EXHIBIT 2.1
LOAN OPTION AGREEMENT
LOAN OPTION AGREEMENT, dated effective January 10, 2002 (this
"Agreement"), by and between Fog Cutter Capital Group Inc., a Maryland
corporation (the "Company") and the entities indicated on the signature page(s)
and listed on Schedule 1 hereto (collectively, the "Stockholder"), each a
stockholder of the Company.
WHEREAS, the Stockholder is the owner of the shares of common stock,
par value $.0001 per share ("Company Common Stock"), of the Company set forth on
Schedule 1 hereto (the "Subject Shares"); and
WHEREAS, the Stockholder wishes to sell the Subject Shares for cash
and/or all or a portion of a certain real estate loan; and
WHEREAS, the Company desires to acquire the Subject Shares, from time
to time, in the manner provided herein to prevent any adverse impact on its
share price, to acquire shares at a discount to book value, to protect its
liquidity position and to dispose of certain non-core real estate assets; and
WHEREAS, the Company desires to acquire an option to require the
Stockholder to acquire all (but not less than all) of a certain real estate loan
at the exercise price and during the exercise period specified in Section 2
below, and Stockholder is willing to grant such put option to the Company in
exchange for the consideration and on the terms set forth in this Agreement; and
WHEREAS, the Stockholder requested an option to put all (but not less
than all) of the Put Option Shares (as defined below) at the exercise price and
during the exercise period specified in Section 3 below, and Company is willing
to grant such put option in exchange for the consideration and on the terms set
forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the Stockholder and the Company agree as
follows:
1. SALE OF SHARES.
(a) SALE OF INITIAL SUBJECT SHARES. Subject to the terms and
conditions set forth in this Agreement, the Stockholder hereby agrees to sell to
the Company, and the Company agrees to buy, on March 6, 2002 (the "Initial
Closing Date") 713,043 shares of Company Common Stock (the "Initial Subject
Shares") for the Initial Subject Shares Purchase Price. For purposes of this
Agreement, the "Initial Subject Shares Purchase Price" means a 46.60%
participation (the "Initial Participation") in the unpaid principal balance (as
of December 31, 2001) of the French American International School Loan described
in Schedule 2 hereto (the "FAS Loan").
(b) PAYMENT AND DELIVERY. Payment of the Initial Subject
Shares Purchase Price shall be made on the Initial Closing Date by delivery to
the Stockholder in Portland, Oregon of the Initial Participation in the FAS
Loan, against delivery by the Stockholder of a stock certificate or certificates
representing Stockholder's Initial Subject Shares, duly endorsed for transfer or
accompanied by duly executed (and, if required, guaranteed) stock powers, at the
Company's offices simultaneously with payment of the Initial Subject Shares
Purchase Price. The Initial Subject Shares shall be free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever. The Initial
Participation will be evidenced by a standard participation agreement and be
free and clear of any lien, encumbrance or claim of any person and the Company
will continue to service the FAS Loan. The parties acknowledge and agree that
the FAS Loan is subject to the lien of one of the Company's lenders securing a
credit line which as of the date hereof has not been drawn down.
2. COMPANY PUT OPTION.
(a) GRANT OF PUT OPTION. Subject to the terms and conditions
set forth in this Agreement, the Stockholder hereby grants to the Company the
option (the "Put Option") to require the Stockholder to purchase, during the Put
Option Exercise Period (as defined below), an additional 46.60% participation in
the unpaid principal balance of the FAS Loan as of the date hereof (the "Put
Option Participation") for the Participation Put Purchase Price (as defined
below).
(b) EXERCISE PRICE. The price (the "Participation Put Purchase
Price") at which the Put Option shall be exercisable shall be an amount equal to
$2,174,778.10, plus 100% of unpaid accrued interest thereon to the date of the
Put Option Closing (as defined below), plus any cash dividends paid by the
Company on 713,042 shares of the Subject Shares and received by the Stockholder
between the date hereof and the Put Option Closing, less any interest accrued on
the sum of $2,174,778.10 (as such amount is reduced by the amount and upon
payment of any such cash dividends, the "Put Notional Balance") between the date
hereof and the Put Option Closing at a rate equal to 10.00% per annum. Against
payment of the Participation Put Purchase Price, the Company shall deliver to
the Stockholder on the Put Option Closing either (i) in the event that the FAS
Loan is not prepaid in full or in part prior to the Put Option Closing, a 46.60%
participation in the unpaid principal balance (as of the date hereof) of the FAS
Loan, (ii) in the event that the FAS Loan is prepaid in full prior to the Put
Option Closing, the principal proceeds of such 46.60% participation or (iii) in
the event that the FAS Loan is partially prepaid prior to the Put Option
Closing, 46.60% of the principal proceeds from any such partial prepayment(s)
and a 46.60% participation in the remaining unpaid principal balance of the FAS
Loan, as the case may be . The participation will be evidenced by a standard
participation agreement and be free and clear of any lien, encumbrance or claim
of any person and the Company will continue to service the FAS Loan. On the Put
Option Closing, the Company shall also deliver to Stockholder 6.80% of the
proceeds of all principal payments and prepayments on the FAS Loan received by
the Company after December 31, 2001, and a 6.80% participation in any remaining
unpaid principal balance of the FAS Loan (or at the Stockholder's request the
FAS Loan in exchange for the above participation interest, which together with
the participation interest previously received by the Stockholder pursuant to
Section 1 hereof shall represent 100% of the FAS Loan), as the case may be (the
proceeds and participation interest, if any, deliverable pursuant to the
foregoing, the "Remainder Interest"), against payment by the Stockholder (the
"Stockholder Remainder Payment") to the Company of an amount equal to 90% of the
unpaid principal balance of such 6.80% remainder as of December 31, 2001 (being
an amount equal to $317,544.63), together with 100% of unpaid accrued interest
thereon to the date of the Put Option Closing. Such purchase by Stockholder will
be on a "servicing released" basis. The price for such remainder of the FAS Loan
shall be paid in full in cash at the Put Option Closing and the transfer of the
FAS Loan shall be made to the Stockholder pursuant to standard documentation,
containing customary representations and warranties, and be free and clear of
any lien, encumbrance or claim of any person. The parties acknowledge and agree
that the FAS Loan is currently valued at 90% of its unpaid principal balance,
plus 100% of accrued interest, on the Company's Statement of Financial
Condition. The parties further acknowledge and agree that the borrower under the
FAS Loan and the Company have entered into a letter agreement dated February 12,
2002, pursuant to which the borrower has received the exclusive right to
purchase the entire interest in the FAS Loan at a price representing a 5%
principal discount at the time of purchase. To secure performance of the
Company's obligations arising hereunder in connection with any exercise of the
Put Option, upon mutual execution of this Agreement the Company shall provide
Stockholder with the following security: (i) a trust deed lien against
Company-owned real property described in attached Schedule 3 ("Xxxxxx
Property"), second and subordinate only to the trust deed lien of the existing
senior lender, such junior trust deed to contain a right of substitution of
collateral by Stockholder subject to reasonable approval of the substituted
collateral by the Company and the Stockholder, and (ii) a pledge of 1,450,000
shares of Wilshire Financial Services Group Inc. The trust deed on the Xxxxxx
Property and the pledge of the 1,450,000 shares of Wilshire Financial Services
Group Inc. will be evidenced by standard documentation, subject to reasonable
approval of the Company and the Stockholder. All of such documentation shall
contain provisions for release and/or termination of security interests,
reconveyance of trust deed and return of pledged shares promptly upon
performance by the Company of its obligations under this Agreement. To secure
performance of the Stockholder's obligations arising hereunder, upon mutual
execution of this Agreement, the Stockholder shall deliver 713,042 shares of the
Subject Shares, duly endorsed for transfer or accompanied by duly executed (and,
if required, guaranteed) stock powers, to the Company.
(c) EXERCISE PERIOD. The Company's right to require the
Stockholder to purchase the Put Option Participation will commence upon
September 11, 2002, and will terminate and expire on September 20, 2002 (such
period, the "Put Option Exercise Period"), subject to the provisions of Section
2(d) below.
(d) EXERCISE OF PUT OPTION.
(i) At any time during the Put Option Exercise
Period, the Company may exercise the Put Option as to all (but not less than
all) of the Put Option Participation by delivering to the Stockholder a written
notice in substantially the form attached hereto as Exhibit A (the "Put Option
Exercise Notice").
(ii) The Company shall not be under any obligation to
exercise the Put Option, and may allow the Put Option to expire without
requiring the Stockholder to purchase the Put Option Participation hereunder.
Notwithstanding any provision herein contained to the contrary, the Company
shall have no right to exercise the Put Option if the Put Option described in
Section 3 below has been exercised.
(e) CLOSING. The closing for the purchase and sale, if any, of
the Put Option Participation (the "Put Option Closing") shall occur in Portland,
Oregon, or such other location as the parties may agree, as promptly as
practicable, and in any event within three (3) business days, after the
Stockholder's receipt of the Put Option Exercise Notice. The Stockholder shall
deliver the Participation Put Purchase Price and Stockholder Remainder Payment
referred to in Section 2(b) against delivery of the Put Option Participation and
the Remainder Interest. Such purchase by Stockholder shall be on a "servicing
released" basis.
3. STOCKHOLDER PUT OPTION.
(a) GRANT OF PUT OPTION. Subject to the terms and conditions
set forth below, the Company hereby grants to Stockholder an option (the "Put
Option"), exercisable by the Stockholder at any time or from time to time during
the Put Option Exercise Period (as defined below), to require the Company to
purchase, at Stockholder's option, the Stockholder's remaining 713,042 Subject
Shares (the "Put Option Shares").
(b) EXERCISE PERIODS. Stockholder's right to require the
Company to purchase all but not less than all of the Put Option Shares (the "Put
Option Shares") will commence upon September 1, 2002 and will terminate and
expire on September 10, 2002 (such period, the "Put Option Exercise Period").
(c) EXERCISE PRICE. The price per share (the "Put Option Price
Per Share") at which the Put Option shall be exercisable shall equal $3.05 per
share, less any dividends paid by the Company on the Put Option Shares and
received by the Stockholder between the date hereof and the Put Option Closing
(as defined below), plus any interest accrued on the then outstanding Notional
Principal Amount between the date hereof and the Put Option Closing at a rate
equal to 10.00% per annum. For purposes of this Agreement, "Notional Principal
Amount" means, as of the determination date, the Put Option Price Per Share
times the number of Put Option Shares, less any cash dividends paid by the
Company on the Put Option Shares between the date hereof and such date of
determination. The Net Put Share Consideration (as defined below) is payable by
delivery of either (i) in the event that the FAS Loan is not prepaid in full or
in part prior to the Put Option Closing, a 46.60% participation in the unpaid
principal balance (as of the date hereof) of the FAS Loan, (ii) in the event
that the FAS Loan is prepaid in full prior to the Put Option Closing, the
principal proceeds of such 46.60% participation or (iii) in the event that the
FAS Loan is partially prepaid prior to the Put Option Closing, 46.60% of the
principal proceeds from any such partial prepayments and a 46.60% participation
in the remaining unpaid principal balance (as of the date hereof) of the FAS
Loan, as the case may be (the consideration payable under either clause (i),
(ii) or (iii), the "Put Share Consideration"); provided that the Put Share
Consideration shall be reduced by the amount of any cash dividends paid by the
Company on the Put Option Shares and received by the Stockholder between the
date hereof and the Put Option Closing and increased by any interest accrued on
the Notional Principal Amount between the date hereof and the Put Option Closing
at a rate equal to 10.00% per annum (the "Net Put Share Consideration"). The
participation will be evidenced by a standard participation agreement and be
free and clear of any lien, encumbrance or claim of any person and the Company
will continue to service the FAS loan. On the Put Option Closing, the Company
shall also deliver to
Stockholder 6.80% of the proceeds of all principal payments and prepayments on
the FAS Loan received by the Company after December 31, 2001, and a 6.80%
participation in any remaining unpaid principal balance of the FAS Loan (or at
the Stockholder's request the FAS Loan in exchange for the above participation
interest, which together with the participation interest previously received by
the Stockholder pursuant to Section 1 hereof shall represent 100% of the FAS
Loan), as the case may be (the proceeds and participation interest, if any,
deliverable pursuant to the foregoing, "Put Remainder Interest"), against
payment by the Stockholder (the "Stockholder Put Remainder Payment") to the
Company of an amount equal to 90% of the unpaid principal balance of such 6.80%
remainder as of December 31, 2001 (being an amount equal to $317,544.63),
together with 100% of unpaid accrued interest thereon. Such purchase by
Stockholder will be on a "servicing released" basis. The Stockholder Put
Remainder Payment shall be paid to the Company by the Stockholder in full in
cash at the Put Option Closing and the transfer of the FAS Loan shall be made to
the Stockholder pursuant to standard documentation, containing customary
representations and warranties, and be free and clear of any lien, encumbrance
or claim of any person. The parties further acknowledge and agree that the
borrower under the FAS Loan and the Company have entered into a letter agreement
dated February 12, 2002, pursuant to which the borrower has received the
exclusive right to purchase the entire interest in the FAS Loan at a price
representing a 5% principal discount at the time of purchase. To secure
performance of the Company's obligations arising hereunder in connection with
any exercise of the Put Option, upon mutual execution of this Agreement the
Company shall provide Stockholder with the following security: (i) a trust deed
lien against Company-owned real property described in attached Schedule 3
("Xxxxxx Property"), second and subordinate only to the trust deed lien of the
existing senior lender, such junior trust deed to contain a right of
substitution of collateral by Stockholder subject to reasonable approval of the
substituted collateral by the Company and the Stockholder, and (ii) a pledge of
1,450,000 shares of Wilshire Financial Services Group Inc. The trust deed on the
Xxxxxx Property and the pledge of the 1,450,000 shares of Wilshire Financial
Services Group Inc. will be evidenced by standard documentation, subject to
reasonable approval of the Company and the Stockholder. All of such
documentation shall contain provisions for reconveyance of trust deed and return
of pledged shares promptly upon performance by the Company of its obligations
under this Agreement. To secure performance of the Stockholder's obligations
arising hereunder, upon mutual execution of this Agreement, the Stockholder
shall deliver the Put Option Shares, duly endorsed for transfer or accompanied
by duly executed (and, if required, guaranteed) stock powers, to the Company.
(d) EXERCISE OF PUT OPTION.
(i) At any time or from time to time during the Put
Option Exercise Period, the Stockholder may exercise the Put Option to require
the Company to purchase all (but not less than all) of Put Option Shares (such
number, the "Put Option Purchased Shares") specified in a written notice in
substantially the form attached hereto as Exhibit B (the "Put Option Exercise
Notice").
(ii) The Stockholder shall not be under any
obligation to exercise the Put Option and may allow the Put Option to expire
without selling any Put Option Shares hereunder.
(e) CLOSING. The closing for the purchase and sale, if any, of
Put Option Purchased Shares (the "Put Option Closing") shall occur in Portland,
Oregon or such other location as the parties may agree, as promptly as
practicable, and in any event within three (3) business days, after the
Company's receipt of the Put Option Exercise Notice. Thereupon, the stock
certificate or certificates representing Stockholder's Put Option Purchased
Shares, duly endorsed for transfer or accompanied by duly executed (and, if
required, guaranteed) stock powers previously delivered by the Stockholder to
the Company for security purposes will be deemed to have been delivered to the
Company. Such Put Option Purchased Shares shall be free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever. At the Put Option
Closing, the Company shall, against delivery of the Put Option Purchased Shares
and the Stockholder Put Remainder Payment, deliver the Net Put Share
Consideration and Put Remainder Interest referred to in Section 2(b). Such
purchase by Stockholder shall be on a "servicing released" basis.
(f) FRACTIONAL SHARES. The Company will not be required to
purchase any fractional Put Option Shares upon exercise of the Put Option.
(g) SECURITY FOR PERFORMANCE. Notwithstanding anything herein
contained apparently to the contrary, the security granted by the parties to
secure performance of their obligations hereunder shall apply, depending on
which put option provided herein is exercised, if any, only to performance of
the obligations arising in connection with the exercised put option, not both
put options.
4. CONFIDENTIALITY; NON-DISPARAGEMENT. The Stockholder agrees that it
will not engage in Detrimental Activity during and following the term of this
Agreement. For purposes of this Agreement, "Detrimental Activity" shall mean:
(i) the disclosure to anyone outside the Company, or the use in any manner other
than in the furtherance of the Company's business, without written authorization
from the Company, of any confidential information or proprietary information,
relating to the business of the Company, except as required by law; (ii) any
attempt, directly or indirectly by the Stockholder of Solicitation (as defined
below) within six (6) months of the end of this Agreement; (iii) any conduct by
the Stockholder which would be considered to be self-dealing or which would
conflict with the Company's interests, including the direct or indirect purchase
or sale of, or loan or investment of any type in, any assets of the Company by
the Stockholder or for the Stockholder's benefit or between the Stockholder and
a third party which is unrelated to the Company, without the company's prior
written authorization; (iv) the Stockholder's Disparagement (as defined herein),
or inducement of others to do so, of the Company or its past and present
officers, directors, employees or products; or (v) without written authorization
from the Company, the rendering of services for any organization, or engaging,
directly or indirectly, in any business, which is competitive with the Company,
or the rendering of services to such organization or business if such
organization or business is otherwise prejudicial to or in conflict with the
interests of the Company. For purposes of this Agreement, "Disparagement" means
making comments or statements to the press, the Company's employees, consultants
or any individual or entity with whom the Company has a business relationship or
otherwise taking any action, except as required by law, which could reasonably
be expected to adversely affect in any manner: the conduct of the business of
the Company (including, without limitation, any products or business plans or
prospects); or the business
reputation of the Company, or any of its products, or its past or present
officers, directors or employees. For purposes of this Agreement, "Solicitation"
shall mean recruiting, soliciting or inducing of any nonclerical employee or
employees of the Company to terminate his or her employment with, or otherwise
cease his or her relationship with, the Company or hiring or assisting another
person or entity to hire (including, but not limited to identifying a
nonclerical employee to another employer for employment) any nonclerical
employee of the Company or any person who within six (6) months before had been
a nonclerical employee of the Company; or, soliciting or inducing any customer
of the Company to cease his or her relationship with the Company.
5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder hereby
represents and warrants to the Company, as of the date hereof and as of each
closing date hereunder, as follows:
(a) OWNERSHIP. Stockholder beneficially owns the shares of
Company Common Stock set forth opposite Stockholder's names on Schedule 1 hereto
and such shares are the only shares of the Company Common Stock owned by the
Stockholder.
(b) DUE AUTHORIZATION. Stockholder has all necessary power and
authority (or, if an individual, capacity), to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. Stockholder
beneficially owns all of its Subject Shares with no restrictions on
Stockholder's voting rights or rights of disposition pertaining thereto (other
than restrictions imposed by securities laws); such Subject Shares constitute
all shares of Company Common Stock beneficially owned by Stockholder; and upon
exercise of the Stockholder's Put Option (together with the Company's Put
Option, the "Options"), Stockholder will deliver good and marketable title to
the Put Option Purchased Shares (the "Option Shares") free and clear of liens,
claims, encumbrances or rights or interests of others. Assuming this Agreement
has been duly and validly authorized, executed and delivered by the Company,
this Agreement constitutes a valid and binding agreement of Stockholder,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
creditors' rights generally or by the principles governing the availability of
equitable remedies.
(c) NO CONFLICTS. Neither the execution and delivery of this
Agreement, nor the consummation by Stockholder of the transactions contemplated
hereby, will conflict with or constitute a violation of or default under any
contract, commitment, agreement, arrangement or restriction of any kind to which
Stockholder is a party or by which Stockholder is bound.
(d) KNOWLEDGE OF STOCKHOLDER; NO OTHER REPRESENTATIONS.
Stockholder has independently acquired all of the necessary information that
Stockholder requires in order to make an informed decision to enter into this
Agreement and to grant the put option provided herein. Additionally, Stockholder
is an experienced investor, well and independently informed of the Company's
business, financial condition and prospects, and has not, in deciding to enter
into this Agreement and to grant the put option provided herein, relied on any
representations or warranties by the Company other than those contained in this
Agreement, and the Company has not made any such additional representations or
warranties.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Stockholder, as of the date hereof, as follows:
(a) DUE AUTHORIZATION. The Company has the requisite capacity,
power and authority to enter into and perform this Agreement. Assuming this
Agreement has been duly and validly authorized, executed and delivered by
Stockholder, this Agreement constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting creditors' rights generally or by the principles
governing the availability of equitable remedies. The Company agrees to cause
each relevant affiliate of the Company to take any and all such acts as are
reasonably necessary to implement and give effect to the agreements of the
Company contained herein, including without limitation the grant of a trust deed
on the Xxxxxx Property as provided herein, and represents and warrants that each
of such acts by each such affiliate will be for valuable consideration and
binding upon and enforceable against the relevant affiliate.
(b) NO CONFLICTS. Neither the execution and delivery of this
Agreement, nor the consummation by the Company of the transactions contemplated
hereby, will conflict with or constitute a violation of or default under any
contract, commitment, agreement, arrangement or restriction of any kind to which
the Company is a party or by which the Company is bound.
(c) FAS LOAN. The Company owns all right, title and interest
as lender under the FAS Loan. The unpaid principal balance of the FAS Loan as of
December 31, 2001, is not less than $5,188,637.73.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in the outstanding shares of
Company Common Stock by reason of a stock dividend, stock split, split-up,
recapitalization, combination, exchange of shares or similar transaction, the
type and number of Subject Shares, and the Option Price Per Share therefor,
shall be adjusted appropriately.
(b) In the event that the Company shall (i) enter into an
agreement to consolidate with or merge into any Person, other one of its
subsidiaries or affiliates, and shall not be the continuing or surviving
corporation of such consolidation or merger, or (ii) enter into an agreement to
permit any Person, other than the Company or one of its subsidiaries or
affiliates, to merge into the Company and the Company shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Company Common Stock shall be changed into or exchanged for stock or
other securities of the Company or any other Person or cash or any other
property, or (iii) liquidate, then, and in each such case, the Company shall
thereafter, during the term of this Agreement, be entitled to receive, upon
exercise of the Options, the securities or properties which a holder of the
number of the Subject Shares or the Option Shares then deliverable upon the
exercise thereof will be entitled to receive upon such consolidation, merger or
liquidation, and Stockholder and the Company shall use their best efforts to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably
may be practicable, in relation to any securities or property thereafter
deliverable upon exercise of the Options.
8. TERMINATION. Except for the provisions of Sections 4, 5 and 6, this
Agreement, and all rights and obligations of the parties hereunder, shall
terminate on September 21, 2002, or the earlier exercise of one of the Options
with respect to all of the 713,043 shares of the Subject Shares (but in no event
sooner than three (3) business days following due and timely delivery hereunder
of a put option exercise notice); provided that the remedy and enforcement
provisions shall continue in effect for such period as needed in the event the
transaction to be completed upon due and timely exercise of one of the Options
has not been completed within three (3) business days after such exercise.
9. TRANSFER OF THE SHARES.
(a) Prior to the termination of this Agreement, except as
otherwise provided herein, Stockholder shall not: (i) transfer, sell, gift-over,
pledge or otherwise dispose of, or consent to any of the foregoing ("Transfer"),
any or all of the Subject Shares or any interest therein; (ii) enter into any
contract, option or other agreement or understanding with respect to any
Transfer; (iii) grant any proxy, power-of-attorney or other authorization or
consent with respect to any of the Subject Shares; (iv) deposit any of the
Subject Shares into a voting trust, or enter into a voting agreement or
arrangement with respect to any of the Subject Shares; or (v) take any other
action, in each case if the same would in any way restrict, limit or interfere
with the performance of Stockholder's obligations hereunder or the transactions
contemplated hereby.
(b) Notwithstanding Subsection (a) above, Stockholder may make
transfers of Subject Shares to Stockholder's spouse or lineal descendants, to
any trust for the benefit of such holder or the benefit of such spouse and/or
lineal descendants, to any corporation, limited liability company or partnership
in which Stockholder, or the spouse and/or the lineal descendants of
Stockholder, are the direct and beneficial owners of all of the equity interests
for estate planning purposes (provided that Stockholder, such spouse and/or
descendants agree in writing to remain the beneficial owners of all such
interests until termination of this Agreement), or to the personal
representative of Stockholder upon Stockholder's death for purposes of
administration of Stockholder's estate or upon such holder's incompetency for
purposes of the protection and management of the assets of Stockholder; PROVIDED
that any such transferee shall, prior to such transfer, consent in a writing
delivered to the Company to be bound by this Agreement and deliver to the
Company an irrevocable power of attorney with respect to the transferred Subject
Shares.
10. NO SOLICITATION. Stockholder shall not, nor shall it permit any of
its subsidiaries or any of its affiliates to, nor shall it authorize or permit
any agent, officer, director or employee of, or any investment banker, attorney
or other advisor or representative of, Stockholder or any of their subsidiaries
or any of Stockholder's affiliates to, directly or indirectly, solicit,
initiate, or encourage any inquiries or proposals from, discuss or negotiate
with, or provide any non-public information to, any Person (other than the
Company) relating to any transaction involving the sale of any of the assets of
the Company, or any
of the capital stock of the Company, or any merger, consolidation, business
combination, or similar transaction involving the Company or any of its
subsidiaries.
11. MISCELLANEOUS.
(a) STOCKHOLDER CAPACITY. If applicable, no representative of
any of the parties to this Agreement signing as Stockholder shall be deemed to
have made any agreement or understanding in his or her capacity as a director or
officer of the Company and no action taken by any such representatives in his or
her capacity as a director or officer of the Company shall be deemed a breach of
this Agreement. Each of such parties executes this Agreement solely in its
capacity as the beneficial owner, where applicable, of Company Common Stock.
(b) EXPENSES. Each of the parties hereto shall bear and pay
all of its own costs and expenses, incurred by it or on its behalf, in
connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
(c) WAIVER AND AMENDMENT. Any provision of this Agreement may
be waived at any time, in writing, by the party that is entitled to the benefits
of such provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(d) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY;
SEVERABILITY. This Agreement (i) constitutes the entire agreement, and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (ii) is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder. If any term or provision of this Agreement is held by a
court of competent jurisdiction or a federal or state regulatory agency to be
invalid, void or unenforceable, the remainder of the terms or provisions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable. If for any reason such court or regulatory agency determines that
the Options do not permit Stockholder to sell the full number of shares of
Company Common Stock as provided in Sections 2(a) and 3(a) it is the express
intention of the Company to allow Stockholder to sell such lesser number of
shares as may be permissible without any amendment or modification hereof.
(e) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, applicable to
contracts made between residents of that state, entered into and to be wholly
performed within that state, except for corporate matters mandatorily governed
by Maryland corporation law, which corporation law shall, to that extent only,
govern.
(f) HEADINGS. The headings contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed duly given if delivered personally, by
facsimile transmission (with confirmation), or if mailed by registered or
certified mail (return receipt requested) or by Federal Express or other
recognized overnight delivery service, to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Stockholder, to:
The address set forth under Stockholder's name on Schedule
1 hereto.
If to the Company, to:
Xxxxxx Xxxxxxxxxx
Fog Cutter Capital Group Inc.
0000 X.X. Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Telecopier no.: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxxxxx, Esq.
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier no.: (000) 000-0000
(h) COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
(i) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Options shall be assigned by
either of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other party. Subject to the preceding sentence,
this Agreement shall be binding upon, inure to the benefit of and be enforceable
by, the parties hereto and their respective successors, assigns, heirs,
executors, administrators and other legal representatives.
(j) FURTHER ASSURANCES. Stockholder and the Company shall
execute and deliver all other documents and instruments and take all other
action that may be reasonably necessary in connection with the matters provided
for hereby.
(k) SPECIFIC PERFORMANCE. The parties acknowledge that it
would be impossible to fix money damages for violations of this Agreement and
that such violations will cause irreparable injury for which adequate remedy at
law is not available and, therefore, this Agreement must be enforced by specific
performance or injunctive relief. The parties hereto agree that either party
may, in its sole discretion, apply to any court of competent jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by
applicable law, each party waives any objection or defense to the imposition of
such relief. Nothing herein shall be construed to prohibit either party from
bringing any action for an injunction for a breach of this Agreement.
Notwithstanding anything herein contained to the contrary, neither party shall
have any recourse hereunder against the other party or any of its assets, except
for the specific remedies provided in this subparagraph (k) and the specific
security provided in this Agreement by such other party.
(l) SURVIVAL. The representations, warranties and agreements
in this Agreement shall survive any closing hereunder.
(m) NEGOTIATION; MEDIATION. The parties agree to make all
reasonable efforts to settle any dispute arising under this Agreement relating
to the Options through good-faith negotiation. In the event that negotiation
between the parties is unsuccessful, the parties agree to attempt to settle
outstanding issues through mediation. The mediator will act in a neutral
capacity as a facilitator or intermediary, to assist the parties in arriving at
a mutually acceptable resolution of the dispute. The mediator shall not have the
power to render a binding decision or to serve as arbitrator, decisionmaker or
fact-finder. The mediator will be chosen by mutual agreement of Stockholder and
the Company. If the parties, within thirty days from the date of any put option
exercise notice, cannot reach an agreement on a mediator or if mediation fails
to resolve the dispute(s) within thirty days after appointment of the mediator,
the parties agree to submit the dispute(s) to binding arbitration in Portland,
Oregon, pursuant to the rules of the Arbitration Service of Portland, Inc.
(n) INDEPENDENT COUNSEL. Each of the parties acknowledges that
it has been represented, or has had the opportunity to be represented, by
independent counsel of such party's choice throughout all negotiations that have
preceded the execution of this Agreement and that, to the extent applicable to
such party, has executed the same with consent and upon the advice of said
independent counsel. Each party and its counsel, as applicable, cooperated in
the drafting and preparation of this Agreement and the documents referred to
herein, and any and all drafts relating thereto shall be deemed the work product
of the parties and may not be construed against either party by reason of its
preparation. Accordingly, any rule of law or any legal decision that would
require interpretation of any ambiguities in this Agreement against the party
that drafted it is of no application and is hereby expressly waived. The
provisions of this Agreement shall be interpreted in a reasonable manner to
effect the intentions of the parties and this Agreement.
(o) MUTUAL RELEASE. In consideration of the mutual covenants
contained in this Agreement, including the payments to Stockholder and the
transfers of the Subject Shares to Company pursuant to this Agreement,
Stockholder and Company, each for itself and for its respective successors and
assigns (as to each party and its respective successors and assigns, as
applicable, hereinafter referred to collectively as "Releasers"), forever
release and discharge the Company or the Stockholder, as applicable, and any and
all of its respective subsidiaries, divisions, affiliated entities, employee
benefits and/or pension plans or funds, successors and assigns, and all of its
or their respective past and present officers, directors, members, shareholders,
trustees, agents and employees (as to each such party and its respective
entities and persons, as applicable, hereinafter referred to collectively as the
"Entities and Persons"), from any and all claims, demands, causes of action,
fees and liabilities of any kind whatsoever, whether known or unknown, which the
Company or the Stockholder, as applicable, ever had, or
may have, or now has, against the Entities and Persons of the other by reason of
any actual or alleged act, omission, transaction, practice, conduct, occurrence
or other matter up to and including the date of this Agreement. Notwithstanding
the foregoing, the foregoing release shall not cover rights of indemnification
to which Jordan X. Xxxxxxxxx is or was entitled under the Company's Certificate
of Incorporation or By-laws or otherwise with regard to his service as a
director of the Company.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Stockholder and the Company have executed this Loan
Option Agreement, each on March 6, 2002, effective the day and year first
written above.
FOG CUTTER CAPITAL GROUP INC.
By: /s/ R. Xxxxx Xxxxxxxxx
----------------------------------------------
Name: R. Xxxxx Xxxxxxxxx
Title: SVP - CFO
STOCKHOLDER:
XXXXXX AND XXXXXX XXXXXXXXX CARE FOUNDATION
By: /s/ Xxxxxx X. Xxxx
----------------------------------------------
Its: Director
XXXXXX AND XXXXXX XXXXXXXXX FOUNDATION
By: /s/ Xxxxxx X. Xxxx
----------------------------------------------
Its: Director
JORDAN AND XXXX XXXXXXXXX FOUNDATION
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Its: Director
N. WAREHOUSING, INC. PENSION PLAN AND TRUST
By: /s/ Jordan X. Xxxxxxxxx
----------------------------------------------
Name: Jordan X. Xxxxxxxxx,
Its: Trustee
SCHEDULE 1
STOCKHOLDER
STOCKHOLDER SUBJECT SHARES
Xxxxxx and Xxxxxx Xxxxxxxxx CARE Foundation 354,370
Xxxxxx and Xxxxxx Xxxxxxxxx Foundation 233,880
Jordan and Xxxx Xxxxxxxxx Foundation 522,835
N. Warehousing, Inc. Pension Plan & Trust 315,000
---------
TOTAL 1,426,085
0000 XX Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Telecopier no.: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxx
Xxxxx Xxxxx, LLP
000 XX 0xx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Telecopier no.: (000) 000-0000
SCHEDULE 2
FRENCH AMERICAN INTERNATIONAL SCHOOL LOAN
The French American International School Loan is evidenced by a
Promissory Note (fixed rate loan secured by a deed of trust) in the original
principal amount of $4,878,300 (subject to adjustment) dated April 1, 1999, made
by the French American International School, a non-profit IRS 501(c)(3)
corporation, payable to Wilshire Funding Corporation, a Delaware corporation,
bearing interest at 9% per annum with a maturity date of April 1, 2009, which
Note is secured by a Deed of Trust, Assignment of Rents and Leases, Security
Agreement and Fixture Filing from the French American International School as
Grantor/Borrower in favor of Wilshire Funding Corporation as Beneficiary/Lender
dated April 1, 1999, recorded April 12, 1999, as Fee No. 99045628 in the
official records of Washington County, Oregon, encumbering real property located
in Washington County and Multnomah County, Oregon.
SCHEDULE 3
EUGENE PROPERTY
A parcel of land located in Lane County, Oregon, including all
improvements located thereon, described as follows:
Beginning at a point North 89(degree)38'30" West 2879.14 feet and North
12(degree)36' West 372.04 feet from the Southeast corner of the Xxxxx Xxxx
Donation Land Claim No. 50 in Township 17 South, Range 4 West of the Willamette
Meridian; said point being on the Easterly right of way line of Prairie Road;
run thence North 12(degree)36' West 720.87 feet along said Easterly right of way
line to the South line of the property described in Deed recorded October 29,
1949, in Book 000, Xxxx 000, Xxxx Xxxxxx Xxxxxx Deed Records; thence North
89(degree)54'30" East 408.96 feet to the Northwest corner of that tract of land
conveyed to the Southern Pacific Company, recorded in Reel Xx. 000, Xxxxxxxxx
Xx. 0000; thence South 20(degree)28' East 755.05 feet along the Westerly line of
said Southern Pacific Company property; thence North 89(degree)38'30" West
515.73 feet to the point of beginning, in Lane County, Oregon;
EXHIBIT A
NOTICE OF PUT OPTION EXERCISE
[Name and address of Stockholder]
Dear [Name]:
Reference is made to that certain Loan Option Agreement (the "OPTION
AGREEMENT") dated as of March __, 2002, by and between you and Fog Cutter
Capital Group Inc. (the "Company"). Capitalized terms used in this notice, but
not otherwise defined, will have the meanings assigned to such terms in the
Option Agreement.
1. EXERCISE OF OPTIONS. The Company hereby elects to exercise its
option to require you to purchase the Put Option Participation at the
Participation Put Purchase Price.
2. TENDER OF THE PARTICIPATION. The Company will cause the Put Option
Participation and the Remainder Interest to be delivered to the Stockholder at
the Put Option Closing, which will take place at [time and place].
3. TENDER OF PURCHASE PRICE. You will tender the Participation Put
Purchase Price (or, if you have elected to receive the FAS Loan, the FAS Loan,
against payment for the remaining amount of the FAS Loan) at the Put Option
Closing.
IN WITNESS WHEREOF, the Company has caused this Put Option Exercise
Notice to be executed as of the ____ day of _________, 200__.
FOG CUTTER CAPITAL GROUP INC.
By:
---------------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: CEO
EXHIBIT B
NOTICE OF PUT OPTION EXERCISE
[Name and address of the Company]
Dear [Name]:
Reference is made to that certain Loan Option Agreement (the "OPTION
AGREEMENT") dated as of March __, 2002, by and between the Stockholder and Fog
Cutter Capital Group Inc. (the "Company"). Capitalized terms used in this
notice, but not otherwise defined, will have the meanings assigned to such terms
in the Option Agreement.
1. EXERCISE OF OPTIONS. The Stockholder hereby elects to exercise its
option to put the Put Option Shares to the Company at the Put Option Price Per
Share.
2. TENDER OF THE PURCHASED SHARES. The Stockholder will cause the Put
Option Shares to be delivered to the Company at the Put Option Closing, which
will take place at [time and place].
3. TENDER OF PURCHASE PRICE. The Company will tender, at its option,
the relevant Net Put Share Consideration (or, if the Stockholder has elected to
receive the FAS Loan, the FAS Loan, against payment for the remaining amount of
the FAS Loan) at the Put Option Closing.
IN WITNESS WHEREOF, the Stockholder(s) has caused this Put Option
Exercise Notice to be executed as of the ____ day of _________, 200__.
XXXXXX AND XXXXXX XXXXXXXXX CARE FOUNDATION
By:
-----------------------------------------
Its:
----------------------------------
XXXXXX AND XXXXXX XXXXXXXXX FOUNDATION
By:
-----------------------------------------
Its:
----------------------------------
JORDAN AND XXXX XXXXXXXXX FOUNDATION
By:
-----------------------------------------
Its:
----------------------------------
N. WAREHOUSING, INC. PENSION PLAN
By:
-----------------------------------------
Jordan X. Xxxxxxxxx, Trustee
