Exhibit 10.17
STOCK REDEMPTION AGREEMENT
This Stock Redemption Agreement (the "Agreement") is made and entered
into as of the 1st day of June, 1998 (the "Effective Date"), by and among
Accredited Home Lenders, Inc., a California corporation (the "Company"), Xxxxx
X. Xxxxxxx, the Chief Executive Officer, a director and the Chairman of the
Board of the Company, and Xxx X. XxXxxxx, a director and the Executive Vice
President and Secretary of the Company (Messrs. Xxxxxxx and XxXxxxx are referred
to herein individually as "Shareholder" and collectively as "Shareholders").
RECITALS
--------
A. Each Shareholder is the owner of over 2,000,000 shares of the common
stock of the Company (the "Shares").
B. Shareholders acknowledge the importance of attracting and retaining
key employees such as the Company's President and Chief Operations Officer,
Xxxxxx X. Xxxxx, in order to enhance the value of the Shareholders' Shares.
C. As part of a compensation package designed to retain the services of
Xx. Xxxxx, the Company has agreed to grant to Xx. Xxxxx incentive stock options
(each, an "Option") to acquire 50,000 Shares at an exercise price of $1.50 per
Share and otherwise on similar terms and conditions as all other incentive stock
options previously granted by the Company (the "50,000 Grant"); provided that
Shareholders enter into this Agreement with the Company setting forth the terms
and conditions by which Shares owned by Shareholders shall be redeemed by the
Company upon Xx. Xxxxx'x exercise of options granted pursuant to the 50,000
Grant.
AGREEMENT
---------
1. Mandatory Redemption of Stock. On the terms and subject to the
conditions contained in this Agreement, Shareholders and the Company agree that
the Company shall redeem from Shareholders a number of the Shares equal to the
number of Shares of the Company for which Options have been validly exercised
and certificates issued pursuant to the 50,000 Grant.
2. Date of Redemptions. The term of the Company's right and obligation
to redeem Shares owned by Shareholders under this Agreement shall be concurrent
with the term of the 50,000 Grant, and this Agreement shall terminate and be of
no further force and effect at such time when no Incentive Stock Options under
the 50,000 Grant are outstanding or exercisable or the 50,000 Grant has expired
or been terminated. On any date that Xx. Xxxxx exercises one or more Options to
purchase Shares under the terms of the 50,000 Grant, the Company shall be
obligated to purchase the same number of Shares from Shareholders as hereafter
provided, and Shareholders shall be obligated to sell such Shares to the
Company.
1
3. Exercise. The Company shall exercise its right and obligation to
redeem the Shares owned by Shareholders by providing written notice to
Shareholders (the "Redemption Notice") which includes the following: (1) the
number of Shares subject to the 50,000 Grant for which Xx. Xxxxx exercised one
or more Option, and (2) the exercise price therefor paid by Xx. Xxxxx to the
Company.
4. Redemption. The number of Shares of each Shareholder which shall be
redeemed at any time pursuant to this Agreement shall be one-half (1/2) the
number of Shares issued to Xx. Xxxxx upon the exercise of Options pursuant to
the 50,000 Grant.
5. Closing. The closing ("Closing") of any Share redemption shall take
place at the offices of the Company no later than five (5) days after the
Redemption Notice is sent to Shareholders. At any Closing, each Shareholder
shall endorse and deliver to the Company one-half (1/2) of the Shares specified
in the Redemption Notice. The certificates representing such Shares shall be
canceled by the Company, and a new certificate shall be issued to each
Shareholder representing the balance of Shares owned.
6. Redemption Price. In consideration of the sale and delivery of the
Shares to the Company at any Closing, the Company shall pay to each Shareholder
the product of the number of Shares redeemed from Shareholder multiplied by the
exercise price of the Shares purchased by Xx. Xxxxx. Except as provided in
Section 9, the redemption price shall be paid in cash or immediately available
funds at each Closing.
7. Representations and Warranties of Shareholder. For the purposes of
inducing the Company to enter into this Agreement, each Shareholder represents
and warrants to the Company as of the Effective Date and as of each Closing,
that:
a. Shareholder owns his Shares free and clear of all liabilities,
liens, encumbrances, pledges, trusts, options, covenants, restrictions and
reservations;
b. So long as all Options granted pursuant to the 50,000 Grant have
not been exercised or terminated, Shareholder shall own a sufficient number of
Shares necessary to satisfy his obligations under this Agreement;
c. Shareholder has full legal right, power and authority to enter
into this Agreement and transfer the Shares to the Company in accordance with
the terms of this Agreement;
d. Shareholder shall cause the Company to endorse a stock certificate
evidencing 25,000 of Shareholder's Shares with the following legend:
THE OWNERSHIP, TRANSFER, ENCUMBRANCE, PLEDGE,
ASSIGNMENT, OR OTHER DISPOSITION OF THIS
CERTIFICATE AND THE SHARES OF STOCK REPRESENTED
THEREBY, ARE SUBJECT TO
2
THE RESTRICTIONS CONTAINED IN A STOCK REDEMPTION
AGREEMENT, A COPY OF WHICH IS ON FILE AT THE OFFICES
OF THE COMPANY. TRANSFER OF SAID SHARES CANNOT BE
MADE EXCEPT UPON COMPLIANCE WITH SUCH PROVISIONS, OF
WHICH NOTICE IS HEREBY GIVEN. THE COMPANY WILL MAIL
TO ANY PERSON AFFECTED BY SAID AGREEMENT A COPY
THEREOF, WITHOUT CHARGE, WITHIN FIVE (5) DAYS AFTER
RECEIPT OF WRITTEN REQUEST THEREFOR.
8. Adjustment to Shares. The aggregate numbers of Shares subject to this
Agreement shall be automatically adjusted, without further action by the Company
or Shareholders, to reflect changes in the capitalization of the Company, such
as stock dividends, stock splits, reverse stock splits, subdivisions,
reorganizations or reclassification, or any similar recapitalization that
affects or modifies the number of Shares issued and outstanding at any time.
9. Prohibition on Payment of Redemption Price. If the funds of the
Company legally available for redemption of the Shares on the relevant
Closing date are insufficient to redeem the total number of Shares to be
redeemed on such date, the Company shall use those funds which are legally
available to redeem in cash the maximum possible number of such Shares, divided
equally between Shareholders. The additional Shares of Shareholders which may
not then be paid for by the Company shall nevertheless be transferred legally
and validly by Shareholders to the Company. At any time thereafter when
additional funds of the Company are legally available for the payment of the
Shares for which payment has not been made by the Company to Shareholders,
such funds will immediately be used to pay the balance (or the maximum portion
thereof which may then be legally paid, divided equally between Shareholders) of
the redemption price for such Shares. Any unpaid redemption price hereunder
shall bear interest at the annualized rate of 10%. Such interest shall be paid
on each six-month anniversary following the first applicable Closing date that
the entire redemption price could not be paid and each subsequent six-month
anniversary date until the overdue redemption price is made in full.
10. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersedes all prior and contemporaneous understandings and agreements between
the parties. No claim of waiver, modification, or consent to the provisions of
this Agreement shall be made against any party, except on the basis of a written
instrument executed by and on behalf of all parties, except as set forth herein.
The waiver by one party of the performance of any covenant, condition, or
promise shall not invalidate this Agreement, nor shall it be considered to be
a waiver of any other covenant, condition or promise. The waiver by any or all
parties of the time for performing any act shall not constitute a
3
waiver of the time for performing any other act or an identical act required to
be performed at a later time.
11. Governing Law. This Agreement is to be governed by and construed in
accordance with the laws of the State of California.
12. Attorneys' Fees. If any party employs legal counsel to enforce or
bring an action against another party by reason of the breach of any covenant,
provision or condition of this Agreement, or otherwise arising out of this
Agreement, the unsuccessful party shall pay to the prevailing party its attorney
fees in a reasonable amount, which shall be payable whether or not any action is
prosecuted to judgment.
13. Notices. All notices, requests, and other communications which are
required or permitted under this Agreement shall be in writing and shall be
deemed to have been given and received either upon personal delivery, or upon
completed telecopy transmission, or twenty-four (24) hours after deposit with
an overnight commercial delivery service, or two (2) days after deposit in the
U.S. Mail.
14. Further Assurances. Each party agrees to do all acts and things and
to deliver such written instruments that shall be reasonably necessary to carry
out the terms of this Agreement.
15. Third Parties. This Agreement shall inure to the benefit of the
Company and Shareholders. Nothing in this Agreement, expressed or implied,
shall be construed as giving any person or entity other than the parties to this
Agreement any right, benefit, remedy, or claim under or in respect to this
Agreement or any provision.
16. Successors. This Agreement shall be binding upon Shareholders and
the Company and their respective successors and assigns.
17. Amendments. This Agreement may be amended or terminated only with
the written consent of the Company and Shareholders.
18. Counterparts. This Agreement may be executed in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
[signature page follows]
4
[signature page to Stock Redemption Agreement]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ACCREDITED HOME LENDERS, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Xxxxx X. Xxxxxxx
Chief Executive Officer
/s/ Xxxxx X. Xxxxxxx
-------------------------------
XXXXX X. XXXXXXX
/s/ Xxx X. XxXxxxx
-------------------------------
XXX X. XxXXXXX
CONSENTS OF SPOUSES
-------------------
I am the spouse of Xxxxx X. Xxxxxxx. On behalf of myself, my heirs and
legatees, I consent to the terms of the Stock Redemption Agreement signed by my
spouse and agree to the redemption of the Shares (as defined in the Stock
Redemption Agreement) registered in the name of my spouse or otherwise
registered upon the terms referenced in the Stock Redemption Agreement.
Dated as of June 1, 1998.
/s/ Xxxxxx X. Xxxxxxx
-------------------------------
XXXXXX X. XXXXXXX
I am the spouse of Xxx X. XxXxxxx. On behalf of myself, my heirs and
legatees, I consent to the terms of the Stock Redemption Agreement signed by my
spouse and agree to the redemption of the Shares (as defined in the Stock
Redemption Agreement) registered in the name of my spouse or otherwise
registered upon the terms referenced in the Stock Redemption Agreement.
Dated as of June 1, 1998.
/s/ Xxxxxxx XxXxxxx
-------------------------------
XXXXXXX XxXXXXX
5
