNERS,
                                    General Partner

                           By: /s/ TIMOTHY G. EWING
                               -------------------------------------------------
                                  Name:  Timothy Ewing
                                  Title: Managing Partner

                           Address:

                                  4514 Cole Avenue - Suite 808
                                  Dallas, Texas 75205

                                       17
<PAGE>   18

                         T. ROWE PRICE RECOVERY FUND II, L.P.

                         By:  T. Rowe Price Recovery Fund II Associates, L.L.C.,
                              General Partner

                         By:
                            --------------------------------------------------
                              Name:  Hubert M. Stiles, Jr.
                              Title: President

                         Address:

                              100 E. Pratt Street
                              Baltimore, Maryland 21202

                                       18<PAGE>   1

                                                                    EXHIBIT 10.4

                               EXCHANGE AGREEMENT

                                  BY AND AMONG

                          ALTIVA FINANCIAL CORPORATION

                                      AND

                           HOLDERS OF THE OUTSTANDING
                     12 1/2% SUBORDINATED NOTES DUE 2001 OF
                          ALTIVA FINANCIAL CORPORATION

                                 MARCH 17, 2000

<PAGE>   2

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----

<S>                                                                       <C>
ARTICLE I DEFINITIONS.......................................................1
Section 1.1      Definitions................................................1

ARTICLE II EXCHANGE OF NOTES................................................7
   Section 2.1   Exchange of Notes..........................................7
   Section 2.2   Expiration Date............................................7

ARTICLE III REPRESENTATIONS AND WARRANTIES..................................8
   Section 3.1   Representations and Warranties of the Company..............8

ARTICLE IV CONDITIONS PRECEDENT TO THE CLOSING.............................18
   Section 4.1   Conditions to Obligations of the Parties..................18
   Section 4.2   Conditions to the Obligations of the Holders..............19
   Section 4.3   Conditions to the Obligations of the Company..............20

ARTICLE V COVENANTS........................................................21
   Section 5.1   Rule 144 and Rule 144A Reporting..........................21
   Section 5.2   Stay, Extension and Usury Laws............................21

ARTICLE VI MISCELLANEOUS...................................................21
   Section 6.1   Survival of Provisions....................................21
   Section 6.2   Termination...............................................21
   Section 6.3   Waiver; Amendments........................................22
   Section 6.4   Communications............................................22
   Section 6.5   Costs, Expenses and Taxes.................................23
   Section 6.6   Execution in Counterparts; FAX Execution..................23
   Section 6.7   Binding Effect; Assignment................................24
   Section 6.8   Governing Law.............................................24
   Section 6.9.  Usury.....................................................24
   Section 6.10  Severability of Provisions................................25
   Section 6.11  Construction..............................................25
   Section 6.12  Integration...............................................25
   Section 6.13  No Third Party Beneficiaries..............................25
   Section 6.14  Representation by Counsel.................................26
   Section 6.15  Waiver of Claims..........................................26
   Section 6.16  Power of Attorney.........................................26
</TABLE>

<PAGE>   3
<TABLE>
<S>                                                                          <C>
ARTICLE VII INDEMNIFICATION; SET OFF.........................................26
   Section 7.1   Indemnification.............................................26
   Section 7.2   Set-Off.....................................................27
</TABLE>

<TABLE>
         <S>               <C>
         Exhibit A         Name and Address of the Holders

         Exhibit B         Form of New Exchange Notes

         Exhibit C         Form of QIB Pledge and Security Agreement

         Exhibit D         Form of non-QIB Pledge and Security Agreement

         Exhibit E         Form of Registration Rights Agreement

         Exhibit F         Form of Intercreditor and Collateral Sharing
                           Agreement

         Exhibit G         Matters to be covered by Opinion of Counsel to the
                           Company
</TABLE>

<PAGE>   4
                               EXCHANGE AGREEMENT

         Exchange Agreement, dated as of March 17, 2000 (the "Agreement"), by
and among Altiva Financial Corporation (the "Company"), a Delaware corporation,
and the Holders of the outstanding 12 1/2% Subordinated Notes due 2001 of the
Company.

                                  WITNESSETH:

         WHEREAS, the Company is seeking to refinance certain existing
indebtedness evidenced by its outstanding 12 1/2% Subordinated Notes due 2001
(the "Old Notes");

         WHEREAS, certain holders of the such outstanding Old Notes have agreed
to exchange such notes for new 12% Secured Senior Notes due 2006 in the
principal amount and on the terms described in this Agreement; and

         WHEREAS, the parties deem it in their best interest to set forth their
mutual agreements herein;

         NOW, THEREFORE, in consideration of any extension of credit and/or
other financial accommodation at any time made by the Holders to or for the
benefit of the Company, and of the promises set forth herein, the parties
hereto agree as follows:

                                   ARTICLE I
                                  DEFINITIONS

         SECTION 1.1  DEFINITIONS. As used in this Agreement, and unless
the context requires a different meaning, the following terms have the meanings
indicated:

         "Agreement" means this Exchange Agreement, as amended, supplemented or
modified from time to time.

         "Applicable Law" is defined in Section 6.9 hereof.

         "Business Day" means any day except a Saturday, Sunday or other day on
which banking institutions in the city of Atlanta, Georgia are authorized by
law to close.

         "Capital Stock" of any Person means any and all shares or other equity
interest of such Person.

         "Claims" is defined in Section 6.15 hereof.

<PAGE>   5
         "Closing" means the closing of the Exchange.

         "Closing Date" means the date on which the Closing occurs.

         "Code" means the Internal Revenue Code of 1986, as amended (or any
successor statute in effect from time to time), and the rules and regulations
promulgated thereunder.

         "Commission" means the Securities and Exchange Commission and any
successor thereto.

         "Common Stock" means the Common Stock, par value $.01 per share, of
the Company.

         "Company" means Altiva Financial Corporation, a Delaware corporation,
together with its successors.

         "Company Financial Statements" has the meaning set forth in Section
3.1(i)(i) hereof.

         "Convertible Value Note Agreement" means that certain Amended and
Restated Secured Convertible Senior Note Purchase Agreement, dated for
reference purposes only as of February 29, 2000, by and among the Company and
Value Partners.

         "Corporate Trust Office" means with respect to the Trustee: 2001 Ross
Avenue, Suite 2700, Dallas, Texas, or such other office as the Trustee or
successor shall designate from time to time.

         "Environmental Claim" means any written notice from any governmental
authority or third party alleging potential liability (including without
limitation potential liability for investigating costs, cleanup costs,
governmental response costs, natural resource damages, property damages,
personal injuries or penalties) arising out of, based on, or resulting from the
presence, or release into the environment of any Materials of Environmental
Concern.

         "Environmental Laws" means any law, statute, rule or regulation of any
governmental, judicial, legislative, executive, administrative or regulatory
authority of the United States, or of any state, local or foreign government or
any subdivision thereof or of any governmental body or other regulatory or
administrative agency or commission, domestic or foreign (a "Law"), relating to
pollution or protection of the environment (including ambient air, surface
water, groundwater, land surface or subsurface strata), including without
limitation the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, the Resource Conservation and Recovery Act of 1976, as
amended, and other Laws relating to (i) emissions, discharges or releases of
pollutants, contaminants, chemicals, or industrial toxic or hazardous

                                      -2-
<PAGE>   6
substances or wastes (collectively known as "Polluting Substances") or (ii) the
handling, storage, disposal, reclamation, recycling or transportation of
Polluting Substances.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended (or any successor statute in effect from time to time).

         "Exchange" shall mean the exchange by the Holders of the Old Notes for
a maximum aggregate of $19,382,000 of New Exchange Notes.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended
and in effect from time to time (or any successor statute in effect from time
to time), and the rules and regulations of the Commission promulgated
thereunder.

         "Expiration Date" is defined in Section 2.2 hereof.

         "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Agreement, consistently
applied.

         "Governmental Entity" means any federal or state court, administrative
agency or commission or other governmental authority or instrumentality.

         "Holders" means the holders of the outstanding Old Notes who have
executed the Agreement.

         "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (or any successor statute in effect from time to time), and
the rules and regulations of the Federal Trade Commission promulgated
thereunder.

         "Indenture" means the Indenture entered into by the Company and U.S.
Trust Company of Texas, N.A., as trustee for the holders of the New Exchange
Notes, as amended, supplemented or otherwise modified from time to time.

         "Indebtedness Instrument" mean any note, mortgage, indenture, chattel
mortgage, deed of trust, loan agreement, hypothecation agreement, pledge
agreement, security agreement, financing statement or other document,
instrument or agreement evidencing or securing the payment of or otherwise
relating to the borrowing of monies. Indebtedness Instruments shall include,
but not

                                      -3-
<PAGE>   7
be limited to, the Old Notes which are not part of the Exchange, the New
Exchange Notes and the Value Notes.

         "Intercreditor Agreement" means that certain Intercreditor and
Collateral Agency Agreement by and between Value Partners and U.S. Trust
Company of Texas, N.A., as collateral agent for the holders of the Exchange
Notes, substantially in the form of Exhibit F hereof.

         "Lien" means, with respect to any asset, any mortgage, lien, pledge,
encumbrance, charge or security interest of any kind in respect of such asset.

         "Loans" is defined in Section 3.1(s)(i) hereof.

         "Material Adverse Effect" means any effect that (i) is material and
adverse to the financial condition, results of operations, business or
prospects of the Company and its Subsidiaries taken as a whole or (ii)
materially impairs the ability of the Company to perform its obligations under
this Agreement, any Related Agreement, the Value Notes or the Value Related
Agreements.

         "Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.

         "MCI" means The Money Centre, Inc., a North Carolina corporation,
together with its successors.

         "NASD" means National Association of Securities Dealers, Inc.

         "New Exchange Notes" means (i) up to $6,428,000 principal amount of
notes being issued pursuant to the Indenture which shall initially consist of
the QIB Convertible Global Note and the Non-QIB Convertible Global Note and
(ii) up to $12,800,000 principal amount of notes being issued pursuant to the
Indenture which shall consist of the QIB Permanent Global Note and the Non-QIB
Permanent Global Note. The New Exchange Notes shall have substantially the same
terms as the Value Notes (except for the provisions regarding convertibility
into shares of Common Stock) and shall be secured as set forth in the Security
Agreements and the Intercreditor Agreement.

         "Non-QIB Convertible Global Note" shall have the meaning given in the
Indenture.

         "Non-QIB Permanent Global Note" shall have the meaning given in the
Indenture.

         "Non-QIB Security Agreement" means that certain Pledge Agreement by
and among the Company and the Trustee for the benefit of the Holders who do not
qualify as QIBs, substantially

                                      -4-
<PAGE>   8
in the form of Exhibit D hereto, as amended, supplemented or otherwise modified
from time to time.

         "Old Notes" has the meaning set forth of the Recitals to this
Agreement.

         "Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or a political subdivision or an agency or instrumentality thereof.

         "Preferred Stock" means the Preferred Stock, par value $.01 per share,
of the Company.

         "Previously Disclosed" means disclosed in a letter dated the date
hereof delivered from the Company to the Trustee, specifically referring to the
appropriate section of this Agreement and describing in reasonable detail the
matters contained therein.

         "QIB" means a qualified institutional buyer as such term is defined in
the Securities Act.

         "QIB Convertible Global Note" shall have the meaning given in the
Indenture.

         "QIB Permanent Global Note" shall have the meaning given in the
Indenture.

         "QIB Security Agreement" means the Pledge and Security Agreement by
and among the Company and the Trustee for the benefit of the Holders who do not
qualify as QIBs, substantially in the form of Exhibit D hereto, as amended,
supplemented or otherwise modified from time to time.

         "Real Estate Owned" means the consolidated properties of the Company
acquired by foreclosure on a loan or deed-in-lieu thereof or otherwise included
in the Company's real estate owned for purposes of reporting asset quality of
the Company in its reports filed with the Commission under the Exchange Act.

         "Registration Rights Agreement" means the Registration Rights
Agreement by and among the Company and the Trustee on behalf of the Holders,
substantially in the form of Exhibit F hereto, as amended, supplemented or
otherwise modified from time to time.

         "Related Agreements" means the Indenture, the New Exchange Notes, the
Security Agreements, the Registration Rights Agreement and the Intercreditor
Agreement.

         "Securities" means (i) the New Exchange Notes and (ii) the Common
Stock issuable upon conversion of the New Exchange Notes.

                                      -5-
<PAGE>   9
         "Securities Act" means the Securities Act of 1933, as amended (or any
successor statute thereto as in effect from time to time), and the rules and
regulations of the Commission promulgated thereunder.

         "Securities Documents" shall mean all reports, offering circulars,
proxy statements, registration statements and all similar documents filed, or
required to be filed, pursuant to the Securities Laws.

         "Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of
1940, as amended; the Trust Indenture Act of 1939, as amended; and the rules
and regulations of the Commission promulgated thereunder.

         "Security Agreements" means the QIB Security Agreement and the Non-QIB
Security Agreement.

         "State" means each of the states of the United States, the District of
Columbia and the Commonwealth of Puerto Rico.

         "Stock Equivalents" means, with respect to any Person, options,
warrants, calls, contracts or other rights entered into or issued by such
Person which confer upon the holder thereof the right (whether or not
contingent) to acquire any Capital Stock, voting securities or securities
convertible into or exchangeable for Capital Stock or voting securities of such
Person.

         "Stock Option Plan" means the 1999 Stock Incentive Plan of the Company.

         "Subsidiary" means with respect to any Person, (i) any corporation,
association, limited liability company or other business entity of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more Subsidiaries of such
Person (or a combination thereof) and (ii) any partnership (a) the sole general
partner or managing general partner of which is such Person or a Subsidiary of
such Person or (b) the only general partners of which are such Person or one or
more Subsidiaries of such Person (or any combination thereof).

         "Taxes" means all taxes, charges, fees, levies or other governmental
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, estimated, severance, stamp,
occupation, property or other taxes, customs, dues, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority
(domestic or foreign).

                                      -6-
<PAGE>   10
         "Tax Returns" means all foreign, federal, State and local returns
relating to Taxes.

         "Trustee" shall mean the Trustee under the Indenture.

         "Value Notes" means the 12% Secured Convertible Senior Notes due 2006
of the Company in the original principal amount of $14,000,000 being issued and
sold by the Company and purchased by Value Partners, as amended, supplemented
or otherwise modified from time to time.

         "Value Partners" means Value Partners, Ltd., a Texas limited
partnership.

         "Value Related Documents" means the Value Notes, the Amended and
Restated Pledge and Security Agreement by and among the Company and Value
Partners, the amended and restated registration rights agreement to which Value
Partners and the Company are party, the Convertible Value Note Agreement and
the Intercreditor Agreement.

                                   ARTICLE II
                               EXCHANGE OF NOTES

         SECTION 2.1       EXCHANGE OF NOTES. Subject to the terms and
conditions herein set forth, on the Expiration Date (as hereinafter defined),
each Holder who has executed this Agreement shall exchange, the outstanding Old
Notes held by such Holder for New Exchange Notes, which the Company agrees to
issue in consideration for the tendering of the Old Notes owned by such Holder,
in a principal amount equal to the product of (i) the outstanding principal,
interest and other amount of the Old Notes being tendered by such Holder;
multiplied by (ii) 0.4. If the tendering Holder is a QIB, then the principal
amount of the New Exchange Notes issued to such tendering Holder shall consist
of an interest in the QIB Permanent Global Note. If the tendering Holder is not
a QIB, then the principal amount of the New Exchange Notes issued to such
tendering Holder shall consist of an interest in the Non-QIB Permanent Global
Note. In addition, each Holder who has executed this Agreement shall receive in
partial exchange for the outstanding Old Notes held by such Holder for New
Exchange Notes, Common Stock which the Company agrees to issue in partial
consideration for the tendering of the Old Notes owned by such Holder, in a
principal amount equal to the product of (i) 6,428,000, multiplied by (ii) the
quotient of (X) the outstanding principal, interest and other amount of the Old
Notes being tendered by such Holder; divided by (Y) $32,385,000.

         SECTION 2.2       EXPIRATION DATE. The Expiration Date shall be 5:00
p.m. New York City Time on March 17, 2000 (the "Expiration Date"). In the event
of such an extension, the "Expiration Date" shall refer to such extended date.
The Company may, in its discretion, accept

                                      -7-
<PAGE>   11
tenders of Old Notes after the Expiration Date or the Closing Date provided
that the Closing has occurred.

                                  ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

         SECTION 3.1       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as Previously Disclosed, the Company represents and warrants to each of
the Holders as follows:

         (a)      Capital Structure. The authorized Capital Stock of the
Company consists of 400,000,000 shares of Common Stock and 5,000,000 shares of
Preferred Stock. As of March 7, 2000, there are (i) 4,026,123 shares of Common
Stock issued and outstanding and no shares of Common Stock are held as treasury
shares and (ii) 56,905 shares of Series A Convertible Preferred Stock are
issued and outstanding and no shares of Preferred Stock are held as treasury
shares. All outstanding shares of Capital Stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable and none of
the outstanding shares of Capital Stock of the Company has been issued in
violation of the preemptive rights of any Person. Except as contemplated by
this Agreement or as Previously Disclosed, there are no Stock Equivalents
authorized, issued or outstanding with respect to the Capital Stock of the
Company as of the date hereof. The Company has Previously Disclosed each option
to purchase Common Stock which is outstanding as of the date hereof, including
the exercise price and term thereof, as well as the relevant terms of any other
Stock Equivalents which are outstanding as of the date hereof.

         (b)      Organization, Standing and Authority of the Company. The
Company is a corporation duly organized and validly existing under the laws of
Delaware with full corporate power and authority to own or lease all of its
properties and assets and to carry on its business as now conducted and is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which its ownership or leasing of property or the conduct of
its business requires such licensing or qualification and where the failure to
be so licensed, qualified or in good standing would have a Material Adverse
Effect.

         (c)      Ownership of Subsidiaries. The Company does not own or have
the right to acquire, directly or indirectly, any outstanding Capital Stock or
other voting securities or ownership interests of any corporation, bank,
savings association, partnership, joint venture or other organization, except
as set forth in Schedule 3.1(c). The outstanding shares of Capital Stock of
each Subsidiary of the Company have been duly authorized and validly issued,
are fully paid and nonassessable, and are directly owned by the Company free
and clear of all Liens. No Stock Equivalents are authorized, issued or
outstanding with respect to the Capital Stock of any Subsidiary of the Company
and there are no agreements, understandings or commitments relating to the
right of the Company to vote or to dispose of such Capital Stock.

                                      -8-
<PAGE>   12
         (d)      Organization, Standing and Authority of Subsidiaries. Each
Subsidiary of the Company (i) is duly organized and validly existing under the
laws of the jurisdiction in which it is organized, (ii) has full corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as now conducted and (iii) is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which its
ownership or leasing of property or the conduct of its business requires such
qualification, except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect. The Company has heretofore
delivered true and complete copies of the articles of incorporation and bylaws
or equivalent documents of each Subsidiary of the Company as in effect as of
the date hereof to each Holders which has requested the same.

         (e)      Authority; Due Execution. The Company has full corporate
power and authority to perform its respective obligations under this Agreement
and each of the Related Agreements, and the execution, delivery and performance
by the Company of this Agreement and each Related Agreement have been duly
authorized by all necessary corporate action on the part of the Company. This
Agreement has been duly executed and delivered by the Company and constitutes,
and each of the Related Agreements, when duly executed and delivered by the
Company, will constitute, a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except (i) rights
to indemnity and contribution under the Registration Rights Agreement may be
limited by applicable law, (ii) enforceability may be limited by bankruptcy,
insolvency, moratorium and similar laws affecting creditors' rights generally
and (iii) rights of acceleration and the availability of equitable remedies may
be limited by equitable principles of general applicability.

         (f)      No Conflict. Neither the execution and delivery of this
Agreement and each of the Related Agreements, nor consummation of the
transactions contemplated hereby and thereby, nor compliance by the Company
with any of the provisions hereof or thereof, (i) does or will conflict with or
result in a breach of any provisions of the Certificate of Incorporation or
Bylaws of the Company or the equivalent documents of any Subsidiary of the
Company, (ii) violate, conflict with or result in a breach of any term,
condition or provision of, or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or give
rise to any right of termination, cancellation or acceleration with respect to,
or result in the creation of any Lien upon any property or asset of the Company
or a Subsidiary of the Company pursuant to, any material note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which the Company or a Subsidiary of the Company is a party, or
by which any of their respective properties or assets may be bound or affected,
or (iii) subject to the compliance referred to in clauses (i) and (ii) of the
succeeding sentence, violate any order, writ, injunction, decree, statute, rule
or regulation applicable to the Company or a Subsidiary of the Company. Except
for (i) compliance with applicable federal and State securities laws in
connection with this Agreement and the performance by the Company of its

                                      -9-
<PAGE>   13
obligations under the Registration Rights Agreement and (ii) any required
compliance by the Company with applicable federal and State securities laws
and/or the HSR Act in connection with the issuance of shares of Common Stock
upon conversion of the New Exchange Notes in accordance with their terms, no
consent, approval, order or other authorization of any Governmental Entity or
of any third party is required by or on behalf of the Company or a Subsidiary
of the Company in connection with the execution, delivery and performance of
this Agreement and each of the Related Agreements. The representations and
warranties contained in this Section 3.1(f), insofar as they relate to federal
and State securities laws requirements, are made in reliance on the Investor
Representation Letters received by the Company.

         (g)      Status of Securities. The Securities have been authorized by
all necessary corporate action on the part of the Company. When delivered to
the Holders at the Closing against the exchange therefor as provided herein,
the Securities will be duly authorized and validly issued and will not be
issued in violation of the preemptive rights of any Person. Subject to the
approvals and compliance referred to in the second sentence of Section 3.1(f)
hereof, shares of Common Stock issued by the Company upon conversion of the New
Exchange Notes in accordance with their terms will be duly authorized, validly
issued and non-assessable at the time of issuance and will not be issued in
violation of the preemptive rights of any Person.

         (h)      Securities Reports. The Company has filed all Securities
Documents required to be filed by it under the Securities Laws on a timely
basis or has received a valid extension of such time of filing, and all such
Securities Documents complied in all material respects with the requirements of
the Securities Laws and did not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, at the time and in light of the
circumstances under which they were made, not misleading.

         (i)      Financial Statements.

                  (i)      The Company has previously delivered to
representatives of the Holders (i) statements of financial condition of the
Company as of August 31, 1999 and 1998 and statements of operations, changes in
stockholders' equity and cash flows of the Company for each of the years ended
August 31, 1999, 1998 and 1997, accompanied by the related audit report of
Deloitte & Touche LLP, (ii) an unaudited statement of financial condition as of
November 30, 1999 and unaudited statements of operations, changes in
stockholders' equity and cash flows of the Company for the three months ended
November 30, 1999 and 1998 and (iii) an unaudited statement of financial
condition as of December 31, 1999 and an unaudited statement of operations for
the three months ended December 31, 1999. The foregoing financial statements,
as well as the financial statements of the Company to be delivered to the
holders of New Exchange Notes after the Closing pursuant to the terms of the
New Exchange Notes (collectively the "Company Financial Statements"), fairly
present or will fairly present, as the case may be, in

                                     -10-
<PAGE>   14
all material respects the consolidated financial condition of the Company as of
the respective dates set forth therein, and the consolidated results of
operations, changes in shareholders' equity and cash flows of the Company for
the respective periods or as of the respective dates set forth therein in
accordance with GAAP.

                  (ii)     Each of the Company Financial Statements has been or
will be, as the case may be, prepared in accordance with GAAP consistently
applied during the periods involved, except as stated therein. The books and
records of the Company and its Subsidiaries are being maintained in material
compliance with applicable legal and accounting requirements, and such books
and records accurately reflect in all material respects all dealings and
transactions in respect of the business, assets, liabilities and affairs of the
Company and its Subsidiaries.

                  (iii)    Except to the extent (x) reflected, disclosed or
provided for in the Securities Documents filed by the Company prior to the date
hereof and (y) of liabilities incurred since August 31, 1999 in the ordinary
course of business, neither the Company nor any Subsidiary of the Company has
any liabilities, whether absolute, accrued, contingent or otherwise, which has
had or could reasonably be expected to have a Material Adverse Effect.

         (j)      Material Adverse Change. Since August 31, 1999, (i) the
Company and the Subsidiaries of the Company have conducted their respective
businesses in the ordinary and usual course (excluding the incurrence of
expenses in connection with this Agreement and the Subordinated Note Agreement
and the transactions contemplated hereby and thereby) and (ii) no event has
occurred or circumstance arisen that, individually or in the aggregate, has had
or could reasonably be expected to have a Material Adverse Effect.

         (k)      Environmental Matters.

                  (i)      The Company is in compliance with all Environmental
Laws, except for any violations of any Environmental Law which, individually or
in the aggregate, has not had and could not reasonably be expected to have a
Material Adverse Effect. The Company has not received any communication
alleging that the Company or any Company Subsidiary is not in such compliance
and, to the knowledge of the Company, there are no present circumstances that
would prevent or interfere with the continuation of such compliance.

                  (ii)     None of the properties owned, leased or operated by
the Company or the any Company Subsidiary has been or is in violation of or
liable under any Environmental Law, except for any such violations or
liabilities which, individually or in the aggregate, has not had and could not
reasonably be expected to have a Material Adverse Effect.

                  (iii)    To the knowledge of the Company, there are no past
or present actions, activities, circumstances, conditions, events or incidents
that could reasonably form the basis of

                                     -11-
<PAGE>   15
any Environmental Claim or other claim or action or governmental investigation
that could result in the imposition of any liability arising under any
Environmental Law against the Company or any of its Subsidiaries or against any
Person whose liability for any Environmental Claim the Company or any
Subsidiary of the Company has or may have retained or assumed either
contractually or by operation of law, except such as, individually or in the
aggregate, have not had and could not reasonably be expected to have a Material
Adverse Effect.

         (l)      Tax Matters.

                  (i)      The Company and its Subsidiaries have timely filed
all Tax Returns required by applicable law to be filed by them (including,
without limitation, estimated tax returns, income tax returns, information
returns and withholding and employment tax returns) and have paid, or where
payment is not required to have been made, have set up an adequate reserve or
accrual for the payment of, all Taxes required to be paid in respect of the
periods covered by such Tax Returns, except in all cases where the failure to
do so, individually or in the aggregate, has not had and could not reasonably
be expected to have a Material Adverse Effect. As of the date hereof, there is
no audit examination, assessed deficiency, deficiency litigation or refund
litigation with respect to any Taxes of the Company or any Subsidiary of the
Company. All Taxes due with respect to completed and settled examinations or
concluded litigation relating to the Company have been paid in full or adequate
provision has been made for any such Taxes on the Company's consolidated
statement of financial condition in accordance with GAAP. The Company has not
executed an extension or waiver of any statute of limitations on the assessment
or collection of any Tax that is currently in effect.

                  (ii)     Neither the Company nor any Subsidiary of the
Company (i) is a party to any agreement providing for the allocation or sharing
of taxes, (ii) is required to include in income any adjustment pursuant to
Section 481(a) of the Code by reason of a voluntary change in accounting method
initiated by the Company or a Subsidiary of the Company (nor does the Company
have any knowledge that the Internal Revenue Service has proposed any such
adjustment or change of accounting method) or (iii) has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.

                  (iii)    There has been no "ownership change," as defined
under Section 382 of the Code and regulations thereunder, of the Company since
August 31, 1998, and consummation of the Exchange (including a later conversion
of a portion of the New Exchange Notes into Common Stock) will not result in
such an ownership change of the Company.

         (m)      ERISA. The Company is in compliance in all material respects
with all presently applicable provisions of ERISA; to the knowledge of the
Company, no "reportable event" (as defined in ERISA) has occurred with respect
to any "pension plan" (as defined in ERISA) for which the Company would have
any material liability; the Company has not incurred and does

                                     -12-
<PAGE>   16
not expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412
(whether or not waived) or 4971 of the Code; and each "pension plan" for which
the Company would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects and to the
knowledge of the Company nothing has occurred, whether by action or by failure
to act, which would cause the loss of such qualification.

         (n)      Litigation. There are no actions, suits, investigations or
legal proceedings instituted, pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary of the Company or against any
asset, interest or right of the Company or any Subsidiary of the Company, or
against any director, officer or employee of any of them that in any such case,
if decided adversely, could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. Neither the Company nor any
Subsidiary of the Company is a party to any order, judgment or decree which has
had or could reasonably be expected to have a Material Adverse Effect.

         (o)      Compliance with Laws. The Company and each of its
Subsidiaries has all permits, licenses, certificates of authority, orders and
approvals of, and has made all filings, applications and registrations with,
federal, State, local and foreign governmental or regulatory bodies that are
necessary in order to permit it to carry on its business as it is presently
being conducted and the absence of which could reasonably be expected to have a
Material Adverse Effect; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect; and to the best knowledge of
the Company, no suspension or cancellation of any of the same is threatened.

         (p)      No Default or Violation. Neither the Company nor any
Subsidiaries of the Company currently is in violation of its Certificate of
Incorporation or Bylaws or equivalent documents, or of any applicable federal,
State or local law or ordinance or any order, rule or regulation of any
Governmental Entity (including, without limitation, all securities, safety,
health, environmental, zoning, anti-discrimination, antitrust, and wage and
hour laws, ordinances, orders, rules and regulations), or in default with
respect to any order, writ, injunction or decree of any court, or in default
under any order, license, regulation or demand of any Governmental Entity, any
of which violations or defaults could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, and neither the
Company nor any Subsidiary of the Company has received any notice or
communication from any Governmental Entity asserting that the Company or any
Subsidiary of the Company is in violation of any of the foregoing which could
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any Subsidiary of the Company is subject to any regulatory or supervisory
cease and desist order, agreement, written directive, memorandum of
understanding or written commitment, and none of them has received any written
communication requesting that they enter into any of the foregoing.

                                     -13-
<PAGE>   17
         (q)      Certain Fees. No fees or commissions will be payable by the
Company to brokers, finders, investment bankers or banks pursuant to any
agreement entered into by the Company with respect to the exchange, offer and
sale of the New Exchange Notes, the Value Notes or any of the other
transactions contemplated hereby, by any Related Agreement.

         (r)      Patents, Trademarks, Etc. The Company and each of its
Subsidiaries owns or possesses all legal rights to use all proprietary rights,
including without limitation all trademarks, trade names, service marks and
copyrights, that are material to the conduct of their existing businesses.
Neither the Company nor any of its Subsidiaries is bound by or a party to any
options, licenses or agreements of any kind with respect to any trademarks,
service marks or trade names which it claims to own. Neither the Company nor
any of its Subsidiaries has received any communications alleging that any of
them has violated or would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other Person.

         (s)      Loan Matters

                  (i)      Each loan agreement, note or borrowing arrangement,
including without limitation portions of outstanding lines of credit and loan
commitments on the books and records of the Company and its Subsidiaries
(collectively, "Loans") that was made by the Company and to the knowledge of
the Company that was made by any third party was made, and has been serviced in
all material respects in accordance with, the Company's underwriting standards
and the relevant Loan documentation in the ordinary course of business, is
evidenced in all material respects by appropriate and sufficient documentation
and, to the best knowledge of the Company, constitutes the legal, valid and
binding obligation of the obligor named therein, subject to bankruptcy,
insolvency, fraudulent conveyance and other laws of general applicability
relating to or affecting creditor's rights and to general equity principles.

                  (ii)     None of the agreements pursuant to which the Company
or any Subsidiary has sold Loans or pools of Loans or participations in Loans
or pools of Loans contain any obligation to repurchase such Loans or interests
therein on account of a payment default by the obligor on any such Loans.
Neither the Company nor any of its Subsidiaries is in default under any such
agreement or has received any notice alleging default.

                  (iii)    To the knowledge of the Company, all brokers and
other third parties who originate or have originated Loans have all required
licenses and approvals from all jurisdictions requiring licenses and approvals
and have complied with and are not in violation of any applicable law,
regulation, order, rule, policy or guidelines of any Governmental Entity.

                                     -14-
<PAGE>   18
                  (iv)     The practices of the Company and its Subsidiaries
with respect to compensation paid to mortgage brokers comply with the policy
statement issued by the Department of Housing and Urban Development in March
1999.

         (t)      Certain Assets. The Company has Previously Disclosed a true
and correct listing of the following assets of the Company and its Subsidiaries
as of November 30, 1999: (i) all non-performing Loans, securities or other
assets (i.e., all assets on which the Company has ceased recognizing interest
under GAAP or as to which any payments of principal or interest are past due 90
or more days as of such date), (ii) all Loans, securities or other assets as to
which any payments of principal or interest are past due 60 or more days, (iii)
all Loans, securities or other assets not included in the foregoing which have
been classified special mention, substandard, doubtful or loss, or otherwise
classified adversely, by management of the Company or regulatory examiners, and
(iv) each parcel of Real Estate Owned (excepting such parcels as may have been
disposed of in the ordinary course of business subsequent to such date),
including an identification of the amount of reserves which have been
established with respect to each such parcel and its net carrying value.

         (u)      Year 2000 Compliance. All computer hardware and software
owned, used or licensed by the Company or any of its Subsidiaries, including
but not limited to system and application programs, files, databases and
computer services, the failure or disfunctionality of which would individually
or in the aggregate have a Material Adverse Effect is Year 2000 Complaint.
"Year 2000 Complaint" means that such hardware and software will (i) correctly
process date data from at least January 1, 1900 through December 31, 2000
without error or interruption due to date, (ii) maintain functionality with
respect to the input, storing, processing or output of records or data
containing dates falling on or after January 1, 2000, and (iii) be
interoperable with other Year 2000 compliant hardware or software owned, used
or licensed by the Company or any of its Subsidiaries which may deliver records
to, receive records from or otherwise interact with such hardware or software
in the course of processing records or data.

         (v)      Labor Matters. Neither the Company nor any of its
Subsidiaries is a party to or is bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor is the Company or any of its Subsidiaries the subject of a
proceeding naming the Company or any Subsidiary as a defendant asserting that
the Company or any such Subsidiary has committed an unfair labor practice
(within the meaning of the National Labor Relations Act) or seeking to compel
the Company or any such Subsidiary to bargain with any labor organization as to
wages or conditions of employment, nor is there any strike or other material
labor dispute or disputes involving it or any of its Subsidiaries pending, or
to the Company's knowledge, threatened, nor the Company aware of any activity
involving its or any of its Subsidiaries' employees seeking to certify a
collective bargaining unit or engaging in other organizational activity.

                                     -15-
<PAGE>   19
         (w)      Insurance. The Company believes that it and each Subsidiary
of the Company is insured, and during each of the past three calendar years has
been insured, for reasonable amounts with financially sound and reputable
insurance companies against such risks as companies engaged in a similar
business would, in accordance with good business practice, customarily be
insured and has maintained all insurance required by applicable laws and
regulations. All of the policies and bonds maintained by the Company and its
Subsidiaries are in full force and effect and all claims thereunder have been
filed in a due and timely manner and, to the Company's knowledge, no such claim
has been denied.

         (x)      Properties. All real and personal property owned by the
Company or a Subsidiary of the Company or presently used by any of them in its
respective business is in an adequate condition (ordinary wear and tear
excepted) and is sufficient to carry on its business in the ordinary course of
business consistent with its past practices. The Company has good and
marketable title free and clear of all Liens (other than equities of redemption
under applicable foreclosure laws) to all of the material properties and
assets, real and personal, reflected on the consolidated statement of financial
condition of the Company as of August 31, 1999 included in the Company
Financial Statements or acquired after such date, other than properties sold by
the Company in the ordinary course of business, except (i) Liens for current
taxes not yet due or payable, (ii) pledges to secure deposits and other liens
incurred in the ordinary course of its banking business, (iii) such
imperfections of title, easements and encumbrances, if any, as are not material
in character, amount or extent and (iv) as reflected on the consolidated
statement of financial condition of the Company as of May 31, 1999 included in
the Company Financial Statements. All real and personal property which is
material to the Company's business and leased or licensed by the Company or a
Subsidiary of the Company is held pursuant to leases or licenses which are
valid and enforceable in accordance with their respective terms.

         (y)      Investment Company Act of 1940. The Company is not, and will
not become upon consummation of the transactions contemplated hereby and by the
Related Agreements, an "investment company" or an entity "controlled" by an
"investment company," as such terms are defined in the Investment Company Act
of 1940, as amended.

         (z)      Private Offering. Neither the Company nor any Person acting
on its behalf has taken or will take any action which might subject the
offering, issuance and exchange of the New Exchange Notes to the registration
requirements of the Securities Act or comparable provisions of any applicable
State securities laws.

         (aa)     Indebtedness Defaults. As of the date hereof and the Closing
Date, the Company is not in default under any Indebtedness Instrument (which
has not been waived).

                                     -16-
<PAGE>   20
         (bb)     Solvency. The Company (i) is now generally paying its debts
as they mature, (ii) owns property which, at a fair valuation, is greater than
the sum of its indebtedness and (iii) has capital sufficient to carry on its
business in the ordinary course consistent with past practice.

         (cc)     Value Notes and Value Related Agreements.

         (i)      The Company has full corporate power and authority to perform
its obligations under the Value Related Agreements and the execution, delivery
and performance by the Company of the Value Related Documents have been duly
authorized by all necessary corporate action on the part of the Company, except
for the approval of the shareholders of the Company of the issuance of Common
Stock upon conversion of the Value Notes pursuant to the requirements of the
NASD. The Value Related Agreements have been duly executed and delivered by the
Company and constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with its terms, except (i) rights
to indemnity and contribution under the registration rights agreement for the
Value Note may be limited by applicable law, (ii) enforceability may be limited
by bankruptcy, insolvency, moratorium and similar laws affecting creditors'
rights generally and (iii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability.

         (ii)     Neither the execution and delivery of any of the Value
Related Agreements, nor the consummation of the transactions contemplated
thereby, nor compliance by the Company with any of the provisions thereof, (a)
does or will conflict with or result in a breach of any provisions of the
Certificate of Incorporation or Bylaws of the Company or the equivalent
documents of any Subsidiary of the Company, (b) violate, conflict with or
result in a breach of any term, condition or provision of, or constitute a
default (or any event which, with notice or lapse of time, or both, would
constitute a default) under or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
Lien upon any property or asset of the Company or a Subsidiary of the Company
pursuant to, any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which the
Company or a Subsidiary of the Company is a party, or by which any of their
respective properties or assets may be bound or affected, or (c) subject to the
compliance referred to in the succeeding sentence, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company or a
Subsidiary of the Company. Except for the approval of the shareholders of the
Company of the issuance of Common Stock upon conversion of the Value Notes
pursuant to the requirements of the NASD and actions by the Commission in
connection with the performance by the Company of its obligations under the
registration rights agreement for the Value Notes related to such shares of
Common Stock, no consent, approval, order or other authorization of any
Governmental Entity or of any third party is required by or on behalf of the
Company or a Subsidiary of the Company in connection with the execution,
delivery and performance of the Value Related Agreements.

                                     -17-
<PAGE>   21
         (iii)    The securities being issued to Value Partners have been
authorized by all necessary corporate action on the part of the Company. When
issued pursuant to the terms of the Convertible Value Purchase Agreement, the
securities being issued to Value Partners will be duly authorized and validly
issued and will not be issued in violation of the preemptive rights of any
Person. The Value Notes and shares of Common Stock issued by the Company upon
conversion of the Value Notes, will be duly authorized, validly issued and
non-assessable at the time of issuance and will not be issued in violation of
the preemptive rights of any Person.

         (dd)     Disclosure. None of the representations and warranties of the
Company or any of the information or documents which have been Previously
Disclosed to the Holders pursuant hereto are false or misleading in any
material respect or contain any untrue statement of a material fact, or omit to
state any material fact required to be stated or necessary to make any such
information or document, at the time and in light of the circumstances, not
misleading. Copies of all documents referred to in this Section 3.1 are true,
correct and complete copies thereof and include all amendments, supplements and
modifications thereto and all waivers thereunder.

                                   ARTICLE IV
                      CONDITIONS PRECEDENT TO THE CLOSING

         SECTION 4.1       CONDITIONS TO OBLIGATIONS OF THE PARTIES. The
respective obligations of each of the parties hereto to fulfill their
obligations under Section 2.1 hereof at the Closing shall be subject to the
satisfaction or waiver prior to the Closing of the following conditions:

         (a)      All requirements prescribed by law which are necessary to the
consummation of the transactions contemplated by this Agreement shall have been
satisfied, including the entry of an effectiveness order by the Commission with
respect to the Form T-3 filed by the Company as to the issuance of the New
Exchange Notes.

         (b)      No party hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of any of the transactions contemplated by this
Agreement.

         (c)      No statute, rule or regulation shall have been enacted,
entered, promulgated, interpreted, applied or enforced by any Governmental
Entity which prohibits, restricts or makes illegal consummation of any of the
transactions contemplated by this Agreement.

         (d)      The Company shall have consummated the sale of $14,000,000
principal amount of Value Notes to Value Partners.

                                     -18-
<PAGE>   22
         (e)      The holders of not less than 92% principal amount of the Old
Notes shall have been entered into this Agreement.

         SECTION 4.2       CONDITIONS TO THE OBLIGATIONS OF THE HOLDERS. The
obligations of the Holders to fulfill its obligations under Section 2.1 hereof
shall be subject to the satisfaction or waiver prior to the Closing of the
following conditions:

         (a)      Each of the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the Closing Date as if made on the
Closing Date (or on the date when made in the case of any representation or
warranty which specifically relates to an earlier date); the Company shall have
performed, in all material respects, each of its covenants and agreements
contained in this Agreement to be performed prior to the Closing; and the
Holders shall have received a certificate signed by the Chief Executive Officer
and the Chief Financial Officer of the Company, dated the Closing Date, to the
foregoing effect.

         (b)      The Company and the Trustee shall have executed the
Indenture.

         (c)      The Company shall have delivered to the Trustee for the
benefit of the Holders, opinions, addressed to the Holders and dated the
Closing Date, of King & Spalding and Franzen & Salzano special counsel to the
Company, with respect to the indicated matters set forth in Exhibit G hereto.

         (e)      No party to this Agreement (other than the Holders) shall be
in material breach of this Agreement unless such breach shall have been waived
in writing by each of the other parties to this Agreement.

         (f)      The Company shall have obtained in writing all consents of
third parties necessary to permit the consummation of the transactions
contemplated by this Agreement and the Related Agreements, as Previously
Disclosed pursuant to Section 3.1(f) hereof, and no such consent shall contain
any term or condition that the Holders reasonably deems to be materially
disadvantageous to the Company or the Holders.

         (g)      Each of City National Bank of West Virginia and Sovereign
Bancorp, Inc. shall have waived any adjustments to the terms of the stock
options issued to them pursuant to the Stock Option Agreement, dated May 29,
1998, between the Company and each such entity, that may be required pursuant
to Section 7 of such Stock Option Agreements as a result of (i) the issuance of
the New Exchange Notes or the conversion of a portion thereof to shares of
Common Stock in accordance with their terms and (ii) consummation of the
Exchange pursuant to this Agreement, in each case in form and substance
reasonably satisfactory to the Holders, and

                                     -19-
<PAGE>   23
Sovereign Bank shall have waived the same pursuant to the Participation
Agreement, dated June 29, 1998, between it and the Company.

         (i)      The Company, the Trustee (in its capacity as Collateral Agent
for the Notes and the Convertible Notes) and the holders of the Value Notes
shall have entered into the Intercreditor Agreement.

         SECTION 4.3       CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to fulfill its obligations under Section 2.1 hereof
shall be subject to the satisfaction or waiver prior to the Closing of the
following conditions:

         (a)      The Company shall have received from each Holder a Letter of
Representations.

         (b)      The Holders shall have delivered to the Old Notes to the
Exchange Agent.

         (c)      The Company shall have received (i) a counterpart to this
Agreement, duly executed and delivered by each Holders, and (ii) a counterpart
of each Related Agreement (other than the New Exchange Notes), substantially in
the form attached hereto as an exhibit, which shall have been duly executed and
delivered by the Holders.

         (d)      No party to this Agreement (other than the Company) shall be
in material breach of this Agreement unless such breach shall have been waived
in writing by each of the other parties to this Agreement.

         (e)      The Company shall have obtained in writing all consents of
third parties necessary to permit the consummation of the transactions
contemplated by this Agreement and the Related Agreements (other than the
consents referred to in Section 4.2(g) hereof) and no such consent shall
contain any term or condition that the Company reasonably deems to be
materially disadvantageous to the Company.

         (f)      The Company shall have received such other certificates,
opinions, documents and instruments related to the transactions contemplated
hereby as may have been reasonably required by the Company and are customary
for transactions of this type, and all corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement, shall be reasonably satisfactory
in form and substance to the Company and its counsel.

                                     -20-
<PAGE>   24
                                   ARTICLE V
                                   COVENANTS

         SECTION 5.1       RULE 144 AND RULE 144A REPORTING. With a view to
making available to holders of Securities the benefits of certain rules and
regulations of the Commission which may permit the sale of the Securities to
the public without registration, the Company agrees at all times to:

         (a)      make and keep public information available, as those terms
are understood and defined in Rules 144 and 144A under the Securities Act (or
any successors thereto); and

         (b)      use its reasonable best efforts to file with the Commission
in a timely manner all Securities Documents required to be filed by the Company
under the Securities Laws.

         SECTION 5.2       STAY, EXTENSION AND USURY LAWS.

         The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law or other
law which would prohibit or forgive the Company from paying all or any portion
of the principal of, premium, if any, or interest on the New Exchange Notes,
wherever enacted, now or at any time hereafter in force, or which may affect
the covenants or the performance of its obligations under the New Exchange
Notes, and the Company (to the extent it may lawfully do so) hereby expressly
waives all benefits or advantages of any such law.

                                   ARTICLE VI
                                 MISCELLANEOUS

         SECTION 6.1       SURVIVAL OF PROVISIONS. The representations,
warranties, covenants and agreements of the Company and the Holders made herein
shall remain operative and in full force and effect regardless of (i) any
investigation made by or on behalf of the Holders or the Company, as the case
may be, (ii) acceptance of any of the Securities and payment by the Holders
therefor and retirement thereof, (iii) the transfer of any Securities or
interest therein by the Holders or (iv) any termination of this Agreement.

         SECTION 6.2       TERMINATION.  This Agreement may be terminated:

         (a)      by mutual agreement of the Company and the Holders;

         (b)      by the Company by written notice to the Holders if any of the
conditions specified in Sections 4.1 and 4.3 of this Agreement has not been met
or waived by it pursuant to the terms

                                     -21-
<PAGE>   25
of this Agreement by 5:00 p.m., Eastern Time, on the Expiration Date, provided,
however, that the right to terminate this Agreement pursuant to this Section
6.2(b) shall not be available to the Company to the extent that any action by
the Company or failure by the Company to fulfill any obligation under this
Agreement has been a cause of, or resulted in, the failure of any one or more
of the conditions specified in Sections 4.1 and 4.3 of this Agreement not being
fulfilled by such date; or

         (c)      by the Trustee as agent for the Holders by written notice to
the Company if any of the conditions specified in Sections 4.1 and 4.2 of this
Agreement has not been met or waived by the Trustee pursuant to the terms of
this Agreement by the Expiration Date, provided, however, that the right to
terminate this Agreement pursuant to this Section 6.2(c) shall not be available
to the extent that any action by the Holders or failure by such Holders to
fulfill any obligation under this Agreement has been a cause of, or resulted
in, the failure of any one or more of the conditions specified in Sections 4.1
and 4.2 of this Agreement not being fulfilled by such date.

         SECTION 6.3       WAIVER; AMENDMENTS.

         No failure or delay on the part of the Company or the Holders in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
the Holders at law or in equity. No waiver of or consent to any departure by
the Company or the Holders from any provision of this Agreement shall be
effective unless signed in writing by the party entitled to the benefit
thereof. Except as otherwise provided herein, no amendment, modification or
termination of any provision of this Agreement shall be effective unless signed
in writing by or on behalf of the Company and the Holders. Any amendment,
supplement or modification of or to any of this Agreement, any waiver of any
provision of this Agreement, and any consent to any departure from the terms of
any provision of this Agreement, shall be effective only in the specific
instance and for the specific purpose for which made or given. Except where
notice is specifically required by this Agreement, no notice to or demand on
any party hereto in any case shall entitle another party hereto to any other or
further notice or demand in similar or other circumstances.

         SECTION 6.4       COMMUNICATIONS. All notices, demands and other
communications provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, telex, telecopier, or air courier
guaranteeing overnight delivery:

                  (i)      if to the Holders, by delivery in care of the
         Trustee , Compliance Officer, Office of the General Counsel, 114 West
         47th Street, New York, New York 10036-1531 Facsimile No. (212)
         852-1306; and

                                     -22-
<PAGE>   26
                  (ii)     if to the Company, initially at 1000 Parkwood
         Circle, Suite 600, Atlanta, Georgia 30339, Attention: Chief Financial
         Officer; and thereafter at such other address notice of which is given
         in accordance with this Section 6.4.

         All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being sent by certified mail, return receipt requested, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied;
and on the next Business Day if timely delivered to an air courier guaranteeing
overnight delivery.

         SECTION 6.5       COSTS, EXPENSES AND TAXES. The Company agrees to pay
(i) all costs and expenses incurred by it in connection with the negotiation,
preparation, typing, reproduction, execution, delivery and performance of this
Agreement and the Related Agreements and any amendment or supplement or
modification hereof or thereof (except to the extent otherwise provided in the
Registration Rights Agreement), including without limitation, attorneys fees
and expenses and all reasonable costs and expenses incurred by it in connection
with the Company's administration of this Agreement and any Related Agreement,
and (ii) the expenses of the Holders incurred in connection with the
transactions provided for herein, including reasonable fees and expenses
payable to counsel to the Holders in connection with the negotiation,
preparation, typing, reproduction, execution and delivery of this Agreement and
the Related Agreements, provided that such fees and expenses of counsel in this
clause (ii) shall not exceed $40,000. The Company shall pay all reasonable
costs and expenses (including, without limitation, attorneys' fees and
expenses), if any, incurred by the Holders in connection with any waiver,
amendment or modification of any provision of this Agreement or any Related
Agreement with respect to an obligation of, or requested by, the Company. In
addition, the Company shall pay any and all stamp, transfer and other similar
taxes payable in connection with the execution and delivery of this Agreement
or the original issuance of any of the Securities, and shall save and hold the
Holders harmless from and against any and all liabilities with respect to or
resulting from any delay in paying, or omission to pay, such taxes.

         SECTION 6.6       EXECUTION IN COUNTERPARTS; FAX EXECUTION.

         (a)      This Agreement may be executed in any number of counterparts
and by different parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and the
same Agreement.

         (b)      For purposes of negotiating and finalizing this Agreement or
any Related Agreement (including any subsequent amendments thereto), any signed
document transmitted by facsimile machine ("FAX") shall be treated in all
manner and respects as an original document.

                                     -23-
<PAGE>   27
The signature of any party by FAX shall be considered for these purposes as an
original signature. Any such FAX document shall be considered to have the same
binding legal effect as an original document. Each of the undersigned parties
hereby agrees that it will not raise the use of the FAX or the fact that any
signature or document was transmitted or communicated through the use of a FAX
as a defense to the formation of this Agreement or any Related Agreement.

         SECTION 6.7       BINDING EFFECT; ASSIGNMENT. Prior to the Closing,
the rights and obligations of any Holders under this Agreement may not be
assigned to any other Person except with the prior written consent of the
Company, and after the Closing the rights and obligations of the Holders may be
assigned by such Holders to any Person purchasing Securities from the Holders
contemporaneously with such assignment (provided the rights so assigned shall
apply to the Securities so purchased). Any subsequent purchaser of New Exchange
Notes from a Holder shall be required to complete an Investor Representation
Letter stating that such purchaser is qualified to hold the New Exchange Notes
purchased. The rights and obligations of the Company under this Agreement may
not be assigned by the Company without the consent of the Holders. Except as
expressly provided in this Agreement, this Agreement shall not be construed so
as to confer any right or benefit upon any Person other than the parties to
this Agreement, and their respective successors and permitted assigns. This
Agreement shall be binding upon the Company and the Holders and their
respective permitted successors and assigns.

         SECTION 6.8       GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.

         SECTION 6.9       USURY.

         All agreements between the Company and the holders of the New Exchange
Notes, whether now existing or hereafter arising and whether written or oral,
are hereby limited so that in no contingency, whether by reason of acceleration
of the maturity of the New Exchange Notes or otherwise, shall the interest
contracted for, charged, received, paid or agreed to be paid to the Holders
exceed the maximum amount permissible under the laws of the State of Minnesota
(hereinafter the "Applicable Law"). If, from any circumstance whatsoever,
interest would otherwise be payable to the holders of the New Exchange Notes in
excess of the maximum amount permissible under the Applicable Law, the interest
payable to the holders of the New Exchange Notes shall be reduced to the
maximum amount permissible under the Applicable Law, and if from any
circumstance the holders of the New Exchange Notes shall ever receive anything
of value deemed interest by the Applicable Law in excess of the maximum amount
permissible under the Applicable Law, an amount equal to the excessive interest
shall be applied to the reduction of the principal of the New Exchange Notes
and not to the payment of interest, or if such excessive amount of interest
exceeds the unpaid principal amount of the New Exchange Notes, such excess
shall be refunded to the Company. All interest paid or agreed to be

                                     -24-
<PAGE>   28
paid to the holders of the New Exchange Notes shall, to the extent permitted by
the Applicable Law, be amortized, prorated, allocated and spread throughout the
full term of the New Exchange Notes (including any renewal or extension) until
payment in full of the principal so that the interest on the New Exchange Notes
for such full term shall not exceed the maximum amount permissible under the
Applicable Law. The Holders expressly disavows any intent to contract for,
charge or receive interest in an amount which exceeds the maximum amount
permissible under the Applicable Law. This paragraph as well as similar
paragraphs set forth in the New Exchange Notes and the Related Agreements shall
control all agreements between the Company and the holders of the New Exchange
Notes.

         SECTION 6.10      SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability only without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.

         SECTION 6.11      CONSTRUCTION. The Article and Section headings and
Table of Contents used or contained in this Agreement are for convenience of
reference only and shall not affect the construction of this Agreement. Section
and other references in this Agreement are to this Agreement unless otherwise
specified. In this Agreement, (i) the phrase "to the knowledge of the Company"
or words of such import shall mean all knowledge, including actual knowledge
and knowledge of matters which a reasonable person in such position knew or
should have known, of the respective directors and officers of the Company;
(ii) use of a particular gender shall be considered to represent the masculine,
feminine or neuter gender as appropriate; and (iii) the terms "hereof,"
"herein," "hereunder" and similar terms refer to this Agreement as a whole and
not to any particular provision. The Company represents and warrants to the
Holders that the WHEREAS recitals to this Agreement are true and accurate and
agrees that such recitals constitute an integral part of this Agreement.

         SECTION 6.12      INTEGRATION. This Agreement (including documents
delivered pursuant hereto) and the Related Agreements constitute the entire
agreement among the parties with respect to the subject matter thereof and
supersede all prior agreements between the parties with respect to such subject
matter and there are no promises or undertakings with respect thereto not
expressly set forth or referred to herein or therein.

         SECTION 6.13.     NO THIRD PARTY BENEFICIARIES. This Agreement is
solely for the benefit of the Holders and its successors and assigns and any
subsequent registered holder of a New Exchange Note and nothing contained
herein shall be deemed to confer upon any other Person any right to insist on
or to enforce the performance or observance of any of the obligations contained
herein. All conditions to the obligations of the Holders to purchase New
Exchange Notes hereunder are imposed solely and exclusively for the benefit of
the Holders and its

                                     -25-
<PAGE>   29
successors and assigns and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms and no other
Person shall under any circumstances be deemed to be a beneficiary of such
conditions.

         SECTION 6.14.     REPRESENTATION BY COUNSEL. The Company hereby
represents that it has been represented by competent counsel of its choice in
the negotiation and execution of this Agreement and the Related Agreements;
that it has read and fully understands the terms hereof and thereof; that the
Company and its counsel have been afforded an opportunity to review, negotiate
and modify the terms of this Agreement and the Related Agreements and that it
intends to be bound by the terms hereof and thereof.

         SECTION 6.15.     WAIVER OF CLAIMS. The Company hereby acknowledges,
agrees and affirms that it possesses no claims, defenses, offsets, recoupment
or counterclaims of any kind or nature against or with respect to the
enforcement of this Agreement or any Related Agreement (collectively, the
"Claims"), nor does the Company now have knowledge of any facts that would or
might give rise to any Claims. If facts now exist which would or could give
rise to any Claim against or with respect to the enforcement of this Agreement
or any Related Agreement, the Company hereby unconditionally, irrevocably and
unequivocally waives and fully releases any and all such Claims as if such
Claims were the subject of a lawsuit, adjudicated to final judgment from which
no appeal could be taken and therein dismissed with prejudice.

         SECTION 6.16      POWER OF ATTORNEY. Each Holder executing this
Agreement hereby appoints the Trustee as the Holder's attorney-in-fact for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing any instrument which the Trustee may deem necessary or advisable
to accomplish the purposes hereof now or in the future, including, but not
limited to, the Registration Rights Agreement, the Intercreditor Agreement, the
QIB Security Agreement or Non-QIB Security Agreement (as applicable) and
financing statements related to the collateral pledges under the Security
Agreements and any amendments, supplements or other related actions to any of
the foregoing which is consistent with the terms of this Agreement, which
appointment is irrevocable and coupled with an interest.

                                  ARTICLE VII
                            INDEMNIFICATION; SET OFF

         SECTION 7.1.      INDEMNIFICATION. The Company hereby agrees to
reimburse and indemnify each holder of a New Exchange Note and its respective
agents, employees and assigns (collectively, the "Indemnified Parties") from
and against any and all losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements of
any kind or nature whatsoever (including, without limitation, the fees and
disbursements of counsel for such Indemnified Party in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnified Party shall be

<PAGE>   30
designated a party thereto) that may at any time be imposed on, asserted
against or incurred by such Indemnified Party as a result of, or arising out
of, or in any way related to or by reason of, this Agreement or any Related
Agreement, any transaction from time to time contemplated hereby or thereby, or
any transaction financed in whole or in part or directly or indirectly with the
proceeds of any New Exchange Note (and without in any way limiting the
generality of the foregoing, including any exercise by a holder of a Note of
any of its rights or remedies under this Agreement or any Related Agreement),
but excluding any such losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements
resulting solely from the gross negligence or willful misconduct of such
Indemnified Party, as finally determined by a court of competent jurisdiction.
If and to the extent that the foregoing obligations of the Company under this
Section 7.1, or any other indemnification obligation of the Company hereunder
or under any Related Agreement, are unenforceable for any reason, the Company
hereby agrees to make the maximum contribution to the payment and satisfaction
of such obligations which is permissible under applicable law.

         SECTION 7.2.      SET-OFF. The Company hereby agrees that if any
obligation or liability of the Company under this Agreement or any Related
Agreement shall be due and payable (by acceleration or otherwise) after the
occurrence of an Event of Default and during the continuation thereof, a holder
of a New Exchange Note shall have the right, without notice to the Company, to
set-off against and to appropriate and apply to such obligation or liability of
the Company any obligation of any nature owing to the Company, including but
not limited to all deposits (whether time or demand, general or special,
provisionally credited or finally credited, whether or not evidenced by a
certificate of deposit) now or hereafter maintained by the Company with a
Holders. Such right shall be absolute and unconditional in all circumstances
and, without limitation, shall exist whether or not a holder of New Exchange
Note or any other Person shall have given notice or made any demand to the
Company or any other Person, whether such obligation owed to the Company is
contingent, absolute, matured or unmatured (it being agreed that a holder of a
New Exchange Note may deem such obligation to be then due and payable at the
time of such setoff), and regardless of the existence or adequacy of any
collateral, guaranty or any other security, right or remedy available to a
Holders or any other Person. The rights provided by this Section 7.2 are in
addition to any other rights of set-off and all other rights and remedies which
a holder of a Note may otherwise have under this Agreement, any Related
Agreement, at law or in equity or otherwise, and nothing in this Agreement or
any Related Agreement shall be deemed a waiver or prohibition of or restriction
on the rights of set-off or any other rights of any such Person.

<PAGE>   31
         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.

                          ALTIVA FINANCIAL CORPORATION

                          By: /s/ Edward B. Meyercord
                             -----------------------------------------------
                             Name:  Edward B. Meyercord
                             Title: Chairman and Chief Executive Officer

<PAGE>   32
HOLDERS (BY UNITED STATES TRUST COMPANY OF NEW YORK AS ATTORNEY-IN-FACT)

Signature: /s/ Glenn E. Mitchell
          ----------------------------------------------------
             Name (Print): Glenn E. Mitchell
             Title: Vice President

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