Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended September 30, 1997 or
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from _______________ to
______________
Commission File Number: 0-13091
IMH Commercial Holdings, Inc.
(Exact name of registrant as specified in its charter)
Maryland 33-0745075
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20371 Irvine Avenue
Santa Ana Heights, California 92614
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (714) 556-0122
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- --------------------------------------- ----------------------------------
Common Stock $0.01 par value American Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [_] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or any amendment to this
Form 10-K. [_]
The aggregate market value of the voting stock held by non-affiliates of
the registrant based upon the closing sales price of its Common Stock on
November 7, 1997 on the American Stock Exchange was approximately $110.9
million.
The number of shares of Common Stock outstanding as of
November 7, 1997: 7,344,789
The number of shares of Class A Common Stock outstanding as of
November 7, 1997: 674,211
Documents incorporated by reference
None
<PAGE>
<TABLE>
IMH COMMERCIAL HOLDINGS, INC. AND SUBSIDIARY
1997 FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS - IMH COMMERCIAL HOLDINGS, INC. Page #
Consolidated Balance Sheets, September 30, 1997 and March 31, 1997......................... 3
Consolidated Statements of Operations, Three-Months Ended September 30, 1997 and For the
period from January 15, 1997 (commencement of operations) through September 30, 1997...... 4
Consolidated Statement of Cash Flows, For the period from January 15, 1997 (commencement of
operations ) through September 30, 1997.................................................... 5
Selected Notes to Consolidated Financial Statements........................................ 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 10
PART II. OTHER INFORMATION
ITEM 1. - 5. NOT APPLICABLE 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 14
SIGNATURES 15
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
IMH COMMERCIAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
<CAPTION>
September 30, 1997 March 31, 1997
---------------------- ----------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 18,847 $ 4,400
Investment securities available for sale 12,390 -
Residual interest in securitizations, held for trading 9,999 10,025
Loan receivables:
Finance receivables 42,662 -
Commercial Mortgages held for investment 34,559 17,535
Allowance for loan losses (55) (13)
---------------------- ----------------------
Net loan receivables 77,166 17,522
Property and equipment 3,901 -
Due from affiliates 3,465 134
Investment in ICCC 3,115 -
Accrued interest receivable 465 128
Other assets 373 41
---------------------- ----------------------
$ 129,721 $ 32,250
====================== ======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Warehouse facilities $ 12,984 $ -
Borrowings from Imperial Warehouse Lending Group 2,526 16,563
Due to affiliates 9,347 520
Accrued interest expense 70 150
Other liabilities 50 -
---------------------- ----------------------
Total Liabilities 24,977 17,233
---------------------- ----------------------
Stockholders' Equity:
Preferred Stock; $.01 par value; 10,000,000 shares authorized;
0 and 3,000,000 issued or outstanding at September 30, 1997
and at March 31, 1997, respectively - 30
Common Stock; $.01 par value; 46,000,000 shares authorized;
7,344,789 and 599,000 shares issued and outstanding at September
30, 1997 and March 31, 1997, respectively 73 6
Class A Common Stock; $.01 par value; 4,000,000 shares authorized;
674,211 and 0 shares issued and outstanding at September 30, 1997
and March 31, 1997, respectively 7 -
Additional paid-in-capital 104,918 17,667
Investment securities valuation allowance 16 -
Accumulated deficit (270) (2,686)
---------------------- ----------------------
Total Stockholders' Equity 104,744 15,017
====================== ======================
$ 129,721 $ 32,250
====================== ======================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
IMH COMMERCIAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
( dollars in thousands, except earnings per share data)
<CAPTION>
For the period from
January 15, 1997
Three Months (commencement of operations)
Ended September 30, 1997 through September 30, 1997
--------------------------- ----------------------------------
<S> <C> <C>
Revenues
Interest income $ 2,457 $ 3,810
Equity in net income of Imperial
Commercial Capital Corporation 627 627
Rental and other income 58 58
---------------------------- --------------------------------
3,142 4,495
Expenses
Interest expense on warehouse facilities 463 788
Interest expense on other affiliated borrowings 205 341
Interest expense on borrowings
from Imperial Warehouse Lending Group 77 418
Professional services 202 380
General and administrative expense 75 85
Provision for loan losses 22 55
Advisory fee 1 1
Stock compensation expense - 2,697
---------------------------- --------------------------------
1,045 4,765
---------------------------- --------------------------------
Net earnings (loss) $ 2,097 $ (270)
============================ ================================
Net earnings (loss) per common share $ 0.38 $ (0.09)
============================ ================================
Weighted average number of shares outstanding used in net
earnings (loss) per share computation 5,534,000 2,974,000
============================ ================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
IMH COMMERCIAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
<CAPTION>
For the period from
January 15, 1997
(commencement of operations)
through September 30, 1997
-----------------------------------
<S> <C>
Cash flows from operating activities:
Net loss $ (270)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Equity in net income of ICCC (627)
Stock compensation expense 2,697
Provision for Commercial Mortgage losses 55
Depreciation 16
Net change in accrued interest receivable (465)
Net change in other assets and liabilities 5,559
Net change in accrued interest expense 70
-----------------------------------
Net cash provided by operating activities 7,035
Cash flows from investing activities:
Net change in Commercial Mortgages held for investment (34,559)
Net change in finance receivables (42,662)
Purchase of investment securities available for sale (12,374)
Purchase of residual interest in securitization (10,098)
Principal reductions on residual interest in securitizations 99
Net change in property and equipment (3,917)
Contributions to ICCC (2,375)
-----------------------------------
Net cash used in investing activities (105,886)
Cash flows from financing activities:
Net change in warehouse facilities 12,984
Net change in borrowings from Imperial Warehouse Lending Group 2,526
Issuance of common stock 102,188
-----------------------------------
Net cash provided by financing activities 117,698
Cash and cash equivalents at end of period $ 18,847
===================================
Supplementary information:
Interest paid $ 1,477
===================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
IMH COMMERCIAL HOLDINGS, INC. and SUBSIDIARY
Notes to Consolidated Financial Statements
Unless the context otherwise requires, references herein to the "Company"'
refer to IMH Commercial Holdings, Inc. ("ICH"), its subsidiary IMH/ICH Dove
Street, LLC ("Dove"), and Imperial Commercial Capital Corporation ("ICCC"),
collectively. References to ICH refer to IMH Commercial Holdings, Inc. as a
separate entity from ICCC or Dove.
1. Basis of Financial Statement Presentation
The accompanying consolidated financial statements have been prepared in
accordance with Generally Accepted Accounting Principles and with the
instructions to Form 10-Q. Accordingly, they do not include all of the
information and footnotes required by Generally Accepted Accounting
Principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation have been included. Operating results for
the period from January 15, 1997 (commencement of operations) through
September 30, 1997 are not necessarily indicative of the results that may
be expected for the period from January 15, 1997 (commencement of
operations) through December 31, 1997.
References to financial information of ICH reflects the financial results
of the Long-Term Investment Operations ("Long-Term Investment Operations")
for the period from January 15, 1997 (commencement of operations) through
September 30, 1997, financial results of ICH's equity interest in net
income in ICCC as a stand-alone entity, subsequent to the Contribution (as
discussed below), and the financial results of Dove for the period from
August 25, 1997 through September 30, 1997. See Item 2. "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Significant Transactions" for additional information on the
Contribution. The results of operations of ICCC, of which 95% of the
economic interest is owned by ICH, are included in the results of
operations for ICH as "Equity of net income of ICCC."
2. Summary of Business and Significant Accounting Policies
ICH is a recently formed specialty commercial property finance company
which has elected to be taxed at the corporate level as a real estate
investment trust ("REIT") for federal income tax purposes, which generally
allows the Company to pass through income to stockholders without payment
of federal income tax at the corporate level. The Company was incorporated
in February 1997 for the purpose of originating, purchasing, securitizing
and selling commercial mortgages and investing in commercial mortgages and
commercial mortgage-backed securities. Imperial Credit Mortgage Holdings,
Inc. ("IMH") capitalized the Company with $15.0 million in cash in March
1997. Upon the closing of the Initial Public Offering ("IPO") on August 8,
1997, IMH owned 719,789, or 9.8%, of ICH Common Stock and 674,211 shares,
or 100%, of ICH non-voting Class A Stock (as defined hereinafter) and
contributed (the "Contribution") 100% of the outstanding shares of
non-voting preferred stock of ICCC in exchange for 95,000 shares of ICH
non-voting Class A Stock. See Item 2. "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Significant Transactions"
for additional information on the IPO.
ICH was formed to seek opportunities in the commercial mortgage market.
Commercial mortgage assets include mortgage loans on
condominium-conversions, mortgage loans on commercial properties, such as
industrial and warehouse space, office buildings, retail space and shopping
malls, hotels and motels, nursing homes, hospitals, multifamily, congregate
care facilities and senior living centers (collectively, "Commercial
Mortgages"). The Company operates the Long-Term Investment Operations,
which invests primarily in Commercial Mortgages and mortgage-backed
securities on commercial properties ("CMBS") and subsequent to the IPO,
engages in the Conduit Operations, which originates, purchases and sells or
securitizes Commercial Mortgages. In April, 1997, ICH secured a $200.0
million warehouse line agreement to finance the origination and purchase of
Commercial Mortgages. The Company's Conduit Operations operates three
divisions: the Condominium Division, the Retail Division, and the
Correspondent and Bulk Purchase Division.
<PAGE>
Long-Term Investment Operations
The Long-Term Investment Operations invests primarily in adjustable rate
Commercial Mortgages for long-term investment and CMBS backed by such
Commercial Mortgages. Income is earned principally from the net interest
income received by the Company on the Commercial Mortgages, finance
receivables, and CMBS purchased and held in its portfolio. At September 30,
1997, the Company's earning assets consisted of $34.6 million in Commercial
Mortgages, $42.7 million in finance receivables and $22.4 million in CMBS.
Conduit Operations
The Company's Conduit Operations, subsequent to the IPO, operates three
divisions: the Condominium Division, the Retail Division, and the
Correspondent and Bulk Purchase Division.
Condominium Division. This Division offers on a retail basis adjustable
rate financing to developers and project owners who have completed the
development of a condominium complex or the conversion of an apartment
complex to a condominium complex on property with a typical loan amount of
$3.0 million to $10.0 million. All originations, underwriting, processing
and funding are performed at ICCC's executive offices. The Company
anticipates that the Condominium Division's Commercial Mortgages will be
offered on a nationwide basis and that Commercial Mortgages originated
through the Condominium Division will be financed through the utilization
of CMO borrowings by the Long-Term Investment Operations.
Retail Division. This Division originates Commercial Mortgages for
properties including general retail property such as shopping centers,
super markets and department stores, light industrial property, and office
buildings. The Retail Division offers smaller balance ($500,000 to $1.5
million) fixed and adjustable rate Commercial Mortgages to developers and
project owners for smaller properties and projects than those funded by the
Correspondent and Bulk Purchase Division. Although processing and funding
operations relating to these Commercial Mortgages are performed centrally
at ICCC's executive offices, the Company has targeted major metropolitan
areas for the opening of satellite offices for regional originations. A
portion of the adjustable rate Commercial Mortgages that will be originated
by the Retail Division may be held in portfolio by the Long-Term Investment
Operations, while the balance thereof and a substantial portion of the
fixed rate Commercial Mortgages originated will be resold by the Conduit
Operations through bulk sale or REMIC securitizations.
Correspondent and Bulk Purchase Division. This Division both originates
Commercial Mortgages on a retail basis and purchases Commercial Mortgages
on a bulk and flow basis. This Division offers larger principal balance
($1.5 million to $10.0 million) Commercial Mortgages for commercial
projects than those funded by the Retail Division. The Correspondent and
Bulk Purchase Division offers adjustable rate and fixed rate Commercial
Mortgages offered through specified correspondents who may in the future be
provided with Company-sponsored warehouse facilities. In addition, the
Division will purchase Commercial Mortgages in bulk and flow from selected
financial institutions and mortgage bankers. A portion of the adjustable
rate Commercial Mortgages originated or purchased by this Division may be
held in portfolio by the Long-Term Investment Operations, while the balance
thereof and a substantial portion of the fixed rate Commercial Mortgages
originated or purchased will be resold through bulk sale or REMIC
securitizations.
<PAGE>
3. Investment in Imperial Commercial Capital Corporation
The Company records its investment in ICCC on the equity method. The
Company is entitled to 95% of the earnings or losses of ICCC through its
ownership of all of the non-voting preferred stock of ICCC.
Summarized financial information for ICCC (in thousands):
<TABLE>
<CAPTION>
BALANCE SHEETS
<S> <C> <C>
September 30, 1997 March 31, 1997
--------------------------------- ----------------------------
ASSETS
Cash $ 1,790 $ -
Commercial Mortgages held for sale 52,841 -
Due from affiliates 574 411
Premises and equipment, net 270 130
Other assets 238 13
Accrued interest receivable 207 -
--------------------------------- ----------------------------
$ 55,920 $ 554
================================= ============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Borrowings from affiliates $ 49,926 $ -
Other liabilities 1,516 153
Due to affiliates 1,199 61
--------------------------------- ----------------------------
Total liabilities 52,641 214
Shareholders' Equity:
Preferred Stock 2,875 500
Common Stock 1 1
Contributed capital 150 25
Retained earnings (accumulated deficit) 253 (186)
--------------------------------- ----------------------------
Total shareholders' equity 3,279 340
--------------------------------- ----------------------------
$ 55,920 $ 554
================================= ============================
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
<CAPTION>
For the period from
January 15, 1997
For the Three Months (commencement of operations)
Ended September 30, 1997 through September 30, 1997
------------------------------- ---------------------------------
<S> <C> <C>
Revenues
Interest income 1,090 $ 1,321
Gain on sale of loans 1,508 1,527
Loan servicing and other income 16 36
------------------------------- ---------------------------------
2,614 2,884
Expenses:
Interest expense on affiliated borrowings 1,076 1,291
Professional services 196 374
Stock compensation expense 125 150
General and administrative expense 132 266
Provision for repurchases 69 90
Personnel expense 100 271
------------------------------- ---------------------------------
1,698 2,442
Earnings before income taxes 916 442
Income tax expense 387 189
------------------------------- ---------------------------------
Net earnings $ 529 $ 253
=============================== =================================
</TABLE>
4. Investment Securities Available-for-Sale
The Company classifies investment and mortgage-backed securities as
held-to-maturity, available-for-sale, and/or trading securities.
Held-to-maturity investment and commercial mortgage-backed securities are
reported at amortized cost, available-for-sale securities are reported at
fair value with unrealized gains and losses as a separate component of
stockholders' equity, and trading securities are reported at fair value
with unrealized gains and losses reported in income. Discounts obtained on
investment securities are amortized to interest income over the estimated
life of the investment securities using the interest method.
At September 30, 1997, ICH's investment securities available-for-sale
included $12.4 million of subordinated securities collateralized by
Commercial Mortgages. In general, subordinated classes of a particular
series of securities bear all losses prior to the related senior classes.
The Company's investment securities are held as available-for-sale,
reported at fair value with unrealized gains and losses reported as a
separate component of stockholders' equity. As the Company qualifies as a
REIT and no income taxes are paid, the unrealized gains and losses are
reported gross in stockholders' equity.
5. Residual Interest in Securitization
The accompanying 1997 balance sheet includes one residual interest in
securitization ("residual") of real estate mortgage investment conduits
("REMICS") which was recorded as a result of a 1995 securitization by
Imperial Credit Industries, Inc. ("ICII") of commercial loans through a
special purpose trust vehicle. ICII has one director who also serves on the
Board of ICH. ICH purchased the residual in March 1997 from ICI Funding
Corporation ("ICIFC"), the Conduit Operations for IMH, for $10.1 million.
ICIFC and ICH have estimated future cash flows from the residual utilizing
assumptions that they believe are commensurate with the risk inherent in
the investment and consistent with those that they believe would be
utilized by an unaffiliated third-party purchaser and discounted at a rate
commensurate with the risk involved. The Company has classified this
residual as a held-for trading security. Unrealized gains and losses, net
of related income taxes, will be recognized as a reduction to current
earnings. To the Company's knowledge, there is currently no active market
for the purchase or sale of this residual. At September 30, 1997, the
Company recorded $10.0 million in residual interest in securitization which
management estimates to approximate fair value.
<PAGE>
The Company financed the purchase of the residual with borrowings from ICII
due December 2007 at a stated interest rate of 10%. At September 30, 1997,
the balance of the affiliated borrowings was $7.9 million, which was
included in due to affiliates on the balance sheet.
6. Warehouse Facilities
In April 1997, ICH as a stand-alone entity entered into a warehouse line
agreement to provide up to $200.0 million to finance the Company's
businesses. Terms of the warehouse line of credit require that the
Commercial Mortgages be held by an independent third party custodian, which
gives the Company the ability to borrow against the collateral as a
percentage of the fair market value of the Commercial Mortgages. The
borrowing rates are expressed in basis points over one-month LIBOR,
depending on the type of collateral provided by the Company. The margins on
the warehouse line agreement are based on the type of mortgage collateral
used and generally range from 85% to 88% of the fair market value of the
collateral. At September 30, 1997 ICH had $13.0 million outstanding in
borrowings under warehouse facilities.
7. Stockholders' Equity
In August 1997, the Company completed its initial public offering of
6,325,000 shares of Common Stock. The Company raised $87.2 million in the
IPO, net of $6.6 million underwriting discount and $1.1 million in other
offering expenses. Upon the closing of the IPO, IMH contributed to ICH 100%
of the outstanding shares of non-voting preferred stock of ICCC in exchange
for 95,000 shares of ICH Class A Stock. As of September 30, 1997, IMH owns
719,789 shares, or 9.8%, of ICH Common Stock in addition to 674,211 shares,
or 100%, of ICH Class A Stock.
On October 20, 1997 the Board of Directors declared a $0.15 cash dividend
payable November 11, 1997 to stockholders of record on October 27, 1997.
8. Subsequent Events
In October 1997, the Company agreed to provide to ICIFC a $15.0 million
revolving line of credit expiring on December 31, 1997 at an interest rate
of Prime plus 1% with interest and principal paid monthly. As of October
31, 1997, there was $2.0 million outstanding on the line of credit.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements which involve
risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors.
References to financial information of ICH reflects the financial results
of the Long-Term Investment Operations for the period from January 15, 1997
(commencement of operations) through September 30, 1997, financial results
of ICH's equity interest in net earnings in ICCC as a stand-alone entity,
subsequent to the Contribution, and the financial results of Dove for the
period from August 25, 1997 through September 30, 1997.
Significant Transactions
In February 1997, certain officers and directors of the Company, as a
group, and IMH purchased 300,000 and 299,000 shares of the Common Stock of
ICH, respectively. In addition, IMH purchased all of the non-voting
preferred stock of ICCC, which represents 95% of the economic interest in
ICCC, for $500,000, and certain of the Company's officers purchased all of
the outstanding shares of common stock of ICCC, which represents 5% of the
economic interest in ICCC. In addition, ICCC brokered ICH's purchase of
$7.3 million and $10.2 million of condominium conversion loans which were
financed with $16.6 million in borrowings under a warehouse lending
facility provided by a subsidiary of IMH, and $900,000 in borrowings from
IMH.
In March 1997, IMH loaned ICH $15.0 million evidenced by a promissory note
convertible into shares of non-voting preferred stock of ICH at the rate of
one share of ICH Preferred Stock for each $5.00 principal amount of said
note. IMH converted the aforementioned $15.0 million principal amount
promissory note into an aggregate of 3,000,000 shares of ICH Preferred
Stock. All shares of ICH Preferred Stock were automatically converted upon
the closing of the IPO into shares of ICH Common Stock determined by
multiplying the number of shares of ICH Preferred Stock to be converted by
a fraction, the numerator of which was $5.00 and the denominator of which
was $15.00. Notwithstanding the foregoing, consistent with IMH's
classification as a REIT, IMH was not entitled to convert into ICH Common
Stock more than that number of shares of ICH Preferred Stock whereby IMH
would own, immediately after such conversion, greater than 9.8% of ICH's
outstanding Common Stock. Any shares of ICH Preferred Stock not converted
into ICH Common Stock upon the closing of the IPO were automatically
converted into shares of ICH non-voting Class A Stock at the same rate as
the ICH Preferred Stock converted into ICH Common Stock. Shares of ICH
Class A Stock convert into shares of ICH Common Stock on a one-for-one
basis and each such class of Common Stock is entitled to cash dividends on
a pro rata basis. Upon any subsequent issuances of Common Stock by ICH or
sale of ICH Common Stock held by IMH, shares of ICH Class A Stock shall
automatically convert into additional shares of the Common Stock of ICH,
subject to a 9.8% limitation. In addition, ICH purchased $10.1 million in
mortgage-backed securities from ICIFC which was financed with a promissory
note. The promissory note was repaid to ICII with cash from IMH's
above-referenced $15.0 million investment. Concurrently, ICH repaid the
$900,000 owed to ICIFC in connection with its purchase of condominium
conversion loans. Subsequently, ICH entered a borrowing agreement with
Imperial Credit Industries, Inc. ("ICII") for $7.9 million secured by $10.1
million CMBS
In April 1997, IMH exchanged the 299,000 shares of ICH Common Stock held
by it for an equivalent number of shares of ICH Class A Stock.
In August 1997, the Company raised $88.2 million, net of underwriting
expenses, from its IPO as stockholders purchased 6,325,000 shares of common
stock at a price of $15.00 per share. Upon the closing of the IPO, IMH
contributed to ICH 100% of the outstanding shares of non-voting preferred
stock of ICCC in exchange for 95,000 shares of ICH Class A Stock. As of
September 30, 1997, IMH owns 719,789 shares, or 9.8%, of ICH Common Stock
in addition to 674,211 shares, or 100%, of ICH Class A Stock.
In August 1997, IMH/ICH Dove Street, LLC, a California limited liability
company, of which each of IMH and ICH own a 50% interest, purchased an
office building for $7.7 million plus related closing costs. IMH and ICH
intend to relocate their headquarters to the building over the next
two-year period.
<PAGE>
Other Matters
William D. Endresen, the ICH's current Senior Vice President and President
and Director of ICCC, filed a petition for Chapter 7 bankruptcy in July
1995 in federal court, Santa Ana. The bankruptcy was discharged in November
1995.
Results of Operations
Three Months Ended September 30, 1997
Revenues for the three months ended September 30, 1997 were $3.1 million
primarily due to interest income earned on Commercial Mortgages, CMBS and
finance receivables and equity in net earnings of ICCC. Revenues were
comprised primarily of $389,000 of interest income earned on Commercial
Mortgages held for investment, $725,000 of interest income from CMBS and
$1.0 million of interest income earned on finance receivables with ICCC and
$627,000 from the equity in net income of ICCC. Interest income for the
three months ended September 30, 1997 was earned on total average Mortgage
Assets of $77.0 million which was comprised of $18.7 million of Commercial
Mortgages held for investment, $13.5 million of CMBS and $44.8 million of
finance receivables. Commercial Mortgages resulted from the purchase of
$19.7 million of condominium conversion loans originated by ICCC while CMBS
and finance receivables were the result of the Company purchasing a $10.1
million residual interest in securitization from ICIFC in March 1997 and
additional CMBS of $12.4 million in August and September 1997. Finance
receivables were the result of providing warehouse financing to ICCC for
the origination of Commercial Mortgages. Additionally, revenues for the
quarter ended September 30, 1997 were positively affected by equity in net
earnings of ICCC of $627,000. Equity in net earnings of ICCC during the
third quarter of 1997 was primarily the result of whole loan sales of $36.7
million resulting in gain on sale of loans of $1.5 million.
Expenses for the three months ended September 30, 1997 were $1.0 million
comprised primarily of $745,000 of interest expense related to warehouse
financing, of which $463,000 was from non-affiliated borrowings and
$282,000 was the result of borrowings from Imperial Warehouse Lending
Group, Inc., a subsidiary of IMH ("IWLG") and other affiliates, and
professional expenses of $202,000. Interest expense for the three months
ended September 30, 1997 was the result of average borrowings under
warehouse facilities of $30.2 million. Professional services was primarily
the result of allocation of costs from ICIFC of $169,000 for services
performed by ICIFC management and staff for finance and accounting
services, MIS, marketing, asset/liability management and reporting.
Additionally, the Company recorded a provision for loan losses of $22,000
during the three months ended September 30, 1997. At September 30, 1997,
the Company's allowance for loan losses expressed as a percentage of loan
receivables which includes Commercial Mortgages held for investment and
finance receivables was 0.07%. As the Company experiences increases in loan
receivables and corresponding increases in delinquencies, the Company
expects to add to the allowance for loan losses. The Company anticipates
that expenses will increase in the future as the Company builds its
infrastructure, increases its borrowings under warehouse lines of credit
and reverse repurchase facilities and relies more heavily on RAI Advisors,
LLC ("RAI" or the "Manager") for its day-to-day operations.
For the period from January 15, 1997 (commencement of operations) through
September 30, 1997
Revenues for the period from January 15, 1997 (commencement of operations)
through September 30, 1997 were $4.5 million due to interest income earned
on Commercial Mortgage, CMBS and finance receivables. Revenues were
comprised primarily of $1.0 million of interest income earned on Commercial
Mortgages held for investment, $1.2 million of interest income from CMBS
and $1.1 million of interest income earned on finance receivables with ICCC
and $627,000 from the equity in net earnings of ICCC. Interest income for
the period from January 15, 1997 (commencement of operations) through
September 30, 1997 was earned on total average Mortgage Assets of $42.1
million which was comprised of $15.5 million of Commercial Mortgages held
for investment, $8.5 million of CMBS and $18.1 million of finance
receivables. Commercial Mortgages resulted from the purchase of $37.2
million of condominium conversion loans while CMBS were the result of the
Company purchasing a $10.1 million residual interest in securitization from
ICIFC in March 1997 and additional CMBS of $12.4 million in August and
September 1997. Finance receivables were the result of providing warehouse
financing to ICCC for the origination of Commercial Mortgages.
<PAGE>
Expenses for the period from January 15, 1997 (commencement of operations)
through September 30, 1997 were $4.8 million which was comprised primarily
of stock compensation expense of $2.7 million, interest expense related to
borrowings of $1.5 million, of which $788,000 was from non-affiliated
borrowings and $759,000 was the result of borrowings from IWLG and other
affiliates, and professional expenses of $380,000. Stock compensation
expense was due to the issuance of 300,000 shares of ICH Common Stock.
Stock compensation expense represents the difference between the price at
which ICH issued 300,000 shares of its Common Stock on February 3, 1997
($.01 per share) and the estimated fair value of such shares for financial
reporting purposes as determined by the Company's management, as of
February 3, 1997 ($9.00 per share). Fair value was based primarily on
management's projection of the Company's future cash flow and net earnings.
Interest expense for the period from January 15, 1997 (commencement of
operations) through September 30, 1997 was the result of average borrowings
under warehouse facilities of $21.6 million. Professional services was
primarily the result of allocation of costs from ICIFC of $346,000 for
services performed by ICIFC management and staff for finance and accounting
services, MIS, marketing, asset/liability management and reporting.
Additionally, the Company recorded a provision for loan losses of $55,000
during the period from January 15, 1997 (commencement of operations)
through September 30, 1997.
Liquidity and Capital Resources
The Company's principal liquidity requirements result from the need to fund
finance receivables and Commercial Mortgages and CMBS acquired by the
Long-Term Investment Operations and the origination or purchase of
Commercial Mortgages held for sale by the Conduit Operations. Prior to the
IPO, ICCC was funded by intercompany borrowings and $500,000 from the
issuance of capital stock and ICH was funded by $15.0 million in
investments by IMH, $900,000 in borrowings from IMH and a $200.0 million
warehouse line. Subsequent to the IPO, the Long-Term Investment Operations
and the Conduit Operations were funded by warehouse lines of credit, the
proceeds from the issuance of capital stock and affiliated borrowings.
For the period from January 15, 1997 (commencement of operations) through
September 30, 1997, net cash provided by operating activities was $7.0
million. Net cash provided by operating activities was positively affected
by $2.7 million in stock compensation expense related to the issuance of
300,000 shares of the common stock of ICH in February 1997. The remaining
net cash provided by operating activities was primarily due to a net
increase of $5.9 million in borrowings and advances from affiliates
partially offset by a net increase of $465,000 in accrued interest
receivable.
For the period from January 15, 1997 (commencement of operations) through
September 30, 1997, net cash used in investing activities was $(105.9)
million. Net cash used in investing activities was negatively affected by
net increases of $(34.6) million in Commercial Mortgages held for
investment, $(42.7) million in finance receivables to ICCC, $(22.4) million
in CMBS, $(3.9) million in property and equipment and $(2.4) million of
contributions to ICCC.
For the period from January 15, 1997 (commencement of operations) through
September 30, 1997, net cash provided by financing activities was $117.7
million. Net cash provided by financing activities was positively affected
by $102.2 million from the issuance of common stock and $15.5 million in
borrowings from warehouse facilities.
In April 1997, as a stand-alone entity, ICH entered into a warehouse line
agreement which provides up to $200.0 million to finance the Company's
businesses. Terms of the warehouse line of credit require that the
Commercial Mortgages be held by an independent third party custodian, which
gives the Company the ability to borrow against the collateral as a
percentage of the fair market value of the Commercial Mortgages. The
borrowing rates are expressed in basis points over one-month LIBOR,
depending on the type of collateral provided by the Company. The margins on
the warehouse line agreement are based on the type of mortgage collateral
used and generally range from 85% to 88% of the fair market value of the
collateral. Management believes that the warehouse line agreement will be
sufficient to handle the Company's liquidity needs.
<PAGE>
On August 4, 1997, the Company's Registration Statement (file number
333-25423) used in connection with the sale of its Common Stock for the IPO
was declared effective by the Securities and Exchange Commission. On August
8, 1997, the Company raised $88.2 million, net of underwriting expenses,
from its IPO as stockholders purchased 6,325,000 shares of common stock at
a price of $15.00 per share. Underwriting discount and commissions were
$6.6 million and the total expenses were approximately $1.1 million, which
the Company believes is a reasonable estimate of such expenses. The net
offering proceeds to the Company, after deducting the above expenses, were
$87.2 million of which $36.8 million was used to reduce borrowings under
warehouse facilities, $18.7 million and $12.4 million was used to purchase
Commercial Mortgages and CMBS, respectively, $3.9 million was used to
purchase a 50% interest in a commercial office building, Dove, and $15.4
million was used for general working capital needs.
In August 1997, the Company agreed to provide to IMH a $15.0 million
revolving line of credit expiring on August 8, 1998 at an interest rate of
determined at the time of each advance with interest and principal paid
monthly. As of September 30, 1997, there was no balance outstanding on the
line of credit.
In October 1997, the Company agreed to provide to ICIFC a $15.0 million
revolving line of credit expiring on December 31, 1997 at an interest rate
of Prime plus 1% with interest and principal paid monthly. As of October
31, 1997, there was $2.0 million outstanding on the line of credit.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1 - 5: NOT APPLICABLE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit 10.10
REAL ESTATE PURCHASE, SALE
AND ESCROW AGREEMENT
by and between
TW/BRP DOVE, LLC
and
IMH/ICH DOVE STREET, LLC
Dated as of August 25, 1997
for
Bank of California Building
1401 Dove Street
Newport Beach, California
<PAGE>
REAL ESTATE PURCHASE, SALE AND ESCROW AGREEMENT
Summary Statement
This Summary Statement is attached to and made in part of that certain Real
Estate Purchase, Sale and Escrow Agreement dated as of the 25th day of August,
1997 by and between the Seller and Purchaser referenced below.
1. DATE OF AGREEMENT: August 25, 1997
2. SELLER: TW/BRP Dove, LLC, a Delaware limited liability company
3. PURCHASER: IMH/ICH Dove Street, LLC, a California limited liability
company
4. PROPERTY DESCRIPTION:
a) Address: 1401 Dove Street, Newport Beach, California.
b) Nature of Improvements: 6-Story Office Building on 3,596
Acre Site
c) Rentable Square Footage: Approximately 73,791
5. PURCHASE PRICE: As provided below ($7,800,000 plus costs)
6. CLOSING DATE: August 27, 1997
7. TITLE AND ESCROW COMPANY: Commonwealth Land Title Insurance Company
<PAGE>
REAL ESTATE PURCHASE AND SALE AGREEMENT
THIS REAL ESTATE PURCHASE, SALE AND ESCROW AGREEMENT ("Agreement") is
made and entered into as of this 25th day of August, 1997 by and between TW/BRP
DOVE, LLC, a Delaware limited liability company ("Seller"), and IMH/ICH DOVE
STREET, LLC, a California limited liability company ("Purchaser").
RECITALS
A. Ken Development Company ("Original Seller") and Transwestern
Investment Company, LLC ("Original Purchaser") have entered into that certain
Real Estate Purchase and Sale Agreement dated May 30, 1997 ("Sale Agreement")
providing for the sale by Original Seller of property and improvements commonly
known as 1401 Dove Street, Newport Beach, California (the "Property") to
Original Purchaser or its assignee.
B. Original Seller, Original Purchaser and American Investors Escrow,
Inc. ("American") have entered into an Escrow Agreement dated June 13, 1997 (the
"Closing Escrow") to provide for (1) the holding and disposition of the earnest
money under the Sale Agreement, and (2) the closing of the transaction
contemplated by the Sale Agreement.
C. Original Purchaser has assigned all of its right, title and
interest in the Sale Agreement and the Closing Escrow to Seller.
D. Concurrently with Seller's acquisition of the Property, Purchaser
desires to purchase the Property from Seller in accordance with the terms
hereof.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Purchaser agree as
follows:
1. AGREEMENT FOR PURCHASE AND SALE. Seller agrees to sell, and Purchaser
agrees to purchase, subject to the terms and conditions contained herein,
the Property, together with:
(a) (i) all of Seller's right, title and
interest in and to all rights of
way, tenements, hereditaments,
easements, rights, interests,
claims, minerals and mineral rights,
water and water rights, utility
capacity and appurtenances, if any,
in any way belonging or appertaining
to the Property and (ii) all of
Seller's right, title and interest,
if any, in and to all adjoining
streets, alleys, private roads,
parking areas, curbs, curb cuts,
sidewalks, landscaping, signage,
sewers and public ways, if not part
of the Property (collectively, the
"Appurtenant Rights"); and
<PAGE>
(b) all of Seller's right, title and
interest in and to any equipment,
machinery and property which is
altered to the Property so as to
constitute fixtures under California
law ("Fixtures"), including without
limitation, all hearing, lighting ,
air conditioning, ventilating,
plumbing, electrical or other
mechanical equipment and other
equipment and personal property at
the Property (collectively, the
"Personal Property"); and
<PAGE>
(c) all of Seller's right, title and
interest as landlord in and to all
leases, tenancies and rental or
occupancy agreements granting
possessory rights in, on or covering
the Property, together with all
modifications, extensions,
amendments and guarantees thereof,
and security deposits with respect
thereto (collectively, the
"Leases"); and
(d) to the extent assignable, all of
Seller's right, title and interest
in and to the contracts, agreements,
guarantees, warranties and
indemnities, written or oral,
affecting the ownership, operation,
management and maintenance of the
Property, Appurtenant Rights,
Fixtures, Personal Property and
Leases (collectively, the
"Contracts"); and
(e) to the extent assignable, all of
Seller's right, title and interest
in and to all (i) plans, models,
drawings, specifications,
blueprints, surveys, engineering
reports, environmental reports and
other technical descriptions or
materials relating in any way to the
Property, Appurtenant Rights,
Personal Property, Fixtures, Leases
or Contracts, and (ii) licenses,
franchises, certificates, occupancy
and use certificates, permits,
authorizations, consents, variances,
waivers, approvals and the like from
any federal, state, county,
municipal or other governmental or
quasi-governmental body, agency,
department, board, commission,
bureau or other entity or
instrumentality affecting the
ownership, operation or maintenance
of the Property (collectively, the
"Licenses").
The Property, Appurtenant Rights, Personal Property, Fixtures, Leases,
Contracts and Licenses and other property described above are collectively
referred to herein as the "Property."
2. PURCHASE PRICE. The purchase price for the Property shall be the
aggregate amount (the "Purchase Price") equal to the sum of $5,848,177.21 (the
"Closing Amount"), (b) $1,850,000.00 (the "Member Amount") and (c) the amount
required to be paid by Purchaser to comply with the terms of this Agreement,
including, without limitation, all premiums for title insurance, the documentary
transfer taxes, escrow charges, recording charges and other amounts referenced
in Section 6 below (the "Second Closing Amount"). The Purchase Price shall be
deposited with Commonwealth Land Title Company ("Escrow Holder") by wire
transfer pursuant to the wire transfer instructions as shown on Schedule 1
attached hereto prior to 5 p.m. (California time) on August 26, 1997.
<PAGE>
3. ESCROW; CLOSING CONDITIONS.
3.1 Escrow. Upon the execution of this Agreement by Purchaser
and Seller, and the acceptance of this Agreement by Escrow Holder in writing,
this Agreement shall constitute the joint escrow instructions of Purchaser and
Seller to Escrow Holder to open an escrow ("Escrow") for the consummation of the
sale of the Property to Purchaser pursuant to the terms of this Agreement. Upon
the Close of Escrow, Escrow Holder shall pay any sum owned to Seller with
immediately available federal funds.
3.2 Closing Date. The Escrow shall close ("Close of
Escrow") on August 27, 1997.
<PAGE>
3.3 Conveyance. On the Closing Date, Seller shall transfer and
convey title to the Property to Purchaser as follows:
(a) delivering to Escrow Holder a grant
deed ("Deed"), subject only to the
exceptions as described on Exhibit A
attached hereto (the "Permitted
Exceptions"), executed by Seller,
that conveys the simple title to the
Property, Fixtures and Appurtenant
Rights to Purchaser;
(b) delivering to Escrow Holder a bill
of sale, executed by Seller, that
transfers the Personal Property
to Purchaser;
(c) delivering to Escrow Holder, an
assignment and assumption, executed
by Seller and Purchaser, that
transfers all of Seller's right,
title, and interest in and to the
Contracts, the Licenses, and the
Leases, to Purchaser (the
"Assignment and Assumption").
The foregoing documents and instruments are collectively referred to herein as
the "Conveyance Documents."
4. REPRESENTATIONS AND WARRANTIES.
(a) Seller represents and warrants to
Purchaser, as of the date hereof and
again on the Closing Date, that
Seller is dully organized, validly
existing and in good standing under
the laws of the State of California.
Seller has all necessary power and
authority to enter into this
Agreement and to consummate all of
the transactions contemplated
herein. The individuals executing
this Agreement on behalf of Seller
are duly authorized to execute,
deliver and perform this Agreement
on behalf of Seller and to bind
Seller according to its terms. This
Agreement and all documents to be
executed by Seller and delivered to
Purchaser hereunder (A) are and will
be the legal, valid and binding
obligations of Seller, enforceable
in accordance with their terms, (B)
do not or will not contravene any
provision of Seller's organizational
documents or any existing laws and
regulations applicable to Seller or
the Property and (C) will not
conflict with or result in a
violation of any agreement,
instrument, order, writ, judgment or
decree to which Seller is a party or
is subject or which governs the
Property;
<PAGE>
(b) Purchaser represents and warrants to
Seller, now and again on the Closing
Date that: (i) Purchaser has all
necessary power and authority to
enter into this Agreement and to
consummate all the transactions
contemplated herein, (ii) the
individuals executing this Agreement
on behalf of Purchaser are duly
authorized to execute, deliver and
perform this Agreement on behalf of
Purchaser and to bind Purchaser
according to its terms, and (iii)
this Agreement and all documents to
be executed by Purchaser and
delivered to Seller hereunder (A)
are and will be the legal, valid and
binding obligations or Purchaser,
enforceable in accordance with their
terms, (B) do not or will not
contravene any provision of
Purchaser's organizational documents
or any existing laws and regulations
applicable to Purchaser and (C) will
not conflict with or result in a
violation of any agreement,
instrument order, writ, judgment or
decree to which Purchaser is a party
or is subject.
(c) All of the representations and
warranties of Seller and Purchaser
contained in this Section 4 are
material, none shall merge into the
deed herein provided for and all
shall survive the Closing Date or
termination of this Agreement for a
period of one (1) year.
<PAGE>
5. DELIVERY OF DOCUMENTS.
(a) On or before August 26, 1997, Seller
shall deliver the following
documents (the "Closing Documents")
to Escrow Agent:
(i) the Conveyance Documents executed by Seller;
(ii) Seller's counterpart of closing and
proration statement, executed by Seller;
(iii) a certification of nonforeign statue satisfying
Section 1445 of the Internal Revenue Code, executed by Seller;
(iv) evidence of Seller's existence and authority to
perform its obligations under this Agreement, in form and substance
reasonably satisfactory to Purchaser and Title Company;
(v) a certified copy of the resolutions or
declarations of Seller or the partners or Seller, as applicable,
authorizing the transaction contemplated by this Agreement or other
satisfactory evidence of authorization.
(b) On or before August 26, 1997, Purchaser shall deliver
the following to Escrow Agent:
(i) counterparts of the Assignment and Assumption,
executed by Purchaser or its assignee;
(ii) counterparts of the closing and petition
statement, executed by Purchaser or its assignee;
(iii) the Purchaser Price; and
(iv) such other documents, instruments or agreements
as may be reasonably requested by (A) Seller, in order to consummate
this Agreement or (B) Title Company or the Escrow Holder, in order to
issue the Title Policy pursuant to the terms hereof, and to otherwise
consummate the Closing.
<PAGE>
6. DISBURSEMENT OF ESCROW. Provided that (a) each of the deposits required
under Section 5 hereof have been made, (b) Escrow Holder is prepared to insure
title in the Property in the name of Purchaser subject only to the Permitted
Exceptions, and (c) all conditions in the Closing Escrow have been satisfied and
the Closing Escrow is prepared to disburse, then Escrow Holder shall (i)
transmit the Members Amount to Seller pursuant to the instructions set forth on
Schedule 2 attached hereto, (ii) apply the Closing Amount to close the Closing
Escrow, (iii) pay the closing costs out to the Second Closing Amount, (iv)
record the Deed, (v) deliver the Bill of Sale and Assignment to Purchaser, (vi)
deliver counterparts of the Assignment and Assumption and the closing and
proration statements to Purchaser and Seller, and (vii) deliver any remaining
funds to Purchaser.
7. CLOSING COSTS. Purchaser shall pay as regard to: (a) any stamp tax,
sales tax, documentary transfer tax or other tax imposed on the transfer of the
Property, (b) the cost of the ALTA Title policy, and the endorsements thereto
required under the terms of this Agreement, (c) all Escrow Holder's fees and (d)
all of Seller's closing, title, recording, proration and other costs under the
Sale Agreement.
8. POSSESSION. Possession of the Property shall be delivered to Purchaser
at Closing, free and clear of all liens and claims other than Permitted
Exceptions and the rights of the tenants.
9. BROKERS. Each party agrees to indemnify, defend and hold harmless the
other party, its successors, assigns and agents, from and against the payment of
any commission, compensation, loss, damages, costs and expenses (including
without limitation attorneys' fees and costs) incurred in connection with, or
arising out of, claims for any broker's, agent's or finder's fees of any person
claiming by or through such party. The obligations of Seller and Purchaser under
this Section 9 shall survive the Closing and the termination of this Agreement.
10. PROPERTY "AS IS".
9.1 No Side Agreements or Representations. No person acting on
behalf of Seller is authorized to make, and by execution hereof, Purchaser
acknowledges that no person has made any representation, agreement, statement,
warranty, guarantee or promise regarding the Property or the transaction
contemplated herein or the zoning, construction, physical condition or other
status of the Property except as may be expressly set forth in this Agreement.
No representation, warranty, agreement, statement, guarantee or promise, if any,
made by any person acting on behalf of Seller which is not contained in this
Agreement will be valid or binding on Seller.
<PAGE>
9.2 "AS IS" CONDITION. PURCHASER ACKNOWLEDGES AND AGREES THAT,
EXCEPT AS SPECIFICALLY PROVIDED IN THIS AGREEMENT, SELLER HAS NOT MADE, DOES NOT
MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES,
PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER
WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR
FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO: (I) VALUE; (II) THE INCOME TO
BE DERIVED FROM THE PROPERTY; (III) THE SUITABILITY OF THE PROPERTY FOR ANY AND
ALL ACTIVITIES AND USES WHICH PURCHASER MAY CONDUCT THEREON, INCLUDING THE
POSSIBILITIES FOR FUTURE DEVELOPMENT OF THE PROPERTY; (IV) THE HABITABILITY,
MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF THE PROPERTY; (V) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF
REPAIR OF THE PROPERTY; (VI) THE NATURE, QUALITY OR CONDITION OF THE PROPERTY,
INCLUDING WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY; (VII) THE COMPLIANCE
OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR
REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY; (VIII) THE MANNER
OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED INTO THE
PROPERTY; (IX) COMPLIANCE WITH ANY ENVIRONMENTAL PROTECTION, POLLUTION OR LAND
USE LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS, INCLUDING, BUT NOT LIMITED
TO, TITLE III OF THE AMERICANS WITH DISABILITIES ACT OF 1990, CALIFORNIA HEALTH
& SAFETY CODE, THE FEDERAL WATER POLLUTION CONTROL ACT, THE FEDERAL RESOURCE
CONSERVATION AND RECOVERY ACT, THE U.S. ENVIRONMENTAL PROTECTION AGENCY
REGULATIONS AT 40 C.F.R., PART 261. THE
<PAGE>
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980. AS
AMENDED, THE RESOURCE CONSERVATION AND RECOVERY ACT OF 1976, THE CLEAN WATER
ACT, THE SAFE DRINKING WATER ACT, THE HAZARDOUS MATERIALS TRANSPORTATION ACT,
THE TOXIC SUBSTANCE CONTROL ACT, AND REGULATIONS PROMULGATED UNDER ANY OF THE
FOREGOING; (X) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER OR
ADJACENT TO THE PROPERTY; (XI) THE CONTENT; (XII) THE CONFORMITY OF THE
IMPROVEMENTS TO ANY PLANS OR SPECIFICATIONS FOR THE PROPERTY, INCLUDING ANY
PLANS AND SPECIFICATIONS THAT MAY HAVE BEEN OR MAY BE PROVIDED TO PURCHASE;
(XIII) THE CONFORMITY OF THE PROPERTY TO PAST, CURRENT OR FUTURE APPLICABLE
ZONING OR BUILDING REQUIREMENTS; (XIV) DEFICIENCY OF ANY UNDERSCORING; (XV)
DEFICIENCY OF ANY DRAINAGE; (XVI) THE FACT THAT ALL OR A PORTION OF THE PROPERTY
MAY BE LOCATED ON OR NEAR AN EARTHQUAKE FAULT LINE; (XVII) THE EXISTENCE OF
VESTED LAND USE, ZONING OR BUILDING ENTITLEMENTS AFFECTING THE PROPERTY; OR
(XVIII) WITH RESPECT TO ANY OTHER MATTER, PURCHASER FURTHER ACKNOWLEDGES AND
AGREES THAT HAVING BEEN GIVEN THE OPPORTUNITY TO INSPECT THE PROPERTY AND REVIEW
INFORMATION AND DOCUMENTATION AFFECTING THE PROPERTY, PURCHASER IS RELYING
SOLELY ON ITS OWN INVESTIGATION OF THE PROPERTY AND REVIEW OF SUCH INFORMATION
AND DOCUMENTATION, AND NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED BY
SELLER. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT ANY INFORMATION MADE
AVAILABLE TO PURCHASER OR PROVIDED OR TO BE PROVIDED BY OR ON BEHALF OF SELLER
WITH RESPECT TO THE PROPERTY WAS OBTAINED FROM A VARIETY OF SOURCES AND THAT
SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH
INFORMATION AND MAKES NO REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF
SUCH INFORMATION. PURCHASER AGREES TO FULLY AND IRREVOCABLY RELEASE ALL SUCH
SOURCES OF INFORMATION AND PREPARERS OF INFORMATION AND DOCUMENTATION AFFECTING
THE PROPERTY WHICH WERE RETAINED BY SELLER FROM ANY AND ALL CLAIMS THAT THEY MAY
NOW HAVE OR HEREAFTER ACQUIRE AGAINST SUCH SOURCES AND PREPARERS OF INFORMATION
FOR ANY COSTS, LOSS, LIABILITY, DAMAGE, EXPENSES, DEMAND, ACTION OR CAUSE OF
ACTION ARISING FROM SUCH INFORMATION OR DOCUMENTATION. SELLER IS NOT LIABLE OR
BOUND IN ANY MANNER BY ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR
INFORMATION PERTAINING TO THE PROPERTY, OR THE OPERATION THEREOF, FURNISHED BY
ANY REAL ESTATE BROKER AGENT. EMPLOYEE, SERVANT OR OTHER PERSON. PURCHASER
FURTHER ACKNOWLEDGES AND AGREES THAT TO THE MAXIMUM EXTENT PERMITTED BY LAW. THE
SALE OF THE PROPERTY AS PROVIDED FOR HEREIN IS MADE ON A "AS IS"CONDITION AND
BASIS WITH ALL FAULTS, AND THAT SELLER HAS NO OBLIGATIONS TO MAKE REPAIRS,
REPLACEMENTS OR IMPROVEMENTS EXCEPT AS MAY OTHERWISE BE EXPRESSLY STATED HEREIN.
PURCHASER REPRESENTS, WARRANTS AND COVENANTS TO SELLER THAT, EXCEPT FOR SELLER'S
EXPRESS REPRESENTATIONS AND WARRANTIES SPECIFIED IN THIS AGREEMENT, PURCHASER IS
RELYING SOLELY UPON PURCHASER'S OWN INVESTIGATION OF THE PROPERTY.
11. MISCELLANEOUS.
(a) Time is of the essence of each provision of this Agreement.
(b) This Agreement and all provisions thereof shall extend to, be obligatory
upon and inure to the benefit of the respective heirs, legatees, successors
and assigns of the parties hereto.
(c) Except as provided herein, this Agreement contains the entire Agreement
between the parties relating to the transactions contemplated hereby.
(d) This Agreement shall be governed by and construed in accordance with the
laws of the State of California.
(e) If any of the provisions of this Agreement or the application thereof to
any persons or circumstances shall, to any event, be deemed, invalid or
unenforceable, the remainder of this Agreement and the application of such
provisions to persons or circumstances other than those as to whom or which
it is held invalid or unenforceable shall not be affected thereby.
(f) This Agreement and any document or instrument executed pursuant hereto may
be executed in any number of counterparts, each of which shall be deemed an
original, but all of which, together, shall constitute one and the same
instrument.
(g) This Agreement shall not be construed more strictly against one party than
against the other merely by virtue of the fact that the Agreement may have
been prepared primarily by counsel for one of the parties, it being
recognized that both Purchaser and Seller have contributed substantially
and materially to the preparation of this Agreement.
<PAGE>
(h) The Exhibits hereto may be finalized, initialed by both parties and
inserted into this Agreement after this Agreement is fully executed and
prior to the Approval Date.
(i) The Summary Statement attached to this Agreement is hereby incorporated
herein and made a part hereof.
12. TERMINATION. In the event all escrow deposits have not been received by
Escrow Holder on or before 5:00 p.m. on August 26, 1997 or if Escrow Holder is
not prepared to disburse under the Closing Escrow before 5:00 p.m. on August 27,
1997, Escrow Holder is hereby authorized and directed to continue to comply with
this Agreement until it has received a written demand from any party hereto for
the return of the deposits made hereunder by said party. Upon receipt of such
demand, Escrow Holder is hereby authorized and directed to return to the party
making such demand the deposits made by such party without notice to any other
party and you may return all remaining deposits to the respective depositors
thereof. Upon such returns, this Agreement shall be null and void.
[Intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, Purchaser and Seller do hereby execute this
Agreement as of the date first written.
PURCHASER: SELLER:
IMH/ICH DOVE STREET, LLC, TW/BRP DOVE, LLC,
a California limited liability company a Delaware limited
liability company
By: ______________________________ By: ______________________
Name: ____________________________ Name: ____________________
Title: _____________________________ Title: __________________
Acceptance by Escrow Holder
Escrow Holder acknowledges receipt of the foregoing agreement and
accepts the instructions contained therein.
Dated: _____________________________
By: ______________________________
Name: ____________________________
Title: __________________________
<PAGE>
EXHIBIT A
At the date hereof Exceptions to coverage in addition to the printed exceptions
and exclusions in said policy form would be as follows:
A. General and special taxes, including any assessments collected with taxes, to
be levied for the fiscal year 1997-1998, which are a lien not yet payable.
B. General and special taxes for the fiscal year 1996-1997 have been paid.
Total: $40,608.00
First Installment: 20,304.00
Second Installment: 20,304.00
Homeowners' Exemption $ none
Code: 07 061
Parcel: 427 221 04
C. The lien of supplemental taxes, if any, assessed pursuant to the
provisions of Section 75, et seq. of the Revenue and Taxation Code
of the State of California.
1. Covenants, conditions and restrictions (deleting any restrictions indicating
any preference, limitation or discrimination based on race, color, religion,
sex, handicap, familial status or national origin) as set forth in the document.
Recorded: in book 9678 page 919, Official Records
Said covenants, conditions and restrictions provide that a violation thereof
shall not defeat or render invalid the lien of any mortgage or deed of trust
made in good faith and for value.
2. Covenants, conditions and restrictions (deleting any restrictions indicating
any preference, limitation or discrimination based on race, color, religion,
sex, handicap, familial status or national origin) as set forth in the document.
Recorded: in book 9993 page 475, Official Records
3. An easement for the purpose shown below and rights incidental thereto as set
forth in document.
Granted to: Southern California Edison Company
Purpose: Public Utilities
<PAGE>
Recorded: in book 10458 page 894, Official Records
Affects: a portion of said land described therein
<PAGE>
4. The following unrecorded leases were disclosed by an instrument
recorded September 21, 1989 as Instrument No. 89-506771, Official
Records: [Revised]
Tenant:
[Revised per current rent roll.]
5. An easement for the purpose shown below and rights incidental thereto as set
forth in document.
Granted to: Pacific Bell
Purpose: underground communication facilities
<PAGE>
Recorded: August 15, 1991 as Instrument No. 91-438055, Official
Records
Affects: said land
WE HEREBY AMEND ITEM 14 TO SHOW THE FOLLOWING:
14. Any rights, interests, or claims which may exist or arise by reason of the
following facts shown on a survey plat.
Entitled: 2 GRE 1001
Dated: June 18, 1997
Prepared by: Psomas & Associates
a) The fact that an electric pull box, an electric vault and electric
transformer and vault on a concrete pad exists on said land.
b) The fact that a trash enclosure located on land adjacent on the Northwest
encroaches onto said land by 0.5 feet.
WE HEREBY AMEND ITEM 1 TO SHOW THE FOLLOWING:
1. Covenants, conditions and restrictions (deleting any restrictions indicating
any preference, limitation or discrimination based on race, color, religion,
sex, handicap, familial status or national origin) as set forth in the document.
<PAGE>
Recorded: August 15, 1991 as Instrument No. 91-438055, Official Records
Affects: said land
PAYOFF INFORMATION
Note No. 1: AS OF JANUARY 1, 1990, CHAPTER 598, CALIFORNIA STATUTES OF 1989, (AB
512; INSURANCE CODE SECTION 12413.1) BECOMES EFFECTIVE. THE LAW REQUIRES THAT
ALL FUNDS BE DEPOSITED AND AVAILABLE FOR WITHDRAWAL BY THE TITLE ENTITY'S ESCROW
OR SUBESCROW ACCOUNT PRIOR TO DISBURSEMENT OF ANY FUNDS.
ONLY CASH OR WIRED FUNDS CAN BE GIVEN IMMEDIATE AVAILABILITY UPON DEPOSIT.
CASHIER'S CHECKS, TELLER'S CHECKS AND CERTIFIED CHECKS MAY BE AVAILABLE ONE
BUSINESS DAY AFTER DEPOSIT.
ALL OTHER FUNDS SUCH AS PERSONAL, CORPORATE OR PARTNERSHIP CHECKS AND DRAFTS MAY
CAUSE MATERIAL DELAYS IN DISBURSEMENT OF FUNDS ON THIS ORDER.
IN ORDER TO AVOID DELAYS, ALL FUNDING SHOULD BE WIRE TRANSFERRED. OUTGOING WIRE
TRANSFERS WILL NOT BE AUTHORIZED UNTIL CONFIRMATION OF THE RESPECTIVE INCOMING
WIRE TRANSFER OR AVAILABILITY OF DEPOSITED CHECKS.
WIRING INFORMATION FOR THIS OFFICE IS AS FOLLOWS:
Union Bank
500 South Main Street
Orange, California 92668
ABA No. 122000496
Account No. 9120008290
<PAGE>
Exhibit 10.9
Revolving Credit And Term Loan Agreement
dated August 21, 1997, between the registrant and
Imperial Credit Mortgage Holdings, Inc.
Imperial Credit Mortgage Holdings, Inc., a Maryland
corporation ("IMH"), and IMH Commercial Holdings, Inc. a Maryland corporation
("ICH") agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 1.01. The Advances. ICH agrees, on the terms and
conditions hereinafter set forth, to make advances (the "Advances") to IMH from
time to time during the period from the date hereof to and including August 8,
1997 (the "Termination Date") in an aggregate amount not to exceed at any time
outstanding $15,000,000 (the "Commitment"). Each Advance shall be in an amount
not less than $10,000. Within the limits of the Commitment, IMH may borrow and
repay pursuant to Section 1.06 and reborrow under this Section 1.01.
SECTION 1.02. Making the Advances. Each Advance shall be made
on at least twenty-four hours notice from IMH to ICH specifying the date and
amount thereof. Not later than 11:00 a.m. (Los Angeles time) on the date of such
Advance and upon fulfillment of the applicable conditions set forth in Article
II, ICH will make such Advance available to IMH in same day funds at IMH's
address referred to in Section 6.02.
SECTION 1.03. Interest and Repayment. IMH shall repay, and
shall pay interest on, the aggregate unpaid principal amount of all Advances in
accordance with an unsecured promissory note of IMH, in substantially the form
of Exhibit A hereto (the "Note" and collectively with this Agreement, the "Loan
Documents"), evidencing the indebtedness resulting from such Advances and
delivered to ICH pursuant to Article II.
SECTION 1.04. Optional Prepayments. IMH may prepay the Note in
whole or in part with accrued interest to the date of such prepayment on the
amount prepaid, provided, that each partial prepayment shall be in a principal
amount not less than $10,000 and, if made after the Termination Date, shall be
applied to the principal installments of the Note in the inverse order of their
maturities.
<PAGE>
SECTION 1.05. Payments and Computations. IMH shall make each
payment under any Loan Document not later than 12:00 noon (Los Angeles time) on
the day when due in lawful money of the United States of America to ICH at its
address referred to in Section 6.02 in same day funds. All computations of
interest under the Note and commitment fee hereunder shall be made by ICH on the
basis of a year of 365 or 366 days, as the case may be, for the actual number of
days (including the first day but excluding the last day) elapsed.
SECTION 1.06. Payment on Non-Business Days. Whenever any
payment to be made hereunder or under the Note shall be stated to be due on a
Saturday, Sunday or a public or bank holiday or the equivalent for banks
generally under the laws of the State of California (any other day being a
"Business Day"), such payment may be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest or commitment fee, as the case may be.
SECTION 1.07. Final Repayment. All advances made under this
Commitment shall become due and payable in full with accrued interest, without
demand by ICH, by not later than the Termination Date.
ARTICLE II
CONDITIONS OF LENDING
SECTION 2.01. Additional Conditions Precedent to All Advances.
The obligation of ICH to make each Advance (including the initial Advance) shall
be subject to the further conditions precedent that on the date of such Advance
(a) the following statements shall be true and ICH shall have received a
certificate signed by a duly authorized officer of each Loan Party (as to each
Loan Document to which it is a party), dated the date of such Advance, stating
that:
(i) The representations and warranties contained in Section
3.01 of this Agreement are correct on and as of the date of such
Advance as though made on and as of such date, and
<PAGE>
(ii) No event has occurred and is continuing, or would result
from such Advance, which constitutes an Event of Default or would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of IMH. IMH
represents and warrants as follows:
(a) IMH is a corporation duly incorporated, validly existing
and in good standing under the laws of Maryland.
(b) The execution, delivery and performance by IMH of each
Loan Document to which it is or will be a party are within IMH's
corporate powers.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by IMH of
any Loan Document to which it is or will be a party.
(d) This Agreement is, and each other Loan Document to which
IMH will be a party when delivered hereunder will be, legal, valid and
binding obligations of IMH enforceable against IMH in accordance with
their respective terms.
(e) There is no pending or threatened action or proceeding
affecting IMH or any of its subsidiaries before any court, governmental
agency or arbitrator, which may materially adversely affect the
financial condition or operations of IMH or any subsidiary.
(f) IMH is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning
of Regulation U issued by the Board of Governors of the Federal Reserve
System), and no proceeds of any Advance will be used to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
<PAGE>
ARTICLE IV
EVENTS OF DEFAULT
SECTION 4.01. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) Failure to Make Payments When Due. Failure of IMH to
pay any principal, interest or other amount due under the Note when due, whether
at stated maturity, by demand or otherwise; or
(b) Breach of Covenants. Failure of IMH to perform or observe
any other term, covenant or agreement on its part to be performed or observed
pursuant to this Agreement or the Note; or
(c) Breach of Representation or Warranty. Any representation
or warranty made by IMH to ICH in connection with this Agreement or the Note
shall prove to have been false in any material respect when made; or
(d) Dissolution of IMH. Any order, judgment or decree shall be
entered against IMH decreeing the dissolution or split-up of IMH; or
(e) Suspension of Business; Liquidation. Suspension of
the usual business activities of IMH or the complete or partial liquidation of
IMH's business; or
<PAGE>
(f) Involuntary Bankruptcy, etc. (i) A court having
jurisdiction in the premises shall enter a decree or order for relief in respect
of IMH or any of its subsidiaries in an involuntary case under Title 11 of the
United States Code entitled "Bankruptcy" (as now and hereinafter in effect, or
any successor thereto, the "Bankruptcy Code") or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, which decree or
order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against IMH or any of its subsidiaries under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect; or a decree or order
of a court having jurisdiction in the premises for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over IMH or any of its subsidiaries or over all or a substantial
part of its property shall have been entered; or the involuntary appointment of
an interim receiver, trustee or other custodian of IMH or any of its
subsidiaries for all or a substantial part of its property shall have occurred;
or a warrant of attachment, execution or similar process shall have been issued
against any substantial part of the property of IMH or any of its subsidiaries,
and, in the case of any event described in this clause (ii), such event shall
have continued for 60 days unless dismissed, bonded or discharged; or
(g) Voluntary Bankruptcy, etc. An order for relief shall be
entered with respect to IMH or any of its subsidiaries or IMH or any of its
subsidiaries shall commence a voluntary case under the Bankruptcy Code or any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case, under any
such law, or shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of its
property; or IMH or any of its subsidiaries shall make an assignment for the
benefit of creditors; or IMH or any of its subsidiaries shall be unable or fail,
or shall admit in writing its inability, to pay its debts as such debts become
due; or the Board of Directors of IMH or any of its subsidiaries (or any
committee thereof) shall adopt any resolution or otherwise authorize action to
approve any of the foregoing;
then, and in any such event, ICH may, by notice to IMH, (i) declare its
obligation to make Advances to be terminated, whereupon the same shall forthwith
terminate, and (ii) declare the Note, all interest thereon and all other amounts
payable under this Agreement to be forthwith due and payable, whereupon the
Note, all such interest and all such amounts shall become and be forthwith due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by IMH.
<PAGE>
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Note, nor consent to any departure by IMH
therefrom, shall in any event be effective unless the same shall be in writing
and signed by ICH and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 5.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including facsimile,
electronic transmission and telegraphic communication) and mailed or telegraphed
or delivered, if to IMH, at its address at 20371 Irvine Avenue, Santa Ana
Heights, California 92707, Attention: Richard J. Johnson, Chief Financial
Officer and if to ICH, at the same address, attention William S. Ashmore,
President or, as to each party, at such other address as shall be designated by
such party in a written notice to the other party. All such notices and
communications shall, when mailed, be effective when deposited in the mails,
respectively, addressed as aforesaid, except that notices to ICH pursuant to the
provisions of Article I shall not be effective until received by ICH.
SECTION 5.03. No Waiver; Remedies. No failure on the part of
ICH to exercise, and no delay in exercising, any right under any Loan Document
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right under any Loan Document preclude any other or further exercise thereof
or the exercise of any other right. The remedies provided in the Loan Documents
are cumulative and not exclusive of any remedies provided by law.
SECTION 5.04. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistently applied, except as
otherwise stated herein.
<PAGE>
SECTION 5.05. Costs, Expenses and Taxes. IMH agrees to pay on
demand all costs and expenses in connection with the preparation, execution,
delivery, filing, recording and administration of the Loan Documents and the
other documents to be delivered under the Loan Documents, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for ICH,
and local counsel who may be retained by said counsel, with respect thereto and
with respect to advising ICH as to its rights and responsibilities under the
Loan Documents, and all costs and expenses, if any (including reasonable counsel
fees and expenses), in connection with the enforcement of the Loan Documents and
the other documents to be delivered under the Loan Documents. In addition, IMH
shall pay any and all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of the
Loan Documents and the other documents to be delivered under the Loan Documents,
and agrees to save ICH harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
and fees.
SECTION 5.06. Binding Effect; Governing Law. The Agreement
shall be binding upon and inure to the benefit of IMH and ICH and their
respective successors and assigns, except that IMH shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of ICH. THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT
THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.
Unless otherwise defined herein or the Note, terms used in Articles 8 and 9 of
the Uniform Commercial Code in the State of California are used herein as
therein defined.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the 21st day of August 1997.
IMPERIAL CREDIT MORTGAGE HOLDINGS, INC.
By: /s/ Richard J. Johnson
Name: Richard J. Johnson
Title: Chief Financial Officer
IMH COMMERCIAL HOLDINGS, INC.
By: /s/ William S. Ashmore
Name: William S. Ashmore
Title: President
<PAGE>
EXHIBIT A
IMPERIAL CREDIT MORTGAGE HOLDINGS, INC.
UNSECURED PROMISSORY NOTE
$_____________ Santa Ana Heights, California
FOR VALUE RECEIVED, the undersigned, IMPERIAL CREDIT MORTGAGE
HOLDINGS, INC., a Maryland corporation (the "Borrower"), HEREBY PROMISES TO PAY
to the order of IMH COMMERCIAL HOLDINGS, INC.("ICH") the principal sum of
__________________________Dollars ($_____________) or, if less, the aggregate
unpaid principal amount of all Advances made by ICH to Borrower pursuant to the
Credit Agreement (as hereinafter defined) outstanding on or before the
Termination Date (as defined in the Credit Agreement), together with interest on
any and all principal amounts remaining unpaid hereunder from time to time
outstanding from the date hereof until said principal amounts are paid in full,
payable during the term hereof and on the final day when said principal amounts
become due and payable, at an interest rate per annum equal at all times to 10%
per annum.
Interest accruing under this Note shall be payable monthly at
the first of each month. All advances made by ICH pursuant to the Credit
Agreement shall be due and payable with accrued interest, without demand by ICH,
by not later than the Termination Date.
Both principal and interest are payable in lawful money of the
United States of America to ICH at 20371 Irvine Avenue, Santa Ana Heights,
California 92707, in same day funds. All Advances made by ICH to Borrower
pursuant to the Credit Agreement and all payments made on account of principal
hereof shall be recorded by ICH, and, prior to any transfer hereof, endorsed on
the grid attached hereto which is part of this Promissory Note.
This Promissory Note is the Note referred to in, and is
entitled to the benefits of, the Revolving Credit and Term Loan Agreement dated
as of August _____, 1997 (the "Credit Agreement") between Borrower and ICH
referred to therein and entered into pursuant thereto. The Credit Agreement,
among other things, contains provisions for acceleration of the maturity hereof
upon the happening of certain stated events and also for prepayments on account
of principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
<PAGE>
IN WITNESS WHEREOF, Borrower has caused this Note to be
executed and delivered by its duly authorized officer as of August ___, 1997.
IMPERIAL CREDIT MORTGAGE HOLDINGS, INC.
By:__________________________
Name: Richard J. Johnson
Title: Chief Financial Officer
Dated: August ___, 1997
<PAGE>
Exhibit 11. Statement Regarding Computation of Earnings per Share
<TABLE>
IMH COMMERCIAL HOLDINGS, INC.
Statement Regarding Computation of Earnings per Share
(in thousands, except per share data)
<CAPTION>
For the period from
January 15, 1997
For the Three Months (commencement of operations)
Ended September 30, 1997 through September 30, 1997
--------------------------- -----------------------------
<S> <C> <C>
Net earnings (loss) $ 2,097 $ (270)
=========================== ================================
Average number of shares outstanding 5,511 2,974
Net effect of dilutive stock options-
Based on treasury stock method using
Average market price 23 -
--------------------------- --------------------------------
Total average shares 5,534 2,974
=========================== ================================
Net earnings (loss) per share $ 0.38 $ (0.09)
=========================== ================================
</TABLE>
(a) 27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
IMH COMMERCIAL HOLDINGS, INC.
By: /s/ Richard J. Johnson
Richard J. Johnson
Senior Vice President
and Chief Financial Officer
Date: November 14, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-15-1997
<PERIOD-END> SEP-30-1997
<CASH> 18,847
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 9,999
<INVESTMENTS-HELD-FOR-SALE> 12,390
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 22,388
<LOANS> 77,221
<ALLOWANCE> (55)
<TOTAL-ASSETS> 129,608
<DEPOSITS> 0
<SHORT-TERM> 24,857
<LIABILITIES-OTHER> 120
<LONG-TERM> 0
0
0
<COMMON> 80
<OTHER-SE> 104,551
<TOTAL-LIABILITIES-AND-EQUITY> 129,608
<INTEREST-LOAN> 3,810
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 1,547
<INTEREST-INCOME-NET> 2,263
<LOAN-LOSSES> 55
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,218
<INCOME-PRETAX> (270)
<INCOME-PRE-EXTRAORDINARY> (270)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (270)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 55
<ALLOWANCE-DOMESTIC> 55
<ALLOWANCE-UNALLOCATED> 0
<ALLOWANCE-FOREIGN> 0
</TABLE>
