UNITED STATED
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13D-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13D-2(A)
(AMENDMENT NO. 16)
FOG CUTTER CAPITAL GROUP INC.
(Name of Issuer)
Common Stock, par value $0.0001 per share
(Title of Class of Securities)
971892104
(CUSIP Number)
Andrew A. Wiederhorn
c/o Fog Cutter Capital Group Inc.
1410 SW Jefferson St.
Portland, Oregon 97201
(503) 721-6500
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 13, 2007
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box. [_].
NOTE: Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits. See
Rule 13d-7 for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 12 Pages)
------------------- -------------------------
CUSIP NO. 971892104 13D/A PAGE 2 OF 12 PAGES
------------------- -------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Andrew A. Wiederhorn
---------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [X]
---------- ---------------------------------------------------------------------
3 SEC USE ONLY
---------- ---------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
---------- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
[_]
---------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
------------------ ------ ------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 0 (See Responses to Items 4 and 5)
BENEFICIALLY ------ ------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 2,400,205 (See Responses to Items 4 and 5)
PERSON ------ ------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
0 (See Responses to Items 4 and 5)
------ ------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,400,205 (See Responses to Items 4 and 5)
------------------ ------ ------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,400,205
---------- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW(11) EXCLUDES CERTAIN SHARES*
[_]
---------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.2% (See Responses to Items 4 and 5)
---------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
---------- ---------------------------------------------------------------------
------------------- -------------------------
CUSIP NO. 971892104 13D/A PAGE 3 OF 12 PAGES
------------------- -------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Tiffany Wiederhorn
---------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [X]
---------- ---------------------------------------------------------------------
3 SEC USE ONLY
---------- ---------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
---------- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
[_]
---------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
------------------ ------ ------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 0 (See Responses to Items 4 and 5)
BENEFICIALLY ------ ------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 2,400,205 (See Responses to Items 4 and 5)
PERSON ------ ------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
0 (See Responses to Items 4 and 5)
------ ------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,400,205 (See Responses to Items 4 and 5)
------------------ ------ ------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,400,205
---------- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW(11) EXCLUDES CERTAIN SHARES*
[_]
---------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.2% (See Responses to Items 4 and 5)
---------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
---------- ---------------------------------------------------------------------
------------------- -------------------------
CUSIP NO. 971892104 13D/A PAGE 4 OF 12 PAGES
------------------- -------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
TTMM, L.P.
---------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [X]
---------- ---------------------------------------------------------------------
3 SEC USE ONLY
---------- ---------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
---------- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
[_]
---------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
------------------ ------ ------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY ------ ------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 929,592
PERSON ------ ------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
929,592
------ ------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
------------------ ------ ------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
929,592
---------- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW(11) EXCLUDES CERTAIN SHARES*
[_]
---------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.7% (See Responses to Items 4 and 5)
---------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
---------- ---------------------------------------------------------------------
------------------- -------------------------
CUSIP NO. 971892104 13D/A PAGE 5 OF 12 PAGES
------------------- -------------------------
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
WM Starlight Investments, LLC
---------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [X]
---------- ---------------------------------------------------------------------
3 SEC USE ONLY
---------- ---------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
---------- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
[_]
---------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
------------------ ------ ------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY ------ ------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 13,826
PERSON ------ ------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
13,826
------ ------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
------------------ ------ ------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,826
---------- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW(11) EXCLUDES CERTAIN SHARES*
[_]
---------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.2% (See Responses to Items 4 and 5)
---------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
---------- ---------------------------------------------------------------------
This Amendment No. 16 (this "Amendment") amends and supplements the
Schedule 13D originally filed on April 1, 1999, (the "Schedule 13D"), as amended
by Amendment No. 1 to the Schedule 13D filed on May 17, 1999 ("Amendment No.
1"), Amendment No. 2 to the Schedule 13D filed on December 20, 1999 ("Amendment
No. 2"), Amendment No. 3 to the Schedule 13D filed on October 17, 2001
("Amendment No. 3"), Amendment No. 4 to the Schedule 13D filed on October 28,
2001 ("Amendment No. 4"), Amendment No. 5 to the Schedule 13D filed on January
30, 2002 ("Amendment No. 5"), Amendment No. 6 to the Schedule 13D filed on
February 11, 2002 ("Amendment No. 6"), Amendment No. 7 to the Schedule 13D filed
on March 5, 2002, Amendment No. 8 to the Schedule 13D filed on August 20, 2002
("Amendment No. 8"), Amendment No. 9 to the Schedule 13D filed on October 16,
2002 ("Amendment No. 9"), Amendment No. 10 to the Schedule 13D filed on February
13, 2003 ("Amendment No. 10"), Amendment No. 11 to the Schedule 13D filed on
March 18, 2004 ("Amendment No. 11"), Amendment No. 12 to the Schedule 13D filed
on May 19, 2004 ("Amendment No. 12"), Amendment No. 13 to the Schedule 13D filed
on October 29, 2004 ("Amendment No. 13"), Amendment No. 14 to the Schedule 13D
filed on March 8, 2006, and Amendment No. 15 to the Schedule 13D filed on April
9, 2007 ("Amendment No. 15") by the undersigned relating to the shares of common
stock, $0.0001 par value per share, (the "Common Stock") of Fog Cutter Capital
Group Inc., a Maryland corporation (the "Issuer"). Unless indicated otherwise,
all defined terms used herein shall have the respective meanings ascribed to
them in the Schedule 13D.
The purpose of this Amendment No. 16 to Schedule 13D is to report
changes in certain information reported by the Reporting Persons on its previous
Schedule 13D and the amendments thereto.
ITEM 1. SECURITY OF THE ISSUER
The responses to Item 1 contained in the Reporting Persons' initial
filing on this Schedule 13D and all prior amendments thereto are incorporated
herein by this reference.
ITEM 2. IDENTITY AND BACKGROUND.
This Amendment is being filed by: Andrew Wiederhorn, Tiffany
Wiederhorn, TTMM, L.P., and WM Starlight Investments, LLC (the "Reporting
Persons"). Andrew Wiederhorn has been the Chairman of the Board of Directors,
Chief Executive Officer, Secretary and Treasurer of the Issuer, formerly known
as Wilshire Real Estate Investment Inc. and Wilshire Real Estate Investment
Trust Inc., since its formation in 1997. Tiffany Wiederhorn is Mr. Wiederhorn's
spouse. TTMM, L.P. is a California limited partnership which is engaged in
making investments. Ivy Capital Partners, L.P., a California limited
partnership, is the general partner of TTMM, L.P. The Wiederhorn Family Limited
Partnership, a California limited partnership, is the general partner of Ivy
Capital Partners, L.P. Tiffany Wiederhorn is the general partner of the
Wiederhorn Family Limited Partnership. WM Starlight Investments, LLC is a
Delaware limited liability company which is engaged in making investments.
Tiffany Wiederhorn is the managing member and majority owner of WM Starlight
Investments, LLC. TTMM, L.P. is the only other owner of WM Starlight
Investments, LLC. Schedule A annexed hereto and incorporated by reference herein
sets forth the addresses of the Reporting Persons.
6
On June 3, 2004, pursuant to a settlement agreement with the United
States government, Andrew Wiederhorn pleaded guilty to two felony violations of
federal law, for which he was sentenced to an 18-month term in custody and
agreed to pay $2 million in restitution and a $25,000 fine. The charges for
which Mr. Wiederhorn pleaded guilty involved a violation of ERISA and filing of
a false income tax return. Other than Mr. Wiederhorn, none of the Reporting
Persons has, during the last five years, been convicted in any criminal
proceeding (excluding traffic violations or similar misdemeanors). Other than
Mr. Wiederhorn, none of the Reporting Persons has, during the last five years,
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and, as a result of such proceeding, was or is subject to
a judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to federal or state securities laws, or finding
any violations with respect to such laws.
Information with respect to each of the Reporting Persons is given
solely by such Reporting Person and no Reporting Person is responsible for the
accuracy or completeness of information supplied by another Reporting Person.
The filing of this Schedule 13D (including all amendments thereto) does
not constitute an admission by any of the persons making this filing that such
persons are a "group" for purposes of Section 13(d)(3) of the Securities
Exchange Act of 1934 (the "Act"). The Reporting Persons deny that they should be
deemed to be such a "group," and such persons are making this filing only
because they may be deemed to constitute a "group" for purposes of Section
13(d)(3) of the Act.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The responses to Item 3 contained in the Reporting Persons' initial
filing on this Schedule 13D and all prior amendments thereto are incorporated
herein by this reference.
The source of the funds to be used by the Andrew Wiederhorn and Tiffany
Wiederhorn to make payments under the promissory notes issued to acquire the
shares of Common Stock reported in this Amendment is expected to be personal
funds of such Reporting Persons.
ITEM 4. PURPOSE OF THE TRANSACTION.
The responses to Item 4 contained in the Reporting Persons' initial
filing on this Schedule 13D and all prior amendments thereto are incorporated
herein by this reference. The purpose of this Amendment No. 16 to Schedule 13D
is to report changes in certain information reported by the Reporting Persons on
its previous Schedule 13D and the amendments thereto. Item 4 is hereby amended
to report the following information:
COLEMAN PUT OPTIONS
As previously reported on Amendment #14 and Amendment #15, on February
27, 2006, Andrew Wiederhorn entered into a letter agreement with Clarence B.
Coleman, as Trustee of the C.B. Coleman and Joan F. Coleman Revocable Trust (the
"Coleman Trust"), pursuant to which Mr. Wiederhorn granted the Coleman Trust a
put option to require Mr. Wiederhorn to purchase
7
100,000 shares of Common Stock at a price of $5.90 per share. On the same date,
Andrew Wiederhorn entered into a letter agreement with Clarence & Joan Coleman
Charitable Foundation (the "Coleman Foundation"), pursuant to which Mr.
Wiederhorn granted the Coleman Foundation a put option to require Mr. Wiederhorn
to purchase 323,189 shares of Common Stock at a price of $5.40 per share. These
put options were exercisable by the Coleman Trust and the Coleman Foundation
during the period from April 1, 2006 through November 30, 2006, with the closing
date of the purchase to be no later than March 31, 2007. The Coleman Trust and
the Coleman Foundation have exercised the put option, and the parties have been
in discussions regarding the closing of the purchase. On March 30, 2007, Andrew
Wiederhorn entered into an agreement with the Coleman Trust and the Coleman
Foundation, pursuant to which the parties agreed that Mr. Wiederhorn's purchase
of the shares in accordance with the terms of put options would occur on or
before June 30, 2007.
On July 13, 2007, the purchases of the 423,189 shares (collectively,
the "Coleman Put Shares") from Coleman Trust and the Coleman Foundation pursuant
to the put options were completed. Andrew Wiederhorn and Tiffany Wiederhorn
purchased the 100,000 shares of Common Stock from the Coleman Trust in exchange
for a promissory note in the principal amount of $645,489.25 and the 323,189
shares of Common Stock from the Coleman Foundation in exchange for a promissory
note in the principal amount of $1,811,214.40. The principal amount of the
promissory notes includes accrued interest on the purchase price from January 2,
2007. Interest on these promissory notes is payable monthly and accrues at the
annual rate of 5% during 2007, 6% during 2008, 7% during 2009 and 8% during 2010
and each year thereafter. The promissory notes provide for annual $50,000
payments of principal, and are due and payable in full on January 15, 2012. The
Wiederhorns' obligations under these promissory notes are secured by a pledge of
Coleman Put Shares and a deed of trust on a parcel of real property owned by the
Wiederhorns.
Other than as described above, none of the Reporting Persons has any
present plans or proposals which would relate to or would result in (a) the
acquisition by any Reporting Person of additional securities of the Issuer, (b)
an extraordinary corporate transaction, such as a merger, reorganization, or
liquidation involving the Issuer, (c) a sale or transfer of a material amount of
the assets of the Issuer, (d) any change in the present board of directors or to
fill any existing vacancies on the Issuer's board of directors, (e) any material
change in the present capitalization or dividend policy of the Issuer, (f) any
other material change in the Issuer's charter, by-laws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Issuer by any person, (h) causing a class of securities of the
Issuer to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association, (i) a class of equity securities of the Issuer
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Act, or (j) any action similar to any of those enumerated above. Item 4
disclosure provisions regarding any plans or proposals to make any changes in a
company's investment policy for which a vote is required by Section 13 of the
Investment Company Act of 1940 are inapplicable.
Notwithstanding anything contained herein, each of the Reporting
Persons reserves the right, depending on other relevant factors, to purchase
additional shares of Common Stock
8
or to dispose of all or a portion of his or her holdings of Common Stock or
change his or her intention with respect to any and all of the matters referred
to in this Item 4.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The ownership by the Reporting Persons of shares of Common Stock and
the percentage of the outstanding shares of Common Stock represented thereby is
as follows:
------------------------------- --------------------------- --------------------
NUMBER OF SHARES PERCENTAGE OF COMMON
BENEFICIALLY OWNED STOCK OUTSTANDING(1)
------------------------------- --------------------------- --------------------
Andrew Wiederhorn 2,400,205(2) 30.2%
------------------------------- --------------------------- --------------------
Tiffany Wiederhorn 2,400,205(3) 30.2%
------------------------------- --------------------------- --------------------
TTMM, L.P. 964,592 11.7%
------------------------------- --------------------------- --------------------
WM Starlight Investments, LLC 13,826 0.2%
------------------------------- --------------------------- --------------------
(1) Computed on the basis of 7,957,428 shares of Common Stock outstanding
as disclosed in the Issuer's Quarterly Report on Form 10-Q filed on May 11,
2007.
(2) Consists of: (a) 368,645 shares held by Mr. Wiederhorn; (b) 1,500
shares held by the Andrew and Tiffany Wiederhorn Revocable Trust; (c)
474,536 shares held by Tiffany Weiderhorn (Mr. Wiederhorn's spouse); (d)
423,189 shares held jointly by Mr. Wiederhorn and Tiffany Wiederhorn; (e)
929,592 shares held by TTMM, L.P.; (f) 13,826 shares of Common Stock owned
by W.M. Starlight Investments, LLC (Mr. Wiederhorn's spouse is the manager
and majority owner of this limited liability company); and (g) 188,917
shares of Common Stock owned by Andrew and Tiffany Wiederhorn's minor
children. Includes a total of 1,417,954 shares of Common Stock owned by the
other Reporting Persons. While Andrew Wiederhorn may be deemed to share
voting and dispositive power with respect to the shares of Common Stock
owned by Tiffany Wiederhorn, TTMM, L.P., W.M. Starlight Investments, LLC
and may be deemed to be the beneficial owner of all such shares, Mr.
Wiederhorn disclaims beneficial ownership of such shares. While the shares
owned by Mr. Wiederhorn's minor children are held in custody for the
benefit of such children pursuant to arrangements that do not give Mr.
Wiederhorn any dispositive or voting power over such shares, Mr. Wiederhorn
may be deemed to share voting and/or dispositive power with respect to such
shares of Common Stock and may be deemed to be the beneficial owner of such
shares. Mr. Wiederhorn also disclaims beneficial ownership of such shares.
Excludes 2,500 unallocated shares of Common Stock held by the Fog Cutter
Long Term Vesting Trust (the "Trust"). Although Mr. Wiederhorn acts as a
Trustee for the Trust, he does not have any beneficial ownership or voting
rights with respect to the shares of Common Stock in the Trust. Of the
2,400,205 shares, Andrew Wiederhorn shares power to vote or to direct the
vote of all of such shares and shares power to dispose or to direct the
disposition of all of such shares.
(3) Consists of: (a) 474,536 shares held by Tiffany Weiderhorn (b) 1,500
shares held by the Andrew and Tiffany Wiederhorn Revocable Trust; (c)
368,645 shares held by Andrew Wiederhorn (Ms. Wiederhorn's spouse); (d)
423,189 shares held jointly by Ms. Wiederhorn and Andrew Wiederhorn; (e)
929,592 shares held by TTMM, L.P.; (f) 13,826 shares of Common Stock owned
by W.M. Starlight Investments, LLC (Ms. Wiederhorn is the manager and
majority owner of this limited liability company); and (g) 188,917 shares
of Common Stock owned by Andrew and Tiffany Wiederhorn's minor children.
Includes a total of 1,312,063 shares of Common Stock owned by other
Reporting Persons. While Ms. Wiederhorn shares voting and dispositive power
with respect to the shares of Common Stock owned by TTMM, L.P. and may be
deemed to be the beneficial owner of such shares and the shares held by
Andrew Wiederhorn, Ms. Wiederhorn disclaims beneficial ownership of all of
such shares of Common Stock. While the shares owned by Ms. Wiederhorn's
minor children are held in custody for the benefit of such children
pursuant to arrangements that do not give Ms. Wiederhorn any dispositive or
voting power over such shares, Ms. Wiederhorn may be deemed to share voting
and/or dispositive power with respect to such shares of Common Stock and
may be deemed to be the beneficial owner of such shares. Ms. Wiederhorn
also disclaims beneficial ownership of such shares. Of the 2,400,205
shares, Tiffany Wiederhorn shared power to vote or to direct the vote of
all of such shares and shared power to dispose or to direct the disposition
of all of such shares.
9
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The responses to Item 6 contained in the Reporting Persons' initial
filing on this Schedule 13D and all prior amendments thereto are incorporated
herein by this reference.
The description of the agreements in Item 4 of this Schedule 13D, and
prior amendments to this Schedule 13D, are incorporated herein by reference.
AMENDED AND RESTATED VOTING AGREEMENT
As previously reported on this Schedule 13D, Andrew Wiederhorn has
entered into a Assignment and Voting Agreement (the "Assignment and Voting
Agreement") with Tiffany Wiederhorn, TTMM, L.P. and WM Starlight Investments,
LLC (collectively, the "Tiffany Wiederhorn Entities"), pursuant to which the
Tiffany Wiederhorn Entities agreed to vote their Common Stock in the manner
specified by Andrew Wiederhorn during the term of the Assignment and Voting
Agreement, and which was previously amended and restated On May 13, 2004. As of
July 13, 2007, the Assignment and Voting Agreement was amended and restated to
reflect the current share holdings of each of the parties to the agreement. A
copy of the Amended and Restated Assignment and Voting Agreement is attached to
this Amendment as Exhibit 1.
COLEMAN PURCHASE AGREEMENTS
In connection with the purchase of the Coleman Put Shares as described
in Item 4 of the Amendment, Andrew and Tiffany Wiederhorn entered into a
Purchase Pursuant to Put Agreement with each of the Coleman Trust and the
Coleman Foundation (the "Purchase Agreements"). Copies of the Purchase
Agreements are attached hereto as Exhibits 2 and 3 and are incorporated herein
by reference. The description of the Purchase Agreements in this Schedule 13D is
subject to, and qualified in its entirety by, the full text of the Purchase
Agreements.
PROMISSORY NOTES
In connection with the purchase of the Coleman Put Shares as described
in Item 4 of the Amendment, Andrew and Tiffany Wiederhorn issued a Promissory
Note to the Coleman Trust and the Coleman Foundation in the principal amounts of
$645,489.26 and $1,811,214.40, respectively, (together, the "Promissory Notes").
Copies of the Promissory Notes are attached hereto as Exhibits 4 and 5 and are
incorporated herein by reference. The description of the Promissory Notes in
this Schedule 13D is subject to, and qualified in its entirety by, the full text
of the Promissory Notes.
STOCK PLEDGE AGREEMENTS
In connection with the purchase of the Coleman Put Shares as described
in Item 4 of the Amendment, Andrew and Tiffany Wiederhorn entered into a Stock
Pledge Agreement with each of the Coleman Trust and the Coleman Foundation (the
"Pledge Agreements"). Copies of the Pledge Agreements are attached hereto as
Exhibits 6 and 7 and are incorporated herein
10
by reference. The description of the Pledge Agreements in this Schedule 13D is
subject to, and qualified in its entirety by, the full text of the Pledge
Agreements.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT
NO. DESCRIPTION
------- ----------------------------------------------------------------
1. Amended and Restated Assignment and Voting Agreement
2. Purchase Pursuant to Put Agreement between the C.B. Coleman and
Joan F. Coleman Revocable Trust and Andrew Wiederhorn and
Tiffany Wiederhorn.
3. Purchase Pursuant to Put Agreement between the Clarence and Joan
Coleman Charitable Foundation and Andrew Wiederhorn and Tiffany
Wiederhorn.
4. Promissory Note issued by Andrew Wiederhorn and Tiffany
Wiederhorn in favor of the C.B. Coleman and Joan F. Coleman
Revocable Trust.
5. Promissory Note issued by Andrew Wiederhorn and Tiffany
Wiederhorn in favor of the Clarence and Joan Coleman Charitable
Foundation.
6. Stock Pledge Agreement between the C.B. Coleman and Joan F.
Coleman Revocable Trust and Andrew Wiederhorn and Tiffany
Wiederhorn.
7. Stock Pledge Agreement between the Clarence and Joan Coleman
Charitable Foundation and Andrew Wiederhorn and Tiffany
Wiederhorn.
11
SIGNATURES
After reasonable inquiry and to the best of knowledge and belief of
each person or entity set forth below, each such person or entity certifies that
the information set forth in this Statement is true, complete and correct.
July 17, 2007 /S/ ANDREW A. WIEDERHORN
------------------------------------------
Andrew A. Wiederhorn
July 17, 2007 /S/ TIFFANY WEIDERHORN
------------------------------------------
Tiffany Wiederhorn
July 17, 2007 TTMM, L.P.
By: IVY CAPITAL PARTNERS,
L.P., its general partner
By: WIEDERHORN FAMILY LIMITED PARTNERSHIP,
its general partner
By: /S/ TIFFANY WEIDERHORN
--------------------------------------
Tiffany Wiederhorn, its general
partner
July 17, 2007 WM STARLIGHT INVESTMENTS, LLC
By: /S/ TIFFANY WEIDERHORN
--------------------------------------
Tiffany Wiederhorn, its
Managing member
12
SCHEDULE A
ADDRESSES OF REPORTING PERSONS
Andrew Wiederhorn
c/o Fog Cutter Capital Group Inc.
1410 SW Jefferson St.
Portland, OR 97201
Tiffany Wiederhorn
c/o Fog Cutter Capital Group Inc.
1410 SW Jefferson St.
Portland, OR 97201
TTMM, L.P.
1410 SW Jefferson St.
Portland, OR 97201
WM Starlight Investments, LLC
1410 SW Jefferson St.
Portland, OR 97201
13
EXHIBIT 1
AMENDED AND RESTATED
ASSIGNMENT AND VOTING AGREEMENT
THIS AMENDED AND RESTATED ASSIGNMENT AND VOTING AGREEMENT (this
"AGREEMENT") is entered into as of July 13, 2007, by and among TTMM, L.P.
("TTMM"), Tiffany Wiederhorn and WM Starlight Investments, LLC (each, a
"STOCKHOLDER"), each of whom is a stockholder of Fog Cutter Capital Group Inc.,
a Maryland corporation (the "COMPANY"), and Andrew A. Wiederhorn, an individual
and a stockholder of the Company ("WIEDERHORN").
WHEREAS, the Stockholder and Wiederhorn are parties to the certain
Amended and Restated Assignment and Voting Agreement dated as of February 20,
2002, as amended and restated as of March 4, 2002, as further amended and
restated on May 13, 2004, and as further amended and restated as of April 6,
2007 (as amended, the "PRIOR AGREEMENT");
WHEREAS, Stockholders are the owners, jointly or separately, of the
shares of common stock, par value $.0001 per share ("COMPANY COMMON STOCK"), of
the Company set forth on SCHEDULE 1 hereto (collectively, the "SUBJECT SHARES");
and
WHEREAS, Wiederhorn and the Stockholders desire to enter into this
Agreement to amend and restate the Prior Agreement in accordance with the terms
and conditions 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, Stockholders and Wiederhorn agree as
follows:
1. CONSENT TO TRANSFERS OF SUBJECT SHARES; ACKNOWLEDGEMENT OF
PRIOR TRANSACTIONS.
1.1 Wiederhorn previously assigned to TTMM the right to
receive, and delegated to TTMM the obligation to pay for, certain shares of
Company Common Stock that Wiederhorn was to purchase pursuant to those certain
Put/Call Option and Voting Agreements (the "OPTION SHARES"), dated as of October
16, 2001, as amended, by and between Wiederhorn and each of Boston Provident
Partners, L.P., Watchung Road Associates, L.P. and Cobalt Capital Management,
Inc. The parties hereby acknowledge that the closing of the purchase of the
Option Shares occurred on or about February 21, 2002, and that such Option
Shares constitute Subject Shares hereunder.
1.2 Grantor hereby consents to any and all Transfers of
the Subject Shares by the Stockholders which have occurred prior to the date
hereof. The parties agree that SCHEDULE 1 hereto sets forth all Company Common
Stock held by the Stockholders as of the date of this Agreement, and that all
such Company Common Stock set forth on SCHEDULE 1 constitute Subject Shares
under this Agreement.
2. VOTING OF SUBJECT SHARES; GOVERNMENT FILINGS.
2.1 Each Stockholder agrees, during the term of this
Agreement:
2.1.1 to vote its Subject Shares on all matters as
to which such Stockholder is entitled to vote at any meeting of the stockholders
of the Company, including, without limitation, with respect to the election of
directors, in the manner specified in writing by Wiederhorn (which notice shall
be delivered on or prior to the date on which such votes, consents or dissents
are to be cast), which vote shall be determined in Wiederhorn's absolute, sole
and binding discretion; and
2.1.2 to express consent or dissent to corporate
action in writing, without a meeting, on all of its Subject Shares in the manner
specified in writing by Wiederhorn (which notice shall be delivered on or prior
to the date on which such votes, consents or dissents are to be cast), which
action shall be determined in Wiederhorn's absolute, sole and binding
discretion.
2.2 Except as may be approved in writing by Wiederhorn,
each Stockholder agrees to refrain from (a) voting at any annual or special
meeting of the stockholders of the Company, (b) executing any written consent in
lieu of a meeting of the stockholders of the Company, (c) exercising any rights
of dissent with respect to such Stockholder's Subject Shares, (d) granting any
proxy or authorization to any Person (other than Wiederhorn) with respect to the
voting of such Stockholder's Subject Shares, and (e) taking any action contrary
to or in any manner inconsistent with the terms of this Agreement.
2.3 Each Stockholder represents that any proxies given
prior to this Agreement regarding any Company Common Stock held by such
Stockholder are revocable, and Stockholder covenants to revoke any such proxies.
2.4 Wiederhorn and the Stockholders shall cooperate in
making all required filings (and amendments thereto) with the Securities and
Exchange Commission and other governmental authorities as a result of this
Agreement that are to be filed by or with respect to both Wiederhorn and one or
more of the Stockholders, including but not limited to any filing required by
Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules
or regulations promulgated thereunder (any "SECTION 13 FILING"). Wiederhorn
shall prepare at its own expense a draft of any Section 13 Filing listing
Wiederhorn and one or more of the Stockholders, shall provide such draft to the
relevant Stockholders with a reasonable opportunity to review and comment and
shall include therein any information reasonably requested to be included
therein by a signatory Stockholder in the form provided. Wiederhorn shall not
make any Section 13 Filing until any signatory Stockholder approves of the
information concerning such Stockholder contained therein, unless and until
required to meet applicable filing deadlines. Wiederhorn shall pay any filing
fee with respect to such Section 13 Filings. Each party hereto shall bear their
own costs, including fees and expenses of counsel, with respect to all filings.
Notwithstanding anything in this SECTION 2.4, Wiederhorn shall be solely
responsible for preparing and filing amendments to any Section 13 Filing dated
before the date hereof and naming Wiederhorn, and no Stockholder, as a reporting
person.
3. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS. Each
Stockholder, hereby represents and warrants, severally and not jointly, to
Wiederhorn as follows:
3.1 OWNERSHIP. Such Stockholder beneficially owns the
shares of Company Common Stock set forth opposite such Stockholder's name on
SCHEDULE 1 hereto, with no
2
contractual restrictions on such Stockholder's voting rights or rights of
disposition pertaining thereto, except as set forth herein. Such Subject Shares
constitute all shares of Company Common Stock beneficially owned by such
Stockholder.
3.2 DUE AUTHORIZATION. Such 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. Assuming this
Agreement has been duly and validly authorized, executed and delivered by
Wiederhorn, and assuming that this Agreement constitutes a valid and binding
agreement of Wiederhorn, this Agreement constitutes a valid and binding
agreement of such 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.
3.3 NO CONFLICTS. Neither the execution and delivery of
this Agreement, nor the consummation by any 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 such Stockholder is a party or by which such Stockholder is bound.
4. REPRESENTATIONS AND WARRANTIES OF WIEDERHORN. Wiederhorn
hereby represents, warrants and covenants to each Stockholder as follows:
4.1 DUE AUTHORIZATION. Wiederhorn has the requisite
capacity to enter into and perform this Agreement. Assuming this Agreement has
been duly and validly authorized, executed and delivered by each Stockholder,
and assuming that this Agreement constitutes a valid and binding agreement of
each Stockholder, this Agreement constitutes a valid and binding agreement of
Wiederhorn, enforceable against Wiederhorn 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.
4.2 NO CONFLICTS. Neither the execution and delivery of
this Agreement, nor the consummation by Wiederhorn 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 Wiederhorn is a party or by which Wiederhorn is bound.
5. ADJUSTMENT UPON CHANGES IN CAPITALIZATION; ETC. 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 shall be
adjusted appropriately.
6. TERMINATION. This Agreement, and all rights and obligations of
the parties hereunder (excluding any obligations of the parties under the
Notes), shall terminate immediately upon the earliest to occur of (i) the fifth
anniversary of the date of this Agreement, or (ii) any date on which both (x)
Wiederhorn is no longer Chairman of the Board of the Company and (y)
Wiederhorn's employment with the Company has been terminated by the Company.
3
7. TRANSFER OF SHARES.
7.1 Prior to the termination of this Agreement, except as
otherwise provided herein, no Stockholder shall: (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 unless Stockholder
obtains, prior to such transfer, and delivers to Wiederhorn the written consent
of the transferee to be bound by this Agreement with respect to any and all
transferred Subject Shares; (ii) enter into any contract, option or other
agreement or understanding with respect to any Transfer other than a Transfer
permitted pursuant to clause (i) above; (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 that would in any way restrict, limit or interfere
with the performance of such Stockholder's obligations hereunder or the
transactions contemplated hereby.
7.2 Each Stockholder agrees to cause to be placed on any
and all certificates evidencing such Stockholder's Subject Shares the following
legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO A VOTING AGREEMENT, AND CERTAIN RESTRICTIONS ON TRANSFER, PURSUANT
TO THAT AMENDED AND RESTATED ASSIGNMENT AND VOTING AGREEMENT BY AND
AMONG ANDREW A. WIEDERHORN, TTMM, L.P., TIFFANY WIEDERHORN AND WM
STARLIGHT INVESTMENTS, LLC.
8. NO SOLICITATION. No Stockholder shall, 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, any Stockholder or any of their
subsidiaries or any of such 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
Wiederhorn) 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.
9. MISCELLANEOUS.
9.1 STOCKHOLDER CAPACITY. None of the parties to this
Agreement 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
of the parties in his or her capacity as a director or officer of the Company
shall be deemed a breach of this Agreement. Each of the parties executes this
Agreement solely in his or her capacity as the beneficial owner, where
applicable, of Company Common Stock.
9.2 EXPENSES. Except as otherwise expressly provided
herein, each of the parties hereto shall bear and pay all costs and expenses
incurred by it or on its
4
behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
9.3 WAIVER AND AMENDMENT. Any provision of this Agreement
may be waived at any time 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
Wiederhorn and the Stockholders.
9.4 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, among 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.
9.5 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with laws of the State of Maryland.
9.6 HEADINGS. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.7 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopies (with confirmation) or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to a Stockholder to:
The address set forth under such Stockholder's name on Schedule 1
hereto.
If to Wiederhorn, to:
Andrew A. Wiederhorn
c/o Fog Cutter Capital Group Inc.
1410 S.W. Jefferson Street
Portland, Oregon 97201
Telecopier no.: (503) 553-7401
with a copy to:
V. Joseph Stubbs, Esq.
Stubbs Alderton & Markiles, LLP
15260 Ventura Blvd., Suite 525
Sherman Oaks, California 91403
Telecopier no.: (818) 444-4520
5
9.8 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.
9.9 ASSIGNMENT; DELEGATION. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties except that the rights of Wiederhorn
under this agreement may be assigned to the spouse or lineal descendants of
Wiederhorn, to any trust for the benefit of Wiederhorn or the benefit of the
spouse and/or lineal descendants of Wiederhorn, to any corporation, partnership,
limited liability company or other entity in which Wiederhorn, the spouse and/or
the lineal descendants of Wiederhorn are the direct and beneficial owners of all
of the equity interests for estate planning purposes (provided that Wiederhorn,
spouse and/or descendants agree in writing to remain the beneficial owners of
all such interests), or to the personal representative of Wiederhorn upon
Wiederhorn's death for purposes of administration of Wiederhorn's estate or upon
such Wiederhorn's incompetency for purposes of the protection and management of
the assets of Wiederhorn; provided that any such assignee shall, prior to such
transfer, consent in a writing delivered to the Stockholder to be bound by this
Agreement. This Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective permitted successors,
assigns, heirs, executors, administrators and other legal representatives.
9.10 FURTHER ASSURANCES. Each Stockholder and Wiederhorn
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.
9.11 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 any 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 any party from bringing any action for damages in addition
to an action for specific performance or an injunction for a breach of this
Agreement.
9.12 SURVIVAL. The representations, warranties, covenants
and agreements in this Agreement (other than the obligations of the parties
under the Notes) shall terminate upon termination of this Agreement.
9.13 TERMINATION OF PRIOR AGREEMENT. The parties hereto
agree that the Prior Agreement is null and void and superseded in all respects
by this Agreement.
9.14 DRAFTING. 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
6
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
any and all drafts relating thereto shall be deemed the work product of the
parties and may not be construed against any 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.
[SIGNATURE PAGE FOLLOWS.]
7
IN WITNESS WHEREOF, Stockholders and Wiederhorn have executed this
Assignment and Voting Agreement all as of the day and year first written above.
WIEDERHORN:
/S/ ANDREW A. WIEDERHORN
-----------------------------------------
Andrew A. Wiederhorn
STOCKHOLDERS:
/S/ TIFFANY WEIDERHORN
-----------------------------------------
Tiffany Wiederhorn
TTMM, L.P.
By: Ivy Capital Partners, L.P.
its General Partner
By: Wiederhorn Family Limited Partnership
its general partner
/S/ TIFFANY WEIDERHORN
-----------------------------------------
Name: Tiffany Wiederhorn
Title: Managing Member
WM Starlight Investments, LLC
/S/ TIFFANY WEIDERHORN
-----------------------------------------
Name: Tiffany Wiederhorn
Title: Managing Member
8
SCHEDULE 1
STOCKHOLDERS
----------------------------------- -------------------
STOCKHOLDER SUBJECT SHARES
----------------------------------- -------------------
TTMM, L.P. 929,592
1410 S.W. Jefferson Street
Portland, Oregon 97201
Telecopier no.: (503) 553-7401
----------------------------------- -------------------
Tiffany Wiederhorn 474,536
1410 S.W. Jefferson Street
Portland, Oregon 97201
Telecopier no.: (503) 553-7401
----------------------------------- -------------------
WM Starlight Investments, LLC 13,826
1410 S.W. Jefferson Street
Portland, Oregon 97201
Telecopier no.: (503) 553-7401
----------------------------------- -------------------
Tiffany A Wiederhorn and Andrew 423,189
A. Wiederhorn
1410 S.W. Jefferson Street
Portland, Oregon 97201
Telecopier no.: (503) 553-7401
----------------------------------- -------------------
9
EXHIBIT 2
PURCHASE PURSUANT TO PUT AGREEMENT
THIS PURCHASE PURSUANT TO PUT AGREEMENT ("THE AGREEMENT") is made as of
January 2, 2007, between the C.B. Coleman and Joan F. Coleman Revocable Trust
("SELLER") and Andrew A. Wiederhorn and Tiffany A. Wiederhorn (together
"BUYER").
RECITALS
A. Seller owns 100,000 shares of the common stock (the
"SHARES") of Fog Cutter Capital Group Inc.
B. By letter agreement effective April 30, 2004 (as thereafter
amended and extended) between Seller and Andrew A. Wiederhorn (the "PUT
AGREEMENT"), Andrew A. Wiederhorn agreed, among other things, to purchase the
Shares from Seller at a price of $5.90 per share upon Seller's exercise of its
put right under the Put Agreement.
C. By letter dated October 31, 2006, Seller exercised its put
right under the Put Agreement with respect to all of the Shares.
D. In satisfaction of Andrew A. Wiederhorn's obligation to
purchase the Shares pursuant to the Put Agreement, Buyer shall purchase the
Shares from Seller on the terms and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual covenants set
forth below, Buyer and Seller agree as follows:
AGREEMENT
1. PURCHASE OF STOCK
1.1 CAPITAL STOCK TO BE PURCHASED. Seller hereby agrees to sell to
Buyer and Buyer hereby agrees to purchase from Seller, the
Shares. The sale shall be closed ("CLOSING") on July 13, 2007
at such time as the parties may mutually agree (the "CLOSING
DATE").
1.2 PURCHASE PRICE. The total purchase price for the Shares (the
"Purchase Price") shall be Six Hundred Forty-Five Thousand
Four Hundred Eighty-Nine Dollars and 26/100 ($645,489.26)
inclusive of accrued interest, and shall be payable by a
Promissory Note in substantially the form attached hereto as
EXHIBIT A (the "PROMISSORY Note").
2. SECURITY FOR PERFORMANCE. Buyer's performance of their obligations
under the Promissory Note will be secured by (a) a Deed of Trust on a
parcel of real property commonly known as 585 F. Street, Gearhart,
Oregon 97138, situated in Clatsop County, Oregon (the "GEARHART
PROPERTY"), in the form attached hereto as EXHIBIT B to be executed by
Tiffany A. Wiederhorn in favor of Seller (the "DEED OF TRUST"), and (b)
the Shares and 323,189 additional
shares of Fog Cutter Capital Group Inc. to be purchased by Buyer from
the Clarence and Joan Coleman Charitable Foundation (the "FOUNDATION")
on the date hereof, pursuant to a Stock Pledge Agreement in the form
attached hereto as EXHIBIT C to be executed by Buyer in favor of Seller
(the "STOCK PLEDGE AGREEMENT"). So long as Buyer is not in default of
their obligations under (i) this Agreement, the Promissory Note, the
Deed of Trust or the Stock Pledge Agreement (collectively, the "COLEMAN
TRUST DOCUMENTS") or (ii) that certain Purchase Pursuant to Put
Agreement between the Foundation and Buyer, that certain Promissory
Note made by Buyer in favor of the Foundation, that certain Deed of
Trust executed by Tiffany A. Wiederhorn in favor of the Foundation or
that certain Stock Pledge Agreement executed by Buyer in favor of the
Foundation (collectively, the "FOUNDATION DOCUMENTS"), Buyer shall
retain the right to vote the Shares.
3. CLOSING. The Closing shall take place on the Closing Date at the
offices of Fog Cutter Capital Group Inc. or at such other place as the
parties may mutually agree.
3.1 DELIVERIES BY SELLER. At Closing, Seller shall deliver to
Buyer: (a) the certificate representing the Shares, properly
endorsed for transfer, together with such other documents as
Buyer may reasonably request to effectuate or evidence the
transactions contemplated by this Agreement; and (2) an
executed original of this Agreement.
3.2 DELIVERIES BY BUYER. At Closing, Buyer shall deliver to
Seller: (a) the executed Promissory Note, (b) the executed
Deed of Trust, (c) the executed Stock Pledge Agreement, and
(d) a subordination agreement, in form and substance
satisfactory to Seller, executed by the Wiederhorn Insurance
Trust #2 in favor of Seller, with respect to the Gearhart
Property. At Closing, Buyer shall also immediately deliver
back to Seller the certificate representing the Shares,
endorsed in blank, as well as such other documents and
instruments as Seller may reasonably require to effectuate or
evidence the transactions contemplated by this Agreement and
the other Coleman Trust Documents, and shall pay the Purchase
Price as set forth in SECTION 1.2.
4. MUTUAL RELEASE. Except for those rights, duties and obligations arising
under this Agreement, the Promissory Note, Deed of Trust and Stock
Pledge Agreement, Seller and Buyer hereby agree to release, discharge,
acquit and covenant not to sue each other and each of their respective
heirs and assigns from and against any and all claims, liabilities
damages, or suits of any nature of kind, which they may have against
one another that arise with respect to the Put Agreement.
5. REPRESENTATIONS AND WARRANTIES.
5.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents
and warrants to Buyer as follows: (a) Seller has full power
and authority to sign and deliver this Agreement and to
perform all of Seller's obligations hereunder; (b) this
Agreement is a legal, valid, and binding obligation of Seller,
enforceable in accordance with its terms, except as
enforceability
2
may be limited by bankruptcy, insolvency, or other similar
laws of general application or by general principles of
equity; (c) the signing and delivery of this Agreement by
Seller and the performance by Seller of all of Seller's
obligations under this Agreement will not (i) breach any
agreement to which Seller is a party, (ii) violate any law,
judgment, or order to which Seller is subject, or (iii)
require the consent, authorization, or approval of any person,
including but not limited to any government body; and (d)
Seller has good and marketable title to the Shares, free and
clear of all claims, encumbrances and restrictions (except
those imposed under applicable federal and state securities
laws), and has the unrestricted power and authority to convey
the Shares to Buyer pursuant to this Agreement.
5.2 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer, jointly and
severally, represents and warrants to Seller as follows: (a)
Buyer has full power and authority to sign and deliver this
Agreement and to perform all of Buyer's obligations hereunder;
(b) this Agreement is a legal, valid, and binding obligation
of Buyer, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, or
other similar laws of general application or by general
principles of equity; (c) the signing and delivery of this
Agreement by Buyer and the performance by Buyer of all of
Buyer's obligations under this Agreement will not (i) breach
any agreement to which Buyer is a party, (ii) violate any law,
judgment, or order to which Buyer is subject, or (iii) require
the consent, authorization, or approval of any person,
including but not limited to any governmental body; (d) Buyer
is acquiring the Shares for his own account and not with a
view to resale or distribution; (e) Buyer will not sell,
transfer or otherwise dispose of or encumber the Shares, at
any time during the term of this Agreement other than pursuant
to the Stock Pledge Agreement in favor of Seller and the
pledge of the Shares in favor of the Foundation pursuant to
the Foundation Documents, without the prior written consent of
Seller which may be granted or withheld in its sole and
absolute discretion; PROVIDED, that Seller shall consent to a
sale of the Shares together with a sale of the 323,189
additional shares of Fog Cutter Capital Group Inc. purchased
by Buyer from the Foundation in the event the proceeds from
such sales are equal to or greater than the amount of the then
outstanding obligations under the Foundation Documents and the
Coleman Trust Documents and such proceeds shall be applied to
the payment in full of all outstanding obligations under the
Foundation Documents and the Coleman Trust Documents and
provided that the agreements and documents relating to such
sales are in form and substance satisfactory to the Foundation
and the Seller; and (f) Buyer is Solvent prior to and after
giving effect to the consummation of the transactions
contemplated by the Coleman Trust Documents and the Foundation
Documents ("Solvency" is defined to mean that (i) the fair
market value of all of Buyer's property is in excess of the
total amount of Buyer's debts (including contingent
liabilities); (ii) Buyer is able to pay its debts as they
mature; and (iii) Buyer is not "insolvent" as such term is
defined in Section 101(31) of the Federal Bankruptcy Code).
6. CONDITIONS PRECEDENT TO CLOSING.
6.1 BUYER'S CONDITIONS. The obligation of Buyer to perform under
this Agreement is subject to the fulfillment of each of the
following conditions: (a) the
3
representations and warranties of Seller contained in this
Agreement shall be true at and as of the Closing Date; and (b)
Seller shall have performed all acts required by this
Agreement to be performed prior to Closing.
6.2 SELLER'S CONDITIONS. The obligation of Seller to perform under
this Agreement is subject to the fulfillment of each of the
following conditions: (a) the representations and warranties
of Buyer contained in this Agreement shall be true at and as
of the Closing Date; and (b) Buyer shall have performed all
acts required by this Agreement to be performed prior to or at
Closing.
7. DEFAULT AND REMEDIES.
7.1 DEFAULT. Time is of the essence of this Agreement. Buyer shall
be in "default" of this Agreement upon the occurrence of an
"Event of Default" under the Promissory Note.
7.2 REMEDIES. Upon "default", Seller shall have, at his option,
the following remedies which shall be cumulative and
nonexclusive: (a) the right to declare the full unpaid balance
of the Purchase Price, together with all interest accrued
thereon, immediately due and payable; or (b) the right to
exercise all remedies granted to Seller under this Agreement,
the Promissory Note, the Deed of Trust or the Stock Pledge
Agreement.
8. MISCELLANEOUS.
8.1 SUCCESSION. This Agreement shall be binding upon and inure to
the benefit of the parties, their heirs, personal
representatives, successors and permitted assigns.
8.2 FURTHER DOCUMENTS. The parties at any time after Closing, upon
request, agree to execute and deliver such further documents
as may be required to carry out the transfer of the Shares
contemplated by this Agreement and to carry out its purposes.
8.3 GOVERNING LAW. This Agreement shall be construed as to both
validity and performance and enforced in accordance with the
laws of the State of Oregon.
8.4 NOTICES. All communications, notices, and demands of any kind
which either party may be required or may desire to give or
serve upon the other, shall be made in writing and (i)
delivered by personal service to the other party, (ii) sent by
overnight service via Federal Express, Express Mail or another
recognized overnight delivery service, or (iii) sent by
facsimile transmission, to the following addresses:
To Buyer: Andrew A. Wiederhorn and Tiffany A. Wiederhorn,
1410 SW Jefferson
Portland, Oregon 97201
Facsimile:
4
To Seller: Clarence B. Coleman, Trustee
C.B. Coleman and Joan F. Coleman Revocable Trust
2401 Merced Street, Suite 300
San Leandro, California 94577
Facsimile:
Any such communication, notice or demand shall be effective and deemed
received upon the earliest of (i) the actual receipt of the same by personal
delivery or otherwise, (ii) one (1) business day after being deposited with a
nationally recognized overnight courier service as required above, or (iii) on
the day sent if sent by facsimile with confirmation on or before 5:00 p.m. New
York time on any business day or on the next business day if so delivered after
5:00 p.m. New York time. Rejection or other refusal to accept or the inability
to deliver because of changed address of which no notice was given as herein
required shall be deemed to be receipt of the communication, notice or demand
sent. For purposes of this paragraph, the name of any addressee and/or an
address may be changed by giving written notice of such change in the manner
herein provided for giving notice. Unless and until such written notice is
received, the last address and addressee as stated by written notice, or
provided herein if not written notice of change has been sent or received, shall
be deemed to continue in effect for all purposes hereunder.
8.5 WAIVERS. The waiver by any party to this Agreement of a breach
of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach.
8.6 HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only and shall not be
deemed to be part of this Agreement or affect the meaning or
interpretation of this Agreement.
8.7 COUNTERPARTS. This Agreement may be executed by the parties in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
SELLER: BUYER:
/S/ CLARENCE B. COLEMAN /S/ ANDREW A. WIEDERHORN
------------------------------- ------------------------
Clarence B. Coleman, as Trustee Andrew A. Wiederhorn
of the C.B. Coleman and Joan F.
Coleman Revocable Trust
/S/ TIFFANY A. WIEDERHORN
-------------------------
Tiffany A. Wiederhorn
5
EXHIBIT 3
PURCHASE PURSUANT TO PUT AGREEMENT
THIS PURCHASE PURSUANT TO PUT AGREEMENT ("THE AGREEMENT") is made as of
January 2, 2007, between the Clarence and Joan Coleman Charitable Foundation
("SELLER") and Andrew A. Wiederhorn and Tiffany A. Wiederhorn (together
"BUYER").
RECITALS
A. Seller owns 323,189 shares of the common stock (the
"SHARES") of Fog Cutter Capital Group Inc.
B. By letter agreement effective July 9, 2004 (as thereafter
amended and extended) between Seller and Andrew A. Wiederhorn (the "PUT
AGREEMENT"), Andrew A. Wiederhorn agreed, among other things, to purchase the
Shares from Seller at a price of $5.40 per share upon Seller's exercise of its
put right under the Put Agreement.
C. By letter dated October 31, 2006, Seller exercised its put
right under the Put Agreement with respect to all of the Shares.
D. In satisfaction of Andrew A. Wiederhorn's obligation to
purchase the Shares pursuant to the Put Agreement, Buyer shall purchase the
Shares from Seller on the terms and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual covenants set
forth below, Buyer and Seller agree as follows:
AGREEMENT
1. PURCHASE OF STOCK
1.1 CAPITAL STOCK TO BE PURCHASED. Seller hereby agrees to sell to
Buyer and Buyer hereby agrees to purchase from Seller, the
Shares. The sale shall be closed ("CLOSING") on July 13, 2007
at such time as the parties may mutually agree (the "CLOSING
DATE").
1.2 PURCHASE PRICE. The total purchase price for the Shares (the
"Purchase Price") shall be One Million Eight Hundred Eleven
Thousand Two Hundred Fourteen Dollars and 40/100
($1,811,214.40) inclusive of accrued interest, and shall be
payable by a Promissory Note in substantially the form
attached hereto as EXHIBIT A (the "PROMISSORY NOTE").
2. SECURITY FOR PERFORMANCE. Buyer's performance of their obligations
under the Promissory Note will be secured by (a) a Deed of Trust on a
parcel of real property commonly known as 585 F. Street, Gearhart,
Oregon 97138, situated in Clatsop County, Oregon (the "GEARHART
PROPERTY"), in the form attached hereto as EXHIBIT B to be executed by
Tiffany A. Wiederhorn in favor of Seller (the "DEED OF TRUST"), and (b)
the Shares and 100,000 additional
shares of Fog Cutter Capital Group Inc. to be purchased by Buyer from
the C.B. Coleman and Joan F. Coleman Revocable Trust (the "COLEMAN
TRUST") on the date hereof, pursuant to a Stock Pledge Agreement in the
form attached hereto as EXHIBIT C to be executed by Buyer in favor of
Seller (the "STOCK PLEDGE AGREEMENT"). So long as Buyer is not in
default of their obligations under (i) this Agreement, the Promissory
Note, the Deed of Trust or the Stock Pledge Agreement (collectively,
the "FOUNDATION DOCUMENTS") or (ii) that certain Purchase Pursuant to
Put Agreement between the Coleman Trust and Buyer, that certain
Promissory Note made by Buyer in favor of the Coleman Trust, that
certain Deed of Trust executed by Tiffany A. Wiederhorn in favor of the
Coleman Trust or that certain Stock Pledge Agreement executed by Buyer
in favor of the Coleman Trust (collectively, the "COLEMAN TRUST
DOCUMENTS"), Buyer shall retain the right to vote the Shares.
3. CLOSING. The Closing shall take place on the Closing Date at the
offices of Fog Cutter Capital Group Inc. or at such other place as the
parties may mutually agree.
3.1 DELIVERIES BY SELLER. At Closing, Seller shall deliver to
Buyer: (a) the certificate representing the Shares, properly
endorsed for transfer, together with such other documents as
Buyer may reasonably request to effectuate or evidence the
transactions contemplated by this Agreement; and (2) an
executed original of this Agreement.
3.2 DELIVERIES BY BUYER. At Closing, Buyer shall deliver to
Seller: (a) the executed Promissory Note, (b) the executed
Deed of Trust, (c) the executed Stock Pledge Agreement, and
(d) a subordination agreement, in form and substance
satisfactory to Seller, executed by the Wiederhorn Insurance
Trust #2 in favor of Seller, with respect to the Gearhart
Property. At Closing, Buyer shall also immediately deliver
back to Seller the certificate representing the Shares,
endorsed in blank, as well as such other documents and
instruments as Seller may reasonably require to effectuate or
evidence the transactions contemplated by this Agreement and
the other Coleman Trust Documents, and shall pay the Purchase
Price as set forth in SECTION 1.2.
4. MUTUAL RELEASE. Except for those rights, duties and obligations arising
under this Agreement, the Promissory Note, Deed of Trust and Stock
Pledge Agreement, Seller and Buyer hereby agree to release, discharge,
acquit and covenant not to sue each other and each of their respective
heirs and assigns from and against any and all claims, liabilities
damages, or suits of any nature of kind, which they may have against
one another that arise with respect to the Put Agreement.
5. REPRESENTATIONS AND WARRANTIES.
5.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents
and warrants to Buyer as follows: (a) Seller has full power
and authority to sign and deliver this Agreement and to
perform all of Seller's obligations hereunder; (b) this
Agreement is a legal, valid, and binding obligation of Seller,
enforceable in accordance with its terms, except as
enforceability
2
may be limited by bankruptcy, insolvency, or other similar
laws of general application or by general principles of
equity; (c) the signing and delivery of this Agreement by
Seller and the performance by Seller of all of Seller's
obligations under this Agreement will not (i) breach any
agreement to which Seller is a party, (ii) violate any law,
judgment, or order to which Seller is subject, or (iii)
require the consent, authorization, or approval of any person,
including but not limited to any government body; and (d)
Seller has good and marketable title to the Shares, free and
clear of all claims, encumbrances and restrictions (except
those imposed under applicable federal and state securities
laws), and has the unrestricted power and authority to convey
the Shares to Buyer pursuant to this Agreement.
5.2 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer, jointly and
severally, represents and warrants to Seller as follows: (a)
Buyer has full power and authority to sign and deliver this
Agreement and to perform all of Buyer's obligations hereunder;
(b) this Agreement is a legal, valid, and binding obligation
of Buyer, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, or
other similar laws of general application or by general
principles of equity; (c) the signing and delivery of this
Agreement by Buyer and the performance by Buyer of all of
Buyer's obligations under this Agreement will not (i) breach
any agreement to which Buyer is a party, (ii) violate any law,
judgment, or order to which Buyer is subject, or (iii) require
the consent, authorization, or approval of any person,
including but not limited to any governmental body; (d) Buyer
is acquiring the Shares for his own account and not with a
view to resale or distribution; (e) Buyer will not sell,
transfer or otherwise dispose of or encumber the Shares, at
any time during the term of this Agreement other than pursuant
to the Stock Pledge Agreement in favor of Seller and the
pledge of the Shares in favor of the Foundation pursuant to
the Foundation Documents, without the prior written consent of
Seller which may be granted or withheld in its sole and
absolute discretion; PROVIDED, that Seller shall consent to a
sale of the Shares together with a sale of the 100,000
additional shares of Fog Cutter Capital Group Inc. purchased
by Buyer from the Coleman Trust in the event the proceeds from
such sales are equal to or greater than the amount of the then
outstanding obligations under the Foundation Documents and the
Coleman Trust Documents and such proceeds shall be applied to
the payment in full of all outstanding obligations under the
Foundation Documents and the Coleman Trust Documents and
provided that the agreements and documents relating to such
sales are in form and substance satisfactory to the Seller and
the Coleman Trust; and (f) Buyer is Solvent prior to and after
giving effect to the consummation of the transactions
contemplated by the Coleman Trust Documents and the Foundation
Documents ("Solvency" is defined to mean that (i) the fair
market value of all of Buyer's property is in excess of the
total amount of Buyer's debts (including contingent
liabilities); (ii) Buyer is able to pay its debts as they
mature; and (iii) Buyer is not "insolvent" as such term is
defined in Section 101 (32) of the Federal Bankruptcy Code).
6. CONDITIONS PRECEDENT TO CLOSING.
6.1 BUYER'S CONDITIONS. The obligation of Buyer to perform under
this Agreement is subject to the fulfillment of each of the
following conditions: (a) the
3
representations and warranties of Seller contained in this
Agreement shall be true at and as of the Closing Date; and (b)
Seller shall have performed all acts required by this
Agreement to be performed prior to Closing.
6.2 SELLER'S CONDITIONS. The obligation of Seller to perform under
this Agreement is subject to the fulfillment of each of the
following conditions: (a) the representations and warranties
of Buyer contained in this Agreement shall be true at and as
of the Closing Date; and (b) Buyer shall have performed all
acts required by this Agreement to be performed prior to or at
Closing.
7. DEFAULT AND REMEDIES.
7.1 DEFAULT. Time is of the essence of this Agreement. Buyer shall
be in "default" of this Agreement upon the occurrence of an
"Event of Default" under the Promissory Note.
7.2 REMEDIES. Upon "default", Seller shall have, at his option,
the following remedies which shall be cumulative and
nonexclusive: (a) the right to declare the full unpaid balance
of the Purchase Price, together with all interest accrued
thereon, immediately due and payable; or (b) the right to
exercise all remedies granted to Seller under this Agreement,
the Promissory Note, the Deed of Trust or the Stock Pledge
Agreement.
8. MISCELLANEOUS.
8.1 SUCCESSION. This Agreement shall be binding upon and inure to
the benefit of the parties, their heirs, personal
representatives, successors and permitted assigns.
8.2 FURTHER DOCUMENTS. The parties at any time after Closing, upon
request, agree to execute and deliver such further documents
as may be required to carry out the transfer of the Shares
contemplated by this Agreement and to carry out its purposes.
8.3 GOVERNING LAW. This Agreement shall be construed as to both
validity and performance and enforced in accordance with the
laws of the State of Oregon.
8.4 NOTICES. All communications, notices, and demands of any kind
which either party may be required or may desire to give or
serve upon the other, shall be made in writing and (i)
delivered by personal service to the other party, (ii) sent by
overnight service via Federal Express, Express Mail or another
recognized overnight delivery service, or (iii) sent by
facsimile transmission, to the following addresses:
To Buyer: Andrew A. Wiederhorn and Tiffany A. Wiederhorn,
1410 SW Jefferson
Portland, Oregon 97201
Facsimile:
4
To Seller: Clarence and Joan Coleman Charitable Foundation
2401 Merced Street, Suite 300
San Leandro, California 94577
Facsimile:
Any such communication, notice or demand shall be effective and deemed
received upon the earliest of (i) the actual receipt of the same by personal
delivery or otherwise, (ii) one (1) business day after being deposited with a
nationally recognized overnight courier service as required above, or (iii) on
the day sent if sent by facsimile with confirmation on or before 5:00 p.m. New
York time on any business day or on the next business day if so delivered after
5:00 p.m. New York time. Rejection or other refusal to accept or the inability
to deliver because of changed address of which no notice was given as herein
required shall be deemed to be receipt of the communication, notice or demand
sent. For purposes of this paragraph, the name of any addressee and/or an
address may be changed by giving written notice of such change in the manner
herein provided for giving notice. Unless and until such written notice is
received, the last address and addressee as stated by written notice, or
provided herein if not written notice of change has been sent or received, shall
be deemed to continue in effect for all purposes hereunder.
8.5 WAIVERS. The waiver by any party to this Agreement of a breach
of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach.
8.6 HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only and shall not be
deemed to be part of this Agreement or affect the meaning or
interpretation of this Agreement.
8.7 COUNTERPARTS. This Agreement may be executed by the parties in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
SELLER: BUYER:
/S/ CLARENCE B. COLEMAN /S/ ANDREW A. WIEDERHORN
--------------------------------- ------------------------
Clarence B. Coleman, as President Andrew A. Wiederhorn
of the Clarence and Joan
Coleman Charitable Foundation
/S/ TIFFANY A. WIEDERHORN
------------------------
Tiffany A. Wiederhorn
5
EXHIBIT 4
PROMISSORY NOTE
$645,489.26 As of January 2, 2007
FOR VALUE RECEIVED, Andrew A. Wiederhorn and Tiffany A. Wiederhorn
(each an "OBLIGOR" and collectively, the "OBLIGORS") jointly and severally
promise to pay to the order of the C.B. Coleman and Joan F. Coleman Revocable
Trust originally dated 3-12-94 and restated on 12-30-04 ("OBLIGEE"), at 2401
Merced Street, Suite 300, San Leandro, California 94577 or such other place as
the holder hereof may from time to time designate, the principal sum of Six
Hundred Forty-Five Thousand Four Hundred Eighty-Nine Dollars and 26/100
($645,489.26), with interest on the unpaid principal balance from time to time
outstanding. Interest shall accrue on the unpaid balance of the Note at the rate
of five percent (5%) per annum during the calendar year of 2007, six percent
(6%) per annum during the calendar year of 2008, seven percent (7%) per annum
during the calendar year of 2009, and eight percent (8%) per annum for the
calendar year 2010 and for every year thereafter. Accrued interest on this Note
shall be due and payable by Obligors on the last business day of each month,
beginning January 2007, and shall continue to be paid each month thereafter
until the principal balance is paid in full. Obligors shall also make annual
principal payments of Fifty Thousand Dollars ($50,000.00) on or before January
15 of each calendar year, beginning on January 15, 2008 and continuing each
calendar year thereafter until the outstanding balance of this Note is paid in
full. All outstanding principal and accrued interest on this Note not earlier
due and payable pursuant to other provisions hereof shall be finally due and
payable on January 15, 2012 (the "MATURITY DATE"). All payments of principal and
interest shall be made to the holder of this Note in lawful money of the United
States of America in immediately available funds, which shall be legal tender
for public and private debts. Interest shall be calculated on the basis of a
360-day year for actual days elapsed. In no event shall the interest rate
applicable at any time to this Note exceed the maximum rate permitted by law.
This Note is secured by: (A) a Deed of Trust (the "DEED OF TRUST") on a parcel
of real property commonly known as 585 F. Street, Gearhart, Oregon 97138,
situated in Clatsop County, Oregon ("GEARHART PROPERTY"); and (B) a Stock Pledge
Agreement (the "STOCK PLEDGE AGREEMENT") containing Obligors pledge of a
security interest in 423,189 shares of common stock of Fog Cutter Capital Group
Inc. (the "SHARES").
ATTACHED AS EXHIBIT "A" HERETO IS A COPY OF THE DEED OF TRUST AND
ATTACHED AS EXHIBIT "B" HERETO IS A COPY OF THE STOCK PLEDGE AGREEMENT, BOTH OF
WHICH WHICH ARE MADE A PART HEREOF.
Obligors may prepay any amounts of principal or interest due hereunder
at any time, without the consent of Obligee and without penalty. Any prepayment
of principal of this Note shall be applied to the remaining principal balance
due under this Note. In accordance with the Stock Pledge Agreement, prior to an
Event of Default, any and all dividends, interest or other distributions paid in
respect of the Shares shall be delivered to the Secured Party or its designated
agent and applied to the payment of the principal balance under this Note.
Each payment to be made hereunder shall be free and clear of, and
without deductions for or on account of any present or future taxes, imposts,
charges, levies, compulsory loans or other withholdings or deductions
whatsoever. If the Obligors, or either of them, shall be required by applicable
law to make any such deduction from any payment hereunder (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this paragraph) the holder of this Note receives an amount equal to the sum it
would have received had no deductions been made, (ii) the Obligors shall make
such deductions, and (iii) the Obligors shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law. In addition, the Obligors agree to pay, if necessary, all stamp,
documentary, or similar taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
instrument.
Upon the occurrence of any of the following (each, an "EVENT OF
DEFAULT"): (i) the failure to pay, when due (whether at the Maturity Date, by
acceleration, by notice from Obligors as to a prepayment or otherwise), any
payment of principal or interest or other amount due hereunder, PROVIDED that
such failure to make payment is not cured by Obligors within ten (10) days of
written notice that any payment is past due, PROVIDED FURTHER that the holder
shall not be required to provide notice of past due payment more than once in
any 12 month period; (ii) either Obligor becomes insolvent or unable to pay his
or her debts as they become due; (iii) the making of an assignment for the
benefit of creditors by any party liable for the payment of this Note, whether
as maker, endorser, guarantor, surety, or otherwise, or the voluntary
appointment (at the request of a receiver, custodian, liquidator, or trustee in
bankruptcy) of a receiver, custodian, liquidator, or trustee in bankruptcy of
any such party's property or the filing by any such part of a petition in
bankruptcy or other similar proceeding under law for the relief of debtors; (iv)
the filing against any party liable for the payment of this Note, whether as
maker, endorser, guarantor, surety, or otherwise, of a petition in bankruptcy or
similar proceeding under the law for the relief of debtors, or the involuntary
appointment of a receiver custodian, liquidator, or trustee in bankruptcy of the
property of any such party, and such petition or appointment is not vacated or
discharged within sixty (60) calendar days after the filing or making thereof;
(v) granting any security interest in the Collateral (as defined in the Stock
Pledge Agreement) (other than to the holder of this Note, the Clarence and Joan
Coleman Charitable Foundation (the "FOUNDATION") or as otherwise permitted by
Lender in writing); (vi) granting a mortgage or security interest on the
Gearhart Property (other than to the holder of this Note, the Foundation or the
following existing mortgage holders holding mortgages on the Gearhart Property
on the date hereof: Citimortgage, Inc., Citibank Federal Savings Bank and
Wiederhorn Insurance Trust #2); (vii) the amount of debt secured by the existing
mortgage on the Gearhart Property in favor of Citimortgage, Inc. shall at any
time exceed $2,097,875; (viii) the amount of debt secured by the existing
mortgage on the Gearhart Property in favor of Citibank Federal Savings Bank
shall at any time exceed $1,214,800, (ix) the amount of debt secured by the
existing mortgage on the Gearhart Property in favor of Wiederhorn Insurance
Trust #2 shall at any time exceed $573,500; (x) the occurrence of any default or
event of default (after giving effect to any applicable grace or cure period)
under any of the loan or mortgage documents existing with respect to the
mortgages in favor of Citimortgage, Inc., Citibank Federal Savings Bank or the
Wiederhorn Insurance Trust #2 or the taking of action by any of such mortgagees
to foreclose on the Gearhart Property; (xi) either of
2
the subordination agreements executed on the date hereof by the Wiederhorn
Insurance Trust #2 in favor of the C.B. Coleman and Joan F. Coleman Revocable
Trust originally dated 3-12-94 and restated on 12-30-04 and the Foundation
(collectively, the "SUBORDINATION AGREEMENTS"), respectively, ceases to be
valid, binding and enforceable in accordance with its terms; (xii) the
occurrence of any default or event of default (after giving effect to any
applicable grace or cure period) under either of the Subordination Agreements;
(xiii) any representation or warranty made by Obligors in this Note, the Deed of
Trust, the Stock Pledge Agreement or that certain Purchase Pursuant to Put
Agreement between the Obligors and the C.B. Coleman and Joan F. Coleman
Revocable Trust (the "PURCHASE Agreement") is found to have been untrue or
misleading in any material respect as of the date when made; (xiv) the breach or
violation by either Obligor of any covenant contained in this Note which is not
otherwise listed as a separate Event of Default in this paragraph, PROVIDED THAT
such breach or violation shall not be deemed to be an Event of Default unless
the Obligors fail to cure such breach or violation to the reasonable
satisfaction of the holder of this Note within thirty (30) days; or (xv) the
breach or violation by, the Obligors, or either of them, of any covenant
contained in the Stock Pledge Agreement, Deed of Trust or Purchase Agreement
(after giving effect to any applicable grace or cure period) or the occurrence
of any default or event of default (after giving effect to any applicable grace
or cure period) under the Stock Pledge Agreement, Purchase Agreement, Deed of
Trust or Foundation Documents (as defined in the Stock Pledge Agreement), or any
of the Stock Pledge Agreement, Deed of Trust or Purchase Agreement ceases to be
valid, binding and enforceable in accordance with its terms; THEN, in the case
of any Event of Default other than those referred to in clause (iii) and (iv) of
this paragraph, the holder of this Note may declare by notice to the Obligors,
or either of them, any and all obligations of the Obligors to be immediately due
and payable, and in case of any Event of Default referred to in clause (iii) and
(iv) of this sentence all of the obligations of the Obligors hereunder shall
automatically become due and payable immediately without notice or demand.
Obligors shall immediately notify the holder of this note in writing
upon the occurrence of a default or event of default under any of the loan or
mortgage documents existing with respect to the mortgages in favor of
Citimortgage, Inc., Citibank Federal Savings Bank or the Wiederhorn Insurance
Trust #2 or the taking of action by any of such mortgagees to foreclose on the
Gearhart Property, and together with such notice Obligors shall include a copy
of any written default or other applicable notice it received from any and all
such mortgagees.
All reasonable fees and expenses (including all legal fees and
expenses) incurred by the C.B. Coleman and Joan F. Coleman Revocable Trust in
connection with the preparation and negotiation of this Note, the Purchase
Agreement, the Stock Pledge Agreement, the Deed of Trust and all related
documents shall be paid by Obligors to the C.B. Coleman and Joan F. Coleman
Revocable Trust or its attorneys and advisors, as applicable, at Closing
(defined in the Purchase Agreement), in immediately available federal funds or
such other manner as may be directed by Clarence B. Coleman, as trustee of the
C.B. Coleman and Joan F. Coleman Revocable Trust or its attorney, as applicable.
If any principal, interest or other amount due under this Note is not paid when
due, whether at maturity or by acceleration, the Obligors agree to pay all costs
of collection, including without limitation reasonable attorneys' fees, and all
expenses in connection with the protection or realization of the collateral
securing this Note or the enforcement of any guarantee hereof incurred by the
holder hereof on account of such
3
collection, whether or not suit is filed hereon. In addition, the Obligors agree
to pay all attorneys' fees and disbursements incurred by the holder of this Note
in obtaining advice as to its rights and remedies in connection with this Note,
upon the occurrence of an Event of Default hereunder.
Presentment, demand for payment, protest, notices of protest, notice of
dishonor and non-payment of this Note and any or all other notices or demands in
connection with the delivery, acceptance, performance, default, endorsement or
guarantee of this Note are hereby separately waived by each Obligor. The
liability of each Obligor hereunder shall be unconditional and shall not be in
any manner affected by any indulgence whatsoever granted or consented to by the
holder hereof, including but not limited to any extension of time, renewal,
waiver or other modification. All of the obligations of the Obligors hereunder
are joint and several. The holder of this Note may, in its sole and absolute
discretion, enforce the provisions hereof against either Obligor and shall not
be required to proceed against both Obligors jointly or seek payment from the
Obligors ratably. No single or partial exercise of any power hereunder by the
holder of this Note under any mortgage, deed of trust or security agreement
securing this Note shall preclude other or further exercise thereof or the
exercise of any other power. The holder hereof shall at all times have the right
to proceed against any portion of the security held therefore in such order and
in such manner as the holder may deem fit, without waiving any rights with
respect to any other security. No delay or omission on the part of the holder
hereof in exercising any right hereunder shall operate as a waiver of such right
or of any other right under this Note. The release of any party liable on this
Note shall not operate to release any other party liable hereon. The holder of
this Note may accept late payments, or partial payments, even though marked
"payment in full" or containing words of similar import or other conditions,
without waiving any of its rights. No amendment, modification or waiver of any
provision of this Note nor consent to any departure by an Obligor therefrom
shall be effective, irrespective of any course of dealing, unless the same shall
be in writing and signed by the holder of this Note, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. This Note cannot be changed or terminated orally or by
estoppel or waiver or by any alleged oral modification regardless of any claimed
partial performance referable thereto.
All communications, notices, and demands of any kind which either party
may be required or may desire to give or serve upon the other, shall be made in
writing and (i) delivered by personal service to the other party, (ii) sent by
overnight service via Federal Express, Express Mail or another recognized
overnight delivery service, or (iii) sent by facsimile transmission, to the
following addresses:
To Obligors: Andrew A. Wiederhorn and Tiffany A. Wiederhorn,
1410 SW Jefferson
Portland, Oregon 97201
Facsimile:
To Obligee: Clarence B. Coleman, Trustee
C.B. Coleman and Joan F. Coleman Revocable Trust
2401 Merced Street, Suite 300
San Leandro, California 94577
Facsimile:
4
Any such communication, notice or demand shall be effective and deemed
received upon the earliest of (i) the actual receipt of the same by personal
delivery or otherwise, (ii) one (1) business day after being deposited with a
nationally recognized overnight courier service as required above, or (iii) on
the day sent if sent by facsimile with confirmation on or before 5:00 p.m. New
York time on any business day or on the next business day if so delivered after
5:00 p.m. New York time. Rejection or other refusal to accept or the inability
to deliver because of changed address of which no notice was given as herein
required shall be deemed to be receipt of the communication, notice or demand
sent. For purposes of this paragraph, the name of any addressee and/or an
address may be changed by giving written notice of such change in the manner
herein provided for giving notice. Unless and until such written notice is
received, the last address and addressee as stated by written notice, or
provided herein if not written notice of change has been sent or received, shall
be deemed to continue in effect for all purposes hereunder.
The holder of this Note may assign or otherwise transfer its rights
hereunder to any other person or entity. None of the rights or obligations of
either of the Obligors hereunder may be assigned or otherwise transferred
without the prior written consent of the holder of this Note at such time, and
any such assignment or transfer shall be null and void.
This Note is fully recourse to the Obligors.
This Note has been executed and delivered by the undersigned Obligors
in the State of Oregon and is to be governed by and construed in accordance with
the laws of the State of Oregon.
/S/ ANDREW A. WIEDERHORN
------------------------------------
Andrew A. Wiederhorn
/S/ TIFFANY A. WIEDERHORN
------------------------------------
Tiffany A. Wiederhorn
5
EXHIBIT 5
PROMISSORY NOTE
$1,811,214.40 As of January 2, 2007
FOR VALUE RECEIVED, Andrew A. Wiederhorn and Tiffany A. Wiederhorn
(each an "OBLIGOR" and collectively, the "OBLIGORS") jointly and severally
promise to pay to the order of the Clarence and Joan Coleman Charitable
Foundation ("OBLIGEE"), at 2401 Merced Street, Suite 300, San Leandro,
California 94577 or such other place as the holder hereof may from time to time
designate, the principal sum of One Million Eight Hundred Eleven Thousand Two
Hundred Fourteen Dollars and 40/100 ($1,811,214.40), with interest on the unpaid
principal balance from time to time outstanding. Interest shall accrue on the
unpaid balance of the Note at the rate of five percent (5%) per annum during the
calendar year of 2007, six percent (6%) per annum during the calendar year of
2008, seven percent (7%) per annum during the calendar year of 2009, and eight
percent (8%) per annum for the calendar year 2010 and for every year thereafter.
Accrued interest on this Note shall be due and payable by Obligors on the last
business day of each month, beginning January 2007, and shall continue to be
paid each month thereafter until the principal balance is paid in full. Obligors
shall also make annual principal payments of Fifty Thousand Dollars ($50,000.00)
on or before January 15 of each calendar year, beginning on January 15, 2008 and
continuing each calendar year thereafter until the outstanding balance of this
Note is paid in full. All outstanding principal and accrued interest on this
Note not earlier due and payable pursuant to other provisions hereof shall be
finally due and payable on January 15, 2012 (the "MATURITY DATE"). All payments
of principal and interest shall be made to the holder of this Note in lawful
money of the United States of America in immediately available funds, which
shall be legal tender for public and private debts. Interest shall be calculated
on the basis of a 360-day year for actual days elapsed. In no event shall the
interest rate applicable at any time to this Note exceed the maximum rate
permitted by law. This Note is secured by: (A) a Deed of Trust (the "DEED OF
TRUST") on a parcel of real property commonly known as 585 F. Street, Gearhart,
Oregon 97138, situated in Clatsop County, Oregon ("GEARHART PROPERTY"); and (B)
a Stock Pledge Agreement (the "STOCK PLEDGE AGREEMENT") containing Obligors
pledge of a security interest in 423,189 shares of common stock of Fog Cutter
Capital Group Inc. (the "SHARES").
ATTACHED AS EXHIBIT "A" HERETO IS A COPY OF THE DEED OF TRUST AND
ATTACHED AS EXHIBIT "B" HERETO IS A COPY OF THE STOCK PLEDGE AGREEMENT, BOTH OF
WHICH WHICH ARE MADE A PART HEREOF.
Obligors may prepay any amounts of principal or interest due hereunder
at any time, without the consent of Obligee and without penalty. Any prepayment
of principal of this Note shall be applied to the remaining principal balance
due under this Note. In accordance with the Stock Pledge Agreement, prior to an
Event of Default, any and all dividends, interest or other distributions paid in
respect of the Shares shall be delivered to the Secured Party or its designated
agent and applied to the payment of the principal balance under this Note.
Each payment to be made hereunder shall be free and clear of, and
without deductions for or on account of any present or future taxes, imposts,
charges, levies, compulsory loans or other withholdings or deductions
whatsoever. If the Obligors, or either of them, shall be required by applicable
law to make any such deduction from any payment hereunder (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this paragraph) the holder of this Note receives an amount equal to the sum it
would have received had no deductions been made, (ii) the Obligors shall make
such deductions, and (iii) the Obligors shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law. In addition, the Obligors agree to pay, if necessary, all stamp,
documentary, or similar taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
instrument.
Upon the occurrence of any of the following (each, an "EVENT OF
DEFAULT"): (i) the failure to pay, when due (whether at the Maturity Date, by
acceleration, by notice from Obligors as to a prepayment or otherwise), any
payment of principal or interest or other amount due hereunder, PROVIDED that
such failure to make payment is not cured by Obligors within ten (10) days of
written notice that any payment is past due, PROVIDED FURTHER that the holder
shall not be required to provide notice of past due payment more than once in
any 12 month period; (ii) either Obligor becomes insolvent or unable to pay his
or her debts as they become due; (iii) the making of an assignment for the
benefit of creditors by any party liable for the payment of this Note, whether
as maker, endorser, guarantor, surety, or otherwise, or the voluntary
appointment (at the request of a receiver, custodian, liquidator, or trustee in
bankruptcy) of a receiver, custodian, liquidator, or trustee in bankruptcy of
any such party's property or the filing by any such part of a petition in
bankruptcy or other similar proceeding under law for the relief of debtors; (iv)
the filing against any party liable for the payment of this Note, whether as
maker, endorser, guarantor, surety, or otherwise, of a petition in bankruptcy or
similar proceeding under the law for the relief of debtors, or the involuntary
appointment of a receiver custodian, liquidator, or trustee in bankruptcy of the
property of any such party, and such petition or appointment is not vacated or
discharged within sixty (60) calendar days after the filing or making thereof;
(v) granting any security interest in the Collateral (as defined in the Stock
Pledge Agreement) (other than to the holder of this Note, the C.B. Coleman and
Joan F. Coleman Revocable Trust originally dated 3-12-94 and restated on
12-30-04 (the "COLEMAN TRUST") or as otherwise permitted by Lender in writing);
(vi) granting a mortgage or security interest on the Gearhart Property (other
than to the holder of this Note, the Coleman Trust or the following existing
mortgage holders holding mortgages on the Gearhart Property on the date hereof:
Citimortgage, Inc., Citibank Federal Savings Bank and Wiederhorn Insurance Trust
#2); (vii) the amount of debt secured by the existing mortgage on the Gearhart
Property in favor of Citimortgage, Inc. shall at any time exceed $2,097,875;
(viii) the amount of debt secured by the existing mortgage on the Gearhart
Property in favor of Citibank Federal Savings Bank shall at any time exceed
$1,214,800, (ix) the amount of debt secured by the existing mortgage on the
Gearhart Property in favor of Wiederhorn Insurance Trust #2 shall at any time
exceed $573,500; (x) the occurrence of any default or event of default (after
giving effect to any applicable grace or cure period) under any of the loan or
mortgage documents existing with respect to the mortgages in favor of
Citimortgage, Inc., Citibank Federal Savings Bank or the Wiederhorn Insurance
Trust #2 or the
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taking of action by any of such mortgagees to foreclose on the Gearhart
Property; (xi) either of the subordination agreements executed on the date
hereof by the Wiederhorn Insurance Trust #2 in favor of the Obligee and the
Coleman Trust (collectively, the "SUBORDINATION AGREEMENTS"), respectively,
ceases to be valid, binding and enforceable in accordance with its terms; (xii)
the occurrence of any default or event of default (after giving effect to any
applicable grace or cure period) under either of the Subordination Agreements;
(xiii) any representation or warranty made by Obligors in this Note, the Deed of
Trust, the Stock Pledge Agreement or that certain Purchase Pursuant to Put
Agreement between the Obligors and the Obligee (the "PURCHASE AGREEMENT") is
found to have been untrue or misleading in any material respect as of the date
when made; (xiv) the breach or violation by either Obligor of any covenant
contained in this Note which is not otherwise listed as a separate Event of
Default in this paragraph, PROVIDED THAT such breach or violation shall not be
deemed to be an Event of Default unless the Obligors fail to cure such breach or
violation to the reasonable satisfaction of the holder of this Note within
thirty (30) days; or (xv) the breach or violation by, the Obligors, or either of
them, of any covenant contained in the Stock Pledge Agreement, Deed of Trust or
Purchase Agreement (after giving effect to any applicable grace or cure period)
or the occurrence of any default or event of default (after giving effect to any
applicable grace or cure period) under the Stock Pledge Agreement, Purchase
Agreement, Deed of Trust or Coleman Trust Documents (as defined in the Stock
Pledge Agreement), or any of the Stock Pledge Agreement, Deed of Trust or
Purchase Agreement ceases to be valid, binding and enforceable in accordance
with its terms; THEN, in the case of any Event of Default other than those
referred to in clause (iii) and (iv) of this paragraph, the holder of this Note
may declare by notice to the Obligors, or either of them, any and all
obligations of the Obligors to be immediately due and payable, and in case of
any Event of Default referred to in clause (iii) and (iv) of this sentence all
of the obligations of the Obligors hereunder shall automatically become due and
payable immediately without notice or demand.
Obligors shall immediately notify the holder of this note in writing
upon the occurrence of a default or event of default under any of the loan or
mortgage documents existing with respect to the mortgages in favor of
Citimortgage, Inc., Citibank Federal Savings Bank or the Wiederhorn Insurance
Trust #2 or the taking of action by any of such mortgagees to foreclose on the
Gearhart Property, and together with such notice Obligors shall include a copy
of any written default or other applicable notice it received from any and all
such mortgagees.
All reasonable fees and expenses (including all legal fees and
expenses) incurred by the Obligee in connection with the preparation and
negotiation of this Note, the Purchase Agreement, the Stock Pledge Agreement,
the Deed of Trust and all related documents shall be paid by Obligors to the
Obligee or its attorneys and advisors, as applicable, at Closing (defined in the
Purchase Agreement), in immediately available federal funds or such other manner
as may be directed by Clarence B. Coleman, as President of the Obligee or its
attorney, as applicable. If any principal, interest or other amount due under
this Note is not paid when due, whether at maturity or by acceleration, the
Obligors agree to pay all costs of collection, including without limitation
reasonable attorneys' fees, and all expenses in connection with the protection
or realization of the collateral securing this Note or the enforcement of any
guarantee hereof incurred by the holder hereof on account of such collection,
whether or not suit is filed hereon. In addition, the Obligors agree to pay all
attorneys' fees and disbursements incurred by the
3
holder of this Note in obtaining advice as to its rights and remedies in
connection with this Note, upon the occurrence of an Event of Default hereunder.
Presentment, demand for payment, protest, notices of protest, notice of
dishonor and non-payment of this Note and any or all other notices or demands in
connection with the delivery, acceptance, performance, default, endorsement or
guarantee of this Note are hereby separately waived by each Obligor. The
liability of each Obligor hereunder shall be unconditional and shall not be in
any manner affected by any indulgence whatsoever granted or consented to by the
holder hereof, including but not limited to any extension of time, renewal,
waiver or other modification. All of the obligations of the Obligors hereunder
are joint and several. The holder of this Note may, in its sole and absolute
discretion, enforce the provisions hereof against either Obligor and shall not
be required to proceed against both Obligors jointly or seek payment from the
Obligors ratably. No single or partial exercise of any power hereunder by the
holder of this Note under any mortgage, deed of trust or security agreement
securing this Note shall preclude other or further exercise thereof or the
exercise of any other power. The holder hereof shall at all times have the right
to proceed against any portion of the security held therefore in such order and
in such manner as the holder may deem fit, without waiving any rights with
respect to any other security. No delay or omission on the part of the holder
hereof in exercising any right hereunder shall operate as a waiver of such right
or of any other right under this Note. The release of any party liable on this
Note shall not operate to release any other party liable hereon. The holder of
this Note may accept late payments, or partial payments, even though marked
"payment in full" or containing words of similar import or other conditions,
without waiving any of its rights. No amendment, modification or waiver of any
provision of this Note nor consent to any departure by an Obligor therefrom
shall be effective, irrespective of any course of dealing, unless the same shall
be in writing and signed by the holder of this Note, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. This Note cannot be changed or terminated orally or by
estoppel or waiver or by any alleged oral modification regardless of any claimed
partial performance referable thereto.
All communications, notices, and demands of any kind which either party
may be required or may desire to give or serve upon the other, shall be made in
writing and (i) delivered by personal service to the other party, (ii) sent by
overnight service via Federal Express, Express Mail or another recognized
overnight delivery service, or (iii) sent by facsimile transmission, to the
following addresses:
To Obligors: Andrew A. Wiederhorn and Tiffany A. Wiederhorn,
1410 SW Jefferson
Portland, Oregon 97201
Facsimile:
To Obligee: Clarence B. Coleman, Trustee
C.B. Coleman and Joan F. Coleman Revocable Trust
2401 Merced Street, Suite 300
San Leandro, California 94577
Facsimile:
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Any such communication, notice or demand shall be effective and deemed
received upon the earliest of (i) the actual receipt of the same by personal
delivery or otherwise, (ii) one (1) business day after being deposited with a
nationally recognized overnight courier service as required above, or (iii) on
the day sent if sent by facsimile with confirmation on or before 5:00 p.m. New
York time on any business day or on the next business day if so delivered after
5:00 p.m. New York time. Rejection or other refusal to accept or the inability
to deliver because of changed address of which no notice was given as herein
required shall be deemed to be receipt of the communication, notice or demand
sent. For purposes of this paragraph, the name of any addressee and/or an
address may be changed by giving written notice of such change in the manner
herein provided for giving notice. Unless and until such written notice is
received, the last address and addressee as stated by written notice, or
provided herein if not written notice of change has been sent or received, shall
be deemed to continue in effect for all purposes hereunder.
The holder of this Note may assign or otherwise transfer its rights
hereunder to any other person or entity. None of the rights or obligations of
either of the Obligors hereunder may be assigned or otherwise transferred
without the prior written consent of the holder of this Note at such time, and
any such assignment or transfer shall be null and void.
This Note is fully recourse to the Obligors.
This Note has been executed and delivered by the undersigned Obligors
in the State of Oregon and is to be governed by and construed in accordance with
the laws of the State of Oregon.
/S/ ANDREW A. WIEDERHORN
------------------------------------
Andrew A. Wiederhorn
/S/ TIFFANY A. WIEDERHORN
------------------------------------
Tiffany A. Wiederhorn
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EXHIBIT 6
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement ("AGREEMENT") is between the C.B. Coleman and Joan
F. Coleman Revocable Trust ("SECURED PARTY"), and Andrew A. Wiederhorn and
Tiffany A. Wiederhorn (each a "PLEDGOR" and collectively, the "PLEDGORS").
SECTION 1. DEFINITIONS
1.1 CAPITALIZED TERMS. Unless defined elsewhere in this Agreement,
capitalized terms used in this Agreement will have the
following meanings:
"COLLATERAL" means the Shares, together with any and all
rights, coupons, warrants or rights to subscribe, options,
dividends, liquidating dividends, splits, dividends paid in
stock, dividends paid in securities, new or reclassified
Shares, or any other property which either Pledgor is or may
hereafter become entitled to receive on account of such
Shares, any and all substitutions, additions or replacements
thereof, and any and all proceeds thereof.
"EVENT OF DEFAULT" means any event specified in SECTION 7.1.
"OBLIGATIONS" means all of Pledgors' obligations arising out
of:
(a) the Promissory Note dated as of January 2, 2007, in
the principal amount of $645,489.26 made by Pledgors,
payable to Secured Party ("NOTE");
(b) the Purchase Pursuant to Put Agreement dated as of
January 2, 2007 by and between Pledgors and the
Secured Party for the sale of 100,000 shares of Fog
Cutter Capital Group Inc. by the Secured Party to
Pledgors ("PURCHASE AGREEMENT"); and
(c) this Agreement.
"SHARES" means 423,189 shares of Fog Cutter Capital Group Inc.
common stock, par value $0.0001 per share, evidenced by the
certificates described on SCHEDULE 1 attached hereto and made
a part hereof, of which (a) 100,000 shares were purchased by
Pledgors from the Secured Party pursuant to the Purchase
Agreement and (b) 323,189 shares were purchased by Pledgors
from the Clarence and Joan Coleman Charitable Foundation (the
"FOUNDATION") pursuant to the that certain Purchase Pursuant
to Put Agreement between the Foundation and Pledgors (together
with the related promissory note, pledge agreement and deed of
trust, the "FOUNDATION DOCUMENTS").
SECTION 2. SECURITY INTEREST
2.1 GRANT. As security for the full and prompt payment and
performance of the Obligations, the Pledgors hereby pledge,
assign, transfer, deliver and set over to the Secured Party,
and grant to the Secured Party a continuing lien upon and
security interest in, all of the Pledgor's right, title and
interest in and to the Collateral.
2.2 PERFECTION. All certificates currently representing the
Collateral, accompanied by undated Stock Powers executed in
blank, in the form of EXHIBIT A attached hereto, shall be
delivered to the Secured Party or its designated agent
simultaneous with the execution of this Agreement.
If a Pledgor shall receive, by virtue of his or her being or
having been an owner of any of the Collateral, any (i) stock
certificate or other instrument, (ii) option or right, whether
as an addition to, substitution for, or in exchange for, any
Collateral, or otherwise, (iii) dividends payable in cash or
in securities or other property or (iv) dividends or other
distributions in connection with a partial or total
liquidation or dissolution or in connection with a reduction
of capital, capital surplus or paid-in surplus, such Pledgor
shall receive such stock certificate, instrument, option,
right, payment or distribution in trust for the benefit of the
Secured Party, and shall deliver it forthwith to the Secured
Party or its designated agent in the exact form received, with
any necessary endorsement and/or appropriate stock powers duly
executed in blank, to be held by the Secured Party or its
designated agent, as Collateral.
Pledgors hereby irrevocably authorize the Secured Party at any
time and from time to time to file in any Uniform Commercial
Code jurisdiction any initial financing statements and
amendments thereto that indicate the Collateral and contain
any other information required by part 5 of Article 9 of the
Uniform Commercial Code of the applicable state. Pledgors
agree to furnish any such information to the Secured Party
promptly upon request.
Upon Secured Party's request, Pledgors will execute and
deliver such other documents and instruments and take any
other actions that Secured Party deems reasonably necessary to
perfect, protect and continue Secured Party's security
interest in the Collateral.
2.3 TERMINATION. Upon Pledgors' request after the full and
indefeasible payment and performance of the Obligations,
Secured Party will take all actions that Pledgors deem
reasonably necessary to terminate Secured Party's security
interest in the Collateral. It is understood by the parties,
that following the indefeasible payment and performance of the
Obligations, to the extent that any obligations under the
Foundation Documents remain outstanding, Secured Party will
deliver to the Foundation all certificates and endorsements in
the Secured Party's possession which evidence Collateral.
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF PLEDGORS
Each Pledgor represents and warrants to Secured Party as
follows:
3.1 AUTHORITY. Pledgors have full power and authority to sign and
deliver this Agreement and to perform all of Pledgors'
obligations under this Agreement.
3.2 BINDING OBLIGATION. This Agreement is the legal, valid, and
binding obligation of Pledgors, enforceable in accordance with
its terms, except as enforceability may be limited by
bankruptcy, insolvency, or other similar laws of general
application or by general principles of equity.
3.3 NO CONFLICTS. The signing and delivery of this Agreement by
Pledgors and the performance by Pledgors of all of Pledgors'
obligations under this Agreement will not:
(a) breach any agreement to which either Pledgor is a
party, or give any person the right to accelerate any
obligation of either Pledgor;
(b) violate any law, judgment, or order to which either
Pledgor is subject; or
(c) require the consent, authorization, or approval of
any person, including but not limited to any
governmental body.
3.4 OWNERSHIP. Pledgors have good title to the Collateral, free
from all liens, mortgages, pledges, security interests, and
other encumbrances except encumbrances in favor of Secured
Party and the Foundation. Pledgors have the right and power to
transfer and assign the Collateral to Secured Party, free from
any restriction or condition.
3.5 APPRAISAL. The Property (as defined in that certain Trust
Deed, effective January 2, 2007, made by Tiffany A. Wiederhorn
in favor of the Secured Party (the "TRUST DEED")) conveyed to
the Secured Party pursuant to the Trust Deed is the same
property which is the subject of the appraisal of March 5,
2007 by Robert Tershel, a copy of which is attached hereto as
EXHIBIT B, and the appraisal does not include any property
which does not comprise the Property.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SECURED PARTY
The Secured Party hereby represents and warrants that the person
executing this Agreement for an on behalf of the C.B. Coleman and Joan
F. Coleman Revocable Trust is authorized to do so and to undertake all
other actions in connection with completing the transactions
contemplated herein.
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SECTION 5. COVENANTS OF PLEDGORS
Each Pledgor covenants to Secured Party that the Pledgors will perform
the following covenants and obligations and observe the following
conditions until the Obligations are fully and indefeasibly paid and
performed:
5.1 OWNERSHIP. Pledgors will keep the Collateral free from all
liens, mortgages, pledges, security interests, and other
encumbrances except encumbrances in favor of Secured Party and
the Foundation.
5.2 IMPAIRMENT. Pledgors shall not take or fail to take any action
which would in any manner impair the validity or
enforceability of the Secured Party's security interest in any
Collateral.
SECTION 6. RIGHTS AND OBLIGATIONS CONCERNING COLLATERAL
6.1 VOTING. (a) So long as no Event of Default shall have occurred
and be continuing the Pledgors may exercise any and all voting
and other consensual rights pertaining to the Collateral for
any purpose not inconsistent with the terms of this Agreement,
the Note, the Purchase Agreement or the Foundation Documents;
PROVIDED, HOWEVER, that neither Pledgor will exercise any such
right if in his or her judgment, such action (or inaction) is
reasonably likely to have a material adverse effect on (i) the
business or financial condition of Fog Cutter Capital Group
Inc., (ii) the value of the Collateral, or (iii) the ability
of the Secured Party to enforce the Obligations or its rights
and remedies under this Agreement, the Note or the Purchase
Agreement.
(b) Upon the occurrence and during the continuance of an Event
of Default, all rights of the Pledgors to exercise the voting
and other consensual rights which it would otherwise be
entitled to exercise pursuant to paragraph (a) of this SECTION
6.1, shall cease, and all such rights shall thereupon become
vested in the Secured Party which shall thereupon have the
sole right to exercise such voting and other consensual rights
6.2 DIVIDENDS.
At all times, whether or not an Event of Default shall have
occurred and be continuing, any and all dividends, interest or
other distributions paid in respect of the Collateral shall be
delivered to the Secured Party or its designated agent to hold
as Collateral. Prior to the occurrence of an Event of Default
all such dividends, interest and other distributions received
by the Secured Party shall be applied immediately to the
payment of the principal balance under the Note, and upon the
occurrence of an Event of Default such dividends, interest and
other distributions shall be applied to the payment of the
Obligations in the Secured Party's discretion in accordance
with SECTION 7.4 of this Agreement. All dividends,
distributions, interest and other payments which are received
by a Pledgor by virtue of his or her being or having been an
owner of any of the
4
Collateral shall be received in trust for the benefit of the
Secured Party, shall be segregated from other funds of the
Pledgors, and shall be forthwith paid over to the Secured
Party or its designated agent as Collateral in the exact form
received with any necessary indorsement and/or appropriate
stock powers duly executed in blank, to be held by the Secured
Party as Collateral and applied immediately by the Secured
Party to the payment of principal under the Note or to the
payment of other Obligations as provided for above.
6.3 ATTORNEY-IN-FACT. Each Pledgor hereby irrevocably appoints the
Secured Party as its attorney-in-fact and proxy, with full
authority in the place and stead and in its name or otherwise,
from time to time, in the Secured Party's reasonable
discretion to take any action and to execute any instrument
which the Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement subject to the
rights of the Pledgors under SECTION 6.1(A) hereof, including,
without limitation, to receive, indorse and collect all
instruments made payable to a Pledgor representing any
dividend or other distribution in respect of any Collateral
and to give full discharge for the same. This power is coupled
with an interest and is irrevocable until all of the
Obligations are indefeasibly paid in full. The powers
conferred on the Secured Party hereunder are solely to protect
its interest in the Collateral and shall not impose any duty
upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Collateral in its
possession and the accounting for moneys actually received by
it hereunder, the Secured Party shall have no duty as to any
Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights
pertaining to any Collateral.
6.4 STOCK POWERS. The Secured Party agrees that prior to the
occurrence of an Event of Default it will hold the Stock
Powers relating to the Collateral in blank and will not insert
its name or the name or any other person or entity on such
Stock Powers.
SECTION 7. DEFAULTS AND REMEDIES
7.1 EVENTS OF DEFAULT. The occurrence of an "Event of Default"
under the Note is an Event of Default hereunder.
7.2 REMEDIES. Upon the occurrence of an Event of Default, Secured
Party may exercise the following rights and remedies, which
are cumulative and which may be exercised singularly or
concurrently:
(a) the right to receive and exercise all voting rights
as owner of the Collateral as set forth in SECTION
6.1(B);
(b) any remedy available to Secured Party under the Note,
Purchase Agreement or any other agreement evidencing,
guaranteeing, or securing the payment or
5
performance of any of the Obligations or any of the
obligations of any guarantor of the Obligations; and
(c) any other right or remedy available to Secured Party
at law or in equity.
7.3 ADDITIONAL RIGHTS AND OBLIGATIONS. After an Event of Default:
(a) upon Secured Party's request, Pledgors will assemble
the Collateral and make it available to Secured Party
at a place designated by Secured Party which is
reasonably convenient to both parties; and
(b) upon Secured Party's request, Pledgors will otherwise
assist Secured Party in exercising any remedy
available to Secured Party under this Agreement.
7.4 APPLICATION OF CASH PROCEEDS. After an Event of Default,
Secured Party will apply or pay over for application the cash
proceeds of collection, enforcement, or disposition of
Collateral in the following order to:
(a) the reasonable expenses of collection, enforcement,
retaking, holding, preparing for disposition,
processing, disposing, and reasonable attorney's fees
and legal expenses incurred by Secured Party;
(b) the satisfaction of the Obligations, in such order as
Secured Party may determine, to the extent such order
is not inconsistent with any agreement evidencing the
payment or performance of the Obligations; and
(c) other persons, including but not limited to Pledgors,
in accordance with the Uniform Commercial Code.
7.5 In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the
Secured Party is legally entitled, the Pledgors shall be
jointly and severally liable for the deficiency, together with
interest thereon at the rate specified in the Note for
interest on overdue principal thereof or such other rate as
shall be fixed by applicable law, together with the costs of
collection and the reasonable fees, costs and expenses of any
attorneys employed by the Secured Party to collect such
deficiency.
SECTION 8. RELEASE, INDEMNIFICATION, AND WAIVERS
8.1 RELEASE AND INDEMNIFICATION. Pledgors release and will defend
and indemnify Secured Party for, from, and against any and all
claims, actions, proceedings, damages, liabilities, and
expenses of every kind, whether known or unknown, including
but not limited to reasonable attorney's fees, resulting from
or arising out of:
(a) any action that Secured Party takes to perfect or
continue Secured Party's security interest in the
Collateral; or
6
(b) the exercise of any right or remedy available to
Secured Party under this Agreement, without regard to
cause or the negligence of Secured Party or any other
person.
8.2 WAIVER BY PLEDGORS. Pledgors waive demand, presentment for
payment, notice of dishonor or nonpayment, protest, notice of
protest, and lack of diligence in collection.
8.3 NO WAIVER. No waiver will be binding on a party unless it is
in writing and signed by the party to be charged. Secured
Party's waiver of a breach of a provision of this Agreement or
any agreement evidencing, guaranteeing, or securing any of the
Obligations will not be a waiver of any other provision or a
waiver of a subsequent breach of the same provision. Secured
Party's failure to exercise any remedy under this Agreement or
any agreement evidencing, guaranteeing, or securing any of the
Obligations will not be considered a waiver by Secured Party
of Secured Party's right to exercise the remedy.
8.4 SECURITY INTEREST ABSOLUTE. All rights of the Secured Party,
all liens and all obligations of the Pledgors hereunder shall
be absolute and unconditional irrespective of: (i) any lack of
validity or enforceability of provisions of the Note, Purchase
Agreement, Foundation Documents or any other documents
executed in connection therewith, (ii) any change in the time,
manner or place of payment of, or in any other term in respect
of, all or any of the Obligations, or any other amendment or
waiver of or consent to any departure from the Note or
Purchase Agreement, (iii) any exchange or release of, or
non-perfection of any lien on any Collateral, or (iv) any
other circumstance which might otherwise constitute a defense
available to, or a discharge of, either Pledgor or any other
person in respect of the Obligations (other than the payment
in full of the Obligations). All authorizations and agencies
contained herein with respect to any of the Collateral are
irrevocable and powers coupled with an interest.
SECTION 9. GENERAL
9.1 TIME OF ESSENCE. Time is of the essence with respect to all
dates and time periods in this Agreement.
9.2 BINDING EFFECT. This Agreement will be binding on the parties
and their respective heirs, personal representatives,
successors, and permitted assigns, and will inure to their
benefit.
9.3 AMENDMENT. This Agreement may be amended only by a written
document signed by the party against whom enforcement is
sought.
9.4 ASSIGNMENT. The Secured Party may assign or otherwise transfer
its rights and obligations under this Agreement to any other
person or entity (an "assignee"), and such assignee shall
thereupon become vested with all of the benefits in respect
thereof granted to the Secured Party, herein or otherwise.
Upon any such assignment or
7
transfer, all references in this Agreement to the Secured
Party shall mean the assignee of the Secured Party. None of
the rights or obligations of either of the Pledgors hereunder
may be assigned or otherwise transferred without the prior
written consent of the Secured Party, and any such assignment
or transfer shall be null and void.
9.5 NOTICES. All notices or other communications required or
permitted by this Agreement:
(a) must be in writing;
(b) must be delivered to the parties at the addresses and
in the manner set forth in the Note, or any other
address that a party may designate by notice to the
other parties; and
(c) are effective in accordance with the terms of the
Note.
9.6 SEVERABILITY. If a provision of this Agreement is determined
to be unenforceable in any respect, the enforceability of the
provision in any other respect and of the remaining provisions
of this Agreement will not be impaired.
9.7 FURTHER ASSURANCES. The parties will sign other documents and
take other actions reasonably necessary to further effect and
evidence this Agreement.
9.8 ATTACHMENTS. Any exhibits, schedules, and other attachments
referenced in this agreement are part of this Agreement.
9.9 REMEDIES. The parties will have all remedies available to them
at law or in equity. All available remedies are cumulative and
may be exercised singularly or concurrently.
9.10 GOVERNING LAW. This Agreement is governed by the laws of the
State of Oregon, without giving effect to any conflict-of-law
principle that would result in the laws of any other
jurisdiction governing this Agreement.
9.11 VENUE. Any action or proceeding arising out of this Agreement
will be litigated in courts located in the State of Oregon.
Each party consents and submits to the jurisdiction of any
local, state, or federal court located in the State of Oregon
solely for purposes of an action or proceeding arising out of
this Agreement.
9.12 ATTORNEY'S FEES. If any arbitration or litigation is
instituted to interpret, enforce, or rescind this Agreement,
including but not limited to any proceeding brought under the
United States Bankruptcy Code, the prevailing party on a claim
will be entitled to recover with respect to the claim, in
addition to any other relief awarded, the prevailing party's
reasonable attorney's fees and other fees, costs, and expenses
of every kind, including but not limited to the costs and
disbursements specified in ORCP 68 A(2), incurred in
connection with the arbitration, the litigation, any appeal or
8
petition for review, the collection of any award, or the
enforcement of any order, as determined by the arbitrator or
court.
9.13 SIGNATURES. This Agreement may be signed in counterparts. A
fax transmission of a signature page will be considered an
original signature page. At the request of a party, a party
will confirm a fax-transmitted signature page by delivering an
original signature page to the requesting party.
9.14 JOINT AND SEVERAL. All of the obligations of the Pledgors
hereunder are joint and several. The Secured Party may, in its
sole and absolute discretion, enforce the provisions hereof
against either of the Pledgors and shall not be required to
proceed against both Pledgors jointly or seek payment from the
Pledgors ratably. In addition, the Secured Party may, in its
sole and absolute discretion, select the Collateral of any one
or more of the Pledgors for sale or application to the
Obligations, without regard to the ownership of such
Collateral, and shall not be required to make such selection
ratably from the Collateral owned by both the Pledgors. The
release or discharge of either Pledgor by the Secured Party
shall not release or discharge the other Pledgor from his or
her obligations hereunder.
[signature page follows]
9
Dated effective: as of January 2, 2007
Secured Party: Pledgors:
/S/ CLARENCE B. COLEMAN /S/ ANDREW A. WIEDERHORN
--------------------------------------- ------------------------
Clarence B. Coleman, as Trustee of the Andrew A. Wiederhorn
of the C.B. Coleman and Joan F. Coleman
Revocable Trust
/S/ TIFFANY A. WIEDERHORN
-------------------------
Tiffany A. Wiederhorn
10
Schedule 1 to Stock Pledge Agreement - Description of Shares
ISSUER CERTIFICATE # # OF SHARES
Fog Cutter Capital Group Inc. 100,000
Fog Cutter Capital Group Inc. 323,189
11
EXHIBIT 7
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement ("AGREEMENT") is between the Clarence and Joan
Coleman Charitable Foundation ("SECURED PARTY"), and Andrew A. Wiederhorn and
Tiffany A. Wiederhorn (each a "PLEDGOR" and collectively, the "PLEDGORS").
SECTION 1. DEFINITIONS
1.1 CAPITALIZED TERMS. Unless defined elsewhere in this Agreement,
capitalized terms used in this Agreement will have the
following meanings:
"COLLATERAL" means the Shares, together with any and all
rights, coupons, warrants or rights to subscribe, options,
dividends, liquidating dividends, splits, dividends paid in
stock, dividends paid in securities, new or reclassified
Shares, or any other property which either Pledgor is or may
hereafter become entitled to receive on account of such
Shares, any and all substitutions, additions or replacements
thereof, and any and all proceeds thereof.
"EVENT OF DEFAULT" means any event specified in SECTION 7.1.
"OBLIGATIONS" means all of Pledgors' obligations arising out
of:
(a) the Promissory Note dated as of January 2, 2007, in
the principal amount of $1,811,214.40 made by
Pledgors, payable to Secured Party ("NOTE");
(b) the Purchase Pursuant to Put Agreement dated as of
January 2, 2007 by and between Pledgors and the
Secured Party for the sale of 323,189 shares of Fog
Cutter Capital Group Inc. by the Secured Party to
Pledgors ("PURCHASE AGREEMENT"); and
(c) this Agreement.
"SHARES" means 423,189 shares of Fog Cutter Capital Group Inc.
common stock, par value $0.0001 per share, evidenced by the
certificates described on SCHEDULE 1 attached hereto and made
a part hereof, of which (a) 100,000 shares were purchased by
Pledgors from the C.B. Coleman and Joan F. Coleman Revocable
Trust (the "COLEMAN TRUST") pursuant to that certain Purchase
Pursuant to Put Agreement between the Coleman Trust and
Pledgors (together with the related promissory note, pledge
agreement and deed of trust, the "COLEMAN TRUST DOCUMENTS")
and (b) 323,189 shares were purchased by Pledgors from the
Secured Party.
SECTION 2. SECURITY INTEREST
2.1 GRANT. As security for the full and prompt payment and
performance of the Obligations, the Pledgors hereby pledge,
assign, transfer, deliver and set over to the Secured Party,
and grant to the Secured Party a continuing lien upon and
security interest in, all of the Pledgor's right, title and
interest in and to the Collateral.
2.2 PERFECTION. All certificates currently representing the
Collateral, accompanied by undated Stock Powers executed in
blank, in the form of EXHIBIT A attached hereto, shall be
delivered to the Secured Party or its designated agent
simultaneous with the execution of this Agreement.
If a Pledgor shall receive, by virtue of his or her being or
having been an owner of any of the Collateral, any (i) stock
certificate or other instrument, (ii) option or right, whether
as an addition to, substitution for, or in exchange for, any
Collateral, or otherwise, (iii) dividends payable in cash or
in securities or other property or (iv) dividends or other
distributions in connection with a partial or total
liquidation or dissolution or in connection with a reduction
of capital, capital surplus or paid-in surplus, such Pledgor
shall receive such stock certificate, instrument, option,
right, payment or distribution in trust for the benefit of the
Secured Party, and shall deliver it forthwith to the Secured
Party or its designated agent in the exact form received, with
any necessary endorsement and/or appropriate stock powers duly
executed in blank, to be held by the Secured Party or its
designated agent, as Collateral.
Pledgors hereby irrevocably authorize the Secured Party at any
time and from time to time to file in any Uniform Commercial
Code jurisdiction any initial financing statements and
amendments thereto that indicate the Collateral and contain
any other information required by part 5 of Article 9 of the
Uniform Commercial Code of the applicable state. Pledgors
agree to furnish any such information to the Secured Party
promptly upon request.
Upon Secured Party's request, Pledgors will execute and
deliver such other documents and instruments and take any
other actions that Secured Party deems reasonably necessary to
perfect, protect and continue Secured Party's security
interest in the Collateral.
2.3 TERMINATION. Upon Pledgors' request after the full and
indefeasible payment and performance of the Obligations,
Secured Party will take all actions that Pledgors deem
reasonably necessary to terminate Secured Party's security
interest in the Collateral. It is understood by the parties,
that following the indefeasible payment and performance of the
Obligations, to the extent that any obligations under the
Coleman Trust Documents remain outstanding, Secured Party will
deliver to the Coleman Trust all certificates and endorsements
in the Secured Party's possession which evidence Collateral.
2
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PLEDGORS
Each Pledgor represents and warrants to Secured Party as
follows:
3.1 AUTHORITY. Pledgors have full power and authority to sign and
deliver this Agreement and to perform all of Pledgors'
obligations under this Agreement.
3.2 BINDING OBLIGATION. This Agreement is the legal, valid, and
binding obligation of Pledgors, enforceable in accordance with
its terms, except as enforceability may be limited by
bankruptcy, insolvency, or other similar laws of general
application or by general principles of equity.
3.3 NO CONFLICTS. The signing and delivery of this Agreement by
Pledgors and the performance by Pledgors of all of Pledgors'
obligations under this Agreement will not:
(a) breach any agreement to which either Pledgor is a
party, or give any person the right to accelerate any
obligation of either Pledgor;
(b) violate any law, judgment, or order to which either
Pledgor is subject; or
(c) require the consent, authorization, or approval of
any person, including but not limited to any
governmental body.
3.4 OWNERSHIP. Pledgors have good title to the Collateral, free
from all liens, mortgages, pledges, security interests, and
other encumbrances except encumbrances in favor of Secured
Party and the Foundation. Pledgors have the right and power to
transfer and assign the Collateral to Secured Party, free from
any restriction or condition.
3.5 APPRAISAL. The Property (as defined in that certain Trust
Deed, effective January 2, 2007, made by Tiffany A. Wiederhorn
in favor of the Secured Party (the "TRUST DEED")) conveyed to
the Secured Party pursuant to the Trust Deed is the same
property which is the subject of the appraisal of March 5,
2007 by Robert Tershel, a copy of which is attached hereto as
EXHIBIT B, and the appraisal does not include any property
which does not comprise the Property.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SECURED PARTY
The Secured Party hereby represents and warrants that the person
executing this Agreement for an on behalf of the Clarence and Joan
Coleman Charitable Foundation is authorized to do so and to undertake
all other actions in connection with completing the transactions
contemplated herein.
3
SECTION 5. COVENANTS OF PLEDGORS
Each Pledgor covenants to Secured Party that the Pledgors will perform
the following covenants and obligations and observe the following
conditions until the Obligations are fully and indefeasibly paid and
performed:
5.1 OWNERSHIP. Pledgors will keep the Collateral free from all
liens, mortgages, pledges, security interests, and other
encumbrances except encumbrances in favor of Secured Party and
the Foundation.
5.2 IMPAIRMENT. Pledgors shall not take or fail to take any action
which would in any manner impair the validity or
enforceability of the Secured Party's security interest in any
Collateral.
SECTION 6. RIGHTS AND OBLIGATIONS CONCERNING COLLATERAL
6.1 VOTING. (a) So long as no Event of Default shall have occurred
and be continuing the Pledgors may exercise any and all voting
and other consensual rights pertaining to the Collateral for
any purpose not inconsistent with the terms of this Agreement,
the Note, the Purchase Agreement or the Coleman Trust
Documents; PROVIDED, HOWEVER, that neither Pledgor will
exercise any such right if in his or her judgment, such action
(or inaction) is reasonably likely to have a material adverse
effect on (i) the business or financial condition of Fog
Cutter Capital Group Inc., (ii) the value of the Collateral,
or (iii) the ability of the Secured Party to enforce the
Obligations or its rights and remedies under this Agreement,
the Note or the Purchase Agreement.
(b) Upon the occurrence and during the continuance of an Event
of Default, all rights of the Pledgors to exercise the voting
and other consensual rights which it would otherwise be
entitled to exercise pursuant to paragraph (a) of this SECTION
6.1, shall cease, and all such rights shall thereupon become
vested in the Secured Party which shall thereupon have the
sole right to exercise such voting and other consensual rights
6.2 DIVIDENDS.
At all times, whether or not an Event of Default shall have
occurred and be continuing, any and all dividends, interest or
other distributions paid in respect of the Collateral shall be
delivered to the Secured Party or its designated agent to hold
as Collateral. Prior to the occurrence of an Event of Default
all such dividends, interest and other distributions received
by the Secured Party shall be applied immediately to the
payment of the principal balance under the Note, and upon the
occurrence of an Event of Default such dividends, interest and
other distributions shall be applied to the payment of the
Obligations in the Secured Party's discretion in accordance
with SECTION 7.4 of this Agreement. All dividends,
distributions, interest and other payments which are received
by a Pledgor by virtue of his or her being or having been an
owner of any of the
4
Collateral shall be received in trust for the benefit of the
Secured Party, shall be segregated from other funds of the
Pledgors, and shall be forthwith paid over to the Secured
Party or its designated agent as Collateral in the exact form
received with any necessary endorsement and/or appropriate
stock powers duly executed in blank, to be held by the Secured
Party as Collateral and applied immediately by the Secured
Party to the payment of principal under the Note or to the
payment of other Obligations as provided for above.
6.3 ATTORNEY-IN-FACT. Each Pledgor hereby irrevocably appoints the
Secured Party as its attorney-in-fact and proxy, with full
authority in the place and stead and in its name or otherwise,
from time to time, in the Secured Party's reasonable
discretion to take any action and to execute any instrument
which the Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement subject to the
rights of the Pledgors under SECTION 6.1(A) hereof, including,
without limitation, to receive, indorse and collect all
instruments made payable to a Pledgor representing any
dividend or other distribution in respect of any Collateral
and to give full discharge for the same. This power is coupled
with an interest and is irrevocable until all of the
Obligations are indefeasibly paid in full. The powers
conferred on the Secured Party hereunder are solely to protect
its interest in the Collateral and shall not impose any duty
upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Collateral in its
possession and the accounting for moneys actually received by
it hereunder, the Secured Party shall have no duty as to any
Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights
pertaining to any Collateral.
6.4 STOCK POWERS. The Secured Party agrees that prior to the
occurrence of an Event of Default it will hold the Stock
Powers relating to the Collateral in blank and will not insert
its name or the name or any other person or entity on such
Stock Powers.
SECTION 7. DEFAULTS AND REMEDIES
7.1 EVENTS OF DEFAULT. The occurrence of an "Event of Default"
under the Note is an Event of Default hereunder.
7.2 REMEDIES. Upon the occurrence of an Event of Default, Secured
Party may exercise the following rights and remedies, which
are cumulative and which may be exercised singularly or
concurrently:
(a) the right to receive and exercise all voting rights
as owner of the Collateral as set forth in SECTION
6.1(B);
(b) any remedy available to Secured Party under the Note,
Purchase Agreement or any other agreement evidencing,
guaranteeing, or securing the payment or
5
performance of any of the Obligations or any of the
obligations of any guarantor of the Obligations; and
(c) any other right or remedy available to Secured Party
at law or in equity.
7.3 ADDITIONAL RIGHTS AND OBLIGATIONS. After an Event of Default:
(a) upon Secured Party's request, Pledgors will assemble
the Collateral and make it available to Secured Party
at a place designated by Secured Party which is
reasonably convenient to both parties;
(b) upon Secured Party's request, Pledgors will otherwise
assist Secured Party in exercising any remedy
available to Secured Party under this Agreement; and
7.4 APPLICATION OF CASH PROCEEDS. After an Event of Default,
Secured Party will apply or pay over for application the cash
proceeds of collection, enforcement, or disposition of
Collateral in the following order to:
(a) the reasonable expenses of collection, enforcement,
retaking, holding, preparing for disposition,
processing, disposing, and reasonable attorney's fees
and legal expenses incurred by Secured Party;
(b) the satisfaction of the Obligations, in such order as
Secured Party may determine, to the extent such order
is not inconsistent with any agreement evidencing the
payment or performance of the Obligations; and
(c) other persons, including but not limited to Pledgors,
in accordance with the Uniform Commercial Code.
7.5 In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the
Secured Party is legally entitled, the Pledgors shall be
jointly and severally liable for the deficiency, together with
interest thereon at the rate specified in the Note for
interest on overdue principal thereof or such other rate as
shall be fixed by applicable law, together with the costs of
collection and the reasonable fees, costs and expenses of any
attorneys employed by the Secured Party to collect such
deficiency.
SECTION 8. RELEASE, INDEMNIFICATION, AND WAIVERS
8.1 RELEASE AND INDEMNIFICATION. Pledgors release and will defend
and indemnify Secured Party for, from, and against any and all
claims, actions, proceedings, damages, liabilities, and
expenses of every kind, whether known or unknown, including
but not limited to reasonable attorney's fees, resulting from
or arising out of:
(a) any action that Secured Party takes to perfect or
continue Secured Party's security interest in the
Collateral; or
6
(b) the exercise of any right or remedy available to
Secured Party under this Agreement, without regard to
cause or the negligence of Secured Party or any other
person.
8.2 WAIVER BY PLEDGORS. Pledgors waive demand, presentment for
payment, notice of dishonor or nonpayment, protest, notice of
protest, and lack of diligence in collection.
8.3 NO WAIVER. No waiver will be binding on a party unless it is
in writing and signed by the party to be charged. Secured
Party's waiver of a breach of a provision of this Agreement or
any agreement evidencing, guaranteeing, or securing any of the
Obligations will not be a waiver of any other provision or a
waiver of a subsequent breach of the same provision. Secured
Party's failure to exercise any remedy under this Agreement or
any agreement evidencing, guaranteeing, or securing any of the
Obligations will not be considered a waiver by Secured Party
of Secured Party's right to exercise the remedy.
8.4 SECURITY INTEREST ABSOLUTE. All rights of the Secured Party,
all liens and all obligations of the Pledgors hereunder shall
be absolute and unconditional irrespective of: (i) any lack of
validity or enforceability of provisions of the Note, Purchase
Agreement, Coleman Trust Documents or any other documents
executed in connection therewith, (ii) any change in the time,
manner or place of payment of, or in any other term in respect
of, all or any of the Obligations, or any other amendment or
waiver of or consent to any departure from the Note or
Purchase Agreement, (iii) any exchange or release of, or
non-perfection of any lien on any Collateral, or (iv) any
other circumstance which might otherwise constitute a defense
available to, or a discharge of, either Pledgor or any other
person in respect of the Obligations (other than the payment
in full of the Obligations). All authorizations and agencies
contained herein with respect to any of the Collateral are
irrevocable and powers coupled with an interest.
SECTION 9. GENERAL
9.1 TIME OF ESSENCE. Time is of the essence with respect to all
dates and time periods in this Agreement.
9.2 BINDING EFFECT. This Agreement will be binding on the parties
and their respective heirs, personal representatives,
successors, and permitted assigns, and will inure to their
benefit.
9.3 AMENDMENT. This Agreement may be amended only by a written
document signed by the party against whom enforcement is
sought.
9.4 ASSIGNMENT. The Secured Party may assign or otherwise transfer
its rights and obligations under this Agreement to any other
person or entity (an "assignee"), and such assignee shall
thereupon become vested with all of the benefits in respect
thereof granted to the Secured Party, herein or otherwise.
Upon any such assignment or
7
transfer, all references in this Agreement to the Secured
Party shall mean the assignee of the Secured Party. None of
the rights or obligations of either of the Pledgors hereunder
may be assigned or otherwise transferred without the prior
written consent of the Secured Party, and any such assignment
or transfer shall be null and void.
9.5 NOTICES. All notices or other communications required or
permitted by this Agreement:
(a) must be in writing;
(b) must be delivered to the parties at the addresses and
in the manner set forth in the Note, or any other
address that a party may designate by notice to the
other parties; and
(c) are effective in accordance with the terms of the
Note.
9.6 SEVERABILITY. If a provision of this Agreement is determined
to be unenforceable in any respect, the enforceability of the
provision in any other respect and of the remaining provisions
of this Agreement will not be impaired.
9.7 FURTHER ASSURANCES. The parties will sign other documents and
take other actions reasonably necessary to further effect and
evidence this Agreement.
9.8 ATTACHMENTS. Any exhibits, schedules, and other attachments
referenced in this agreement are part of this Agreement.
9.9 REMEDIES. The parties will have all remedies available to them
at law or in equity. All available remedies are cumulative and
may be exercised singularly or concurrently.
9.10 GOVERNING LAW. This Agreement is governed by the laws of the
State of Oregon, without giving effect to any conflict-of-law
principle that would result in the laws of any other
jurisdiction governing this Agreement.
9.11 VENUE. Any action or proceeding arising out of this Agreement
will be litigated in courts located in the State of Oregon.
Each party consents and submits to the jurisdiction of any
local, state, or federal court located in the State of Oregon
solely for purposes of an action or proceeding arising out of
this Agreement.
9.12 ATTORNEY'S FEES. If any arbitration or litigation is
instituted to interpret, enforce, or rescind this Agreement,
including but not limited to any proceeding brought under the
United States Bankruptcy Code, the prevailing party on a claim
will be entitled to recover with respect to the claim, in
addition to any other relief awarded, the prevailing party's
reasonable attorney's fees and other fees, costs, and expenses
of every kind, including but not limited to the costs and
disbursements specified in ORCP 68 A(2), incurred in
connection with the arbitration, the litigation, any appeal or
8
petition for review, the collection of any award, or the
enforcement of any order, as determined by the arbitrator or
court.
9.13 SIGNATURES. This Agreement may be signed in counterparts. A
fax transmission of a signature page will be considered an
original signature page. At the request of a party, a party
will confirm a fax-transmitted signature page by delivering an
original signature page to the requesting party.
9.14 JOINT AND SEVERAL. All of the obligations of the Pledgors
hereunder are joint and several. The Secured Party may, in its
sole and absolute discretion, enforce the provisions hereof
against either of the Pledgors and shall not be required to
proceed against both Pledgors jointly or seek payment from the
Pledgors ratably. In addition, the Secured Party may, in its
sole and absolute discretion, select the Collateral of any one
or more of the Pledgors for sale or application to the
Obligations, without regard to the ownership of such
Collateral, and shall not be required to make such selection
ratably from the Collateral owned by both the Pledgors. The
release or discharge of either Pledgor by the Secured Party
shall not release or discharge the other Pledgor from his or
her obligations hereunder.
[signature page follows]
9
Dated effective: as of January 2, 2007
Secured Party: Pledgors:
/S/ CLARENCE B. COLEMAN /S/ ANDREW A. WIEDERHORN
--------------------------------------- ------------------------
Clarence B. Coleman, as Trustee of the Andrew A. Wiederhorn
of the C.B. Coleman and Joan F. Coleman
Revocable Trust
/S/ TIFFANY A. WIEDERHORN
-------------------------
Tiffany A. Wiederhorn
10
Schedule 1 to Stock Pledge Agreement - Description of Shares
ISSUER CERTIFICATE # # OF SHARES
Fog Cutter Capital Group Inc. 100,000
Fog Cutter Capital Group Inc. 323,189
11