EXHIBIT 10.7
FIRST AMENDMENT
TO
STOCK OPTION AGREEMENT
This FIRST AMENDMENT to STOCK OPTION AGREEMENT (the "Amendment") is entered
into effective as of October 1, 1997 (the "Amendment Effective Date") by and
among BPN CORPORATION, a California corporation ("BPN"), PAN AMERICAN GROUP,
INC., a Delaware corporation ("PAGI"), and XXXXX X. XXXXXX, an individual ("X.
Xxxxxx"), XXXXXXX X. XXXXXX, an individual ("X. Xxxxxx") (X. Xxxxxx and X.
Xxxxxx collectively, the "Walskis"), XXXXXXXXX X. X'XXXX, an individual
("X'Xxxx"), and THE XXXXXX FAMILY TRUST, dated August 30, 1989 (the "Trust") (X.
Xxxxxx, X. Xxxxxx and X'Xxxx, each a "Principal" and collectively, the
"Principals") (the Trust and X'Xxxx each, a "Shareholder" and collectively, the
"Shareholders"), and amends the Stock Option Agreement (the "Agreement"), dated
as of May 17, 1995 between the parties.
R E C I T A L S
A. As of the Amendment Effective Date, the Shareholders own beneficially
and of record all the issued and outstanding shares (the "Shares") of BPN as
follows:
Shareholder No. of Shares
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Trust 750
X'Xxxx 350
B. Under the terms of the Agreement, the Shareholders granted to PAGI the
Share Option and the Affiliate Share Option to acquire the Shares and the
Affiliate Shares.
C. On or about April 28, 1997, BPN delivered to PAGI the Lending Target
Notice described in Section 5.1 of the Agreement, and on July 24, 1997, PAGI
delivered to BPN, and each of the Shareholders an Exercise Notice respecting its
exercise of the Share Option and Affiliate Share Option as contemplated by
Sections 4.2 and 5.1 of the Agreement.
D. The parties hereto desire to provide for the withdrawal by BPN of the
April 28, 1997 Lending Target Notice and the withdrawal by PAGI of the July 24,
1997 Exercise Notice, and to amend the terms of the Agreement respecting the
Share Option and the Affiliate Share Option as provided herein.
NOW, THEREFORE, in consideration of mutual promises and covenants contained
in this amendment and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Withdrawal of Notices. BPN hereby withdraws the April 28, 1997 Lending
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Target Notice and PAGI consents to the withdrawal of the Lending Target Notice
by BPN. PAGI hereby withdraws its July 24, 1997 Exercise Notice and BPN, the
Principals and Shareholders hereby consent to such withdrawal by PAGI. The
parties agree that PAGI shall remain entitled to exercise the Share Option and
Affiliate Share Option, and to deliver the Exercise Notice pursuant to the terms
of Section 4.1 of the Agreement.
2. Extension of Option. The Option Termination Date as set forth in
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Section 3 of the Agreement is hereby extended to March 31, 2005, and the Option
Period shall be extended to such date.
3. Future Exercise of Option. BPN agrees that it shall not deliver the
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Lending Target Notice contemplated by Section 5.1 of the Agreement prior to
October 29, 1999. At the time the Lending Target Notice is delivered, BPN shall
have had $30,000,000 or more in premium finance loans outstanding for the six
consecutive months preceding delivery of such notice to PAGI. PAGI agrees that
it shall not deliver the Exercise Notice to exercise the Share Option or
Affiliate Share Option prior to April 29, 1999; provided, however, that PAGI may
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exercise the Share Option and Affiliate Option prior to such date in the event
of the breach by BPN, any Shareholder or any Principal of their obligations
under the Agreement, the Insurance Premium Financing Management Agreement
between BPN and Pan American Bank, FSB (the "Bank"), or the Guaranties delivered
by the Principals for the benefit of the Bank in connection with such Insurance
Premium Financing Management Agreement.
4. Exercise Price of the Share Option and the Affiliate Share Option. In
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the event the Exercise Notice is delivered on or prior to the date occurring 90
days after delivery of the Lending Target Notice to PAGI, the Share Option
Exercise Price shall be $3,250,000. PAGI shall also be required to make the
Non-Competition Consideration payments contemplated by Section 10.4 of the
Agreement, which Section 10.4 is hereby amended to reduce the aggregate amount
of the Non-Competition Consideration from $2,000,000 to $750,000. If the
Exercise Notice is given at anytime after the 90th day following delivery to
PAGI of the Lending Exercise Notice, the Share Option Exercise Price shall be
the greater of (a) $3,250,000 or (b) four times BPN's pre-tax earnings for the
twelve complete consecutive calendar months immediately preceding the date of
the Exercise Notice less the $750,000 in total Non-Competition Consideration
provided in Section 10.4 of the Agreement.
5. Capitalized Terms. Capitalized terms not otherwise defined herein
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shall have the meanings set forth for such terms in the Agreement.
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6. No Other Changes. Except to set forth in this Amendment, the Agreement
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shall remain in full force and effect without modification or amendment.
PAGI: PAN AMERICAN GROUP, INC.
By: /s/ XXXXXXXX X. GRILL
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Its: President
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Printed Name: XXXXXXXX X. GRILL
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BPN: BPN CORPORATION
By: /s/ XXXXX X. XXXXXX
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Its: President
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Printed Name: XXXXX X. XXXXXX
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TRUST: THE XXXXXX FAMILY TRUST,
August 30, 1989
By: /s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx, Trustee
By: /s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx, Trustee
X. XXXXXX: /s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx
X. XXXXXX: /s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
X'XXXX: /s/ XXXXXXXXX X. X'XXXX
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Xxxxxxxxx X. X'Xxxx
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