Exhibit 10.11
THIS DEBENTURE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT
BE OFFERED OR SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED, OR OTHERWISE DISPOSED OF
EXCEPT IN A TRANSACTION THAT IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND FROM THE REGISTRATION AND QUALIFICATION REQUIREMENTS OF
APPLICABLE STATE SECURITIES LAWS, OR IN A TRANSACTION EFFECTED PURSUANT TO SUCH
REGISTRATION AND QUALIFICATION.
Accredited Home Lenders, Inc.
Floating-Rate Convertible Debenture
$3,000,000 March 17, 1999
(Date of Issue)
FOR VALUE RECEIVED, ACCREDITED HOME LENDERS, INC., a California
corporation (the "Borrower"), promises to pay to RESIDENTIAL FUNDING
CORPORATION, a corporation organized under the laws of Delaware, or its
registered assigns (the "Holder"), at 0000 Xxxxxxxxxx Xxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxxxxxx, Xxxxxxxxx 00000, or at such other place designated at any time by
the Holder hereof, in lawful money of the United States of America and in
immediately available funds, the principal amount of Three Million Dollars
($3,000,000) or, if less, the. unpaid aggregate principal amount of the amounts
advanced hereunder, together with interest on the unpaid balance accruing at the
rate specified herein on the Maturity Date, unless this Debenture is earlier
converted into the Conversion Shares as provided herein, upon presentation and
surrender of this Debenture, as set forth herein. This Debenture is the
Debenture referred to in, and issued under, the Loan and Security Agreement
(Convertible Debt) of even date herewith by and between the Borrower and the
Holder (the "Loan Agreement"). Capitalized terms used herein and not otherwise
defined have the meanings given them in the Loan Agreement.
Section 1. Maturity. The outstanding principal and all accrued and
unpaid interest shall be due and payable on the Maturity Date, unless this
Debenture is converted, in whole or in part, in the sole discretion of the
Holder, into the Conversion Shares (as that term is defined in Section 7 hereof)
as provided in the Loan Agreement and Section 4 hereof, provided, however, that
monthly payments into the Escrow Account in respect of principal hereunder may
be required by the Holder pursuant to Section 2.6 of the Loan Agreement if the
Borrower does not satisfy certain Milestones set forth therein.
Section 2. Payment of Principal and Interest. Except as required by
Section 2.6 of the Loan Agreement, no principal payment shall be due until the
Maturity Date. Interest shall accrue and be payable on the principal balance, or
so much thereof as may be outstanding from time to time, at the applicable rate
and times set forth in Section 2.4 of the Loan Agreement, until
the principal and interest hereof has been paid in full or until conversion of
this Debenture, whichever occurs first. Interest shall be computed on the basis
of a 360-day year and applied to the actual number of days elapsed in each
interest calculation period. The Borrower may not prepay the Debenture, in whole
or in part, prior to the Maturity Date; provided, however, that the Borrower
shall prepay the Debenture at the option of the Lender in accordance with
Section 2.6 of the Loan Agreement.
Section 3. Security. This Debenture is secured by a security interest
in the Collateral, Escrow Account, and Investment Property granted under the
Loan Agreement.
Section 4. Conversion Rights. The outstanding principal amount of this
Debenture may be converted (the "Conversion Option") by the Holder, in whole or
in part, at any time after the date of issue until and including the Maturity
Date, upon the following terms:
(a) Conversion of Principal. The principal amount of this
Debenture subject to conversion (the "Principal Conversion Amount"),
as set forth in the Conversion Notice and the Confirmation of
Conversion Exercise (as those terms are hereinafter defined), shall be
converted into up to 2,095,625 Conversion Shares (the "Initial
Number") at a rate of one share of Series B Common Stock for each
$1.43 of principal being converted (the "Initial Conversion Price").
The Initial Number and the Initial Conversion Price are subject to
adjustment in certain events, as more fully set forth in Section 5 of
this Debenture.
(b) Method of Exercise. To exercise the Conversion Option, in
whole or in part, the Holder shall provide to the Borrower a
conversion notice substantially in the form attached hereto as
Schedule X-x (a "Conversion Notice"), at any time prior to the
expiration of the Conversion Exercise Period, followed by delivery of
a Confirmation of Conversion Exercise (as hereinafter defined) in the
form attached hereto as Schedule B-2, which Confirmation of Conversion
Exercise shall be irrevocable. Within thirty (30) calendar days after
receipt of the Conversion Notice, the Borrower shall deliver to the
Holder an updated schedule of exceptions to the Borrower's
representations and warranties under the Loan Agreement dated the date
of delivery thereof to the Holder (the "Updated Disclosure Schedule"),
which shall constitute the then current update to disclosures related
to such representations and warranties as of such date. In the event
that the Borrower does not deliver an Updated Disclosure Schedule to
the Holder within thirty (30) calendar days following receipt of the
Conversion Notice, then the initial Disclosure Schedule (together with
any interim updates thereto) shall be deemed to be the Updated
Disclosure Schedule for all purposes hereof. If, after reviewing the
Updated Disclosure Schedule and otherwise completing its due diligence
review, the Holder still desires to exercise the Conversion Option,
the Holder shall deliver to the Borrower a written confirmation of
exercise (a "Confirmation of Conversion Exercise") within thirty (30)
calendar days after receipt by the Holder of the Updated Disclosure
Schedule. If the Holder delivers the Conversion Notice during the
Conversion Exercise Period, neither the Confirmation of Conversion
Exercise nor the surrender and conversion of the Debenture need occur
within the Conversion Exercise Period, but the Confirmation of
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Conversion Exercise must be delivered and the Debenture surrendered
within the applicable time periods specified above. The Holder shall
have no obligation to exercise its option to convert this Debenture,
in whole or in part. If the Holder does not deliver a Conversion
Notice during the Conversion Exercise Period, the Conversion Option
shall terminate at the expiration of the Conversion Exercise Period.
In addition, if the Holder delivers a Conversion Notice during the
Conversion Exercise Period but does not deliver a Confirmation of
Conversion Exercise within the applicable time period set forth above,
after the Borrower has delivered (or has failed to deliver) the
Updated Disclosure Schedule, then the Conversion Option shall
terminate either immediately or at the expiration of the Conversion
Exercise Period, whichever occurs later.
(c) Surrender of Debenture: Issuance of Conversion Shares. This
Debenture shall be converted only when:
(i) The Holder has delivered the Confirmation of Conversion
Exercise to the Borrower; and
(ii) The Holder has surrendered the Debenture, accompanied by
proper assignment thereof to the Borrower or in blank for
transfer; and
(iii) The Holder pays to the Borrower an amount equal to the
Principal Conversion Amount less the principal balance of
this Debenture outstanding on the Conversion Date (the
"Additional Principal Amount").
The Series B Common Stock issuable on conversion shall be issued in
the name of the Holder appearing in the books and records of the
Borrower and shall be issued and delivered within two (2) Business
Days after the date of delivery of the Confirmation of Conversion
Exercise, the surrender of this Debenture by the Holder, and, if
applicable, the payment of the Additional Principal Amount (the
"Conversion Date"). Such conversion shall be deemed to have been
effected immediately prior to the close of business on the Conversion
Date, and subject to the payment of the accrued interest due
hereunder, all rights of the Holder as a holder of a Debenture, to the
extent of such conversion, shall cease at such time and the Holder
shall be treated for all purposes as having become the holder of
record from such time of the Conversion Shares issued to the Holder in
such conversion. Upon delivery of such Conversion Shares, this
Debenture, or the portion hereof so converted, shall be deemed to have
been satisfied and discharged, and the Conversion Shares into which
this Debenture shall be so converted shall be fully paid and
nonassessable. In the event this Debenture has not been converted in
full, the Borrower shall issue and deliver to the Holder a new
Debenture identical to the one surrendered, except that it shall be in
the correct principal amount after the partial conversion.
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(d) Accrued Interest. Accrued but unpaid interest to the date of
conversion on the Principal Conversion Amount shall not be converted
but shall be paid in full in cash to the Holder within ten (10)
Business Days of the Conversion Date.
(e) Reservation of Common Stock. The Borrower covenants that it
will at all times reserve and keep available out of its authorized but
unissued shares of Common Stock such number of shares of Series B
Common Stock as are necessary to satisfy the conversion of this
Debenture into the Conversion Shares and such number of shares of
Series A Common Stock as are necessary to satisfy the conversion of
the Series B Common Stock into shares of Series A Common Stock.
(f) Fractional Shares. No fractional shares of Series B Common
Stock shall be issued upon conversion of this Debenture. The Borrower
shall pay to the Holder the principal amount representing such
fractional interest, at the Conversion Date and following surrender of
this Debenture.
Section 5. Anti-Dilution Provisions.
(a) Reorganization, Reclassification or Recapitalization of the
Company. In case of (i) a capital reorganization, reclassification, or
recapitalization of the Borrower's Capital Stock (other than in the
cases referred to in Section 5(c) hereof), (ii) the Borrower's
consolidation or merger with or into another corporation in which the
Borrower is not the surviving entity, or a reverse triangular merger
in which the Borrower is the surviving entity but the shares of the
Borrower's Capital Stock outstanding immediately prior to the merger
are converted, by virtue of the merger, into other property, whether
in the form of securities, cash, or otherwise, or (iii) the sale or
transfer of the Borrower's property as an entirety or substantially as
an entirety, then, as part of such reorganization, reclassification,
recapitalization, merger, consolidation, sale, or transfer,
appropriate provision (in form and substance satisfactory to the
Holder) shall be made so that there shall thereafter be deliverable
upon the conversion of this Debenture or any portion thereof (in lieu
of or in addition to the number of shares of Series B Common Stock
theretofore deliverable, as appropriate), and without payment of any
additional consideration, the number of shares of stock or other
securities or property to which the holder of the number of shares of
Series B Common Stock which would otherwise have been deliverable upon
the conversion of this Debenture or any portion thereof at the time of
such reorganization, reclassification, recapitalization,
consolidation, merger, sale, or transfer would have been entitled to
receive in such reorganization, reclassification, recapitalization,
consolidation, merger, sale or transfer. This Section 5(a) shall apply
to successive reorganizations, reclassifications, recapitalizations,
consolidations, mergers, sales, and transfers and to the stock or
securities of any other corporation that are at the time receivable
upon the conversion of this Debenture.
(b) Splits and Combinations. If the Borrower at any time
subdivides any of its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately
prior to such subdivision shall be
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proportionately reduced and, conversely, if the outstanding shares of
Common Stock are combined into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall
be proportionately increased.
(c) Reclassifications. If the Borrower changes any of the
securities as to which conversion rights under this Debenture exist
into the same or a different number of securities of any other class
or classes, this Debenture shall thereafter represent the right to
acquire such number and kind of securities as would have been issuable
as the result of such change with respect to the securities that were
subject to the conversion rights under this Debenture immediately
prior to such reclassification or other change and the Conversion
Price therefor shall be appropriately adjusted.
(d) Dividends and Distributions. If the Borrower declares a
dividend or other distribution on the Common Stock or if a dividend or
other distribution on the Common Stock occurs pursuant to the Articles
of Incorporation (other than a cash dividend or distribution), then,
as part of such dividend or distribution, appropriate provision shall
be made so that there shall thereafter be deliverable upon the
conversion of this Debenture or any portion thereof, in addition to
the number of shares of Series B Common Stock receivable thereupon and
without payment of any additional consideration, the amount of the
dividend or other distribution to which the Holder would have been
entitled to receive had the conversion occurred immediately prior to
the record date for such dividend or distribution.
(e) Liquidation; Dissolution. If the Borrower shall dissolve,
liquidate, or wind up its affairs, the Holder shall have the right,
but not the obligation, to convert this Debenture in whole or in part
effective as of the date of such dissolution, liquidation, or winding
up. If any such dissolution, liquidation, or winding up results in any
cash distribution to the Holder in excess of any Additional Principal
Amount payable hereunder, then the Holder may, at its option, convert
this Debenture without making payment of such Additional Principal
Amount and, in such case, the Borrower shall, upon distribution to the
Holder, consider such Additional Principal Amount to have been paid in
full, and in making such settlement to the Holder, shall deduct an
amount equal to such Additional Principal Amount from the amount
payable to the Holder.
(f) Adjustment of Conversion Price Upon Issuance of Additional
Stock. The Conversion Price shall be subject to adjustment from time
to time as follows:
(i) Upon each issuance by the Borrower of any Additional Stock
(as such term is defined in Section 7 hereof) after the
Closing Date, without consideration or for a consideration
per share less than the Conversion Price in effect
immediately prior to the issuance of such Additional Stock,
the Conversion Price in effect immediately prior to each
such issuance shall forthwith (except as otherwise provided
in this Section 5) be adjusted to a price determined by
multiplying the Conversion Price by a fraction, the
numerator of which shall be the number of shares of
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Common Stock Equivalents Outstanding immediately prior to
such issuance plus the number of shares of Series B Common
Stock which the aggregate consideration received by the
Borrower for the Additional Stock so issued would purchase
at such Conversion Price and the denominator of which shall
be the number of shares of Common Stock Equivalents
Outstanding immediately prior to such issuance plus the
number of shares of such Additional Stock issued in such
issuance.
(ii) No adjustment of the Conversion Price shall be made in an
amount less than one cent ($0.01) per share, provided that
any adjustments that are not required to be made by reason
of this sentence shall be carried forward and shall be
either taken into account in any subsequent adjustment made
prior to three (3) years from the date of the event giving
rise to the adjustment being carried forward, or shall be
made at the end of three (3) years from the date of the
event giving rise to the adjustment being carried forward.
Except to the limited extent provided for in Sections
5(f)(vi)(C) and (D) hereof, no adjustment of the Conversion
Price pursuant to this Section 5(f) shall have the effect
of increasing the Conversion Price above the Conversion
Price in effect immediately prior to such adjustment.
(iii) In the case of issuance by the Borrower of Additional Stock
for cash, the consideration shall be deemed to be the net
amount received by the Borrower therefor.
(iv) In the case of issuance by the Borrower of Additional Stock
for a consideration in whole or in part other than cash,
the consideration other than cash shall be deemed to be the
fair value of such consideration, except where such
consideration consists of securities, in which case the
amount of consideration received by the Borrower shall be
the market price thereof as of the date of receipt. The
fair value of any consideration other than cash or
securities shall be determined by the Board of Directors of
the Borrower in good faith, and notice thereof shall be
promptly provided to the Holder. If the Holder is
dissatisfied with such valuation, such fair value shall be
determined by an appraiser jointly selected by the Borrower
and the Holder. The determination of such appraiser shall
be final and binding on the Borrower and the Holder, and
the fees and expenses of such appraiser shall be paid by
the Borrower.
(v) In case any Options are issued in connection with the issue
or sale of other securities of the Borrower, together
comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties
thereto, the Options shall be deemed to have been issued
without consideration.
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(vi) In the case of the issuance (whether before, on, or after
the Closing Date) of Options or Convertible Securities, the
following provisions shall apply for all purposes of this
Section 5(f):
(A) The aggregate maximum number of shares of Additional
Stock deliverable upon exercise of such Options shall
be deemed to have been issued at the time such Options
were issued and for a consideration equal to the
consideration (determined in the manner provided in
Sections 5(f)(iii), (iv), and (v) hereof), if any,
received by the Borrower upon issuance of such Options
plus the minimum exercise price provided in such
Options (without taking into account potential
anti-dilution adjustments) for the Additional Stock
covered thereby.
(B) The aggregate maximum number of shares of Additional
Stock deliverable upon conversion of Convertible
Securities shall be deemed to have been issued at the
time such Convertible Securities were issued and for a
consideration equal to the consideration, if any,
received by the Borrower for any such Convertible
Securities (excluding any cash received on account of
accrued interest or accrued dividends), plus the
minimum additional consideration, if any, to be
received by the Borrower (without taking into account
potential anti-dilution adjustments) upon the
conversion of such Convertible Securities (the
consideration in each case to be determined in the
manner provided in Sections 5(f)(iii), (iv), and (v)
hereof).
(C) In the event of any change in the number of shares of
Additional Stock deliverable upon exercise or
conversion as applicable or in the consideration
payable to the Borrower upon exercise of such Options
or upon conversion of such Convertible Securities,
including, without limitation, a change resulting from
anti-dilution provisions thereof, the Conversion Price,
to the extent in any way affected by or computed using
such Options or Convertible Securities, shall be
recomputed to reflect such change, but no further
adjustment shall be made in conjunction with the actual
issuance of Additional Stock or any payment of such
consideration upon the exercise of any such Options or
the conversion of such Convertible Securities.
(D) Upon the expiration or termination of any such Options
or the expiration or termination of any conversion
rights related to such Convertible Securities, the
Conversion Price, to the extent in any way affected by
or computed using such Options or Convertible
Securities, shall be recomputed to reflect the issuance
of only the number of shares of Additional Stock (and
Convertible Securities
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which remain in effect) actually issued upon the
exercise of such Options or upon the conversion of such
Convertible Securities.
(E) The number of shares of Additional Stock deemed issued
and the consideration deemed paid therefor pursuant to
Sections 5(f)(vi)(A) and (B) hereof shall be
appropriately adjusted to reflect any change,
termination or expiration of the type described in
either Sections 5(f)(vi)(C) or (D) hereof.
(g) Adjustment of Initial Number of Conversion Shares. Upon each
adjustment of the Conversion Price pursuant to Section 5(f) hereof,
the Initial Number of shares of Series B Common Stock issuable upon
conversion hereof shall equal the number of shares determined by
dividing (i) the aggregate Conversion Price for all Conversion Shares
issuable upon conversion of this Debenture immediately prior to such
adjustment by (ii) the Conversion Price per share in effect
immediately after such adjustment.
(h) Dilutive Events. Notwithstanding anything else contained
herein to the contrary, if any event occurs as to which more than one
anti-dilution provision of this Section 5 would apply, then the
parties agree that the operation of the provisions of this Section 5
shall be limited to the preservation, without dilution, of the
purchase rights represented by this Debenture prior to such dilutive
event and in no event shall the Holder be put in a more advantageous
position as a result of the operation of the provisions of this
Section 5 than the Holder's position prior to any such dilutive event.
(i) No Impairment. The Borrower shall not, by amendment of the
Articles of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger,
dissolution, issue, or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder or under the Loan
Agreement by the Borrower, but shall at all times in good faith assist
in the carrying out of all the provisions of this Section 5 and in the
taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holder against impairment.
(j) Application. Except as otherwise provided herein, all
sections of this Section 5 are intended to operate independently of
one another. If an event occurs that requires the application of more
than one section, all applicable sections shall be given independent
effect.
Section 6. Certificates and Notices.
(a) Adjustment Certificates. Upon any adjustment of the
Conversion Price and/or the number of shares of Series B Common Stock
issuable upon conversion of this Debenture, a certificate, signed by
(i) the Borrower's Chief Executive Officer, President, Executive Vice
President, or Chief Financial Officer, or (ii) any
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independent firm of certified public accountants of recognized
national standing the Borrower selects at its own expense, setting
forth in reasonable detail the events requiring the adjustment and the
method by which such adjustment was calculated, shall be mailed to the
Holder and shall specify the adjusted Conversion Price and the number
of shares of Series B Common Stock issuable upon conversion of the
Debenture after giving effect to the adjustment.
(b) Extraordinary Corporate Events. If the Borrower, after the
date hereof, proposes to effect (i) any transaction described in
Section 5(a) or (c) hereof, (ii) a liquidation, dissolution or winding
up of the Borrower described in Section 5(e) hereof, or (iii) any
payment of a dividend, distribution, split, or combination with
respect to Common Stock, then, in each such case, the Borrower shall
mail to the Holder a notice describing such proposed action and
specifying the date on which the Borrower's books shall close, or a
record shall be taken, for determining the holders of Common Stock
entitled to participate in such action, or the date on which such
reorganization, reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up shall take place or
commence, as the case may be, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to receive
securities and/or other property deliverable upon such action, if any
such date is to be fixed. Such notice shall be mailed to the Holder at
least thirty (30) days prior to the record date for such action in the
case of any action described in clause (i) or clause (iii) above, and
in the case of any action described in clause (ii) above, at least
thirty (30) days prior to the date on which the action described is to
take place and at least thirty (30) days prior to the record date for
determining holders of Common Stock entitled to receive securities
and/or other property in connection with such action.
Section 7. Additional Definitions. For purposes of this Debenture, the
following terms shall have the following respective meanings:
"Additional Stock" shall mean any shares of Common Stock issued
(or deemed to have been issued pursuant to Section 5(f) hereof) by the
Borrower after the Closing Date other than (i) shares of Common Stock
issuable or issued pursuant to the conversion of shares of the Series
A Preferred Stock outstanding as of the Closing Date, (ii) shares of
Common Stock issuable or issued pursuant to the Xxxxxx Warrant or the
Cargill Warrant (as those terms are defined in this Section 7), (iii)
shares of Common Stock or Options to acquire shares of Common Stock,
issued or issuable to officers, employees, consultants, or directors
of the Borrower pursuant to Existing Stock Option/Plans, but excluding
any such shares or Options issued or issuable to the Senior Managers
or to the directors elected by the holders of the Borrower's
outstanding shares of Series A Preferred Stock, if any.
"Cargill Warrant" means that certain Xxxxxxx and Restated Cargill
Warrant Agreement dated as of January 30, 1998, issued by the Borrower
to Cargill, exercisable for up to One Hundred Fifty Thousand (150,000)
shares of Common Stock, subject to adjustment in accordance with the
terms of such agreement.
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"Conversion Price" means the Initial Conversion Price per share
of Series B Common Stock, as such price may be adjusted pursuant to
pursuant to the terms of Section 5(f) hereof.
"Conversion Shares" means the Initial Number of shares of Series
B Common Stock issuable upon conversion of this Debenture, as such
number may be adjusted pursuant to the terms of Section 5(g) hereof;
provided, that if under the terms hereof there shall be a change such
that the securities issuable under the Debenture shall be issued by a
Person other than the Borrower or there shall be a change in the type
or class of securities issuable under the Debenture, then the term
shall mean the securities issuable upon conversion of the Debenture
and the exercise of the rights granted hereunder.
"Fair Market Value" means:
(i) If shares of Common Stock are being sold pursuant to a
Registration and Fair Market Value is being determined as of the
closing of the public offering, the "price to public" specified
for such shares in the final prospectus for such public offering;
(ii) If(i) is not applicable and if shares of Common Stock
are then listed or admitted to trading on any national securities
exchange or traded on any national market system, the average of
the daily closing prices for the thirty (30) trading days before
such date, excluding any trades that are not bona fide, arm's
length transactions. The closing price for each day shall be the
last sale price on such date or, if no such sale takes place on
such date, the average of the closing bid and asked prices on
such date, in each case as officially reported on the principal
national securities exchange or national market system on which
such shares are then listed, admitted to trading, or traded. If
both (i) and (ii) are applicable, "Fair Market Value" shall be
the higher of that determined by (ii) and (i);
(iii) If neither (i) nor (ii) is applicable, the average of
the reported closing bid and asked prices thereof for the thirty
(30) trading days before such date in the over-the-counter market
as shown by the National Association of Securities Dealers
automated quotation system or, if such shares are not then quoted
in such system, as published by the National Quotation Bureau,
Incorporated or any similar successor organization, and in either
case as reported by any member firm of the New York Stock
Exchange selected by the Holder (provided, however, that the
selected member firm may not be an affiliate of the Holder). If
both (i) and (iii) are applicable, "Fair Market Value" shall be
the higher of that determined by (i) and (iii); or
(iv) If no shares of Common Stock are then listed or
admitted to trading on any national exchange or traded on any
national market system, if no closing bid and asked prices
thereof are then so quoted or published in the over-the-counter
market and if no such shares are being offered to the public
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pursuant to a Registration, the Fair Market Value of a share of Common
Stock shall be determined as follows:
(A) The Borrower and the Holder shall each appoint a
representative and such representatives shall use their best
efforts to agree on the Fair Market Value within ten (10)
Business Days.
(B) If such representatives are unable to agree on the Fair
Market Value within ten (10) Business Days, the Borrower and the
Holder shall, on the last day of such ten (10) Business Day
period, appoint a qualified appraiser experienced in appraising
businesses similar to the business of the Borrower. If the
Borrower and Holder do not agree on an appraiser, each of them
shall instruct their respective appraiser to mutually select a
third appraiser experienced in appraising businesses similar to
the business of the Borrower. This third appraiser shall be
jointly engaged by the Borrower, on the one hand, and the Holder,
on the other hand, to appraise the fair value of the Borrower on
a controlling interest basis, and shall be instructed to complete
its appraisal within thirty (30) days after its appointment. In
such case, the fair value estimate of such appraiser shall be the
Fair Market Value. Once the Fair Market Value has been
determined, such appraiser shall deliver the results to the
Borrower and the Holder.
(D) The appraisal shall be conducted in accordance with the
Uniform Standards of Professional Appraisal Practice in effect as
of the effective date of the appraisal as promulgated by the
Appraisal Standards Board of the Appraisal Foundation.
(E) The standard of value shall be the fair value of the
Borrower as a going concern.
(F) The Borrower shall make available all relevant
information that may be reasonably requested by the appraiser,
including, without limitation, any and all forecasts, other
appraisals, valuation analyses, market analyses, and other
information that may reflect expectations regarding the future
earnings of the Borrower. The Holder shall make available all
relevant information it possesses as such information relates
specifically to the Borrower.
(G) The appraiser shall consider all appropriate valuation
methods and procedures, including, without limitation, the
following three approaches to value:
(1) The income approach based on the estimated future
earnings of the Borrower;
(2) The market approach based on market transactions
involving public or private guideline companies engaged in
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businesses in which the Borrower may be engaged as
of the effective date of the appraisal; and
(3) The asset based "cost approach" based on the
replacement cost of the Borrower's assets less its
liabilities valued at market, including the
consideration of tangible and intangible assets such
as goodwill.
(H) The appraiser shall consider and reconcile the
indications of value resulting from the various approaches
to arrive at the Fair Market Value.
"Xxxxxx Warrant" means that certain Common Stock Purchase Warrant
dated October 1, 1997, issued by the Borrower to Xxxxxx, exercisable
for Three Hundred Sixty-Three Thousand Eight Hundred Nineteen (363,819)
shares of Common Stock, subject to adjustment in accordance with the
terms of such agreement.
Section 8. Purchase Rights. If at any time the Borrower grants, issues,
or sells any Options, Convertible Securities, or rights to purchase stock,
warrants, securities, or other property pro rata to the record holders of any
class of Common Stock (the "Purchase Rights"), the Holder shall be entitled in
each case to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights that the Holder could have acquired if the Holder had
held the number of shares of Series B Common Stock acquirable upon the complete
conversion of this Debenture immediately before the date on which a record is
taken for the grant, issuance, or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common Stock are to
be determined for the grant, issue, or sale of such Purchase Rights.
Section 9. Restrictions on Transferability. This Debenture and the
Conversion Shares (unless registered) shall be "restricted securities" as
defined in Rule 144(a)(3) of the Securities Act. This Debenture and the
Conversion Shares (unless registered) may be transferred only in accordance with
(a) applicable law, and only on the same basis as a restricted security would be
transferable thereunder, (b) any transfer restrictions applicable to shares of
the Capital Stock generally, (c) the conditions set forth in this Section 9, and
(d) with respect to any transfer of the Debenture, the conditions and
limitations set forth in Section 12(c). The Holder, by acceptance hereof, agrees
to give written notice to the Borrower at least ten (10) days before
transferring this Debenture or the Conversion Shares (unless registered), of the
Holder's intent to do so, describing briefly the manner of the proposed
transfer. Promptly upon receiving such written notice, the Borrower shall
present copies thereof to counsel for the Borrower. If, in the opinion of
counsel satisfactory in form and substance to the Borrower, the proposed
transfer or conversion may be effected without violation of the applicable
federal and state securities laws, the Holder shall be entitled to transfer this
Debenture or the Conversion Shares (unless registered) in the manner
contemplated in the above-referenced notice to the Borrower; provided, that an
appropriate legend may be endorsed on this Debenture or the Conversion Shares
(unless registered) respecting restrictions on transfer thereof necessary or
advisable in the opinion of counsel and satisfactory in form and substance to
the Borrower to prevent further transfers that would be in violation of the
securities laws or adversely affect the exemptions relied upon by the
-12-
Borrower. Upon transfer of this Debenture, the transferee, by acceptance of this
Debenture, agrees to be bound by the provisions, terms, conditions, and
limitations of this Debenture and the Loan Agreement. If (a) no opinion of
counsel referred to in this Section 9 has been provided to the Borrower, or (b)
in the opinion of such counsel the proposed transfer, conversion, or disposition
of this Debenture or the Conversion Shares (unless registered) described in the
Holder's written notice given pursuant to this Section 9 may not be effected
without registration or without adversely affecting the exemptions relied upon
by the Borrower or without violating the terms of this Section 9, the Holder
will restrict the transfer, conversion, or disposition of this Debenture or the
Conversion Shares (unless registered) accordingly.
Section 10. Replacement of Debenture. Upon receipt of evidence
satisfactory to the Borrower of the loss, theft, destruction, or mutilation of
this Debenture and in the case of any such loss, theft, or destruction, upon
delivery of an undertaking of indemnity satisfactory to the Borrower, if
requested by the Borrower, or in the case of any such mutilation, upon surrender
and cancellation of such Debenture, the Borrower shall issue a new Debenture
identical in form to the lost, stolen, destroyed, or mutilated Debenture.
Section 11. Remedies on Default. Upon the occurrence of an Event of
Default and so long as any Event of Default is continuing, the Holder shall have
the option to declare the entire principal amount hereof and all accrued but
unpaid interest thereon to be immediately due and payable by written notice to
the Borrower. The Holder shall have all other remedies at law and in equity
afforded to holders of debt or otherwise provided for by this Debenture, the
Loan Agreement, and the other Convertible Debt Documents.
Section 12. General Provisions.
(a) Modification and Waiver. No amendment, modification, or
waiver of any provision hereof shall be binding upon the Borrower or
the Holder unless set forth in a written document signed, in the case
of amendments or modifications, by the Borrower and the Holder or, in
the case of waivers, by the party granting the waiver. Any waiver
shall be limited to the provision hereof in the circumstances or
events specifically made subject thereto, and shall not be deemed a
waiver of any other term hereof or of the same circumstance or event
upon any reoccurrence thereof.
(b) Notices. Except when telephonic notice is expressly
authorized by this Debenture or the Loan Agreement, any notice or
other communication to any party in connection with this Debenture
shall be in writing and shall be sent by manual delivery, telegram,
telex, facsimile transmission, overnight courier, or United States
mail (postage prepaid) addressed to such party at the address
specified on the signature page of the Loan Agreement, or at such
other address as such party shall have specified to the other party
hereto in writing. All periods of notice shall be measured from the
date of delivery thereof if manually delivered, from the date of
sending thereof if sent by telegram, telex, or facsimile transmission,
from the first Business Day after the date of sending if sent by
overnight courier, or from four days after the date of mailing if
mailed.
-13-
(c) Successors and Assigns. All the terms and provisions of this
Debenture shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the Borrower
and the Holder, whether or not so expressed, except that neither the
Borrower nor the Holder may assign its rights or delegate its
obligations hereunder without the prior written consent of the other
party; provided, however, that the Holder may at any time sell,
assign, transfer, grant participations in, or otherwise dispose of any
portion of the Loan and its rights under this Debenture to one or more
Affiliates.
(d) Governing Law and Construction. THE VALIDITY, CONSTRUCTION,
AND ENFORCEABILITY OF THIS DEBENTURE SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF MINNESOTA, WTHOUT GIVING EFFECT TO CONFLICT OF
LAWS PRINCIPLES THEREOF.
(e) Waiver of Demand, Presentment, and Notice of Dishonor. The
Borrower hereby waives demand, notice, protest, presentment, and
notice of dishonor, and all other notices, filing of suit, and
diligence in collecting amounts due hereunder.
(f) Attorneys' Fees. In the event of an occurrence of an Event of
Default, whether or not collection is initiated by the prosecution of
any suit or by judicial proceeding, the Borrower shall pay, in
addition to all other amounts due hereunder, all court costs and
reasonable attorneys' fees and expenses incurred by the Holder in
connection therewith.
(g) Severability. Should any one or more of the provisions of
this Debenture be determined to be invalid, illegal, or unenforceable,
all other provisions hereof will be given effect separately from the
provision or provisions determined to be invalid, illegal, or
unenforceable and will not be affected thereby.
IN WITNESS WHEREOF, the Borrower has caused this Debenture to be
executed by its duly authorized officer as of the Date of Issue specified above.
ACCREDITED HOME LENDERS, INC.
BY [ILLEGIBLE]
--------------------------
Its Executive Vice President
------------------------
-14-
SCHEDULE A
REGISTER OF DEBENTURE ADVANCES
================================================================================
Date of
Advance, Advance, Payment, or Aggregate Outstanding
Payment, or Conversion Amount Principal Balance Notation Made By:
Conversion
================================================================================
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
A-1
SCHEDULE X-x
FORM OF CONVERSION NOTICE
To be signed upon exercise of right of conversion.
1. The undersigned, the Holder of the $3,000,000 Accredited Home Lenders, Inc.
Floating-Rate Convertible Debenture, issued on March ____, 1999 (the
"Debenture"), hereby conditionally elects to exercise the conversion right
under Section 4 of the Debenture and Section 3.1 of the Loan Agreement to
convert [the entire outstanding principal amount] [up to $_____________]
of the Debenture into shares of Series B Common Stock of the Borrower
(collectively, the "Shares"). The undersigned requests that the Borrower
deliver to the undersigned at the address set forth below, documentation
setting forth in reasonable detail calculations setting forth the current
Conversion Price, the number of Shares calculated using such Conversion
Price, the maximum number of Conversion Shares into which the Debenture may
be converted, and an Updated Disclosure Schedule. In the event the
undersigned desires to exercise its option to convert the Debenture into
the Shares after its receipt and review of the Updated Disclosure Schedule
and completion of its due diligence, the undersigned shall deliver to you a
written confirmation of exercise within thirty (30) calendar days of its
receipt of the Updated Disclosure Schedule. Capitalized terms used herein
without definition have the meanings specified in the Debenture.
2. The undersigned hereby further acknowledges, represents, warrants, and
agrees that:
a) the Shares have not been registered under the Securities Act of 1933,
as amended (the "Act") or applicable state securities laws and are
being issued by the Borrower pursuant to exemptions from such
registration requirements and are subject to restrictions on
transferability and resale and may not be transferred or resold except
as permitted under the Act and applicable state securities laws, or
pursuant to registration or exemption therefrom;
b) in the event the Borrower is conducting an initial public offering
("IPO") at or about the time of the conversion of the Debenture and
the Shares of the Holder are not included in such registration, the
Holder has agreed not to sell, pledge, transfer, or otherwise dispose
of, directly or indirectly, any of the Shares for a period which shall
be the shorter of (i) one hundred eighty (180) days commencing on the
effective date of IPO, or (ii) the period for which the executive
officers of the Borrower lock-up their shares of Capital Stock, unless
the managing underwriter of the IPO agrees, in its sole discretion, to
shorten or waive such lock-up period;
C) in the event the Borrower is conducting a secondary offering at or
about the time of the conversion of the Debenture and the Shares of
the Holder are not included in such registration, the Holder has
agreed not to sell, pledge, transfer, or otherwise dispose of,
directly or indirectly, any of the Shares for a period which shall be
the shorter of (i) ninety (90) days commencing on the effective date
of secondary offering, or (ii) the period for which the executive
officers of the Borrower lock-up their shares of Capital
B-l-l
Xxxxx, unless the managing underwriter of the secondary offering
agrees, in its sole discretion, to shorten or waive such lock-up
period; and
d) accrued but unpaid interest to the date of conversion shall not be
converted but shall be paid in full in cash to the Holder not later
than ten (10) Business Days following the date of conversion.
3. The conversion represented by this notice shall be deemed to have been
effected immediately prior to the close of business on the date the
Confirmation of Conversion Exercise (as such term is defined in the
Debenture) is delivered, the Debenture is surrendered, and, if applicable,
the Additional Principal Amount paid (the "Conversion Date"), and subject
to the payment of any accrued and unpaid interest due hereunder, all rights
of the Holder as a holder of a Debenture, to the extent of such conversion,
shall cease at such time and the Holder shall be treated for all purposes
as having become the holder of record of the shares represented by the
conversion thereby at such time. Upon delivery of such shares, this
Debenture, or the portion hereof so converted, shall be deemed to have been
satisfied and discharged, and the shares into which this Debenture shall be
so converted shall be fully paid and nonassessable. In the event this
Debenture has not been converted in full, the Borrower shall issue and
deliver to the Holder a new Debenture identical to the one surrendered,
except that it shall be in the correct principal amount after the partial
conversion.
Dated:
_______________________________
(Signature)
Address:
--------
_______________________________
_______________________________
_______________________________
B-1-2
SCHEDULE B-2
FORM OF CONFIRMATION OF CONVERSION EXERCISE
The undersigned, the Holder of the attached Debenture, hereby
irrevocably confirms its election to exercise the conversion right under Section
4 of the Debenture and Section 3.1 of the Loan Agreement to convert [the entire
outstanding principal amount] [$______________] of the Debenture into shares
of Series B Common Stock of the Borrower. Capitalized terms used herein without
definition have the meanings specified in the Debenture.
Enclosed with this notice is the original Debenture, accompanied by
proper Assignments thereof to the Borrower or in blank for transfer. The
undersigned requests that a certificate representing the Conversion Shares (as
defined in the Conversion Notice heretofore delivered) be delivered to the
undersigned at the address set forth below and, in the event of a partial
conversion, a new Debenture identical to the one surrendered, except that it
shall be in the correct principal amount after such partial conversion.
Dated:
_________________________________
(Signature)
Address:
-------
_________________________________
_________________________________
_________________________________
B-2-1
--------------------------------------------------------------------------------
CONSENT,
FIFTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
(Convertible Debt)
and
FIRST AMENDMENT
TO
FLOATING-RATE CONVERTIBLE DEBENTURE
--------------------------------------------------------------------------------
CONSENT, FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (Convertible Debt) AND
FIRST AMENDMENT TO FLOATING-RATE CONVERTIBLE DEBENTURE (this "Amendment") dated
as of September 16, 2002, among ACCREDITED HOME LENDERS, INC., a California
corporation ("Borrower"), ACCREDITED HOME LENDERS HOLDING CO., a Delaware
corporation ("Parent"), and RESIDENTIAL FUNDING CORPORATION, a Delaware
corporation ("Lender").
X. Xxxxxxxx and Lender are parties to a Loan and Security Agreement (Convertible
Debt) dated as of March 17, 1999, as amended by a First Amendment to Loan and
Security Agreement (Convertible Debt) dated as of July 12, 2000, a Second
Amendment to Loan and Security Agreement (Convertible Debt) dated as of
January 31, 2001, a Third Amendment to Loan and Security Agreement
(Convertible Debt) dated as of December 28, 2001, and a Fourth Amendment to
Loan and Security Agreement (Convertible Debt) dated as of March 12, 2002 (as
amended, the "Agreement").
B. In connection with the initial execution and delivery of the Agreement,
Xxxxxxxx issued a Floating-Rate Convertible Debenture dated March 17, 1999 to
Lender (the "Debenture").
X. Xxxxxxxx has notified Lender that (a) Parent proposes to amend and restate
its Certificate of Incorporation as set forth in Exhibit A to this Amendment
(the "Certificate Amendment"), (b) Borrower proposes to engage in a corporate
reorganization in which AHL Merger Sub, a California corporation and a wholly
owned subsidiary of Parent, will merge with and into Borrower, with Borrower
as the surviving corporation (the "Merger"), as the result of which (i)
Borrower will become a wholly owned subsidiary of Parent, (ii) each holder of
Borrower's stock will become a holder of a like number of shares of capital
stock of Parent of a series having the same terms and conditions as the
shares of Borrower's stock held prior to the Merger and (iii) the Debenture
will become convertible, by its terms, into shares of stock of Parent and (c)
following consummation of the Merger, Xxxxxx proposes to make an initial
public offering ("IPO" and, together with the Certificate Amendment and the
Merger, the "Proposed Transactions") of shares of Parent's common stock.
D. Under Sections 7.3, 7.5 and 7.6 of the Agreement, the Proposed Transactions
are subject to the prior approval of Xxxxxx and, in the absence of a consent
or waiver by Lender, consummation of the Proposed Transactions would result
in one or more Events of Default under the Agreement.
X. Xxxxxxxx has requested that Xxxxxx consent to the Proposed Transactions and,
in connection with such consent, to amend certain terms of the Agreement and
the Debenture, all as more fully set out in, and subject to the terms and
conditions of, this Amendment.
NOW, THEREFORE, the parties to this Amendment agree as follows:
Accredited (5/th/ Amendment)
1. Lender consents to the Certificate Amendment and the Merger, subject to:
a. Satisfactory completion of a fairness hearing pursuant to Section
25142 of the California Corporate Securities Law of 1968, as amended
(the "Hearing"), by the California Commissioner of Corporations (the
"Commissioner");
b. The issuance of a permit by the Commissioner (the "Permit") that
states that Parent is qualified to offer, sell and issue the
securities described in the application for the Permit (the
"Application") and the issuance by the Commissioner of a Certificate
of Issuance of Permit (the "Certificate") that states that the terms
and conditions of the proposed offer and sale of securities as
described in the Application are fair and are approved;
c. Xxxxxx's receipt of a copy of the Permit and the Certificate;
d. Xxxxxx's receipt of a copy of Xxxxxx's amended and restated
Certificate of Incorporation, certified by the Delaware Secretary of
State;
e. Xxxxxx's receipt of documentation evidencing the fact that the
amendment and restatement of Parent's Certificate of Incorporation and
the Merger have been approved by Parent's and Xxxxxxxx's respective
Boards of Directors and shareholders;
f. Xxxxxx's receipt of four executed originals of this Amendment;
g. Xxxxxx's receipt of four executed originals of a Twelfth Amendment to
Warehousing Credit, Term Loan and Security Agreement; and
h. Xxxxxx's receipt of four executed originals of the Parent Guaranty (as
defined below).
2. Effective simultaneously with the consummation of the Merger:
a. The definition of "Convertible Debt Documents" set forth in Section
1.1. of the Agreement shall be amended to read in its entirety as
follows:
"Convertible Debt Documents" means this Agreement, the Debenture,
the Investors' Rights Agreement, the Co-Sale Agreement, any agreement
of the Borrower relating to Subordinated Debt, the Parent Guaranty,
and each other document, instrument, or agreement executed by the
Borrower in connection herewith or therewith, as any of the same may
from time to time be amended, supplemented, restated, renewed, or
otherwise modified or replaced, or, if terminated, then as in effect
immediately preceding such termination.
b. The definition of "Debenture" set forth in Section 1.1. of the
Agreement shall be amended to read in its entirety as follows:
"Debenture" means the Debenture referenced in Section 2.3 hereof,
as the same may from time to time be amended, supplemented, restated,
renewed, or otherwise modified or replaced.
c. Section 1.1 of the Agreement shall be amended to add, in appropriate
alphabetical order, definitions of "Parent" and "Parent Guaranty" to
read in their entireties as follows:
"Parent" means Accredited Home Lenders Holding Co., a Delaware
corporation.
"Parent Guaranty" means the Guaranty of Parent dated September 16,
2002, as the same may be amended, restated, renewed or replaced from
time to time, pursuant to
Accredited (5/th/ Amendment) -2-
which Parent guarantees the payment and performance of Xxxxxxxx's
Obligations under this Agreement, the Debenture, the Warehouse Credit
and Term Loan Agreement, and the other Transaction Documents.
d. All references in the Agreement and the Debenture to Capital Stock,
Common Stock, Series A Common Stock, Series A Preferred Stock and
Series B Common Stock shall be references to the appropriate class or
series of the capital stock of Parent.
e. Section 4(c)(iii) of the Debenture and the phrase "and, if applicable,
the payment of the Additional Principal Amount" in the second sentence
of Section 4(c) of the Debenture shall be deleted in their entirety
and the parties agree that Xxxxxx's conversion of the Debenture shall
occur solely in exchange for surrender of the Debenture without the
payment by Lender of any additional consideration in connection
therewith.
3. Borrower and Parent acknowledge that, from and after the consummation of
the Merger, the Debenture will be convertible into shares of capital stock
of Parent by reason of Section 5(a)(ii) of the Debenture and Section 8 of
the form of Agreement and Plan of Merger by and among Borrower, Parent and
Merger Sub submitted in connection with the Application.
4. In the event that Xxxxxx, in its sole discretion, executes and delivers an
underwriting agreement with respect to the IPO and the terms and conditions
of Xxxxxx's participation therein (the "Underwriting Agreement"), then,
simultaneously with the closing of the IPO on the terms and conditions
specified in the Underwriting Agreement (but not otherwise):
a. Lender shall be deemed to have consented to the consummation of the
IPO;
b. The Debenture shall be converted into the Initial Number of Conversion
Shares and the Conversion Shares shall be converted into shares of
Class A Common Stock. To facilitate conversion, Xxxxxx agrees to
surrender the Debenture to a custodian under a custody agreement with
terms and conditions acceptable to Lender in its sole discretion to be
executed simultaneously with the Underwriting Agreement;
c. Parent shall issue the number of shares of Class A Common Stock
issuable upon conversion of the Initial Number of Conversion Shares.
Such shares shall, upon delivery, be duly authorized, validly issued,
fully paid and nonassessable;
d. Lender shall not be deemed to have any rights pursuant to Section 3.2
as the result of the transactions contemplated by this Section 4;
e. Section 3.2 of the Agreement shall be deleted in its entirety; and
f. The covenants in Articles VI and VII of the Agreement shall be of no
further force and effect.
The parties agree that the transactions described in this Section 4 shall be
consummated upon satisfaction of the conditions specified in this Section 4
without regard to, or any need for any party to comply with, the provisions of
Sections 4(b) and 4(c) of the Debenture. The parties further acknowledge and
agree that Xxxxxx's right to payment of accrued interest due under the Debenture
shall survive the conversion provided for in this Section 4 as provided in
Section 4(d) of the Debenture.
5. Each of Borrower and Parent represents, warrants and agrees that:
a. There does not exist as of the date of this Amendment, and there will
not exist as of the consummation of the Merger, any Default or Event
of Default under the Transaction Documents;
Accredited (5/th/ Amendment)
-3-
b. The Transaction Documents continue as of the date of this Amendment,
and will continue as of the consummation of the Merger, to be the
legal, valid and binding agreements and obligations of Borrower,
enforceable in accordance with their terms, as modified by this
Amendment;
c. Borrower is not as of the date of this Amendment, and will not be as
of the consummation of the Merger, in default under any of the
Transaction Documents and Borrower has as of the date of this
Amendment, and will have as of the consummation of the Merger, no
offset or defense to its performance or obligations under any of the
Transaction Documents;
d. Except for changes permitted by the terms of the Agreement, Xxxxxxxx's
representations and warranties contained in the Transaction Documents
are as of the date of this Amendment, and will as of the consummation
of the Merger be, true, accurate and complete in all respects; and
e. There has been as of the date of this Amendment, and will have been as
of the consummation of the Merger, no material adverse change in
Borrower's financial condition from the date of the Agreement.
6. The parties agree that Xxxxxx's execution and delivery of this Amendment is
not and shall not be deemed to be a reaffirmation as of the date of this
Amendment or any other date of the representations and warranties contained
in Section 3.4 of the Agreement.
7. Unless otherwise defined in this Amendment, all capitalized terms have the
meanings given to those terms in the Agreement or the Debenture, as the
case may be. Defined terms may be used in the singular or the plural, as
the context requires. The words "include," "includes" and "including" are
deemed to be followed by the phrase "without limitation." Unless the
context in which it is used otherwise clearly requires, the word "or" has
the inclusive meaning represented by the phrase "and/or." References to
Sections and Exhibits are to Sections and Exhibits of this Amendment unless
otherwise expressly provided.
8. Except as expressly modified by this Amendment, the Agreement and the
Debenture are unchanged and remain in full force and effect, and each of
Borrower and Parent ratifies and reaffirms all of its obligations under the
Agreement, the Debenture and the other Transaction Documents.
9. Except as specifically set forth in this Amendment, Xxxxxx's consent to any
of the Proposed Transactions shall not be deemed a consent to the breach by
Borrower or Parent of any other covenants or agreements contained in the
Agreement or any other Convertible Debt Document or Transaction Document
with respect to any of the Proposed Transactions or any other transaction
or matter. Borrower and Parent further agree that the consents set forth in
this Amendment are limited to the precise meaning of the words as written
and shall not be deemed (i) to be a consent or consents to any waiver or
modification of any other term or condition of the Agreement, the Debenture
or any other Convertible Debt Document or Transaction Document or (ii) to
prejudice any right or remedy that Lender may now have or may in the future
have under or in connection with the Agreement, the Debenture or any other
Convertible Debt Document or Transaction Document other than with respect
to the matters for which the consents in this Amendment have been provided.
Except as expressly set forth in this Amendment, the consents described
herein do not alter, affect, release or prejudice in any way any of
Borrower's or Parent's obligations under the Agreement, the Debenture and
the other Convertible Debt Documents and Transaction Documents.
10. This Amendment may be executed in any number of counterparts, each of which
will be deemed an original, but all of which together constitute but one
and the same instrument.
Accredited (5/th/ Amendment)
-4-
IN WITNESS WHEREOF, Xxxxxxxx, Xxxxxx and Xxxxxx have caused this Amendment to be
duly executed on their behalf by their duly authorized officers as of the day
and year specified above.
ACCREDITED HOME LENDERS, INC.,
a California corporation
By: /s/ Xxx X. XxXxxxx
------------------------------
Its: Executive Vice President
----------------------------
ACCREDITED HOME LENDERS HOLDING CO.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Its: Chief Executive Officer
----------------------------
RESIDENTIAL FUNDING CORPORATION,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------
Managing Director
Accredited (5/th/ Amendment)
-5-
