UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[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 000-23089
Imperial Credit Commercial Mortgage Investment Corp.
- -------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 95-4648345
- ---------------------------------- ------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
11601 Wilshire Blvd., Suite 2080, Los Angeles, CA 90025
- -------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(310) 231-1280
--------------
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, $0.0001 par value 34,500,000 shares as of October 31, 1997
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Imperial Credit Commercial Mortgage Investment Corp.
INDEX
PART I - FINANCIAL INFORMATION Page
Item 1. Interim Financial Statements (Unaudited)
Consolidated Balance Sheet as of
September 30, 1997 (Unaudited) 3
Consolidated Statement of Income for the period from
inception (July 31, 1997) through September 30, 1997 (Unaudited) 3
Consolidated Statement of Cash Flows for the period from
inception (July 31, 1997) through September 30, 1997 (Unaudited) 4
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 6
PART II - OTHER INFORMATION 6
Signatures 8
2
Imperial Credit Commercial Mortgage Investment Corp.
Consolidated Balance Sheet (Unaudited)
September 30, 1997
(In thousands)
Assets:
Cash $2
Direct costs of obtaining capital 212
-----
Total Assets $214
=====
Liabilities:
Accounts payable - Imperial Credit Industries $212
-----
Total Liabilities 212
-----
Stockholder's Equity:
Common stock, par value $0.0001 per share.
Authorized 500,000,000 shares,
100 shares issued and outstanding 0
Paid-in capital 2
-----
Total Stockholder's Equity 2
-----
Total Liabilities and Stockholder's Equity $214
=====
See accompanying Notes to Consolidated Financial Statements.
Imperial Credit Commercial Mortgage Investment Corp.
Consolidated Statement of Income (Unaudited)
For the period from Inception (July 31, 1997) through September 30, 1997
(In thousands, except per share data)
Net Income $0
=====
Net Income per common share $0.00
=====
See accompanying Notes to Consolidated Financial Statements.
3
Imperial Credit Commercial Mortgage Investment Corp.
Consolidated Statement of Cash Flows (Unaudited)
For the period from Inception (July 31, 1997) through September 30, 1997
(In thousands)
Cash Provided by Financing Activities:
Issuance of common stock $2
Increase in accounts payable 212
-----
Total Cash Provided by Financing Activities 214
-----
Cash Used for Investing Activities:
Increase in direct costs of obtaining capital 212
-----
Cash balance at September 30, 1997 $2
=====
See accompanying Notes to Consolidated Financial Statements.
Imperial Credit Commercial Mortgage Investment Corp.
Notes to Consolidated Financial Statements
Note 1 - Organization
Imperial Credit Commercial Mortgage Investment Corp. (the "Company") was
incorporated in Maryland on July 31, 1997 and was initially capitalized on such
date through the sale of 100 shares of its Common Stock, par value $0.0001 per
share (the "Common Stock"), for $1,500. The Company will seek to acquire
multifamily and commercial mortgage loans, interests in mortgage backed
securities ("MBS") and real property. The Company's sole activity through
September 30, 1997 consisted of the organization and startup of the Company.
Note 2 - Summary of Significant Accounting Polices
The unaudited consolidated financial statements of the Company and its
subsidiary are prepared in accordance with generally accepted accounting
principles for interim financial information. In the opinion of management,
all adjustments, consisting of normal and recurring accruals, necessary for a
fair presentation of the financial position and the results of operations for
the interim period presented have been included.
Income Taxes
The Company will elect to be taxed as a real estate investment trust ("REIT")
under Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended. A REIT generally will not be subject to federal income taxation on
that portion of its income that qualifies as REIT taxable income to the extent
that it distributes at least 95% of its taxable income to its stockholders and
complies with certain other requirements. Accordingly, no provision has been
made for federal income taxes for the Company and its subsidiaries in the
accompanying consolidated financial statements.
4
Income Recognition
Income and expenses are to be recorded on the accrual basis of accounting.
Note 3 - Subsequent Events
On October 22, 1997, the Company commenced its operations upon consummation of
an initial public offering of 34,500,000 shares of its Common Stock, with
gross proceeds of $517,500,000 and net proceeds to the Company of $481,150,000.
The Company entered into a management agreement (the "Management Agreement")
with Imperial Credit Commercial Asset Management Corporation (the "Manager"), a
wholly-owned subsidiary of Imperial Credit Industries, Inc. ("Imperial
Credit"), under which the Manager will advise the Company on various aspects of
its business and manage its day-to-day operations, subject to the supervision
of the Company's Board of Directors. The Manager will receive a base
management fee of 1% per annum of the first $1 billion of average invested
assets, 0.75% of the next $250 million of average invested assets, and 0.5% of
average invested assets above $1.25 billion, payable quarterly, and a quarterly
incentive fee in an amount equal to (A) 25% of the dollar amount by which (1)
(a) Funds from Operations, as defined in the Management Agreement, (before the
incentive fee) of the Company per share of Common Stock (based on the weighted
average number of shares outstanding), plus (b) gains (or minus losses) from
debt restructuring and sales of property per share of common stock (based on
the weighted average number of shares outstanding), exceed (2) an amount equal
to (a) the weighted average of the price per share at the initial public
offering and the prices per share at any secondary offerings by the Company
multiplied by (b) the ten-year U.S. Treasury Rate plus four percent per annum
multiplied by (B) the weighted average number of shares of Common Stock
outstanding during such quarter.
The Company adopted a stock option plan (the "Plan") to provide a means of
incentive compensation, under which the Manager, certain executive officers of
the Manager and certain officers and directors of the Company were granted
options (including all options for Special Reserve Shares as defined in the
Plan) to purchase 3,450,000 shares of Common Stock exercisable at the initial
public offering price. One third of those options will be exercisable on each
of the first three anniversaries of their grant and all of those options
that have not been exercised as of October 16, 2007 will expire.
Imperial Credit purchased 2,970,000 shares of Common Stock from the
underwriters in the Company's initial public offering, at the initial
public offering price net of any underwriting discounts and commissions.
Concurrently with the closing of the Company's initial public offering, the
Company acquired certain mortgage loans for a purchase price of approximately
$109 million and certain MBS interests for approximately $55 million from
Imperial Credit and Southern Pacific Bank, affiliates of the Manager.
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Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The Company was incorporated in Maryland on July 31, 1997 for the purpose of
investing in multifamily and commercial mortgage loans, MBS interests and
real property. The Company expects to generate income for distribution to
its stockholders primarily from the net income derived from its investments
in real estate related assets. The Company intends to operate in a manner that
permits it to elect, and it intends to elect, to be subject to tax as a REIT
for federal income tax purposes.
On October 22, 1997, the Company commenced its operations upon consummation of
a public offering of 34,500,000 shares of its Common Stock. The Company had
not conducted any material operations as of September 30, 1997.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
None
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
On October 15, 1997, the Securities and Exchange Commission declared effective
the Company's Registration Statement on Form S-11 (File No. 333-32683) (the
"Registration Statement") relating to the initial public offering of
30,000,000 shares of its Common Stock at an initial public offering price of
$15.00 per share. On October 16, 1997, the Securities and Exchange Commission
declared effective the Company's Registration Statement on Form S-11 (File No.
333-38015), filed pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, relating to the initial public offering of an additional 4,500,000
shares of its Common Stock at an initial public offering price to the public of
$15.00 per share. As part of the Company's initial public offering, 2,970,000
shares of Common Stock were sold to Imperial Credit and 500,000 shares of
Common Stock were sold to certain directors, officers and employees of the
Company, the Manager and Imperial Credit and members of their respective
immediate families, in each case net of the underwriting discount. On October
22, 1997, the Company completed the offering of the 34,500,000 shares, with
gross proceeds of $517,500,000 and net proceeds to the Company of $481,150,000.
The managing underwriters of the initial public offering were Friedman,
Billings, Ramsey & Co., Inc. and Jefferies & Company, Inc. Concurrently with
the closing of the initial public offering, the underwriters exercised an
option to purchase the 4,500,000 shares registered to cover over-allotments.
Item 3. Defaults Upon Senior Securities
None
6
Item 4. Submission of Matters to a Vote of Security Holders
On September 22, 1997 by unanimous written consent of the sole stockholder in
lieu of the annual meeting of stockholders, each of the following persons was
elected as a director of the Company to serve until the next annual meeting of
stockholders and until such person's successor is elected and qualifies or
until such person's earlier resignation or removal:
Name Votes For
- ---------------------- ---------
Patric H. Hendershott 100
Joseph A. Jaconi, Jr. 100
Mark S. Karlan 100
Louis H. Masotti 100
Kenneth A. Munkacy 100
H. Wayne Snavely 100
Kevin E. Villani 100
On September 22, 1997 by unanimous written consent of the sole stockholder in
lieu of a meeting of stockholders, the Company's 1997 Stock Option Plan was
approved in the form adopted by the Board of Directors.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 1.1 - Underwriting Agreement
Exhibit 3.1* - Charter of the Company
Exhibit 3.2 - Bylaws of the Company
Exhibit 10.1 - Imperial Credit Commercial Mortgage Investment Corp.
1997 Stock Option Plan
Exhibit 10.2 - Management Agreement dated October 22, 1997 between the Company
and Imperial Credit Commercial Asset Management Corp.
Exhibit 10.3 - Agreement for Purchase and Sale of Real Estate Loans between
Southern Pacific Bank and the Company dated as of October 1, 1997
Exhibit 10.4 - Agreement for Purchase of Mortgage-Backed Securities
between Southern Pacific Bank and the Company dated as of October 22, 1997
Exhibit 10.5 - Agreement for Purchase of Mortgage-Backed Securities between
Imperial Credit Industries, Inc. and the Company dated as of October 22, 1997
Exhibit 27 - Financial Data Schedule
*Incorporated by reference to the Company's Form S-11 Registration No 333-32683
(b) Reports on Form 8K
None
7
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.
Imperial Credit Commercial Mortgage Investment Corp.
Date: 11/24/97 /s/ Mark S. Karlan
-----------------------------------
Mark S. Karlan, President and Chief Executive Officer
(Principal Executive Officer, Principal Financial Officer and
Principal Accounting Officer)
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INDEX TO EXHIBITS
1.1 ** Underwriting Agreement
3.1 * Charter of the Company
3.2 ** Bylaws of the Company
10.1 ** 1997 Stock Option Plan
10.2 ** Management Agreement dated October 22, 1997 between the
Company and Imperial Credit Commercial Asset Management Corp.
10.3 ** Agreement for Purchase and Sale of Real Estate Loans between
Southern Pacific Bank and the Company dated as of
October 1, 1997
10.4 ** Agreement for Purchase of Mortgage-Backed Securities between
Southern Pacific Bank and the Company dated as of
October 22, 1997
10.5 ** Agreement for Purchase of Mortgage-Backed Securities between
Imperial Credit Industries, Inc. and the Company dated as of
October 22, 1997
27 ** Financial Data Schedule
*Incorporated by reference to the Company's Form S-11 Registration No 333-32683
** Filed herewith.
9
Exhibit 3.2
REVISED SEPTEMBER, 22, 1997
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.
BYLAWS
ARTICLE I
OFFICES
Section 1. PRINCIPAL EXECUTIVE OFFICE. The principal executive office of
the Corporation shall be located at such place or places as the Board of
Directors may designate.
Section 2. ADDITIONAL OFFICES. The Corporation may have additional
offices at such places as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE. All meetings of stockholders shall be held at the
principal executive office of the Corporation or at such other place within
the United States as shall be stated in the notice of the meeting.
Section 2. ANNUAL MEETING. The Corporation shall hold an annual meeting
of its stockholders to elect directors and transact any other business
within its powers, either at 10:00 a. m. on the first Tuesday of May in
each year if not a legal holiday, or at such other time on such other day
falling on or before the 30th day thereafter as shall be set by the Board
of Directors; provided, however, that the annual meeting of stockholders in
1997 shall be either at 8:00 a. m. on September 22, 1997, or at such other
time on such other day falling on or before the 30th day thereafter as
shall be set by the Board of Directors. Except as the Charter or statute
provides otherwise, any business may be considered at an annual meeting
without the purpose of the meeting having been specified in the notice.
Failure to hold an annual meeting does not invalidate the Corporation's
existence or affect any otherwise valid corporate acts.
Section 3. SPECIAL MEETINGS. The president, chief executive officer or
Board of Directors may call special meetings of the stockholders. Special
meetings of stockholders shall also be called by the secretary of the
Corporation upon the written request of the holders of shares entitled to
cast not less than a majority of all the votes entitled to be cast at such
meeting. Such request shall state the purpose of such meeting and the
matters proposed to be acted on at such meeting. The secretary shall
1
inform such stockholders of the reasonably estimated cost of preparing and
mailing notice of the meeting and, upon payment to the Corporation by such
stockholders of such costs, the secretary shall give notice to each
stockholder entitled to notice of the meeting.
Section 4. NOTICE. Not less than ten nor more than 90 days before each
meeting of stockholders, the secretary shall give to each stockholder
entitled to vote at such meeting and to each stockholder not entitled to
vote who is entitled to notice of the meeting written or printed notice
stating the time and place of the meeting and, in the case of a special
meeting or as otherwise may be required by any statute, the purpose for
which the meeting is called, either by mail or by presenting it to such
stockholder personally or by leaving it at his residence or usual place of
business. If mailed, such notice shall be deemed to be given when
deposited in the United States mail addressed to the stockholder at his
post office address as it appears on the records of the Corporation, with
postage thereon prepaid.
Section 5. SCOPE OF NOTICE. Any business of the Corporation may be
transacted at an annual meeting of stockholders without being specifically
designated in the notice, except such business as is required by any
statute to be stated in such notice. No business shall be transacted at a
special meeting of stockholders except as specifically designated in the
notice.
Section 6. ORGANIZATION. At every meeting of stockholders, the chairman
of the board of directors, if there be one, shall conduct the meeting or,
in the case of vacancy in office or absence of the chairman of the board of
directors, one of the following officers present shall conduct the meeting
in the order stated: the chief executive officer, if there be one, the
president, the vice presidents in their order of rank and seniority, or a
chairman chosen by the stockholders entitled to cast a majority of the
votes which all stockholders present in person or by proxy are entitled to
cast, shall act as chairman, and the secretary, or, in his absence, an
assistant secretary, or in the absence of both the secretary and assistant
secretaries, a person appointed by the chairman shall act as secretary.
Section 7. QUORUM. Unless the Corporation's Charter provides otherwise,
at a meeting of stockholders the presence in person or by proxy of
stockholders entitled to cast a majority of all the votes entitled to be
cast at the meeting shall constitute a quorum. Whether or not a quorum is
present, a meeting of stockholders convened on the date for which it was
called may be adjourned from time to time without further notice by a
majority vote of the stockholders present in person or by proxy to a date
not more than 120 days after the original record date. Any business which
might have been transacted at the meeting as originally notified may be
deferred and transacted at any such adjourned meeting at which a quorum
shall be present.
Section 8. VOTING; PROXIES. Unless the Corporation's Charter provides
otherwise, each outstanding share of stock, regardless of class, is
2
entitled to one vote on each matter submitted to a vote at a meeting of
stockholders and majority of all the votes cast at a meeting at which a
quorum is present is sufficient to approve any matter which properly comes
before the meeting, except that a plurality of all the votes cast at a
meeting at which a quorum is present is sufficient to elect a director. In
all elections for directors, each share of stock may be voted for as many
individuals as there are directors to be elected and for whose election the
share is entitled to be voted. A stockholder may vote the stock the
stockholder owns of record either in person or by proxy. A stockholder may
sign a writing authorizing another person to act as proxy. Signing may be
accomplished by the stockholder or the stockholder's authorized agent
signing the writing or causing the stockholder's signature to be affixed to
the writing by any reasonable means, including facsimile signature. A
stockholder may authorize another person to act as proxy by transmitting,
or authorizing the transmission of, a telegram, cablegram, data gram, or
other means of electronic transmission to the person authorized to act as
proxy or to a proxy solicitation firm, proxy support service organization,
or other person authorized by the person who will act as proxy to receive
the transmission. Unless a proxy provides otherwise, it is not valid more
than 11 months after its date. A proxy is revocable by a stockholder at
any time without condition or qualification unless the proxy states that it
is irrevocable and the proxy is coupled with an interest. A proxy may be
made irrevocable for so long as it is coupled with an interest. The
interest with which a proxy may be coupled includes an interest in the
stock to be voted under the proxy or another general interest in the
Corporation or its assets or liabilities.
Section 9. VOTING OF STOCK BY CERTAIN HOLDERS. The Board of Directors may
adopt by resolution a procedure by which a stockholder may certify in
writing to the Corporation that any shares of stock registered in the name
of the stockholder are held for the account of a specified person other
than the stockholder. The resolution shall set forth the class of
stockholders who may make the certification, the purpose for which the
certification may be made, the form of certification and the information to
be contained in it; if the certification is with respect to a record date
or closing of the stock transfer books, the time after the record date or
closing of the stock transfer books within which the certification must be
received by the Corporation; and any other provisions with respect to the
procedure which the Board of Directors considers necessary or desirable.
On receipt of such certification, the person specified in the certification
shall be regarded as, for the purposes set forth in the certification, the
stockholder of record of the specified stock in place of the stockholder
who makes the certification.
Section 10. INSPECTORS. At any meeting of stockholders, the chairman of
the meeting may appoint one or more persons as inspectors for such meeting.
Such inspectors shall ascertain and report the number of shares
represented at the meeting based upon their determination of the validity
and effect of proxies, count all votes, report the results and perform such
other acts as are proper to conduct the election and voting with
impartiality and fairness to all the stockholders.
3
Each report of an inspector shall be in writing and signed by him or by a
majority of them if there is more than one inspector acting at such
meeting. If there is more than one inspector, the report of a majority
shall be the report of the inspectors. The report of the inspector or
inspectors on the number of shares represented at the meeting and the
results of the voting shall be prima facie evidence thereof.
Section 11. NOMINATIONS AND PROPOSALS BY STOCKHOLDERS.
(a) ANNUAL MEETINGS OF STOCKHOLDERS. (1) Nominations of persons for
election to the Board of Directors and the proposal of business to be
considered by the stockholders may be made at an annual meeting of
stockholders (i) pursuant to the Corporation's notice of meeting, (ii) by
or at the direction of the Board of Directors or (iii) by any stockholder
of the Corporation who was a stockholder of record both at the time of
giving of notice provided for in this Section 11(a) and at the time of the
annual meeting, who is entitled to vote at the meeting and who complied
with the notice procedures set forth in this Section 11(a).
(2) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (iii) of paragraph
(a)(1) of this Section 11, the stockholder must have given timely notice
thereof in writing to the secretary of the Corporation and such other
business must otherwise be a proper matter for action by stockholders. To
be timely, a stockholder's notice shall be delivered to the secretary at
the principal executive offices of the Corporation not later than the close
of business on the 60th day nor earlier than the close of business on the
90th day prior to the first anniversary of the preceding year's annual
meeting; provided, however, that in the event that the date of the annual
meeting is advanced by more than 30 days or delayed by more than 60 days
from such anniversary date or if the Corporation has not previously held an
annual meeting, notice by the stockholder to be timely must be so delivered
not earlier than the close of business on the 90th day prior to such annual
meeting and not later than the close of business on the later of the 60th
day prior to such annual meeting or the tenth day following the day on
which public announcement of the date of such meeting is first made by the
Corporation. In no event shall the public announcement of a postponement
or adjournment of an annual meeting to a later date or time commence a new
time period for the giving of a stockholder's notice as described above.
Such stockholder's notice shall set forth (i) as to each person whom the
stockholder proposes to nominate for election or reelection as a director
all information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors in an election contest,
or is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (including
such person's written consent to being named in the proxy statement as a
nominee and to serving as a director if elected); (ii) as to any other
business that the stockholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material
interest in such business of such stockholder and of the beneficial owner,
4
if any, on whose behalf the proposal is made; and (iii) as to the
stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made, (x) the name and address of such
stockholder, as they appear on the Corporation's books, and of such
beneficial owner and (y) the number of shares of each class of stock of the
Corporation which are owned beneficially and of record by such stockholder
and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph (a)(2) of
this Section 11 to the contrary, in the event that the number of directors
to be elected to the Board of Directors is increased and there is no public
announcement by the Corporation naming all of the nominees for director or
specifying the size of the increased Board of Directors at least 70 days
prior to the first anniversary of the preceding year's annual meeting, a
stockholder's notice required by this Section 11(a) shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the secretary at the
principal executive offices of the Corporation not later than the close of
business on the tenth day following the day on which such public
announcement is first made by the Corporation.
(b) SPECIAL MEETINGS OF STOCKHOLDERS. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting.
Nominations of persons for election to the Board of Directors may be made
at a special meeting of stockholders at which directors are to be elected
(i) pursuant to the Corporation's notice of meeting, (ii) by or at the
direction of the Board of Directors or (iii) provided that the Board of
Directors has determined that directors shall be elected at such special
meeting, by any stockholder of the Corporation who is a stockholder of
record both at the time of giving of notice provided for in this Section
11(b) and at the time of the special meeting, who is entitled to vote at
the meeting and who complied with the notice procedures set forth in this
Section 11(b). In the event the Corporation calls a special meeting of
stockholders for the purpose of electing one or more directors to the Board
of Directors, any such stockholder may nominate a person or persons (as the
case may be) for election to such position as specified in the
Corporation's notice of meeting, if the stockholder's notice containing the
information required by paragraph (a)(2) of this Section 11 shall be
delivered to the secretary at the principal executive offices of the
Corporation not earlier than the close of business on the 90th day prior to
such special meeting and not later than the close of business on the later
of the 60th day prior to such special meeting or the tenth day following
the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to
be elected at such meeting. In no event shall the public announcement of a
postponement or adjournment of a special meeting to a later date or time
commence a new time period for the giving of a stockholder's notice as
described above.
5
(c) GENERAL. (1) Only such persons who are nominated in accordance with
the procedures set forth in this Section 11 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance
with the procedures set forth in this Section 11. The chairman of the
meeting shall have the power and duty to determine whether a nomination or
any business proposed to be brought before the meeting was made or
proposed, as the case may be, in accordance with the procedures set forth
in this Section 11 and, if any proposed nomination or business is not in
compliance with this Section 11, to declare that such nomination or
proposal shall be disregarded.
(2) For purposes of this Section 11, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable news service or in a document publicly filed
by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 11, a
stockholder shall also comply with all applicable requirements of state law
and of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in this Section 11. Nothing in this
Section 11 shall be deemed to affect any rights of stockholders to request
inclusion of proposals in the Corporation's proxy statement pursuant to
Rule 14a-8 under the Exchange Act.
Section 12. VOTING BY BALLOT. Voting on any question or in any election
may be viva voce unless the presiding officer shall order or any
stockholder shall demand that voting be by ballot.
ARTICLE III
DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed under the direction of its Board of Directors, which may
exercise all of the powers of the Corporation, except such as are by law or
by the Corporation's Charter or by these Bylaws conferred upon or reserved
to the stockholders.
Section 2. INDEPENDENT MAJORITY. A majority of the members of the Board
of Directors shall at all times after the first annual meeting of
stockholders be Independent Directors.
Section 3. NUMBER, TENURE AND QUALIFICATIONS. Subject to the rights of
the holders of any class of stock separately entitled to elect one or more
directors, at each annual meeting the stockholders shall elect directors to
hold office until the next annual meeting and until their successors are
elected and qualified. At any regular meeting or at any special meeting
called for that purpose, a majority of the entire Board of Directors may
establish, increase or decrease the number of directors, provided that the
6
number thereof shall never be less than the minimum number required by the
General Laws of the State of Maryland, nor more than nine, and further
provided that the tenure of office of a director shall not be affected by
any decrease in the number of directors.
Section 4. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held not less frequently than once per calendar quarter, with one
such regular meeting of the Board of Directors being held immediately after
and at the same place as the annual meeting of stockholders, no notice
other than this Bylaw being necessary. The Board of Directors may provide,
by resolution, the time and place, either within or without the State of
Maryland, for the holding of regular meetings of the Board of Directors
without other notice than such resolution.
Section 5. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the chairman of the board of
directors, president or by a majority of the directors then in office. The
person or persons authorized to call special meetings of the Board of
Directors may fix any place, either within or without the State of
Maryland, as the place for holding any special meeting of the Board of
Directors called by them.
Section 6. CHAIRMAN OF THE BOARD OF DIRECTORS. The chairman of the board
of directors shall preside, if present, at all meetings of the Board of
Directors (if the chairman of the board of directors is not present at a
meeting, then the chief executive officer of the Corporation shall preside
at such meeting). The chairman of the board of directors shall see that
all orders and resolutions of the Board of Directors are carried into
effect and shall from time to time report to the Board of Directors all
matters within his or her knowledge which the interests of the Corporation
may require to be brought to their notice. The chairman of the board of
directors shall also perform such other duties and he or she may exercise
such other powers as from time to time may be delegated to him or her by
the Board of Directors.
Section 7. VICE CHAIRMAN OF THE BOARD OF DIRECTORS. The vice chairman of
the board of directors shall perform such duties and may exercise such
powers as from time to time may be delegated to him or her by the Board of
Directors.
Section 8. NOTICE. Notice of any special meeting of the Board of
Directors shall be delivered personally or by telephone, facsimile
transmission, United States mail or courier to each director at his
business or residence address. Notice by personal delivery, by telephone
or a facsimile transmission shall be given at least two days prior to the
meeting. Notice by mail shall be given at least five days prior to the
meeting and shall be deemed to be given when deposited in the United States
mail properly addressed, with postage thereon prepaid. Telephone notice
shall be deemed to be given when the director is personally given such
notice in a telephone call to which he is a party. Facsimile transmission
notice shall be deemed to be given upon completion of the transmission of
7
the message to the number given to the Corporation by the director and
receipt of a completed answer-back indicating receipt. Neither the
business to be transacted at, nor the purpose of, any annual, regular or
special meeting of the Board of Directors need be stated in the notice,
unless specifically required by statute or these Bylaws.
Section 9. QUORUM. A majority of the entire Board of Directors shall
constitute a quorum for the transaction of business. In the absence of a
quorum, the directors present by majority vote and without notice other
than by announcement may adjourn the meeting from time to time until a
quorum shall attend. At any such adjourned meeting at which a quorum shall
be present, any business may be transacted which might have been transacted
at the meeting as originally notified.
Section 10. VOTING. Unless applicable law, the Corporation's Charter or
these Bylaws requires a greater proportion, the action of a majority of the
directors present at a meeting at which a quorum is present is the action
of the Board of Directors.
Section 11. TELEPHONE MEETINGS. Directors may participate in a meeting by
means of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time.
Participation in a meeting by these means shall constitute presence in
person at the meeting.
Section 12. ACTION BY DIRECTORS WITHOUT A MEETING. Any action required or
permitted to be taken at a meeting of the Board of Directors may be taken
without a meeting, if an unanimous written consent which sets forth the
action is signed by each member of the Board and filed with the minutes of
proceedings of the Board of Directors.
Section 13. VACANCIES. If for any reason any or all the directors cease
to be directors, such event shall not terminate the Corporation or affect
these Bylaws or the powers of the remaining directors hereunder (even if
fewer than three directors remain). Subject to the rights of the holders
of any class of stock separately entitled to elect one or more directors,
the stockholders may elect a successor to fill a vacancy on the Board of
Directors which results from the removal of a director. A director elected
by the stockholders to fill a vacancy which results from the removal of a
director serves for the balance of the term of the removed director.
Subject to the rights of the holders of any class of stock separately
entitled to elect one or more directors, a majority of the remaining
directors, whether or not sufficient to constitute a quorum, may fill a
vacancy on the Board of Directors which results from any cause except an
increase in the number of directors, and a majority of the entire Board of
Directors may fill a vacancy which results from an increase in the number
of directors. A director elected by the Board of Directors to fill a
vacancy serves until the next annual meeting of stockholders and until his
or her successor is elected and qualifies. No decrease in the number of
directors constituting the Board of Directors shall affect the tenure of
office of any director.
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Section 14. COMPENSATION. The Corporation will pay an annual director's
fee to each Independent Director equal to $20,000, with no additional fee
to be paid for the first four meetings of the Board of Directors. Each
Independent Director will be paid a fee of $1,000 for each additional
meeting of the Board of Directors attended in person by such Independent
Director. In addition, an annual fee of $2,000 will be paid to any
Independent Director who is the chair of any committee of the Board of
Directors. Affiliated Directors shall not receive any stated salary for
their services as directors. All Directors may be reimbursed for expenses
of attendance, if any, at each annual, regular or special meeting of the
Board of Directors or of any committee thereof and for their expenses, if
any, in connection with each property visit and any other service or
activity they performed or engaged in as directors; but nothing herein
contained shall be construed to preclude any directors from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 15. LOSS OF DEPOSITS. No director shall be liable for any loss
which may occur by reason of the failure of the bank, trust company,
savings and loan association, or other institution with whom moneys or
stock have been deposited.
Section 16. SURETY BONDS. Unless required by law, no director shall be
obligated to give any bond or surety or other security for the performance
of any of his duties.
Section 17. RELIANCE. Each director, officer, employee and agent of the
Corporation shall, in the performance of his duties with respect to the
Corporation, be fully justified and protected with regard to any act or
failure to act in reliance in good faith upon the books of account or other
records of the Corporation, upon an opinion of counsel or upon reports made
to the Corporation by any of its officers or employees or by the adviser,
accountants, appraisers or other experts or consultants selected by the
Board of Directors or officers of the Corporation, regardless of whether
such counsel or expert may also be a director.
Section 18. INVESTMENT POLICIES AND RESTRICTIONS. The investment policies
of the Corporation and the restrictions thereon shall be established from
time to time by the Board of Directors, including a majority of the
Independent Directors; provided, however, that the investment policies of
the Corporation and the limitations thereon shall be at all times in
compliance with the restrictions applicable to real estate investment
trusts pursuant to the Internal Revenue Code of 1986, as it may be amended
from time to time. The Independent Directors shall review the investment
policies of the Corporation at least annually to determine that the
policies then being followed by the Corporation are in the best interests
of its stockholders. Each such determination and the basis therefor shall
be set forth in the minutes of the Board of Directors.
Section 19. MANAGEMENT AGREEMENTS. The Board of Directors may engage a
Manager to advise the Board of Directors and be responsible for directing
the day-to-day business affairs of the Corporation pursuant to a written
9
agreement or agreements. The approval of any such management agreement and
the renewal or termination thereof shall require the affirmative vote of a
majority of the Independent Directors.
The Board of Directors shall evaluate the performance of the Manager
before entering into or renewing any management agreement. The minutes of
the meetings with respect to such evaluation shall reflect the criteria
used by the Board of Directors in making such evaluation. Upon any
termination of the management agreement described in the initial
registration statement of this Corporation's initial public offering of
securities, the Board of Directors shall determine that any successor
Manager possesses sufficient qualifications (a) to perform the management
function for the Corporation and (b) to justify the compensation provided
for in its contract with the Corporation. Each extension of the contract
for the services of a Manager entered into by the Board of Directors shall
have a term of no more than two years.
In determining whether to enter into or renew any management agreement,
the Independent Directors shall consider the following factors and all
other factors that they may deem relevant and their findings on each of
such factors shall be recorded in the minutes of the Board of Directors:
(a) The size of management fee in relation to the size and profitability
of the investment portfolio of the Corporation;
(b) The success of the Manager in generating opportunities that meet the
investment objectives of the Corporation;
(c) The quality and extent of service and advice furnished by the Manager
to the Corporation;
(d) The rates charged to other corporations similar to the Corporation and
to other investors by advisers performing similar services; and
(e) Additional revenues realized by the Manager and its Affiliates through
their relationship with the Corporation, including loan administration,
underwriting or broker commissions, servicing, engineering, inspection and
other fees, whether paid by the Corporation or by others with whom the
Corporation does business.
Section 20. RELATED PARTY TRANSACTIONS. A majority of the Independent
Directors shall approve general guidelines ("Guidelines") for the
Corporation's investments, borrowings and operations, and the Independent
Directors shall conduct a quarterly review of all transactions engaged in
by the Corporation, including transactions with the Manager or any
Affiliate of the Manager, to insure compliance with the Guidelines. The
Independent Directors shall not be required to approve transactions between
the Corporation and the Manager or any Affiliate of the Manager.
Section 21. MANAGEMENT BY DIRECTORS. Should the Board of Directors elect
to delegate the duty of management of the Corporation's assets and
administration of the Corporation's day-to-day operations to a Manager the
directors of the Corporation will not be required to devote their full time
to the affairs of the Corporation; provided that the directors devote so
much of their time to the Corporation's affairs as is necessary or required
for the effective conduct and operation of the Corporation's business.
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ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors may
appoint from among its members an Executive Committee, an Audit Committee,
a Compensation Committee, and other committees composed of one or more
directors and delegate to these committees any of the powers of the Board
of Directors, except the power to authorize dividends on stock, elect
directors, issue stock other than as provided in the next sentence,
recommend to the stockholders any action which requires stockholder
approval, amend these Bylaws, or approve any merger or share exchange which
does not require stockholder approval. If the Board of Directors has given
general authorization for the issuance of stock providing for or
establishing a method or procedure for determining the maximum number of
shares to be issued, a committee of the Board, in accordance with that
general authorization or any stock option or other plan or program adopted
by the Board of Directors, may authorize or fix the terms of stock subject
to classification or reclassification and the terms on which any stock may
be issued, including all terms and conditions required or permitted to be
established or authorized by the Board of Directors. At least a majority
of the members of the Compensation Committee of the Board of Directors and
the Audit Committee of the Board of Directors shall be composed of
Independent Directors.
Section 2. MEETINGS. Notice of committee meetings shall be given in the
same manner as notice for special meetings of the Board of Directors. A
majority of the members of the committee shall constitute a quorum for the
transaction of business at any meeting of the committee. The act of a
majority of the committee members present at a meeting shall be the act of
such committee. The Board of Directors may designate a chairman of any
committee, and such chairman or any two members of any committee may fix
the time and place of its meeting unless the Board shall otherwise provide.
In the absence of any member of any such committee, the members thereof
present at any meeting, whether or not they constitute a quorum, may
appoint another director to act in the place of such absent member. Each
committee shall keep minutes of its proceedings.
Section 3. TELEPHONE MEETINGS. Members of a committee of the Board of
Directors may participate in a meeting by means of a conference telephone
or similar communications equipment if all persons participating in the
meeting can hear each other at the same time. Participation in a meeting
by these means shall constitute presence in person at the meeting.
Section 4. INFORMAL ACTION BY COMMITTEES. Any action required or
permitted to be taken at any meeting of a committee of the Board of
Directors may be taken without a meeting, if an unanimous written consent
which sets forth the action is signed by each member of the committee and
such written consent is filed with the minutes of proceedings of such
committee.
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Section 5. VACANCIES. Subject to the provisions hereof, the Board of
Directors shall have the power at any time to change the membership of any
committee, to fill all vacancies, to designate alternate members to replace
any absent or disqualified member or to dissolve any such committee.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Corporation shall
include a president, a secretary and a treasurer and may include a chairman
of the board, a vice chairman of the board, a chief executive officer, one
or more senior vice presidents or vice presidents, a chief operating
officer, a chief financial officer, one or more assistant secretaries and
one or more assistant treasurers. In addition, the Board of Directors may
from time to time appoint such other officers with such powers and duties
as they shall deem necessary or desirable. The officers of the Corporation
shall be elected annually by the Board of Directors at the first meeting of
the Board of Directors held after each annual meeting of stockholders,
except that the chief executive officer or president may appoint one or
more vice presidents, assistant secretaries and assistant treasurers. If
the election of officers shall not be held at such meeting, such election
shall be held as soon thereafter as may be convenient. Each officer shall
hold office until his successor is elected and qualifies or until his
death, resignation or removal in the manner hereinafter provided. Any two
or more offices except president and vice president may be held by the same
person. In its discretion, the Board of Directors may leave unfilled any
office except that of president, treasurer and secretary. Election or
appointment of an officer or agent shall not of itself create contract
rights between the Corporation and such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the
Corporation may be removed by the Board of Directors if in its judgment the
best interests of the Corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed. Any officer of the Corporation may resign at any time by giving
written notice of his resignation to the Board of Directors, the chairman
of the board, the president or the secretary. Any resignation shall take
effect at any time subsequent to the time specified therein or, if the time
when it shall become effective is not specified therein, immediately upon
its receipt. The acceptance of a resignation shall not be necessary to
make it effective unless otherwise stated in the resignation. Such
resignation shall be without prejudice to the contract rights, if any, of
the officer, agent or Corporation.
Section 3. VACANCIES. A vacancy in any office may be filled by the Board
of Directors for the balance of the term.
Section 4. CHIEF EXECUTIVE OFFICER. The Board of Directors may designate
a chief executive officer. In the absence of such designation, the
president shall be the chief executive officer of the Corporation. The
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chief executive officer shall have general responsibility for
implementation of the policies of the Corporation, as determined by the
Board of Directors, and for the management of the business and affairs of
the Corporation. If the chairman of the board of directors is not present
at a meeting of the Board of Directors then the chief executive officer of
the Corporation shall act as the chairman of the board of directors at such
meeting and shall preside over such meeting.
Section 5. CHIEF OPERATING OFFICER. The Board of Directors may designate
a chief operating officer. The chief operating officer shall have the
responsibilities and duties as set forth by the Board of Directors or the
chief executive officer.
Section 6. CHIEF FINANCIAL OFFICER. The Board of Directors may designate
a chief financial officer. The chief financial officer shall have the
responsibilities and duties as set forth by the Board of Directors or the
chief executive officer.
Section 7. PRESIDENT. The president or chief executive officer, as the
case may be, shall in general supervise and control all of the business and
affairs of the Corporation. In the absence of a designation of a chief
operating officer by the Board of Directors, the president shall be the
chief operating officer. He may execute any deed, mortgage, bond, contract
or other instrument, except in cases where the execution thereof shall be
expressly delegated by the Board of Directors or by these Bylaws to some
other officer or agent of the Corporation or shall be required by law to be
otherwise executed; and in general shall perform all duties incident to the
office of president and such other duties as may be prescribed by the Board
of Directors from time to time.
Section 8. VICE PRESIDENTS. In the absence of the president or in the
event of a vacancy in such office, the senior vice president (or in the
event there be more than one senior vice president, the senior vice
presidents in the order designated at the time of their appointment or
election or, in the absence of any designation, then in the order of their
appointment or election, or if there be no senior vice presidents, the vice
president or vice presidents in the order designated at the time of their
appointment or election or, in the absence of any designation, in the order
of their appointment or election) shall perform the duties of the president
and when so acting shall have all the powers of and be subject to all the
restrictions upon the president; and shall perform such other duties as
from time to time may be assigned to him by the president or by the Board
of Directors. The Board of Directors may designate one or more vice
presidents as executive vice president or as vice president for particular
areas of responsibility.
Section 9. SECRETARY. The secretary shall (a) keep the minutes of the
proceedings of the stockholders, the Board of Directors and committees of
the Board of Directors in one or more books provided for that purpose; (b)
see that all notices are duly given in accordance with the provisions of
these Bylaws or as required by law; (c) be custodian of the corporate
13
records and of the seal of the Corporation; (d) keep a register of the post
office address of each stockholder which shall be furnished to the
secretary by such stockholder; (e) have general charge of the share
transfer books of the Corporation; and (f) in general perform such other
duties as from time to time may be assigned to him by the chief executive
officer, the president or by the Board of Directors.
Section 10. TREASURER. The treasurer shall have the custody of the funds
and securities of the Corporation and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the
Board of Directors. In the absence of a designation of a chief financial
officer by the Board of Directors, the treasurer shall be the chief
financial officer of the Corporation.
The treasurer shall disburse the funds of the Corporation as may be ordered
by the Board of Directors, taking proper vouchers for such disbursements,
and shall render to the president and Board of Directors, at the regular
meetings of the Board of Directors or whenever it may so require, an
account of all his transactions as treasurer and of the financial condition
of the Corporation.
If required by the Board of Directors, the treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of
his death, resignation, retirement or removal from office, of all books,
papers, vouchers, moneys and other property of whatever kind in his
possession or under his control belonging to the Corporation.
Section 11. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant
secretaries and assistant treasurers, in general, shall perform such duties
as shall be assigned to them by the secretary or treasurer, respectively,
or by the president or the Board of Directors. The assistant treasurers
shall, if required by the Board of Directors, give bonds for the faithful
performance of their duties in such sums and with such surety or sureties
as shall be satisfactory to the Board of Directors.
Section 12. SALARIES. The salaries and other compensation of the officers
shall be fixed from time to time by the Board of Directors and no officer
shall be prevented from receiving such salary or other compensation by
reason of the fact that he is also a director.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Board of Directors may authorize any officer or
agent to enter into any contract or to execute and deliver any instrument
in the name of and on behalf of the Corporation and such authority may be
14
general or confined to specific instances. Any agreement, deed, mortgage,
lease or other document executed by one or more of the directors or by an
authorized person shall be valid and binding upon the Board of Directors
and upon the Corporation when authorized or ratified by action of the Board
of Directors.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or agent of the
Corporation in such manner as shall from time to time be determined by the
Board of Directors.
Section 3. DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in
such banks, trust companies or other depositories as the Board of Directors
may designate.
ARTICLE VII
STOCK
Section 1. CERTIFICATES. Each stockholder is entitled to certificates
which represent and certify the shares of stock he or she holds in the
Corporation. Each stock certificate shall include on its face the name of
the Corporation, the name of the stockholder or other person to whom it is
issued, and the class of stock and number of shares it represents. It
shall also include on its face or back (a) a statement of any restrictions
on transferability and (b) a statement which provides in substance that the
Corporation will furnish to any stockholder on request and without charge a
full statement of the designations and any preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue, of the difference in
the relative rights and preferences between the shares of each series of a
preferred or special class in series which the Corporation is authorized to
issue, to the extent they have been set, and of the authority of the Board
of Directors to set the relative rights and preferences of subsequent
series of a preferred or special class of stock and any restrictions on
transferability. Such request may be made to the secretary or to its
transfer agent. It shall be in such form, not inconsistent with law or
with the Corporation's Charter, as shall be approved by the Board of
Directors or any officer or officers designated for such purpose by
resolution of the Board of Directors. Each stock certificate shall be
signed by the chairman of the board, the president, or a senior vice-
president, and countersigned by the secretary, an assistant secretary, the
treasurer, or an assistant treasurer. Each certificate may be sealed with
the actual corporate seal or a facsimile of it or in any other form and the
signatures may be either manual or facsimile signatures. A certificate is
valid and may be issued whether or not an officer who signed it is still an
officer when it is issued. A certificate may not be issued until the stock
represented by it is fully paid.
15
Section 2. TRANSFERS. Upon surrender to the Corporation or the transfer
agent of the Corporation of a stock certificate duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, the Corporation shall issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction
upon its books.
The Corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such
share or on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws
of the State of Maryland.
Notwithstanding the foregoing, transfers of shares of any class of stock
will be subject in all respects to the Corporation's Charter and all of the
terms and conditions contained therein.
Section 3. REPLACEMENT CERTIFICATE. Any officer designated by the Board
of Directors may direct a new certificate to be issued in place of any
certificate previously issued by the Corporation alleged to have been lost,
stolen or destroyed upon the making of an affidavit of that fact by the
person claiming the certificate to be lost, stolen or destroyed. When
authorizing the issuance of a new certificate, an officer designated by the
Board of Directors may, in his discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or the owner's legal representative to advertise the same in
such manner as he shall require and/or to give bond, with sufficient
surety, to the Corporation to indemnify it against any loss or claim which
may arise as a result of the issuance of a new certificate.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The Board
of Directors may set, in advance, a record date for the purpose of
determining stockholders entitled to notice of or to vote at any meeting of
stockholders or determining stockholders entitled to receive payment of any
dividend or the allotment of any other rights, or in order to make a
determination of stockholders for any other proper purpose. Such date, in
any case, shall not be prior to the close of business on the day the record
date is fixed and shall be not more than 90 days and, in the case of a
meeting of stockholders, not less than ten days, before the date on which
the meeting or particular action requiring such determination of
stockholders of record is to be held or taken.
In lieu of fixing a record date, the Board of Directors may provide that
the stock transfer books shall be closed for a stated period but not longer
than 20 days. If the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten days before the
date of such meeting.
16
If no record date is fixed and the stock transfer books are not closed for
the determination of stockholders, (a) the record date for the
determination of stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day on which the
notice of meeting is mailed or the 30th day before the meeting, whichever
is the closer date to the meeting; and (b) the record date for the
determination of stockholders entitled to receive payment of a dividend or
an allotment of any other rights shall be the close of business on the day
on which the resolution of the directors, declaring the dividend or
allotment of rights, is adopted.
When a determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this section, such determination
shall apply to any adjournment thereof, except when (i) the determination
has been made through the closing of the transfer books and the stated
period of closing has expired or (ii) the meeting is adjourned to a date
more than 120 days after the record date fixed for the original meeting, in
either of which case a new record date shall be determined as set forth
herein.
Section 5. STOCK LEDGER. The Corporation shall maintain at its principal
office or at the office of its counsel, accountants or transfer agent, an
original or duplicate share ledger containing the name and address of each
stockholder and the number of shares of each class held by such
stockholder.
Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors
may issue fractional stock or provide for the issuance of scrip, all on
such terms and under such conditions as they may determine.
Notwithstanding any other provision of the Corporation's Charter or these
Bylaws, the Board of Directors may issue units consisting of different
securities of the Corporation. Any security issued in a unit shall have
the same characteristics as any identical securities issued by the
Corporation, except that the Board of Directors may provide that for a
specified period securities of the Corporation issued in such unit may be
transferred on the books of the Corporation only in such unit.
Section 7. EXEMPTION FROM CONTROL SHARE ACQUISITION STATUTE. To the
fullest extent permitted by Maryland law, the capital stock of the
Corporation shall be exempt from the provisions of Sections 3-701 to 3-709
of the Corporations and Associations Article of the Annotated Code of
Maryland (as the same may be amended) and any successor statutes.
ARTICLE VIII
ACCOUNTING YEAR
The fiscal year of the Corporation shall end on December 31st of each year.
The Board of Directors shall have the power from time to time to change
the fiscal year provided that such change does not cause the Corporation to
fail to qualify as a REIT.
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ARTICLE IX
DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other distributions upon the
stock of the Corporation may be authorized and declared by the Board of
Directors and may be paid in cash, property or stock of the Corporation,
subject to the provisions of law and the Corporation's Charter, to insure
that the Corporation satisfies the requirements for qualification as a
REIT.
Section 2. CONTINGENCIES. Before payment of any dividends or other
distributions, there may be set aside out of any assets of the Corporation
available for dividends or other distributions such sum or sums as the
Board of Directors may from time to time, in its absolute discretion, think
proper as a reserve fund for contingencies, for equalizing dividends or
other distributions, for repairing or maintaining any property of the
Corporation or for such other purpose as the Board of Directors shall
determine to be in the best interest of the Corporation, and the Board of
Directors may modify or abolish any such reserve in the manner in which it
was created.
ARTICLE X
INVESTMENT POLICY
Subject to the provisions of the Corporation's Charter, the Board of
Directors, including a majority of the Independent Directors, may from time
to time adopt, amend, revise or terminate any policy or policies with
respect to investments by the Corporation as it shall deem appropriate in
its sole discretion.
ARTICLE XI
SEAL
Section 1. SEAL. The Board of Directors may authorize the adoption of a
seal by the Corporation. The seal shall contain the name of the
Corporation and the year of its incorporation and the words "Incorporated
in Maryland. " The Board of Directors may authorize one or more duplicate
seals and provide for the custody thereof.
Section 2. AFFIXING SEAL. Whenever the Corporation is permitted or
required to affix its seal to a document, it shall be sufficient to meet
the requirements of any law, rule or regulation relating to a seal to place
the word "(SEAL)" adjacent to the signature of the person authorized to
execute the document on behalf of the Corporation.
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ARTICLE XII
INDEMNIFICATION AND ADVANCE OF EXPENSES
The Corporation shall indemnify and hold harmless and, without requiring a
determination of the ultimate entitlement to indemnification, pay
reasonable expenses in advance of the final disposition of any proceeding
to (A) its present and former directors and officers, whether serving the
Corporation or at its request any other entity, to the full extent required
or permitted by the General Laws of the State of Maryland now or hereafter
in force, including the advance of expenses under the procedures and to the
full extent permitted by law and (B) other employees and agents to such
extent as shall be authorized by the Board of Directors or the
Corporation's Charter and be permitted by law. The foregoing rights of
indemnification shall not be exclusive of any other rights to which those
seeking indemnification may be entitled.
Any indemnification, or payment of expenses in advance of the final
disposition of any proceeding, shall be made promptly, and in any event
within 60 days, upon the written request of the director or officer
entitled to seek indemnification (the "Indemnified Party"). The right to
indemnification and advances hereunder shall be enforceable by the
Indemnified Party in any court of competent jurisdiction, if (i) the
Corporation denies such request, in whole or in part, or (ii) no
disposition thereof is made within 60 days. The Indemnified Party's costs
and expenses incurred in connection with successfully establishing his or
her right to indemnification, in whole or in part, in any such action shall
also be reimbursed by the Corporation. It shall be a defense to any action
for advance for expenses that (a) a determination has been made that the
facts then known to those making the determination would preclude
indemnification or (b) the Corporation has not received both (i) an
undertaking as required by law to repay such advances in the event it shall
ultimately be determined that the standard of conduct has not been met and
(ii) a written affirmation by the Indemnified Party of such Indemnified
Party's good faith belief that the standard of conduct necessary for
indemnification by the Corporation has been met.
The indemnification and advance of expenses provided by the Corporation's
Charter and these By-Laws shall not be deemed exclusive of any other rights
to which a person seeking indemnification or advance of expenses may be
entitled under any law (common or statutory), or any agreement, vote of
stockholders or disinterested directors or other provision that is
consistent with law, both as to action in his or her official capacity and
as to action in another capacity while holding office or while employed by
or acting as agent for the Corporation, shall continue in respect of all
events occurring while a person was a director or officer after such person
has ceased to be a director or officer, and shall inure to the benefit of
the estate, heirs, executors and administrators of such person. The
Corporation shall not be liable for any payment under this Bylaw in
connection with a claim made by a director or officer to the extent such
director or officer has otherwise actually received payment under insurance
19
policy, agreement, vote or otherwise, of the amounts otherwise
indemnifiable hereunder. All rights to indemnification and advance of
expenses under the Corporation's Charter and hereunder shall be deemed to
be a contract between the Corporation and each director or officer of the
Corporation who serves or served in such capacity at any time while this
Bylaw is in effect. Nothing herein shall prevent the amendment of this
Bylaw, provided that no such amendment shall diminish the rights of any
person hereunder with respect to events occurring or claims made before its
adoption or as to claims made after its adoption in respect of events
occurring before its adoption. Any repeal or modification of this Bylaw
shall not in any way diminish any rights to indemnification or advance of
expenses of such director or officer or the obligations of the Corporation
arising hereunder with respect to events occurring, or claims made, while
this Bylaw or any provision hereof is in force.
Neither the amendment nor repeal of this Article XII, nor the adoption or
amendment of any other provision of these Bylaws or the Corporation's
Charter inconsistent with this Article XII, shall apply to or affect in any
respect the applicability of the preceding paragraph with respect to any
act or failure to act which occurred prior to such amendment, repeal or
adoption.
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the Corporation's
Charter or these Bylaws or pursuant to applicable law, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Neither the business to be transacted at nor the
purpose of any meeting need be set forth in the waiver of notice, unless
specifically required by statute. The attendance of any person at any
meeting shall constitute a waiver of notice of such meeting, except where
such person attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE XIV
AMENDMENT OF BYLAWS
In accordance with the Corporation's Charter, these Bylaws may be repealed,
altered, amended or rescinded by the stockholders of the Corporation only
by vote of not less than two-thirds of the outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast at a meeting of
the stockholders called for that purpose (provided that notice of such
proposed repeal, alteration, amendment or rescission is included in the
notice of such meeting). In addition, except as otherwise provided in the
Corporation's Charter and in these Bylaws, the Board of Directors may
repeal, alter, amend or rescind these Bylaws by vote of a majority of the
Board of Directors at a meeting held in accordance with the provisions of
these Bylaws.
20
Exhibit 1.1
UNDERWRITING AGREEMENT
October 16, 1997
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
JEFFERIES & COMPANY, INC.
as Representatives of the several Underwriters
c/o Friedman, Billings, Ramsey & Co., Inc.
1001 19th Street North
Arlington, Virginia 22209
Dear Sirs:
Imperial Credit Commercial Mortgage Investment Corp. (the "Company")
confirms its agreements with Friedman, Billings, Ramsey & Co., Inc.,
Jefferies & Company, Inc., and each of the other Underwriters listed in
Schedule I hereto (collectively, the "Underwriters"), for whom Friedman,
Billings, Ramsey & Co., Inc. and Jefferies & Company, Inc. are acting as
representatives (in such capacity, the "Representatives"), with respect
to (i) the sale by the Company, and the purchase by the Underwriters,
acting severally and not jointly, of the respective numbers of shares of
Common Stock, par value $0.0001 per share, of the Company ("Common
Stock"), totaling 30,000,000, set forth in Schedule I hereto and (ii) the
grant by the Company to the Underwriters, acting severally and not jointly,
of the option described in Section 1(b) hereof to purchase all or any part
of 4,500,000 additional shares of Common Stock to cover over-allotments, if
any. The 30,000,000 shares of Common Stock (the "Initial Shares") to be
purchased by the Underwriters and all or any part of the 4,500,000 shares
of Common Stock subject to the option described in Section 1(b) hereof that
the Underwriters elect to purchase (the "Option Shares") are hereinafter
called, collectively, the "Shares." The Company acknowledges that at its
request, the Underwriters have reserved (i) 2,970,000 of the Initial Shares
for sale to Imperial Credit Industries, Inc. ("Imperial Credit"), at the
initial public offering price of the Shares net of any underwriting
discounts or commissions, (ii) up to 500,000 of the Initial Shares for sale
to certain directors, officers and employees of the Company, Imperial
Credit Commercial Asset Management Corporation (the "Manager") and
Imperial Credit to be identified by the Company at the initial public
offering price of the Shares net of any underwriting discounts or
commissions, and (iii) up to 250,000 of the Initial Shares for sale to
certain other persons to be identified by the Company at the initial public
offering price of the Shares.
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a registration statement on Form S-11 (No. 333-32683) and
a related preliminary prospectus for the registration of the Shares under
1
the Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations thereunder (the "Securities Act Regulations"). The
Company has prepared and filed such amendments thereto, if any, and such
amended preliminary prospectuses, if any, as may have been required to the
date hereof, and will file such additional amendments thereto and such
amended prospectuses as may hereafter be required. The registration
statement has been declared effective under the Securities Act by the
Commission. The registration statement as amended at the time it became
effective (including all information deemed to be a part of the
registration statement at the time it became effective pursuant to Rule
430A(b) of the Securities Act Regulations) is hereinafter called the
"Registration Statement," except that, if the Company files a post-
effective amendment to such registration statement which becomes effective
prior to the Closing Time (as defined below), "Registration Statement"
shall refer to such registration statement as so amended. Any registration
statement filed by the Company pursuant to Rule 462(b) of the Securities
Act Regulations is hereinafter called the "Rule 462(b) Registration
Statement," and after such filing the term "Registration Statement"
shall include the 462(b) Registration Statement. Each prospectus included
in the registration statement, or amendments thereof, before it became
effective under the Securities Act and any prospectus filed with the
Commission by the Company with the consent of the Underwriters pursuant to
Rule 424(a) of the Securities Act Regulations is hereinafter called the
"Preliminary Prospectus." The term "Prospectus" means the final
prospectus, as first filed with the Commission pursuant to paragraph (1) or
(4) of Rule 424(b) of the Securities Act Regulations.
The Company understands that the Underwriters propose to make a public
offering of the Shares at the initial public offering price set forth in
the Prospectus as soon as the Representatives deem advisable after this
Agreement has been executed and delivered.
The Company and the Underwriters agree as follows:
1. Sale and Purchase:
(a) Initial Shares. Upon the basis of the warranties and representations
and other terms and conditions herein set forth, the Company agrees to sell
to each Underwriter, severally and not jointly, and each Underwriter
agrees, severally and not jointly, to purchase from the Company, at the
purchase price per share of $15.00, that proportion of the number of
Initial Shares set forth opposite such Underwriter's name in Schedule I,
plus any additional number of Initial Shares which such Underwriter may
become obligated to purchase pursuant to the provisions of Section 8
hereof, subject to such adjustments among the Underwriters as the
Representatives in their sole discretion shall make to eliminate any sales
or purchases of fractional shares. The Underwriters may from time to time
increase or decrease the public offering price after the initial public
offering to such extent as the Underwriters may determine.
(b) Option Shares. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, the
Company hereby grants an option to the Underwriters, severally and not
jointly, to purchase from the Company that number of Option Shares up to
the maximum number of Option Shares of Common Stock at the purchase price
2
per share set forth in paragraph (a) above plus any additional number of
Option Shares which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 8 hereof. The option hereby
granted will expire 30 days after the date hereof and may be exercised in
whole or in part from time to time only for the purpose of covering over-
allotments which may be made in connection with the offering and
distribution of the Initial Shares upon notice by the Representatives to
the Company setting forth the number of Option Shares as to which the
several Underwriters are then exercising the option and the time and date
of payment and delivery for such Option Shares. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the
Representatives, but shall not be later than seven full business days nor
earlier than two full business days after the exercise of said option, nor
in any event prior to the Closing Time, as hereinafter defined, unless
otherwise agreed by the Representatives and the Company. If the option is
exercised as to all or any portion of the Option Shares, each of the
Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Shares then being purchased which
the number of Initial Shares set forth in Schedule I opposite the name of
such Underwriter bears to the total number of Initial Shares, subject in
each case to such adjustments as the Representatives in their discretion
shall make to eliminate any sales or purchases of fractional shares.
2. Payment and Delivery:
(a) Initial Shares. Payment of the purchase price for the Initial Shares
shall be made to the Company by wire transfer or certified or official bank
check payable in federal (same-day) funds at the office of Hunton &
Williams, 200 Park Avenue, New York, New York 10166 (unless another place
shall be agreed upon by the Representatives and the Company) against
delivery of the certificates for the Initial Shares to the Representatives
for the respective accounts of the Underwriters. Unless postponed pursuant
to the proviso to this sentence or Section 8 or 10, such payment and
delivery shall be made at 10:00 a.m., New York City time, on the third
(fourth, if this Agreement is executed and delivered after 4:30 p.m. (New
York City time) on the date hereof) business day after the date hereof;
provided, however, that if the Company has not made available to the
Representatives copies of the Prospectus by not later than 10:00 a.m. (New
York City time) on the second business day following execution and delivery
of this Agreement, the Representatives may, in their sole discretion,
postpone such payment and delivery until no later than two (2) full business
days following delivery of copies of the Prospectus to the Representatives.
The time at which such payment and delivery are actually made is
hereinafter sometimes called the "Closing Time." Unless the
Representatives elect to take delivery of the Initial Shares by credit
through full fast transfer to the accounts at The Depository Trust Company
designated by the Representatives, certificates for the Initial Shares
shall be delivered to the Representatives in definitive form registered in
such names and in such denominations as the Representatives shall specify
at least one full business day prior to the Closing Time., and shall be
made available to the Representatives for the purpose of expediting the
checking thereof at or before 3:00 P.M. , New York City time, on the
3
business day preceding the Closing Time.
(b) Option Shares. In addition, payment of the purchase price for the
Option Shares shall be made to the Company by wire transfer or certified or
official bank check payable in federal (same-day) funds at the office of
Hunton & Williams, 200 Park Avenue, New York, New York 10166 (unless
another place shall be agreed upon by the Representatives and the Company)
against delivery of the certificates for the Option Shares to the
Representatives for the respective accounts of the Underwriters. Such
payment and delivery shall be made at 10:00 a.m., New York City time, on
each Date of Delivery. Unless the Representatives elect to take delivery
of the Option Shares by credit through full fast transfer to the accounts at
The Depository Trust Company designated by the Representatives,
certificates for the Option Shares shall be delivered to the
Representatives in definitive form registered in such names and in such
denominations as the Representatives shall specify at least one full
business day prior to the applicable Date of delivery, and shall be made
available to the Representatives for the purpose of expediting the checking
thereof at or before 3:00 P.M. , New York City time, on the business day
preceding such Date of Delivery.
3. Representations and Warranties of the Company:
The Company represents and warrants to the Underwriters that:
(a) each of the Registration Statement and any Rule 462(b) Registration
Statement has become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued under the Securities Act and
no proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission; any
request on the part of the Commission for additional information has been
complied with; and the Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus;
(b) the Registration Statement complies and the Prospectus and any further
amendments or supplements thereto will, when they become effective or are
filed with the Commission, as the case may be, comply in all material
respects with the requirements of the Securities Act and the Securities Act
Regulations; the Registration Statement did not, and any amendment thereto
will not, in each case as of the applicable effective date, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; and the Prospectus and any amendment or supplement thereto
will not, as of the applicable filing date and at Closing Time and on each
Date of Delivery (if any), contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty shall
not apply to any statement in or omission from the Registration Statement
or the Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by any Underwriter through the
Representatives expressly for use in the Registration Statement or the
Prospectus;
(c) each Preliminary Prospectus in paper format was and the Prospectus in
4
paper format delivered to the Underwriters for use in connection with this
offering will be identical to the electronic submission thereof transmitted
to the Commission pursuant to Regulation S-T of the Securities Act
Regulations, except to the extent permitted by such Regulation S-T;
(d) the Company is a corporation duly organized and validly existing under
the laws of the State of Maryland, with full corporate power and authority
to own its properties and conduct its business as described in the
Registration Statement and the Prospectus, and to execute and deliver this
Agreement and the Management Agreement (the "Management Agreement"), to
be entered into at or prior to the Closing Time between the Company and the
Manager, in substantially the form filed as an exhibit to the Registration
Statement; Imperial Credit Mortgage Securitization Corp. (the
"Subsidiary") has been duly organized and is validly existing under the
laws of the State of California with full corporate power and authority to
own its properties and conduct its business as described in the
Registration Statement and the Prospectus, and the Company has no
subsidiaries other than the Subsidiary;
(e) the authorized and outstanding capital stock of the Company was at the
date indicated as set forth in the Prospectus under the caption
"Capitalization" and conforms in all material respects to the statements
relating thereto contained in the Registration Statement and the Prospectus,
the Initial Shares and the Option Shares, if any, have been duly authorized
for issuance and sale to the Underwriters pursuant to this Agreement and,
when issued and delivered by the Company against payment therefor in
accordance with the terms of this Agreement, will be duly and validly issued
and fully paid and nonassessable, will be sold free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest and will
be the only outstanding shares of Common Stock; and no preemptive right, co-
sale right, registration right, right of first refusal or other similar
right of shareholders exists with respect to any of the Initial Shares or
Option Shares or the issuance and sale thereof; all issued and outstanding
shares of capital stock of the Subsidiary have been duly authorized and
validly issued and are fully paid and nonassessable, and were not issued in
violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities and all such shares issued an
outstanding at any time were and are owned exclusively by the Company free
and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest; except as disclosed in the Registration Statement and
the financial statements of the Company and the related notes thereto
included in the Registration Statement, neither the Company nor the
Subsidiary has outstanding any options to purchase, or any preemptive rights
or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or
sell, shares of its capital stock or any such options, rights, convertible
securities or obligations;
(f) the Company and the Subsidiary are duly qualified or licensed by and in
good standing in each jurisdiction in which they conduct their respective
businesses or own or lease property and in which the failure, individually
or in the aggregate, to be so licensed or qualified could have a material
adverse effect on the operations, business or condition (financial and
other) of the Company and the Subsidiary, taken as a whole; and each of the
5
Company and the Subsidiary is in compliance in all material respects with
the laws, rules and regulations enacted or promulgated by such
jurisdictions, except where the failure to comply would not have a material
adverse effect on the operations, business or condition (financial or
otherwise) of the Company and the Subsidiary, taken as a whole;
(g) neither the Company nor the Subsidiary is in breach of, or in default
under (nor has any event occurred which with notice, lapse of time, or both
would constitute a breach of, or default under), its articles of
incorporation, by-laws or other constituent documents or in the performance
or observance of any obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which it is a party or by which it is bound,
except for such breaches or defaults as would not have a material adverse
effect on the operations, business or condition (financial and other) of
the Company and the Subsidiary, taken as a whole; and the execution,
delivery and performance of this Agreement and the Management Agreement and
consummation of the transactions contemplated hereby and thereby will not
conflict with, or result in any breach of or constitute a default under
(nor constitute any event which with notice, lapse of time, or both would
constitute a breach of, or default under), (i) any provision of the
articles of incorporation, by-laws or other constituent documents of the
Company or the Subsidiary, or (ii) any provision of any license, indenture,
mortgage, deed of trust, bank loan or credit agreement or other agreement
or instrument to which the Company or the Subsidiary is a party or by which
the Company or the Subsidiary or any of their respective properties may be
bound or affected, or under any federal, state or local law, regulation or
rule or any decree, judgment or order applicable to the Company or the
Subsidiary, except, in the case of clauses (i) and (ii), for such breaches
or defaults which would not have a material adverse effect on the
operations, business or condition (financial and other), of the Company
and the Subsidiary, taken as a whole;
(h) this Agreement has been duly authorized, executed and delivered by the
Company and is a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and by general principles of equity,
and except to the extent that the enforceability of the indemnification
provisions of Section 9 hereof may be limited by federal or state
securities laws or public policy considerations in other federal or state
laws; the Management Agreement has been duly authorized by the Company and
at the Closing Time will have been duly executed and delivered by the
Company and will constitute a valid and binding agreement of the Company
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and by general principles of equity,
whether considered at law or in equity;
(i) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the sale of the Shares
as contemplated hereby other than (i) such as have been obtained, or will
be obtained at the Closing Time or the relevant Date of Delivery, as the
6
case may be, under the Securities Act, (ii) such approvals as have been
obtained in connection with the approval of the inclusion of the Shares on
the Nasdaq National Market, and (iii) any necessary qualification under the
securities or blue sky laws of the various jurisdictions in which the
Shares are being offered by the Underwriters;
(j) KPMG Peat Marwick LLP, whose report on the balance sheet of the Company
is included in the Registration Statement and the Prospectus, are
independent public accountants as required by the Securities Act and the
Securities Act Regulations;
(k) the Company and the Subsidiary have all necessary licenses,
authorizations, consents and approvals and has made all necessary filings
required under any federal, state or local law, regulation or rule, and has
obtained all necessary authorizations, consents and approvals from other
persons, required in order to conduct its respective business, except to
the extent that any failure to have any such licenses, authorizations,
consents or approvals, to make any such filings or to obtain any such
authorizations, consents or approvals would not, alone or in the aggregate,
have a material adverse effect on the operations, business or condition
(financial and other) of the Company and the Subsidiary, taken as a whole;
neither the Company nor the Subsidiary is in violation of, or in default
under, any such license, authorization, consent or approval or any federal,
state or local law, regulation or rule or any decree, order or judgment
applicable to the Company or the Subsidiary, the effect of which could be
material and adverse to the operations, business or condition (financial
and other) of the Company and the Subsidiary, taken as a whole;
(l) all legal or governmental proceedings, contracts or documents of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement have
been so described or filed as required;
(m) there are no actions, suits or proceedings pending or, to the Company's
knowledge, threatened against the Company or the Subsidiary or any of their
respective properties, at law or in equity, or before or by any federal,
state, local or foreign governmental or regulatory commission, board, body,
authority or agency which could result in a judgment, decree or order
having a material adverse effect on the operations, business or condition
(financial and other) of the Company and the Subsidiary, taken as a whole;
(n) the balance sheet of the Company, including the notes thereto, included
in the Registration Statement and the Prospectus presents fairly the
financial position of the Company as of the date thereof and has been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis;
(o) subsequent to the effective date of the Registration Statement and the
date of the Prospectus, and except as may be otherwise stated in the
Registration Statement or Prospectus, there has not been (i) any material
and unfavorable change, financial or otherwise, in the operations, business
or condition (financial and other) of the Company and the Subsidiary, taken
as a whole, (ii) any transaction, other than in the ordinary course of
business, which is material to the Company and the Subsidiary, taken as a
whole, contemplated or entered into by the Company or the Subsidiary or
(iii) any obligation, contingent or otherwise, directly or indirectly
incurred by the Company or the Subsidiary, other than in the ordinary
7
course of business, which is material to the Company and the Subsidiary,
taken as a whole;
(p) the Company is not, and upon the sale of the Shares as herein
contemplated will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company
Act"); the transactions contemplated by the Registration Statement and the
conduct of the Company of its business as set forth in the Registration
Statement will not cause the Company to become an "investment company"
subject to registration under the Investment Company Act;
(q) there are no persons with registration or other similar rights to have
any securities of the Company registered under the Securities Act; and
(r) the Company is organized in conformity with the requirements for
qualification as a real estate investment trust (a "REIT") under the
Internal Revenue Code of 1986, as amended (the "Code"), and the
organization and contemplated method of operation of the Company as set
forth in the Registration Statement and the Prospectus are such as to
enable the Company to meet the requirements for taxation as a REIT under
the Code.
4. Certain Covenants of the Company:
The Company hereby agrees with each Underwriter:
(a) to prepare the Prospectus in a form approved by the Underwriters and to
file such Prospectus with the Commission pursuant to Rule 424(b) of the
Securities Act Regulations not later than 10:00 a.m. (New York City time),
on the second business day following the execution and delivery of this
Agreement and to furnish promptly to the Underwriters as many copies of the
Prospectus (or of the Prospectus as amended or supplemented if the Company
shall have made any amendments or supplements thereto after the effective
date of the Registration Statement) as the Underwriters may reasonably
request for the purposes contemplated by the Securities Act Regulations;
(b) to advise the Representatives promptly and (if requested by the
Representatives) to confirm such advice in writing, when the Company learns
that the Registration Statement has become effective and when the Company
learns that any post-effective amendment thereto becomes effective under
the Securities Act Regulations;
(c) to advise the Representatives promptly, confirming such advice in
writing, of (i) any request by the Commission for amendments or supplements
to the Registration Statement or Prospectus or for additional information
with respect thereto, or (ii) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, or of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, or of the initiation or threatening
of any proceedings for any of such purposes and, if the Commission or any
other government agency or authority should issue any such order, to make
every reasonable effort to obtain the lifting or removal of such order as
soon as possible; to advise the Representatives promptly of any proposal to
amend or supplement the Registration Statement or Prospectus and to file no
such amendment or supplement to which the Representatives shall reasonably
object in writing;
8
(d) for a period of five years from the date of this Agreement, to furnish
to the Representatives, and to any Underwriter on written request, (i)
copies of all annual, quarterly, current and other reports or notices,
definitive proxy materials and other documents furnished to holders the
Common Stock or filed by the Company with the Commission, (ii) every
material press release that was generally released to shareholders, and
(iii) such other information of a public nature (and generally available to
holders of the Common Stock) regarding the Company as the Representatives
or such Underwriter may reasonably request in writing;
(e) to advise the Underwriters promptly of the happening of any event known
to the Company within the time during which a Prospectus relating to the
Shares is required to be delivered under the Securities Act Regulations
which, in the judgment of the Company, would require the making of any
change in the Prospectus then being used so that the Prospectus would not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading, and, during such time, at the Company's expense, to prepare and
furnish to the Underwriter promptly such amendments or supplements to the
Prospectus as may be necessary to reflect any such change and to furnish to
the Representatives a copy of such proposed amendment or supplement before
filing any such amendment or supplement with the Commission;
(f) to furnish promptly to the Representatives a signed copy of the
Registration Statement, as initially filed with the Commission and of each
amendment thereto (including all exhibits) and such number of conformed
copies of the foregoing as the Representatives may reasonably request;
(g) to use the net proceeds from the sale of the Shares in the manner
described under the caption "Use of Proceeds" in the Prospectus;
(h) to pay all expenses, out-of-pocket fees incurred and taxes (other than
any transfer taxes and the fees and disbursements of counsel for the
Underwriters except as set forth under Section 5 hereof and clause (iii)
below) in connection with (i) the preparation and filing of the
Registration Statement, each Preliminary Prospectus, the Prospectus, and
any amendments or supplements thereto, and the printing and furnishing of
copies of each thereof to the Underwriters and to dealers (including costs
of mailing and shipment), (ii) the preparation, issuance and delivery of
the certificates for the Shares to the Underwriters, including any stock or
other transfer taxes or duties payable upon the sale of the Shares to the
Underwriters, (iii) the word processing and/or printing of this Agreement,
the agreement among underwriters, any dealer agreements and any blue sky
surveys, and the reproduction and/or printing and furnishing of copies of
each thereof to the Underwriters and to dealers (including costs of mailing
and shipment), (iv) any filing for review of the underwriting terms of the
offering of the Shares by the NASD, (v) the fees and expenses of any
transfer agent or registrar for the Shares, (vi) the fees and expenses
incurred in connection with the inclusion of the Shares in the Nasdaq
National Market and (vii) the performance of the Company's other
obligations hereunder;
(i) to make generally available to its security holders as soon as
practicable, but not later than 90 days after the close of the period
covered thereby, an earnings statement (in form complying with the
9
provisions of Rule 158 of the Securities Act Regulations) covering a period
of 12 months beginning not later than the first day of the first fiscal
quarter of the Company beginning after the "effective date" (as defined
in such Rule 158) of the Registration Statement;
(j) to use its best efforts to effect and maintain inclusion of the Shares
in the Nasdaq National Market and to file with The Nasdaq Stock Market
Inc. all documents and notices required of companies having securities
included in the Nasdaq National Market;
(k) except as described in the Prospectus, to refrain during a period of
120 days from the date of the Prospectus, without the prior written consent
of the Representatives, from (i) offering, pledging, selling, contracting
to sell, selling any option or contract to purchase, purchasing any option
or contract to sell, granting any option for the sale of, or otherwise
disposing of or transferring, directly or indirectly, any shares of Common
Stock or any securities convertible into or exchangeable for Common Stock,
or filing any registration statement under the Securities Act with respect
to any of the foregoing , and (ii) entering into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly
or indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction described in clause (i) or (ii) above
is to be settled by delivery of Common Stock or securities convertible into
or exchangeable for Common Stock, in cash or otherwise; and
(l) except as otherwise expressly permitted by its charter and bylaws, to
conduct its operations in a manner that will enable it to qualify as a REIT
under the Code and will not subject it to registration as an "investment
company" under the Investment Company Act.
5. Reimbursement of the Underwriters' Expenses:
If any Shares are not delivered at the Closing Time or any Date of
Delivery, as the case may be, for any reason other than default by one or
more of the Underwriters in its or their respective obligations hereunder,
the Company shall reimburse the Underwriters for all of their reasonable
out-of-pocket expenses relating to the transactions contemplated hereby,
including the fees and disbursements of their counsel.
6. Conditions of the Underwriters' Obligations:
The obligations of the Underwriters hereunder are subject (i) to the
accuracy of the representations and warranties of the Company herein
contained, as of the date hereof, the Closing Time and each Date of
Delivery; subject to any exceptions that, in the reasonable judgment of the
Representatives, are not material, (ii) to the accuracy of the statements
of the Company's officers made in any certificate pursuant to the
provisions hereof, as of the date of such certificate, subject to any
exceptions that, in the reasonable judgment of the Representatives, are not
material, (iii) to the performance by the Company of all of its covenants
and other obligations hereunder, and (iv) to the following further
conditions:
(a) No amendment or supplement to the Registration Statement or Prospectus
shall have been filed to which the Representatives shall have objected in
writing.
(b) At the Closing Time, the Shares shall have been approved for inclusion
on the Nasdaq National Market System.
10
(c) At the Closing Time, the NASD shall not have raised any objection with
respect to the fairness and reasonableness of the underwriting terms and
arrangements.
(d) At the Closing Time, no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the Securities Act or
proceedings therefor initiated or threatened by the Commission nor any
order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus shall have been issued by the Commission, and no suspension of
the qualification of the Shares for offering or sale in any jurisdiction,
or of the initiation or threatening of any proceedings for any of such
purposes, shall have occurred; and the Registration Statement and all
amendments thereto, or modifications thereof, if any, and the Prospectus
and all amendments or supplements thereto, or modifications thereof, if
any, shall not contain an untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
are made, not misleading.
(e) At the Closing Time, the Company and the Manager shall have executed
and delivered the Management Agreement, and the Company, Imperial Credit
Industries, Inc. ("Imperial") and Southern Pacific Bank ("SPB") shall
have executed and delivered an agreement or agreements (the "Acquisition
Agreements") for the acquisition by the Company from SPTL and Imperial
Credit of the Initial Investments, as defined in the Prospectus, each
(including the Management Agreement) in substantially the form filed as an
exhibit to the Registration Statement, and all conditions to closing
contained in the Acquisition Agreements shall have been satisfied (or, with
the approval of the Representatives, which shall not be unreasonably
withheld, waived).
(f) At the Closing Time, the Representatives shall have received:
(i) the opinion, dated as of the Closing Time, of Sonnenschein Nath &
Rosenthal, counsel for the Company, in form and substance reasonably
satisfactory to counsel for the Underwriters, to the effect that:
(A) the Company is a corporation duly organized and validly existing under
the laws of the State of Maryland, with full corporate power and authority
to own its properties and conduct its business as described in the
Registration Statement and the Prospectus, and to execute and deliver this
Agreement and the Management Agreement; the Subsidiary has been duly
organized and is validly existing under the laws of the State of California
with full corporate power and authority to own its properties and conduct
its business as described in the Registration Statement and the Prospectus;
the Company has no subsidiaries other than the Subsidiary; and all of the
capital stock of the Subsidiary issued and outstanding at any time was and
is owned exclusively by the Company;
(B) the Manager is a corporation duly organized and validly existing under
the laws of the State of California, with full corporate power and
authority to conduct its business as described in the Registration
Statement and the Prospectus, and to execute and deliver the Management
Agreement; the Manager has no subsidiaries; and all of the issued and
outstanding capital stock of the Manager is owned by Imperial Credit;
(C) the Company and the Subsidiary are duly qualified or licensed by and in
good standing in each jurisdiction in which they conduct their respective
11
businesses or own or lease property and in which the failure, individually
or in the aggregate, to be so licensed or qualified could have a material
adverse effect on the operations, business or condition (financial and
other) of the Company and the Subsidiary, taken as a whole; and, to the
best of such counsel's knowledge and information, each of the Company and
the Subsidiary is in compliance with the laws, orders, rules, regulations
and directives issued or administered by such jurisdictions, except where
the failure to so comply would not have a material adverse effect on the
operations, business and condition (financial and other) of the Company and
the Subsidiary, taken as a whole;
(D) the Company has authorized and outstanding capital stock as set forth
in the Prospectus under "Capitalization" (except for subsequent issuances,
if any, pursuant to transactions referred to in the Prospectus including,
without limitation, granting of stock options);
(E) the Shares have been duly and validly authorized by all necessary
corporate action and, when issued and delivered pursuant to this Agreement
against payment of the consideration therefor, the Shares will be validly
issued, fully paid and nonassessable, free and clear of any pledge, lien,
encumbrance, security interest, or other claim, and will be the only shares
of Common Stock outstanding;
(F) the issuance and sale of the Shares by the Company is not subject to
preemptive or other similar rights arising by operation of law, under the
charter or by-laws of the Company or under any agreement known to such
counsel to which the Company or the Subsidiary is a party or, to such
counsel's knowledge, otherwise;
(G) this Agreement has been duly authorized, executed and delivered by the
Company;
(H) the Management Agreement has been duly authorized, executed and
delivered by the Company and the Manager and constitutes the valid and
binding agreement of each of the Company and the Manager enforceable in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and by general principles of equity, considered at law or
in equity (such opinion may contain appropriate and customary exceptions
for the enforceability of any non-competition agreements contained
therein);
(I) the Registration Statement is effective under the Securities Act and,
to the best of such counsel's knowledge and information, no stop order
suspending the effectiveness of the Registration Statement has been issued
under the Securities Act or proceedings therefor initiated or threatened by
the Commission;
(J) the Registration Statement and the Prospectus, as of their respective
effective or issue dates, comply as to form in all material respects with
the requirements of the Securities Act and the Securities Act Regulations;
it being understood, however, that no opinion need be rendered with respect
to the financial statements, schedules and other financial and statistical
data included in the Registration Statement or the Prospectus or state
securities or blue sky laws;
(K) to the best of such counsel's knowledge, no authorization, approval or
consent of any court or governmental authority or agency is required that
has not been obtained in connection with the consummation by the Company of
12
the transactions contemplated by this Agreement; it being understood,
however, that no opinion need be rendered with respect to state securities
or blue sky laws;
(L) to the best of such counsel's knowledge, the execution and delivery of
this Agreement and the Management Agreement by the Company and the
consummation of the transactions contemplated herein and therein and
compliance by the Company with its obligations hereunder and thereunder
will not conflict with or constitute a breach of, or default under or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or the Subsidiary pursuant to
any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or the Subsidiary is a party or by which
either of them may be bound or to which any of the property or assets of
the Company or the Subsidiary is subject, nor will such action result in
violation of the provisions of the charter or bylaws of the Company or any
law, administrative regulation or court decree known to such counsel;
provided that such opinion may include appropriate and customary exceptions
for the enforceability of any non-competition agreements contained therein;
(M) the statements under the captions "Legal and Tax Risks," "Description
of Capital Stock," "Certain Provisions of ICCMIC's Charter and Bylaws,"
"Federal Income Tax Considerations" and "ERISA Considerations" in the
Prospectus, insofar as such statements describe legal documents or
statutes, rules or regulations, constitute fair summaries thereof;
(N) to the best of such counsel's knowledge, except as set forth in the
Registration Statement, no holders of Common Stock or other securities of
the Company have registration rights with respect to securities of the
Company;
(O) on the basis of such assumptions as to investment of such minimum
percentages of their respective assets in such types of investments as such
counsel shall specify, and other assumptions as such counsel shall specify,
the Company and the Subsidiary are not now and after the sale of the Shares
to be sold hereunder and application of the net proceeds from such sale as
described in the Prospectus under the caption "Use of Proceeds," neither of
them will be, an "investment company", or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company Act
of 1940, as amended; and
(P) the form of certificate evidencing the Common Stock filed as an exhibit
to the Registration Statement complies with all applicable statutory law
and all requirements of the Nasdaq National Market.
In rendering their opinion, Sonnenschein Nath & Rosenthal may rely as to
matters of Maryland law upon the opinion of Piper & Marbury L.L.P. or other
counsel reasonably satisfactory to the Underwriters. The Representatives
will accept an opinion of Piper & Marbury L.L.P. , dated as of the Closing
Time and in form and substance reasonably acceptable to counsel for the
Underwriters, addressing the matters of Maryland law implicated in the
description of the opinion of Sonnenschein Nath & Rosenthal in subsection
(f)(i) of this Section, in which case the opinion of Sonnenschein Nath &
Rosenthal is permitted to state that such counsel express no opinion as to
the laws of any jurisdiction other than the United States of America and
the State of California.
13
(ii) a letter, dated as of the Closing Time, of Sonnenschein Nath &
Rosenthal, addressed to the Representatives stating that such
Representatives are entitled to rely on the opinion filed with the
Registration Statement as Exhibit 8.1;
(iii) the favorable opinion, dated as of the Closing Time, of Cadwalader,
Wickersham & Taft, in form and substance reasonably satisfactory to counsel
for the Underwriters, to the effect that nothing has come to their
attention that would lead them to believe that statements in the Prospectus
under the captions "Initial Investments" and "Yield Considerations
Relating to the Initial MBS Interests" (excluding, in each case, the
financial statements, schedules and other financial and statistical data
included therein, as to which such counsel need express no belief), at the
time the Registration Statement became effective or at the Closing Time,
contained or contains an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and
(iv) the opinion, dated as of the Closing Time, of Hunton & Williams,
counsel for the Underwriters, to the effect that:
(A) the Company is a corporation duly organized and validly existing under
the laws of the State of Maryland, with full corporate power and authority
to own its properties and conduct its business as described in the
Registration Statement and the Prospectus, and to execute and deliver this
Agreement;
(B) the Shares have been duly and validly authorized by all necessary
corporate action and, when issued and delivered pursuant to this Agreement
against payment of the consideration therefor, the Shares will be validly
issued, fully paid and nonassessable, free and clear of any pledge, lien,
encumbrance, security interest, or other claim;
(C) the issuance and sale of the Shares by the Company is not subject to
preemptive or other similar rights arising by operation of law, under the
charter or by-laws of the Company or under any agreement known to such
counsel to which the Company or the Subsidiary is a party or, to such
counsel's knowledge, otherwise;
(D) this Agreement has been duly authorized, executed and delivered by the
Company;
(E) the Registration Statement is effective under the Securities Act and,
to the best of such counsel's knowledge and information, no stop order
suspending the effectiveness of the Registration Statement has been issued
under the Securities Act or proceedings therefor initiated or threatened by
the Commission;
(F) the Registration Statement and the Prospectus, as of their respective
effective or issue dates, comply as to form in all material respects with
the requirements of the Securities Act and the Securities Act Regulations;
it being understood, however, that no opinion need be rendered with respect
to the financial statements, schedules and other financial and statistical
data included in the Registration Statement or the Prospectus; and
(G) the Shares conform in all material respects to the statements relating
thereto contained in the Prospectus.
In rendering their opinion, Hunton & Williams may rely as to matters of
Maryland law upon the opinion of Piper & Marbury L.L.P.
14
In rendering their opinions required by subsections (f)(i) and (f)(iv),
respectively, of this Section, Sonnenschein Nath & Rosenthal and Hunton &
Williams shall each additionally contain statements to the effect that
nothing has come to their attention that would lead them to believe that
the Registration Statement (excluding the financial statements, schedules
and other financial and statistical data included therein, as to which such
counsel need express no belief), at the time it became effective, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus (excluding the financial statements,
schedules and other financial and statistical data included therein, as to
which such counsel need express no belief), at the such time or at Closing
Time, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that Sonnenschein Nath & Rosenthal and
Hunton & Williams need express no belief as to the statements in the
Prospectus under the captions "Initial Investments" and "Yield
Considerations Relating to the Initial MBS Interests."
(g) At the Closing Time, the Representatives shall have received a
certificate of the President and Chief Executive Officer and the Secretary
of the Company, dated as of the Closing Time, to the effect that the
representations and warranties in Section 3 are true and correct with the
same force and effect as though made at the date of such certificate,
subject to any exceptions that, in the reasonable judgment of the
Representatives, are not material.
(h) At the Closing Time, there shall not have been, since the date hereof
or since the respective dates as of which information is given in the
Prospectus, any material adverse change in the operations, business or
condition, financial and other, of the Company and the Subsidiary, taken as
a whole; and no transaction which is material and unfavorable to the
Company shall have been entered into by the Company or the Subsidiary, the
effect of which, in the reasonable opinion of the Representatives, is so
material and adverse as to make it impractical or inadvisable to proceed
with the public offering or delivery of the Shares being delivered at the
Closing Time or Date of Delivery.
(i) At the time of execution and delivery of this Agreement, the
Representatives shall have received from KPMG Peat Marwick LLP a letter
dated such date, in form and substance satisfactory to the Representatives,
to the effect that (i) they are independent accountants with respect to the
Company within the meaning of the Securities Act and the Securities Act
Regulations; (ii) it is their opinion that the balance sheet of the Company
included in the Registration Statement and the Prospectus and covered by
their opinion therein complies in form in all material respects with the
applicable accounting requirements of the Securities Act and the Securities
Act Regulations; (iii) based upon limited procedures set forth in detail in
such letter, nothing came to their attention that caused them to believe
that, at a specified date not more than five days prior to the date of this
Agreement, there has been any change in the assets, liabilities or
stockholders' equity of the Company, as compared with the amounts shown in
the balance sheet included in the Registration Statement and the
15
Prospectus; and (iv) in addition to the audit referred to in their opinion
and the limited procedures referred to in clause (iii) above, they have
carried out certain specified procedures, not constituting an audit, with
respect to certain amounts, percentages and financial information included
in the Registration Statement and the Prospectus and specified by the
Representatives, and have found such amounts, percentages and financial
information to be in agreement with the relevant accounting, financial and
other records of the Company identified in such letter.
(j) At the Closing Time, the Representatives shall have received from KPMG
Peat Marwick LLP a letter dated as of the Closing Time to the effect that
they reaffirm the statements made in the letter furnished pursuant to
subsection (i) of this Section, except that the "specified date" referred
to shall be a date not more than five days prior to the Closing Time.
(k) At the time of execution and delivery of this Agreement, the Company
shall have received from each executive officer of the Company listed
under the caption "The Company" in the Prospectus and each director of the
Company a written agreement (a "Lock-up Agreement") to the effect that
such person will not, for a period of 120 days from the date that the
Registration Statement is declared effective by the Commission, offer to
sell, contract to sell, or otherwise sell, dispose of, loan, or grant any
rights with respect to (collectively, a "Disposition") any shares of Common
Stock, any options or warrants to purchase any shares of Common Stock or any
securities convertible into, exercisable for or exchangeable for shares of
Common Stock (collectively, "Securities") now owned or hereafter acquired
directly by such person or any affiliate or with respect to which such
person has or hereafter acquires the power of Disposition, otherwise than
(i) as a bona fide gift or gifts, provided the donee or donees thereof agree
in writing to be bound by this restriction, (ii) with respect to up to 85%
of such Securities in connection with pledges to secure obligations for
borrowed money, or (iii) with the prior written consent of Friedman,
Billings, Ramsey & Co., Inc.; and copies of such Lock-up Agreements shall
have been provided to the Representatives.
(l) In the event the Underwriters exercise their option to purchase all or
any portion of the Option Shares, the representations and warranties of the
Company contained herein and the statements in any certificates furnished
by the Company hereunder shall be true and correct as of each Date of
Delivery, and the Representatives shall have received:
(i) a certificate, dated such Date of Delivery, of the President and Chief
Executive Officer and the Secretary of the Company, in their capacities as
such, confirming that the certificate delivered at Closing Time pursuant to
subsection (g) of this Section remains true and correct as of such Date of
Delivery; subject to any exceptions that, in the reasonable judgment of the
Representatives, are not material ;
(ii) the opinions of Sonnenschein Nath & Rosenthal (and, if the Company or
its counsel shall so elect, the opinion of Piper & Marbury L.L.P.) and
Cadwalader, Wickersham & Taft, each in form and substance reasonably
satisfactory to counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Shares and otherwise substantially to the same
effect as the opinions required or permitted by subsections (f)(i), (f)(ii)
and (f)(iii) of this Section;
16
(iii) the opinion of Hunton & Williams, dated such Date of Delivery,
relating to the Option Securities and otherwise to the same effect as the
opinion required by subsection (f)(iv) of this Section; and
(iv) a letter from KPMG Peat Marwick LLP, in form and substance
satisfactory to the Representatives and dated such Date of Delivery,
substantially the same in scope and substance as the letter furnished to
the Representatives pursuant to subsection (i) of this Section, except that
the "specified date" in the letter furnished pursuant to this subsection
(l)(iv) shall be a date not more than five days prior to such Date of
Delivery.
(m) The Company shall have furnished counsel for the Underwriters with such
documents and (as they relate to California and Maryland law) opinions as
they may reasonably request for the purpose of enabling them to pass upon
the issuance and sale of the Shares as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained as of the Closing Time or any Date of Delivery.
(n) The Company shall have furnished to the Representatives such other
documents, certificates and opinions as to the accuracy and completeness of
any statement in the Registration Statement and the Prospectus or any
amendment or supplement thereto as of the Closing Time or any Date of
Delivery as the Underwriters may reasonably request.
(o) The Company shall have performed such of its respective obligations
under this Agreement as are to be performed by the terms hereof at or
before the Closing Time or the relevant Date of Delivery.
7. Termination:
(a) If the sale to the Underwriters of the Shares, as contemplated by
this Agreement, is not carried out by the Underwriters for any reason
permitted under this Agreement or if such sale is not carried out because
the Company is unable to comply with any of the terms of the Agreement,
then the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Section 9 hereof) and the
Underwriters shall be under no obligation or liability to the Company under
this Agreement (except to the extent provided under Section 9 hereunder) or
to one another hereunder; provided that if the Underwriters terminate this
Agreement because a condition specified in Section 6 shall not have been
fulfilled when and as required to be fulfilled, then the Company also shall
be liable to the extent provided in Section 5.
(b) The obligations of the several Underwriters hereunder shall be
subject to termination in the absolute discretion of the Representatives,
at any time prior to the Closing Time or any Date of Delivery, if trading
in securities on the New York Stock Exchange shall have been suspended or
minimum prices or other material limitation in trading in securities
generally shall have been established on the New York Stock Exchange or
Nasdaq, or if a banking moratorium shall have been declared either by the
United States or New York state or California state authorities, or if the
United States shall have declared war in accordance with its constitutional
processes or there shall have occurred any material outbreak or escalation
of hostilities or other national or international calamity or crisis of such
magnitude in its effect on the financial markets of the United States as, in
17
the judgment of the Representatives, make it impractical or inadvisable to
proceed with the public offering or the delivery of the Shares on the terms
and in the manner contemplated in the Prospectus.
(c) If the Representatives elect to terminate this Agreement as provided in
this Section 7, the Company and the Underwriters shall be notified promptly
by letter, facsimile, telefax or telegram.
8. Increase in Underwriters' Commitments:
If any Underwriter shall default at Closing Time or on a Date of Delivery
in its obligation to take up and pay for the Shares to be purchased by it
under this Agreement on such date and if the total number of Shares which
such Underwriter shall have agreed but failed to take up and pay for does
not exceed 10% of the total number of Shares to be purchased on such date,
each non-defaulting Underwriter shall take up and pay for (in addition to
the number of Shares which it is obligated to purchase on such date
pursuant to this Agreement) the portion of the total number of Shares
agreed to be purchased by the defaulting Underwriter on such date in the
proportion that its underwriting obligations hereunder bears to the
underwriting obligations of all non-defaulting Underwriters. Without
relieving any defaulting Underwriter from its obligations hereunder, the
Company agrees with the non-defaulting Underwriters that it will not sell
any Shares hereunder on such date unless all of the Shares to be purchased
on such date are purchased on such date by the Underwriters (or by
substituted Underwriters selected by the Representatives with the approval
of the Company or selected by the Company with the approval of the
Representatives).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing
Time or the relevant Date of Delivery for a period not exceeding five
business days in order that any necessary changes in the Registration
Statement and Prospectus and other documents may be effected.
The term "Underwriter" as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with the like
effect as if such substituted Underwriter had originally been named in this
Agreement.
9. Indemnity by the Company and the Underwriters:
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter and any person who controls any Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, from
and against any loss, expense, liability or claim (including the reasonable
cost of investigation) which, jointly or severally, any such Underwriter or
controlling person may incur under the Securities Act, the Exchange Act or
otherwise, insofar as such loss, expense, liability or claim arises out of
or is based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof
by the Company) or in a Prospectus (the term Prospectus for the purpose of
this Section 9 being deemed to include any Preliminary Prospectus, the
Prospectus and the Prospectus as amended or supplemented by the Company),
18
or arises out of or is based upon any omission or alleged omission to state
a material fact required to be stated in such Registration Statement or
necessary to make the statements made in the Registration Statement not
misleading or arises out of or is based on an omission or alleged omission
to state a material fact required to be stated in the Prospectus or
necessary to make the statements therein, in light of circumstances under
which they were made, not misleading, except insofar as any such loss,
expense, liability or claim arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in and
in conformity with information furnished in writing by the Underwriters
through the Representatives to the Company expressly for use in such
Registration Statement or such Prospectus, or arises out of or is based
upon any omission or alleged omission to state a material fact in
connection with such information required to be stated in either such
Registration Statement or Prospectus or necessary to make such information
not misleading, provided, however, that the indemnity agreement contained
in this subsection (a) with respect to any Preliminary Prospectus shall not
inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) with respect to any person asserting any such
loss, expense, liability or claim which is the subject thereof if any
subsequent Preliminary Prospectus or the Prospectus corrected any such
alleged untrue statement or omission and if such Underwriter failed to send
or give a copy of such subsequent Preliminary Prospectus or the Prospectus,
as the case may be, to such person at or prior to the written confirmation
of the sale of Shares to such person, unless such failure resulted from
non-compliance by the Company with Section 4(a).
If any action is brought against an Underwriter or controlling person in
respect of which indemnity may be sought against the Company pursuant to
the preceding paragraph, such Underwriter shall promptly notify the Company
in writing of the institution of such action and the indemnifying party
shall assume the defense of such action, including the employment of
counsel and payment of expenses. Such Underwriter or controlling person
shall have the right to employ its or their own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of such
Underwriter or such controlling person unless the employment of such
counsel shall have been authorized in writing by the indemnifying party in
connection with the defense of such action or the indemnifying party shall
not have employed counsel to have charge of the defense of such action
within a reasonable time or such indemnified party or parties shall have
reasonably concluded (based on the advice of counsel) that there may be
defenses available to it or them which are different from or additional to
those available to the indemnifying party (in which case the indemnifying
party shall not have the right to direct the defense of such action on
behalf of the indemnified party or parties), in any of which events such
reasonable fees and expenses shall be borne by the indemnifying party and
paid as incurred (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel for
the Underwriters or controlling persons in any one action or series of
related actions in the same jurisdiction representing the indemnified
parties who are parties to such action). Anything in this paragraph to the
contrary notwithstanding, the indemnifying party shall not be liable for
19
any settlement of any such claim or action effected without the written
consent of the indemnifying party.
(b) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Company, its directors and officers and any
person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any
loss, expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, the Company or any such person
may incur under the Securities Act, the Exchange Act or otherwise, insofar
as such loss, expense, liability or claim arises out of or is based upon
any untrue statement or alleged untrue statement of a material fact
contained in and in conformity with information furnished in writing by
such Underwriter through the Representatives to the Company expressly for
use in the Registration Statement (or in the Registration Statement as
amended by any post-effective amendment thereof by the Company) or in a
Prospectus, or arises out of or is based upon any omission or alleged
omission to state a material fact in connection with such information
required to be stated either in such Registration Statement or Prospectus
or necessary to make such information not misleading.
If any action is brought against the Company or any such person in respect
of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company or such person shall promptly notify the
Representatives in writing of the institution of such action and the
Representatives, on behalf of the Underwriters, shall assume the defense of
such action, including the employment of counsel and payment of expenses.
The Company or such person shall have the right to employ its own counsel
in any such case, but the fees and expenses of such counsel shall be at the
expense of the Company or such person unless the employment of such counsel
shall have been authorized in writing by the Representatives in connection
with the defense of such action or the Representatives shall not have
employed counsel to have charge of the defense of such action within a
reasonable time or such indemnified party or parties shall have reasonably
concluded (based on the advice of counsel) that there may be defenses
available to it or them which are different from or additional to those
available to the Underwriters (in which case the Representatives shall not
have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and
expenses shall be borne by such Underwriter and paid as incurred (it being
understood, however, that the Underwriters shall not be liable for the
expenses of more than one separate counsel in any one action or series of
related actions in the same jurisdiction representing the indemnified
parties who are parties to such action). Anything in this paragraph to the
contrary notwithstanding, no Underwriter shall be liable for any settlement
of any such claim or action effected without the written consent of such
Underwriter.
(c) If the indemnification provided for in this Section 9 is unavailable to
an indemnified party under subsections (a) and (b) of this Section 9 in
respect of any losses, expenses, liabilities or claims referred to therein,
then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, expenses, liabilities or
20
claims (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on
the other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company
on the one hand and of the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, expenses,
liabilities or claims, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the
Company bear to the underwriting discounts and commissions received by the
Underwriters. The relative fault of the Company on the one hand and of the
Underwriters on the other shall be determined by reference to, among other
things, whether the untrue statement or alleged untrue statement of a
material fact or omission or alleged omission relates to information
supplied by the Company or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party
as a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or
defending any claim or action.
(d) The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in subsection (c)
above. Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the amount by which
the total price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages
which such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 9 are
several in proportion to their respective underwriting commitments and not
joint.
(e) The indemnity and contribution agreements contained in this Section 9
and the covenants, warranties and representations of the Company contained
in this Agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of any Underwriter, or any person who
controls any Underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, or by or on behalf of the Company,
its directors and officers or any person who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and shall survive any termination of this Agreement (other
21
than termination hereof pursuant to Section 7 before the sale and delivery
of the Initial Shares) or the sale and delivery of the Shares. The Company
and each Underwriter agree promptly to notify the others of the
commencement of any litigation or proceeding against it and, in the case of
the Company, against any of the Company's officers and directors, in
connection with the sale and delivery of the Shares, or in connection with
the Registration Statement or Prospectus.
10. Default by the Company.
If the Company shall fail at the Closing Time or on any Date of Delivery to
sell and deliver the number of Shares that Company is obligated to sell
hereunder on such date, then the Underwriters may, at the option of the
Representatives by notice from the Representatives to the Company,
terminate this Agreement without any liability on the part of any non-
defaulting party except that the provisions of Sections 4(h), 5 and 9 shall
remain in full force and effect. No action taken pursuant to this Section
10 shall relieve the Company from liability, if any, in respect of such
default.
In the event of a default by the Company as referred to in this Section 10,
the Representatives shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding seven days in
order to effect any required change in the Registration Statement or
Prospectus or in any other documents or arrangements.
11. Notices:
Except as otherwise herein provided, all statements, requests, notices and
agreements shall be in writing or by telegram and, if to the Underwriters,
shall be sufficient in all respects if delivered or sent to Friedman,
Billings, Ramsey & Co., Inc., 1001 19th Street North, Arlington, Virginia
22209, Attention: Compliance Department; and if to the Company, shall be
sufficient in all respects if delivered to the Company at the offices of
the Company at 11601 Wilshire Boulevard, Suite 2080, Los Angeles,
California 90025, Attention: President and Chief Executive Officer and
Secretary.
12. GOVERNING LAW:
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
13. Headings:
The section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
14. Parties in Interest:
The Agreement herein set forth has been and is made solely for the benefit
of the Underwriters and the Company and the controlling persons, directors
and officers referred to in Section 9 hereof, and their respective
successors, assigns, executors and administrators. No other person,
partnership, association or corporation (including a purchaser, as such
purchaser, from any of the Underwriters) shall acquire or have any right
22
under or by virtue of this Agreement.
15. Counterparts:
This Agreement may be signed by the parties in counterparts which together
shall constitute one and the same agreement among the parties.
If the foregoing correctly sets forth the understanding among the Company
and the Underwriters, please so indicate in the space provided below for
the purpose, whereupon this letter shall constitute a binding agreement
among the Company and the Underwriters.
Very truly yours,
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.
/s/ Mark S. Karlan
By: Mark S. Karlan
President and Chief Executive Officer
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
JEFFERIES & COMPANY, INC.
For themselves and as Representatives of the other
Underwriters named in Schedule I hereto.
By: Friedman, Billings, Ramsey & Co. Inc.
/s/ James Kleeblatt
James Kleeblatt
Managing Director
23
Schedule I
Underwriter No. of Shares
- ----------- --------------
Friedman, Billings, Ramsey & Co., Inc. 12,150,000
Jefferies & Company, Inc. 12,150,000
Bear, Stearns & Co., Inc. 300,000
Cowen & Company 300,000
Credit Suisse First Boston Corporation 300,000
Goldman, Sachs & Co. 300,000
Lehman Brothers Inc. 300,000
J.P. Morgan Securities Ltd. 300,000
NationsBanc Montgomery Securities 300,000
PaineWebber Incorporated 300,000
Prudential Securities Incorporated 300,000
Smith Barney Inc. 300,000
Advest, Inc. 150,000
William Blair & Company, L.L.C. 150,000
Brean Murray & Co., Inc. 150,000
Crowell, Weedon & Co. 150,000
Dabney/Resnick/Imperial LLC 150,000
Dominick & Dominick, Incorporated 150,000
Equitable Securities Corporation 150,000
EVEREN Securities, Inc. 150,000
Fahnestock & Co., Inc. 150,000
Gerard Klauer Mattison & Co., Inc. 150,000
Legg Mason Wood Walker, Incorporated 150,000
McDonald & Company Securities, Inc. 150,000
The Ohio Company 150,000
Piper Jaffray Inc. 150,000
The Seidler Companies Incorporated 150,000
Stifle, Nicolaus & Company Incorporated 150,000
Sutro & Co. Incorporated 150,000
Tucker Anthony Incorporated 150,000
----------
Total 30,000,000
Exhibit 10.1
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.
1997 STOCK OPTION PLAN
Section 1.
(a) This plan is the 1997 Stock Option Plan (the "Plan") of Imperial Credit
Commercial Mortgage Investment Corp., a Maryland corporation (the
"Company"). This Plan was adopted by the Board on September 22, 1997,
subject to the approval of the Company's shareholders. The purpose of this
Plan is to enable the Company and its Subsidiaries to obtain and retain
competent employees, directors and others who will contribute to the
Company's success by their ability, ingenuity and industry, and to provide
incentives to such individuals and entities that are linked directly to
increases in shareholder value which will, therefore, inure to the benefit
of all shareholders of the Company.
(b) For purposes of this Plan, the following terms shall have the meanings
set forth below:
(1) "Award" means any grant of a Stock Option.
(2) "Board" means the Board of Directors of the Company.
(3) "Cause" means any one or more of the following: (A) a Participant's
commission of a crime which, in the judgment of the Committee, is likely to
result in injury to an Employer; (B) a Participant's material violation of
written policies of an Employer; (C) a Participant's habitual neglect in
the performance of his duties to an Employer; (D) a Participant's action
or inaction in connection with his duties to an Employer intended to
result, in the judgment of the Committee, in material injury to an
Employer; or (E) a Participant's termination from employment by an Employer
for "cause", as that term is defined or used in such Participant's
employment agreement with such Employer.
(4) "Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto.
(5) "Committee" means (i) the Compensation Committee of the Board, or, if
there is no Compensation Committee of the Board, the entire Board, and (ii)
with respect to the Special Reserve Shares only, the Special Committee.
(6) "Company" means Imperial Credit Commercial Mortgage Investment Corp., a
corporation organized under the laws of the State of Maryland (or any
corporation into which it is merged or with which it is consolidated).
1
(7) "Disability" means permanent and total disability as determined under
the Employer's disability program or policy.
(8) "Effective Date" shall mean the date on which the Plan is approved by
the Company's shareholders.
(9) "Eligible Recipient" means (i) any employee (including any officer) of
an Employer, (ii) any director of an Employer, (iii) the Manager, or (iv)
any other individual or entity performing services for the Company or a
Subsidiary.
(10) "Employer" means the Company, any Subsidiary or the Manager.
(11) "Exercise Price" means the price per share at which the Stock subject
to a Stock Option may be purchased.
(12) "Fair Market Value" means with respect to any Awards hereunder, as of
any given date (other than on the IPO Pricing Date) , (A) the closing sale
price of the Stock on such date as reported in the Western Edition of the
Wall Street Journal Composite Tape (or, if no sale of the Stock was
reported for such date, on the next preceding date on which a sale of the
Stock was reported) or (B) if on such date the Stock is not listed on any
securities exchange or quoted on the National Association of Securities
Dealers, Inc.'s NASDAQ National Market System, the highest price per share
which the Company then could obtain from a willing buyer of authorized but
unissued shares of Stock if the Company were selling such shares of Stock,
as determined in good faith by the Board. Solely as of the IPO Pricing
Date, Fair Market Value of the Stock means the price per share at which the
Stock first is offered for sale to the public pursuant to the prospectus
used in connection with the IPO, as that price is indicated in such
prospectus.
(13) "ICII" means Imperial Credit Industries, Inc., a California
corporation.
(14) "First Exercise Date" means the first date on which a Stock Option is
exercisable.
(15) "Immediate Family" means, with respect to a Participant who is an
individual, such Participant's spouse, siblings, parents, children or
grandchildren or a trust established for the benefit of such Participant's
spouse, siblings, parents, children or grandchildren.
(16) "Incentive Stock Option" means any Stock Option designated and
qualifying as an "incentive stock option" within the meaning of Section 422
of the Code.
(17) "IPO" means the initial public offering of the Stock of the Company.
2
(18) "IPO Pricing Date" means the date on which Stock first is priced for
sale to the public pursuant to the prospectus used in connection with the
IPO, as that date is indicated in such prospectus.
(19) "IPO Stock Option" means any Stock Option that is granted as of the IPO
Pricing Date.
(20) "Last Exercise Date" means the last date on which a Stock Option is
exercisable.
(21) "Manager" means Imperial Credit Commercial Asset Management Corp., a
California corporation.
(22) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option, including any Stock Option that provides (as of the
time of its Award) that it will not be treated as an Incentive Stock
Option.
(23) "Option Term" means the period of time beginning on the date of Award
of a Stock Option and ending on the Last Exercise Date.
(24) "Parent Corporation" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company, if each of the
corporations in the unbroken chain (other than the Company) owns stock
possessing 50% or more of the combined voting power of all classes of stock
in one of the other corporations in the chain.
(25) "Participant" means any Eligible Recipient selected to receive an
Award of a Stock Option pursuant to the authority granted to the Committee
in Section 2.
(26) "Permitted Transferee" means, with respect to a Participant who is an
individual, a member of such Participant's Immediate Family to whom a Stock
Option has been transferred with the approval of the Committee pursuant to
Section 5(h).
(27) "Special Committee" means a committee of the Board consisting solely of
the President of the Company for so long as he is a member of the Board.
(28) "Special Reserve Shares" has the meaning given to that term in
Section 4.
(29) "Stock" means the Common Stock, par value $.0001 per share, of the
Company.
(30) "Stock Option" means any option to purchase shares of Stock granted
pursuant to this Plan.
(31) "Stock Option Agreement" means the written agreement by which a Stock
Option and the Award thereof shall be evidenced.
3
(32) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations in the unbroken chain (other than the last corporation in the
chain) owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in the chain.
(33) "Termination of Affiliation" means the first day on which an individual
or entity for any reason no longer is performing services for the Company
or any Subsidiary.
(34) "Unexercised Stock Option" means any Stock Option which has not been
fully exercised.
(35) "Voluntary Termination of Affiliation" means a Termination of
Affiliation resulting from the resignation, retirement, quitting or other
voluntary cessation of all affiliations with an Employer.
Section 2. Administration; Delegation of Authority.
(a) This Plan shall be administered by the Committee and, with respect to
the Special Reserve Shares only, shall be administered by the Committee or
the Special Committee.
(b) The Committee shall have the power and authority to make Awards of Stock
Options to Eligible Recipients pursuant to the terms of this Plan; provided
that, with respect to Special Reserve Shares, the Special Committee also
shall have the power and authority to make Awards of Stock Options to
Eligible Recipients who are employees of the Manager, including the
President of the Company if he is an employee of the Manager, pursuant to
the terms of this Plan.
In particular, subject to Section 4, the Committee shall have the
authority:
(1) to select those Eligible Recipients who will become Participants;
(2) to determine whether, when and to what extent Awards of Stock Options
are to be made to Participants hereunder;
(3) to determine the number of shares of Stock to be the subject of each
Award;
(4) to determine the terms and conditions of any Award consistent with
this Plan including, but not limited to, the First Exercise Date and
Last Exercise Date when all or a portion of the shares of Stock that
are subject to a Stock Option may be purchased; and
(5) to determine the terms and conditions, consistent with this Plan, that
shall be set forth in the Stock Option Agreement evidencing the Award
of a Stock Option made pursuant to this Plan.
4
(c) The Committee shall have the power and authority to adopt, alter and
repeal such administrative rules, guidelines and practices governing this
Plan as the Committee from time to time shall deem advisable; to interpret
the terms and provisions of this Plan and any Award made under this Plan;
and to supervise the administration of this Plan.
(d) All decisions made by the Committee pursuant to the provisions of this
Plan shall be final and binding on all persons, including the Company, its
Subsidiaries and the Participants.
Section 3. Stock Subject to Plan.
(a) The total number of shares of Stock reserved and available for issuance
under Awards of Stock Options pursuant to this Plan shall be seven million
five hundred thousand (7,500,000) shares. Such shares shall consist of
authorized but unissued shares of Stock.
(b) If a Stock Option expires or otherwise is terminated without being
exercised, the shares of Stock that were subject to such expired or
terminated Stock Option again shall be available for issuance in connection
with future Awards made under this Plan. If any shares of Stock have been
pledged as collateral for indebtedness incurred by a Participant in
connection with the exercise of a Stock Option and certificates
representing such shares of Stock are surrendered to the Company in
satisfaction of such indebtedness, such shares of Stock again shall be
available for issuance in connection with future Awards made under this
Plan.
(c) If any merger, reorganization, consolidation, recapitalization, stock
dividend, or other change in the Company's corporate structure occurs that
affects or could affect the Stock, a substitution or adjustment may be made
in (i) the aggregate number of shares of Stock reserved for issuance under
this Plan, and (ii) the kind, number and option price of shares of Stock
subject to outstanding Awards of Stock Options made under this Plan, in
each case as determined by the Committee in its reasonable discretion to be
appropriate under the circumstances, provided that the number of shares of
Stock subject to any Award always shall be a whole number.
Section 4. Eligibility; Award Determination.
Eligible Recipients who are responsible for or contribute to the
management, growth and/or profitability of the business of the Company or a
Subsidiary shall be eligible for Awards of Non-Qualified Stock Options
hereunder. Eligible Recipients who are employees of the Company or a
Subsidiary also shall be eligible for Awards of Incentive Stock Options
hereunder. The Committee shall determine the total number of shares of
Stock subject to Awards of Stock Options to be made as of any date;
provided, however, that not less than thirty percent (30%) of the total
number of shares of Stock subject to Awards of Stock Options (the "Manager
Reserve") made as of any date shall have been made to Eligible Recipients
who are employees (including officers) of the Manager, of which not less
5
than one-third (1/3) of such Manager Reserve (i.e., not less than ten percent
(10%) of the total number of shares of Stock subject to Awards of Stock
Options) shall have been made as of such date to the President of the
Manager; provided, further, that up to one-third (1/3) of the Manager Reserve
on the IPO Pricing Date may be set aside and be not subject to Stock
Options that are granted as of the IPO Pricing Date (shares so set aside
are referred to as "Special Reserve Shares"). The Committee or the Special
Committee may make Awards of Stock Options from Special Reserve Shares
after the IPO Pricing Date to Eligible Recipients who are employees of the
Manager, including the President of the Company if he is an employee of the
Manager.
Section 5. Stock Options for Eligible Recipients.
(a) General. Any Award of Stock Options under this Plan shall be in such
form as the Committee may from time to time approve, and the terms and
conditions of each Stock Option need not be the same with respect to each
Participant. A Participant shall enter into a Stock Option Agreement with
the Company, in such form as the Committee shall determine, which agreement
shall set forth, among other things, the Exercise Price, the First Exercise
Date and the Last Exercise Date, the Option Term and other provisions
regarding exercisability of the Stock Options granted thereunder.
(b) Types of Stock Options. An award of Stock Options made under this
Plan may consist of either or both of two types of Stock Options: (i)
Incentive Stock Options (provided the Participant receiving such Incentive
Stock Options is an employee of the Company or a Subsidiary) , and (ii) Non-
Qualified Stock Options. If any Stock Option does not qualify as an
Incentive Stock Option, it shall be deemed to be a Non-Qualified Stock
Option.
(c) Certain Terms and Conditions. An Award of Stock Options shall be
subject to the following terms and conditions and shall contain such
additional terms and conditions, consistent with this Plan, as the
Committee shall deem desirable:
(1) Exercise Price. The Exercise Price shall be determined by the Committee
at the time of Award, but shall be not less than 100% of the Fair Market
Value of the Stock on the date of such Award; provided, however, that prior
to the first anniversary of the IPO Pricing Date the Committee or the
Special Committee may make Awards of Stock Options from Special Reserve
Shares pursuant to Section 4 at an Exercise Price equal to the Fair Market
Value of the Stock on the IPO Pricing Date. If an employee of the Company
or a Subsidiary owns or is deemed to own (by reason of the attribution
rules applicable under Section 424(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Company or any Parent
Corporation or Subsidiary and an Award of an Incentive Stock Option is made
to such employee, the Exercise Price of such Incentive Stock Option (to the
extent required by the Code at the time of Award) shall be not less than
110% of the Fair Market Value of the Stock on the date of the Award of such
Incentive Stock Option.
6
(2) Option Term. The Option Term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten (10)
years after the date of the Award of such Stock Option; provided, however,
that if an employee of the Company or a Subsidiary owns or is deemed to own
(by reason of the attribution rules of Section 424(d) of the Code) more
than 10% of the combined voting power of all classes of stock of the
Company or any Parent Corporation or Subsidiary and an Award of an
Incentive Stock Option is made to such employee, the Option Term of such
Incentive Stock Option (to the extent required by the Code at the time of
grant) shall be no more than five (5) years.
(d) Exercisability. A Stock Option shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by
the Committee at the time of Award; provided that, except as otherwise
provided in this Plan, or unless otherwise determined by the Committee at
the time of the Award, a Stock Option shall be exercisable not earlier than
one (1) year following the date of its Award. All IPO Stock Options and
Stock Options with respect to Special Reserve Shares first shall become
exercisable in equal installments on each of the first three anniversaries
of the date on which they are granted. If a Stock Option Agreement
provides that a Stock Option is exercisable only in installments, the
Committee may waive such installment exercise provisions at any time in
whole or in part based on such factors as the Committee may determine in
its reasonable discretion to be appropriate under the circumstances.
(e) Method of Exercise. Subject to Section 5(d) above and the terms and
conditions of the relevant Stock Option Agreement, a Stock Option may be
exercised in whole or in part at any time on or between the First Exercise
Date and Last Exercise Date by giving written notice of exercise to the
Company specifying the number of shares of Stock to be purchased,
accompanied by payment in full of the purchase price in cash or its
equivalent, as determined by the Committee. Payment in whole or in part
also may be made (i) in the form of Stock already owned by the Participant
(based on the Fair Market Value of the Stock on the date the Stock Option
is exercised) , (ii) by cancellation of any indebtedness owed by the Company
to the Participant, (iii) if approved by the Committee, by a full recourse
promissory note executed by the Participant, (iv) pursuant to procedures
approved by the Company, through the sale of shares of Stock acquired on
exercise of the Stock Option through a broker-dealer to whom the
Participant has submitted an irrevocable notice of exercise and irrevocable
instructions to deliver to the Company the amount of sale or loan proceeds
sufficient to pay for the shares of Stock, together with, if requested by
the Company, the amount of Federal, state or local taxes payable by the
Participant by reason of such exercise, (v) pursuant to procedures approved
by the Company, and with the prior approval of the Committee, by pyramiding
(i.e., making payment to the Company with shares of Stock simultaneously
acquired on exercise of the Stock Option (based on the Fair Market Value of
the Stock on the date the Stock Option is exercised) ) or (vi) by any
combination of the foregoing. A Participant generally shall have the right
to dividends and other rights of a shareholder with respect to shares of
7
Stock subject to a Stock Option only after the Participant has given
written notice of exercise, has paid in full for such shares of Stock and,
if requested to do so by the Committee, has given the representation
described in Section 8(a) , below.
(f) Elective Shares Tax Withholding. Subject to the conditions specified in
the following sentence, and with the Committee's prior approval, a
Participant may, upon the exercise of a Stock Option, elect that the
Company withhold a portion of the shares of Stock otherwise deliverable to
such Participant having a Fair Market Value equal to either (i) the minimum
amount necessary to satisfy all Federal, state and local tax withholding
requirements related to such exercise, or (ii) a greater amount, not to
exceed the estimated total amount of such Participant's tax liability with
respect to such exercise. Each such share withholding election shall be
subject to the following conditions: (i) the Participant's election shall
be subject to the Committee's reasonable discretion to revoke the
Participant's right to elect share withholding at any time before exercise
of the Stock Option; (ii) the Participant's election must be made before
the date on which the amount of tax to be withheld is determined; and (iii)
the Participant's election shall be irrevocable.
(g) Requirement of Surrender in Certain Cases. The Committee may require
that a Participant surrender all or a portion of any Stock Option as a
condition precedent to a grant of a new Stock Option. Subject to the
provisions of this Plan, such new Stock Option shall be exercisable at the
price, during such period and on such other terms and conditions as are
specified in the Stock Option Agreement presented to the Participant at the
time the new Stock Option is granted; provided, however, should the
Committee so require, the number of shares of Stock subject to such new
Stock Option shall not be greater than the number of shares of Stock
subject to the surrendered Stock Option. The Stock Options so surrendered
shall be canceled and the shares of Stock previously subject to such
canceled Stock Options again shall be available for Awards of Stock Options
hereunder.
(h) Limited Transferability of Stock Options. No Stock Option shall be
transferable by a Participant other than by will or by the laws of descent
and distribution, and all Stock Options shall be exercisable during a
Participant's lifetime only by the Participant, except that (i) a
Participant may, in a manner permitted by the Committee and by law,
transfer a Non-Qualified Stock Option to a member of his or her Immediate
Family, and (ii) the Manager may, in a manner and to the extent permitted
by the Committee and by law, transfer a Non-Qualified Stock Option
previously granted to it to any other Eligible Recipient. The Committee's
approval of a proposed transfer may be subject to the satisfaction of such
conditions as the Committee deems appropriate, including (A) that the Stock
Options that are the subject of such proposed transfer and the Stock
subject thereto be registered or exempt from registration under the
Securities Act of 1933, and (B) in the case of a proposed transfer by the
Manager pursuant to clause (ii) of the preceding sentence, that the
Eligible Recipient to whom such proposed transfer is to be made executes an
8
agreement in form satisfactory to the Committee to the effect that the
Stock Options to be transferred to him will be subject to the terms and
conditions that would be applicable to those Stock Options pursuant to this
Plan (including without limitation the provisions of this Section 5(h) and
Sections 5(i) and 5(j) , below) if those Stock Options had been granted
directly to such Eligible Recipient, rather than to the Manager, pursuant
to this Plan.
(i) Voluntary Termination. If a Participant has a Voluntary Termination of
Affiliation, all Unexercised Stock Options granted to such Participant,
whether or not such Stock Options have been transferred by such Participant
to a Permitted Transferee or otherwise, shall terminate immediately upon
such Voluntary Termination of Affiliation.
(j) Termination for Cause. If a Participant has a Termination of
Affiliation for Cause, all Unexercised Stock Options granted to such
Participant, whether or not such Stock Options have been transferred by
such Participant to a Permitted Transferee or otherwise, shall terminate
immediately upon such Termination of Affiliation.
(k) Other Termination. Except as otherwise determined by the Committee, if
a Participant has a Termination of Affiliation because of death or
Disability or for any other reason other than a Voluntary Termination of
Affiliation and other than a Termination of Affiliation for Cause, any
Unexercised Stock Option then held by such Participant or a Permitted
Transferee thereafter may be exercised if and to the extent such
Unexercised Stock Option is or thereafter becomes exercisable in accordance
with the terms of the related Stock Option Agreement (or on such
accelerated basis as the Committee may determine at or after the date of
Award) , by the Participant or Permitted Transferee (or, if the Participant
or Permitted Transferee has died or shall thereafter die, by the legal
representative of the estate of that Participant or Permitted Transferee or
by the legatee of that Participant or Permitted Transferee under the will
of that Participant or Permitted Transferee) , (i) for a period of twelve
months (or such shorter period as the Committee shall specify at the time
of the Award) from the later of (A) the date of the Participant's
Termination of Affiliation or (B) the date that such Unexercised Stock
Option first becomes exercisable (or, in the case of an Unexercised Stock
Option that is exercisable in installments, the date that the final
installment first becomes exercisable) in accordance with the terms of the
related Stock Option Agreement (or on such accelerated basis as the
Committee may determine at or after the date of Award) or (ii) until the
expiration of the Option Term, whichever period is shorter. In the event
of a Termination of Affiliation to which this Section 5(k) applies, if an
Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, such Stock
Option thereafter will be treated as a Non-Qualified Stock Option.
(l) Annual Limit on Incentive Stock Options. To the extent that the
aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of the shares of Stock with respect to which Incentive
9
Stock Options granted under this Plan and all other option plans of the
Company or any Parent Corporation or Subsidiary become exercisable for the
first time by a Participant during any calendar year exceeds $100,000, such
options shall be treated as Non-Qualified Stock Options. The preceding
sentence shall be applied by taking options into account in the order in
which they were granted.
(m) Annual Limit on All Stock Options. More than one (1) Stock Option may
be granted to an Eligible Recipient during any fiscal year of the Company,
but the aggregate number of shares of Stock underlying all Stock Options
granted to any Eligible Recipient during any such fiscal year shall not
exceed fifty percent (50%) of the shares of Stock reserved for issuance
under this Plan pursuant to Section 3 of this Plan.
(n) Disqualifying Disposition. If a Participant makes a disqualifying
disposition (within the meaning of Section 421(b) of the Code) of shares of
Stock acquired pursuant to the exercise of an Incentive Stock Option, such
Participant shall provide written notice thereof to the Company within 10
days after such disqualifying disposition.
(o) Notice of Section 83(b) Election. If a Participant, in connection with
the exercise of a Stock Option, makes the election permitted under Section
83(b) of the Code to include in such Participant's gross income in the year
of transfer the amounts specified in Section 83(b) of the Code, then such
Participant shall notify the Company of such election within 10 days after
filing the notice of such election with the Internal Revenue Service.
Section 6. Amendment and Termination.
(a) The Board may amend, alter or discontinue this Plan, provided that no
such action shall be taken by the Board that would impair the economic or
legal rights of a Participant under any Award previously granted without
such Participant's consent, and provided that, without the approval of the
Company's shareholders, no such action shall:
(1) increase the total number of shares of Stock reserved and available for
issuance under Awards of Stock Options pursuant to this Plan, except
as otherwise provided in Section 3;
(2) decrease the Exercise Price of any Stock Option to less than 100% of the
Fair Market Value (and, in the case of Stock Options for Special
Reserve Shares, Fair Market Value of the Stock on the IPO Pricing
Date) on the date of the Award of that Stock Option.
(3) materially change the individuals or entities or class of individuals or
entities eligible to participate in this Plan;
(4) materially increase the benefits accruing to Participants under this
Plan; or
10
(5) extend the Option Term beyond the maximum term permitted by Section
5(c) (2) , above.
(b) The Committee may amend the terms of any Award previously granted,
prospectively or retroactively, but notwithstanding any other provision of
this Agreement, no such amendment shall impair the rights of any
Participant without his consent.
Section 7. Unfunded Status of Plan.
This Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant
by the Company, nothing contained herein shall give any such Participant
any rights that are greater than those of a general creditor of the
Company.
Section 8. General Provisions.
(a) The Committee may require each person purchasing shares of Stock
pursuant to a Stock Option to represent to the Company in writing that such
person is acquiring those shares of Stock without a view towards
distribution thereof. All certificates for shares of Stock delivered under
this Plan shall be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Stock then is listed, and any
applicable Federal or state securities law, and the Committee may cause a
legend or legends to be placed on any such certificates to make appropriate
reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to shareholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of
this Plan shall not confer upon any employee of the Company or any
Subsidiary any right to continued employment with the Company or a
Subsidiary, as the case may be, nor shall it interfere in any way with the
right of the Company or a Subsidiary to terminate the employment of any of
its employees at any time.
(c) Each Participant shall, no later than the date as of which the value of
an Award first becomes includable in the gross income of the Participant
for Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any Federal, state, or
local taxes of any kind required by law to be withheld with respect to such
Award. The obligations of the Company under this Plan shall be conditional
on such payment or arrangements, and the Company (and, where applicable,
its Subsidiaries) shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due to the
Participant.
11
(d) No member of the Board or the Committee, nor any officer or employee of
the Company acting on behalf of the Board or the Committee, shall be liable
personally for any action, determination, or interpretation taken or made
in good faith with respect to this Plan, and all members of the Board and
the Committee and each and every officer or employee of the Company acting
on their behalf shall, to the extent permitted by law, be exculpated,
indemnified and protected fully by the Company in respect of any such
action, determination or interpretation.
Section 9. Specific Performance.
The Stock Options granted under this Plan and the shares of Stock issued
pursuant to the exercise of such Stock Options may not be readily purchased
or sold in the open market and, for that reason among others, the Company
and its shareholders will be damaged irreparably if this Plan is not
specifically enforced. If any controversy arises concerning the right to
purchase or obligation to sell any shares of Stock subject to a Stock
Option, such right or obligation shall be enforceable in a court of equity
by a decree of a specific performance. Such remedy shall, however, be
cumulative and not exclusive, and shall be in addition to any other remedy
that the parties may have.
Section 10. Invalid Provisions; Construction of Plan.
If any provision of this Plan is found to be invalid or otherwise
unenforceable under any applicable law, such invalidity or unenforceability
shall not be construed as rendering any other provisions contained herein
invalid or unenforceable, and all such other provisions shall be given full
force and effect to the same extent as though the invalid or unenforceable
provision was not contained herein. Headings at the beginning of each
Section of this Plan are solely for convenience and are not a part of this
Plan. Whenever required by the context of this Plan, the singular shall
include the plural and the masculine shall include the feminine and neuter,
and vice versa.
Section 11. Applicable Law.
This Plan shall be governed by and construed in accordance with the laws of
the State of California.
Section 12. Successors and Assigns.
This Plan shall be binding on and inure to the benefit of the Company and
the Participants to whom a Stock Option is granted hereunder, and such
Participants' heirs, executors, administrators, successors, legatees,
personal representatives, assignees and transferees.
Section 13. Effective Date of Plan.
This Plan shall be effective as of the Effective Date.
12
Section 14. Term of Plan.
No Award of a Stock Option shall be granted pursuant to this Plan on or
after the tenth anniversary of the earlier of the date this Plan is adopted
by the Board or approved by the Company's shareholders, but Awards
previously made may extend beyond that date.
IN WITNESS WHEREOF, and pursuant to a resolution of the Board adopting this
Plan and authorizing its execution, the Company has caused this Plan to be
duly executed by its duly authorized signatory on the day and year first
above written.
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.
By: /s/ H. Wayne Snavely
H. Wayne Snavely
Chairman of the Board of Directors
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.
STOCK OPTION AGREEMENT
This AGREEMENT is made effective as of the _______ day of
___________________, (the "Award Date") , by and between Imperial Credit
Commercial Mortgage Investment Corp., a Maryland corporation (the
"Company") and ______________________________________ (the "Optionee").
RECITALS
WHEREAS, the Board of Directors of the Company has established the 1997
Stock Option Plan (the "Plan") effective as of September 22, 1997, and
WHEREAS, pursuant to the provisions of said Plan, the [Committee
established pursuant to the Plan] Board of Directors of the Company, by
action duly taken on ______________, 199__, granted to the Optionee an
option or options (the "Option(s) ") to purchase shares of the Common Stock
of the Company (the "Optioned Shares") on the terms and conditions set
forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants set forth herein and other good and valuable consideration, the
parties hereto agree as follows:
Section 1. The Option(s). The Optionee may, at his option, purchase all
or any part of an aggregate of _____________ shares of Common Stock, at the
price of $_________ per share (the "Exercise Price") , on the terms and
conditions set forth herein.
13
Section 2. Plan Type; Exercise Dates and Method of Exercise. Options
intended to qualify as Incentive Stock Options are designated by "ISO"
under the category "Plan." Options intended as Non-Qualified Stock Options
are designated by "NQO" under the category "Plan." The Option(s) shall be
exercisable as to the specified number of Optioned Shares on and after the
"First" dates and on or before the "Last" dates set forth below:
Plan Number of Optioned Shares Exercise Dates
First Last
__________ _______________________ ________________________
__________ _______________________ ________________________
__________ _______________________ ________________________
__________ _______________________ ________________________
__________ _______________________ ________________________
Optionee acknowledges, understands and agrees that he has no right
whatsoever to exercise the Option(s) granted hereunder with respect to any
Optioned Shares until the First Exercise Date of such Optioned Shares as
provided above. Optionee further understands that the Option(s) granted
hereunder shall expire and become unexercisable after the Last Exercise
Date and otherwise as provided in Section 3(c) below.
This Option shall be deemed exercised as to the Optioned Shares to be
purchased when written notice of such exercise has been given to the
Company at its principal business office by the Optionee. Such notice
shall be accompanied by full payment (i) in cash or cash equivalents, (ii)
in Stock already owned by the Optionee (based on the Fair Market Value of
the Stock on the date the Option is exercised) , (iii) if approved by the
Committee, by a full recourse promissory note executed by the Optionee in
such form, and with such terms and conditions, as the Committee may
require, (iv) by cancellation of any indebtedness owed by the Company to
the Optionee, (v) pursuant to procedures approved by the Company, through
the sale of Optioned Shares acquired on exercise of the Option through a
broker-dealer to whom the Optionee has submitted an irrevocable notice of
exercise and irrevocable instructions to deliver to the Company the amount
of sale or loan proceeds sufficient to pay for the Optioned Shares to be
purchased, together with, if requested by the Company, the amount of
Federal, state or local taxes payable by the Participant by reason of such
exercise; (vi) pursuant to procedures approved by the Company, and with the
prior approval of the Committee, by pyramiding (i.e., making payment to the
Company with Optioned Shares simultaneously acquired on exercise of the
Option (based on the Fair Market Value of the Stock on the date the Option
is exercised) ) , or (vii) by any combination of the foregoing as may be
approved by the Committee with respect to the Optioned Shares to be
purchased. The approval of the Committee may be granted, withheld or
conditioned as determined appropriate by the Committee in its reasonable
discretion.
14
Section 3. Governing Plan. This Agreement hereby incorporates by
reference the Plan and all of the terms and conditions of the Plan as
heretofore amended and as the same may be amended from time to time
hereafter, but no such subsequent amendment shall adversely affect the
Optionee's rights under this Agreement and the Plan as it existed before
such subsequent amendment except as may be required by applicable law. The
Optionee expressly acknowledges and agrees that the provisions of this
Agreement are subject to the Plan; the terms of this Agreement shall not
limit or modify the Plan; and in case of any conflict between the
provisions of the Plan and this Agreement, the provisions of the Plan shall
be controlling and binding upon the parties hereto. The Optionee also
hereby expressly acknowledges, represents and agrees as follows:
(a) The Optionee acknowledges receipt of a copy of the Plan, a copy of which
is attached hereto and by reference incorporated herein, and represents
that he is familiar with the terms and conditions of the Plan and hereby
accepts this Agreement subject to all of the terms and provisions of the
Plan.
(b) The Optionee agrees to accept as binding, conclusive and final all
decisions or interpretations of the Committee upon any questions arising
under the Plan.
(c) The Optionee acknowledges and represents that he is familiar with
Sections of the Plan regarding the exercise of the Option(s) and that he
understands that said Option(s) must be exercised on or before the earliest
of the following dates, whichever is applicable: (i) the "Last" exercise
date noted above in Section 2 of this Agreement; (ii) the day prior to the
[fifth][tenth][_____] anniversary of the Award Date with respect to Options
granted as Incentive Stock Options and the day prior to the tenth
anniversary of the Award Date with respect to Options granted as Non-
Qualified Stock Options; or (iii) if the Optionee has a "Termination of
Affiliation" (as that term is defined in the Plan) , the last date for
exercise, or date prior to termination of the Option(s) , specified in
Subsection 5(i) , (j) or (k) , as applicable, of the Plan.
(d) The Optionee acknowledges, understands and agrees that the existence of
the Plan and the execution of this Agreement are not sufficient by
themselves to cause the exercise of any Option(s) granted as an Incentive
Stock Option to qualify for favorable tax treatment through the application
of Section 422 of the Internal Revenue Code; that Optionee must, in order
to so qualify, individually meet by his own action all applicable
requirements of Section 422, including without limitation the following
holding period and employment requirements:
(1) holding period requirement: no disposition of an Optioned Share may be
made by Optionee within two (2) years from the date of the granting of the
Option(s) nor within one (1) year after the transfer of such Optioned Share
to him, and
15
(2) employment requirement: at all times during the period beginning on
the date of the granting of the Option(s) and ending on the day three (3)
months before the date of exercise, the Optionee must have been an employee
of the Company, the parent or a subsidiary of the Company, or a corporation
or a parent or subsidiary of such corporation issuing or assuming the
Option(s) in a transaction to which Section 424(a) of the Internal Revenue
Code applies, except where the termination of employment is by means of the
employee's disability, in which case said three (3) month period may be
extended to one (1) year, as provided under Internal Revenue Code Section
422.
Section 4. Additional Representations and Warranties. As a condition to
the exercise of any Option(s) , the Company may require the person
exercising such Option(s) to make any representation and/or warranty to the
Company that may, in the judgment of counsel to the Company, be required
under any applicable law or regulation, including but not limited to a
representation and warranty that the shares are being acquired only for
investment and without any present intention to sell or distribute such
shares if, in the opinion of counsel for the Company, such a representation
is required under the Securities Act of 1933 or any other applicable law,
regulation or rule of any governmental agency. Optionee hereby represents
to the Company that each of the Option(s) evidenced hereby and the shares
of Stock purchasable upon exercise thereof is being acquired only for
investment and without any present intention to sell or distribute such
securities.
Section 5. Limited Transferability of Options. The Option(s) may be
exercised during the lifetime of the Optionee only by the Optionee or, to
the extent permitted by the Committee in its discretion, a member of the
Optionee's Immediate Family (as that term is defined in the Plan). The
Optionee's rights and interests under this Agreement and in and to the
Option(s) may not be sold, pledged, hypothecated, assigned, encumbered,
gifted or otherwise transferred in any manner, either voluntarily or
involuntarily by operation of law, except by will or the laws of descent or
distribution, and except that (i) the Optionee may, in a manner and to the
extent permitted by the Committee in its reasonable discretion, transfer
the Option(s) to a member of the Optionee's Immediate Family, and (ii) the
Manager may, in a manner and to the extent permitted by the Committee and
the Plan, transfer a Non-Qualified Stock Option previously granted to it to
any other Eligible Recipient.
Section 6. No Enlargement of Employee Rights. Nothing in this Agreement
shall be construed to confer upon an Optionee who is an employee of the
Company or any Subsidiary any right to continued employment with the
Company or any Subsidiary, or to restrict in any way the right of the
Company or any Subsidiary to terminate his employment. The Optionee
acknowledges that in the absence of an express written employment agreement
to the contrary, optionee's employment with the Company or a Subsidiary may
be terminated by the Company or Subsidiary at any time, with or without
cause.
16
Section 7. Withholding of Taxes. The Optionee authorizes the Company to
withhold from any compensation payable to him any taxes required to be
withheld by federal, state or local law as a result of the Award of the
Option(s) or the issuance of stock pursuant to the exercise of such
Option(s).
Section 8. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
Section 9. Successors and Assigns. The terms of this Agreement shall be
binding upon the heirs, executors, administrators, successors, legatees,
assignees and transferees of the Optionee.
Section 10. Costs of Litigation. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement or the Plan,
the unsuccessful party to such litigation, as determined by the court in a
final judgment or decree, shall pay to the successful party all costs,
expenses and reasonable attorneys' fees incurred by the successful party
(including, without limitation, costs, expenses and fees on any appeals) ,
which shall be included as part of the judgment.
Section 11. Necessary Acts. The Optionee agrees to perform all acts and
execute and deliver any documents that may be reasonably necessary to carry
out the provisions of this Agreement, including but not limited to all acts
and documents related to compliance with federal and/or state securities
laws.
Section 12. Counterparts. For convenience, this Agreement may be executed
in any number of identical counterparts, each of which shall be deemed a
complete original in itself and each of which may be introduced in evidence
or used for any other purpose without the production of any other
counterparts.
Section 13. Invalid Provisions. If any provision of this Agreement is
found to be invalid or otherwise unenforceable under any applicable law,
such invalidity or unenforceability shall not be construed as rendering any
other provisions contained herein invalid or unenforceable, and all such
other provisions shall be given full force and effect to the same extent as
though the invalid and unenforceable provision was not contained herein.
Section 14. Limitation on Value of Certain Optioned Shares. Optionee
acknowledges that the Plan provides that the aggregate fair market value
(determined as of the date hereof) of the shares of Common Stock as to
which options granted as Incentive Stock Options are exercisable for the
first time by Optionee during any calendar year under all incentive stock
option plans of the Company and any Subsidiary shall not exceed $100,000.
It is understood and agreed that if it is determined that Option(s) granted
as an Incentive Stock Option hereunder would exceed such limitation, such
Option(s) shall be considered granted as Non-Qualified Stock Option(s) to
the extent of such excess. The preceding sentence shall be applied by
17
taking the Incentive Stock Options granted under this Plan and the
incentive stock options granted under all other plans of the Company and
any Subsidiary into account in the order in which they were granted. This
limitation does not apply to any Option(s) granted as a Non-Qualified Stock
Option.
NOTICE: IF AN OPTIONEE (A) MAKES A DISQUALIFYING DISPOSITION (WITHIN THE
MEANING OF SECTION 421(b) OF THE INTERNAL REVENUE CODE) OF SHARES OF STOCK
ACQUIRED PURSUANT TO THE EXERCISE OF AN INCENTIVE STOCK OPTION, OR (B)
MAKES, IN CONNECTION WITH THE EXERCISE OF A STOCK OPTION, THE ELECTION
PERMITTED UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE TO INCLUDE IN
SUCH OPTIONEE'S GROSS INCOME IN THE YEAR OF TRANSFER THE AMOUNTS SPECIFIED
IN SAID SECTION 83(b) , SUCH OPTIONEE MUST PROVIDE WRITTEN NOTICE TO THE
COMPANY OF SUCH DISQUALIFYING DISPOSITION OR ELECTION, AS APPLICABLE,
WITHIN 10 DAYS AFTER SUCH DISQUALIFYING DISPOSITION OR FILING OF THE NOTICE
OF THE SECTION 83(b) ELECTION WITH THE INTERNAL REVENUE SERVICE,
RESPECTIVELY.
IN WITNESS WHEREOF, the Company and the Optionee have executed this
Agreement effective as of the date first written above.
IMPERIAL CREDIT COMMERCIAL OPTIONEE
MORTGAGE INVESTMENT CORP.
By:
Name:
Title:
Street Address
City and State
Social Security Number
By his or her signature below, the spouse of the Optionee to whom such
Optionee is legally married as of the date of execution of this Agreement
acknowledges that he or she has read, understands and agrees to be bound by
all of the terms and conditions of this Agreement and the Plan.
Spouse ______________________________________
Social Security Number
Dated:
By his or her signature below, the Optionee represents that he or she is
not legally married as of the date of execution of this Agreement.
Optionee ______________________________________
Dated:
18
Exhibit 10.2
MANAGEMENT AGREEMENT
THIS AGREEMENT, dated as of October 22, 1997 by and among IMPERIAL
CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP., a Maryland corporation
("ICCMIC" and together with its subsidiaries, the "Company") , and IMPERIAL
CREDIT COMMERCIAL ASSET MANAGEMENT CORPORATION, a California corporation
(the "Manager") ;
WITNESSETH:
WHEREAS, the Company intends to invest in Mortgage Loans, MBS
Interests, Real Property and Non-Real Estate Assets ("REIT Investments")
and expects to qualify for the tax benefits of a real estate investment
trust (a "REIT") accorded by Sections 856 through 860 of the Internal
Revenue Code of 1986, as amended (the 'Code") ; and
WHEREAS, the Company desires to retain the Manager to advise and
counsel the Company as to the acquisition and sale of, and to otherwise
manage the investments of, the Company and to perform administrative
services for the Company in the manner and on the terms set forth herein;
NOW THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto agree as follows:
SECTION 1. Definitions. Capitalized terms used but not defined
herein shall have the respective meanings assigned them in the Prospectus
of ICCMIC dated October 16, 1997, 1997. In addition, the following terms
shall have the following:
(a) "Agreement" means this Management Agreement, as amended from time
to time.
(b) "Closing Date" means the date of closing of the Company's initial
public offering of Common Stock.
(c) "Governing Instruments" means the charter and bylaws in the case
of a corporation, or the partnership agreement in the case of a
partnership.
(d) "Subsidiary" means any subsidiary of the Company and any
partnership, a general partner of which is the Company or any subsidiary of
the Company.
1
SECTION 2. Duties of the Manager.
(a) The Manager at all times will be subject to the supervision of
ICCMIC's Board of Directors (the "Board of Directors") and will have only
such functions and authority as the Company delegates to it. The Manager
will advise the Board of Directors as to the activities and operations of
the Company. The Manager shall be responsible for the day-to-day business
affairs of the Company pursuant to the authority granted to it by the Board
of Directors under this Agreement, and the Manager will perform (or cause
to be performed) such services and activities relating to the assets and
operations of the Company as may be directed by the Board of Directors or
as the Manager otherwise considers appropriate, including:
(i) serving as the Company's consultant with respect to
formulation of investment criteria and preparation of policy
Guidelines by the Board of Directors;
(ii) advising and representing the Company in connection with the
acquisition and commitment to acquire assets, the sale and commitment
to sell assets, and the maintenance and administration of its
portfolio of assets;
(iii) advising the Company regarding, and arranging for, (a)
the issuance of CMOs collateralized by the Company's Mortgage Loans,
(b) reverse repurchase agreements on the Company's MBS Interests, and
(c) other borrowings, as appropriate;
(iv) furnishing reports and statistical and economic research to
the Company regarding the Company's activities and the services
performed for the Company by the Manager;
(v) monitoring and providing to the Board of Directors on an
ongoing basis price information and other data obtained from dealers
that maintain markets in assets identified by the Board of Directors
from time to time, and providing data and advice to the Board of
Directors in connection with the identification of such dealers;
(vi) providing executive and administrative personnel,
administering office space and office services required in rendering
services to the Company; administering the day-to-day operations of
the Company; and performing and supervising the performance of such
other administrative functions necessary in the management of the
Company, including the collection of revenues and the payment of the
Company's debts and obligations and maintenance of appropriate
computer services to perform such administrative functions;
(vii) communicating on behalf of the Company with the holders
of any equity or debt securities of the Company as required to satisfy
the reporting and other requirements of any governmental bodies or
agencies or trading markets and to maintain effective relations with
such holders;
2
(viii) to the extent not otherwise subject to an agreement
executed by the Company, designating a servicer for mortgage loans
sold to the Company and arranging for the monitoring and administering
of such servicers;
(ix) counseling the Company in connection with policy decisions to
be made by the Board of Directors;
(x) engaging in hedging activities on behalf of the Company which
are consistent with the Company's status as a REIT and with the
Guidelines;
(xi) upon request by the Board of Directors and in accordance with
the Guidelines, investing or reinvesting any money of the Company;
(xii) counseling the Company regarding the maintenance of its
exemption from the Investment Company Act and monitoring compliance
with the requirements for maintaining exemption from that Act;
(xiii) counseling the Company regarding the maintenance of its
status as a REIT and monitoring compliance with the various REIT
qualification tests and other rules set out in the Code and the income
tax regulations promulgated thereunder (the "Treasury Regulations") ;
and
(xiv) counseling the Company as to compliance with all
applicable laws, including those that would require the Company to
qualify to do business in particular jurisdictions.
(b) Portfolio Management. The Manager will perform portfolio
management services on behalf of the Company with respect to the Company's
investments. Such services will include, but not be limited to, consulting
the Company on purchase, sale and other opportunities, collection of
information and submission of reports pertaining to the Company's assets,
interest rates, and general economic conditions, periodic review and
evaluation of the performance of the Company's portfolio of assets, acting
as liaison between the Company and banking, mortgage banking, investment
banking and other parties with respect to the purchase, financing and
disposition of assets, and other customary functions related to portfolio
management. The Manager may enter into subcontracts with other parties,
including Imperial Credit and its affiliates, to provide any such services
to the Company.
(c) Monitoring of Primary Servicing. The Manager will monitor and
administer the loan servicing activities provided by servicers of the
Company's Mortgage Loans, other than loans pooled to collateralize MBS
Interests or pledged to secure MBS Interests. Such monitoring and
administrative services will include, but not be limited to, the following
activities: serving as the Company's consultant with respect to the
servicing of loans; collection of information and submission of reports
pertaining to the mortgage loans and to moneys remitted to the Manager or
3
the Company by servicers; periodic review and evaluation of the performance
of each servicer to determine its compliance with the terms and conditions
of the servicing agreement and, if deemed appropriate, recommending to the
Company the termination of such servicing agreement; acting as a liaison
between servicers and the Company and working with servicers to the extent
necessary to improve their servicing performance; review of and
recommendations as to fire losses, easement problems and condemnation,
delinquency and foreclosure procedures with regard to the Mortgage Loans;
review of servicers' delinquency, foreclosing and other reports on Mortgage
Loans; advising as to and supervising claims filed under any mortgage
insurance policies; and enforcing the obligation of any servicer to
repurchase Mortgage Loans from the Company.
(d) Monitoring of Special Servicing. The Manager will perform
monitoring services on behalf of the Company with respect to loan servicing
activities provided by third parties and with respect to the Company's
rights to service the Company's portfolio of Special Servicing rights.
Such monitoring services will include, but not be limited to: negotiating
Special Servicing agreements; acting as liaison between the servicers of
the Mortgage Loans and the Company; review of servicer's delinquency,
foreclosures and other reports on Mortgage Loans; supervising claims filed
under any mortgage insurance policies; and enforcing the obligation of any
servicer to repurchase Mortgage Loans.
(e) Efforts. The Manager agrees to use commercially reasonable
efforts at all times in performing services for the Company hereunder.
SECTION 3. Additional Activities of Manager. Nothing herein shall
limit or restrict the right of the Manager or any of its officers,
directors, employees or Affiliates to engage in any business or to render
services of any kind to any other person including the purchase of, or
rendering advice to others purchasing, assets that meet the Company's
policies and criteria, except that the Manager may not manage or advise
another REIT or other entity that invests or intends to invest primarily in
commercial and multifamily Mortgage Loans or subordinated CMBS Interests.
Directors, officers, employees and agents of the Manager or Affiliates
of the Manager may serve as directors, officers, employees, agents,
nominees or signatories for the Company or any of its Subsidiaries, to the
extent permitted by their Governing Instruments, as from time to time
amended, or by any resolutions duly adopted by the Board of Directors
pursuant to the Company's or any of its Subsidiaries' Governing
Instruments. When executing documents or otherwise acting in such
capacities for the Company, such persons shall use their respective titles
in the Company.
SECTION 4. Commitments. In order to meet the investment requirements
of the Company, as determined by the Board of Directors from time to time,
the Manager agrees at the direction of the Board of Directors to issue on
behalf of the Company commitments on such terms as are established by the
Board of Directors, for the acquisition by the Company of assets.
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SECTION 5. Bank Accounts. At the direction of the Board of
Directors, the Manager may establish and maintain one or more bank accounts
in the name of ICCMIC or any of its subsidiaries, and may collect and
deposit funds into any such account or accounts, and disburse funds from
any such account or accounts, under such terms and Conditions as the Board
of Directors may approve; and the Manager shall from time to time render
appropriate accountings of such collections and payments to the Board of
Directors and, upon request, to the auditors of ICCMIC or any of its
subsidiaries.
SECTION 6. Records; Confidentiality. The Manager shall maintain
appropriate books of accounts and records relating to services performed
hereunder, and such books of account and records shall be accessible for
inspection by representatives of the Company or any of its Subsidiaries at
any time during normal business hours. The Manager shall keep confidential
any and all information obtained in connection with the services rendered
hereunder and shall not disclose any such information to nonaffiliated
third parties except with the prior written consent of the Board of
Directors or as may be required by law or order of a court or other
tribunal having requisite jurisdiction.
SECTION 7. Obligations of Manager.
(a) The Manager shall require each seller or transferor of assets to
be acquired by the Company to make such representations and warranties
regarding such assets as may be directed by the Board of Directors, or, if
no such directions are given, as may, in the judgment of the Manager, be
necessary and appropriate. In addition, the Manager shall take such other
action as may be directed by the Board of Directors, or, if no such
directions are given, as it deems necessary or appropriate with regard to
the protection of the Company's assets.
(b) The Manager shall refrain from any action that, in its sole
judgment made in good faith, would adversely affect the status of ICCMIC as
a REIT, or as exempt from regulation under the Investment Company Act or
that, in its sole judgment made in good faith, would violate any law, rule
or regulation of any governmental body or agency having jurisdiction over
the Company or any of its Subsidiaries or that would otherwise not be
permitted by their respective Governing Instruments. If the Manager is
ordered to take any such action by the Board of Directors, the Manager
shall promptly notify the Board of Directors of the Manager's judgment that
such action would adversely affect such status or violate any such law,
rule or regulation or the Governing Instruments. Notwithstanding the
foregoing, the Manager, its directors, officers, stockholders and employees
shall not be liable to the Company or any of its Subsidiaries, the
Independent Directors, or ICCMIC's or any of its subsidiaries' stockholders
or partners for any act or omission by the Manager, its directors,
officers, stockholders or employees except as provided in Section 11 of
this Agreement.
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(c) Absent written direction from the Board of Directors, the Manger
shall use reasonable efforts to comply with the Guidelines, as they may be
revised from time to time.
SECTION 8. Compensation.
(a) Commencing with the first fiscal quarter after the Closing Date,
the Company shall pay to the Manager, for services rendered under this
Agreement, a base management fee, calculated as a percentage of the Average
Invested Assets of the Company for such quarter (pro rated based on the
number of days elapsed during any partial fiscal quarter) , and equal to 1 %
per annum of the first $1 billion of such Average Invested Assets, 0.75% of
the next $250 million of such Average Invested Assets, and 0.50% Average
Invested Assets above $1.25 billion.
(b) The Company shall pay to the Manager incentive compensation for
each fiscal quarter in an amount equal the product of (A) 25 % of the
dollar amount by which (1) (a) Funds from Operations of the Company (before
the incentive fee) per share of Common Stock (based on the weighted average
number of shares outstanding) plus (b) gains (or minus losses) from debt
restructuring and sales of property per share of Common Stock (based on the
weighted average number of shares outstanding) , exceed (2) an amount equal
to (a) the weighted average of the price per share at the initial offering
and the prices per share at any secondary offerings by the Company
multiplied by (b) the Ten-year U.S. Treasury Rate plus four percent per
annum multiplied by (B) the weighted average number of shares of Common
Stock outstanding during such quarter. "Funds from Operations' as defined
by the National Association of Real Estate Investment Trusts ("NAREIT")
means net income (computed in accordance with GAAP) excluding gains (or
losses) from debt restructuring and sales of property, plus depreciation
and amortization on real estate assets, and after adjustments for
unconsolidated partnerships and joint ventures. Funds from Operations does
not represent cash generated from operating activities in accordance with
GAAP and should not be considered as an alternative to net income as an
indication of the Company's performance or to cash flows as a measure of
liquidity or ability to make distributions. As used in calculating the
Manager's compensation, the term "Ten Year U.S. Treasury Rate" means the
arithmetic average of the weekly average yield to maturity for actively
traded current coupon U.S. Treasury fixed interest rate securities
(adjusted to constant maturities of ten years) published by the Federal
Reserve Board during a quarter, or, if such rate is not published by the
Federal Reserve Board, any Federal Reserve Bank or agency or department of
the federal government selected by the Company. If the Company determines
in good faith that the Ten Year U.S. Treasury Rate cannot be calculated as
provided above, then the rate shall be the arithmetic average of the per
annum average yields to maturities, based upon closing asked prices on each
business day during a quarter, for each actively traded marketable U.S.
Treasury fixed interest rate security with a final maturity date not less
than eight nor more than twelve years from the date of the closing asked
prices as chosen and quoted for each business day in each such quarter in
6
New York City by at least three recognized dealers in U.S. government
securities selected by the Company.
(c) The Manager shall compute the compensation payable under Sections
8(a) and 8(b) of this Agreement within 45 days after the end of each fiscal
quarter. A copy of the computations made by the Manager to calculate its
compensation shall thereafter promptly be delivered to the Board of
Directors and, upon such delivery, payment of the compensation earned under
Sections 8(a) and 8(b) of this Agreement shown therein shall be due and
payable within 60 days after the end of such fiscal quarter.
(d) The Manager may charge the Company for any out of pocket expenses
that the Manager incurs in connection with employing third parties to
conduct due diligence on assets considered for purchase by the Company.
(e) The Company is granting to the Manager and directors and
executive officers of the Manager and certain other persons options (the
"Options") to purchase shares of common stock of the Company at a price per
share equal to the initial offering price therefor pursuant to the terms of
the Company's 1997 Stock Option Plan. The number of shares of common stock
to be subject to the Options will be 10% of the number of shares to be
issued pursuant to the initial offering, assuming that the underwriters
fully exercise their over-allotment option. One-third of the Options so
granted to the Manager and its directors and executive officers will be
exercisable by them on each of the first three anniversaries of the Closing
Date of the initial public offering of the Company's Common Stock, and
unexercised Options shall expire on the tenth anniversary of that Closing
Date.
SECTION 9. Expenses of the Company. The Company or any Subsidiary
shall pay all of its expenses and shall reimburse the Manager for
documented expenses of the Manager incurred on its behalf.
SECTION 10. Calculations of Expenses. Expenses incurred by the
Manager on behalf of the Company shall be reimbursed quarterly to the
Manager within 60 days after the end of each quarter. The Manager shall
prepare a statement documenting the expenses of the Company and those
incurred by the Manager on behalf of the Company during each quarter, and
shall deliver such statement to the Company within 45 days after the end of
each quarter.
SECTION 11. Limits of Manager Responsibility. The Manager assumes
no responsibility under this Agreement other than to render the services
called for hereunder in good faith and shall not be responsible for any
action of the Board of Directors in following or declining to follow any
advice or recommendations of the Manager, including as set forth in Section
7(b) of this Agreement. The Manager, its directors, officers, stockholders
and employees will not be liable to the Company, any Subsidiary, the
Independent Directors, the Company's stockholders or any of the Company's
Subsidiaries' stockholders or partners for any acts or omissions by the
7
Manager, its directors, officers, stockholders or employees under or in
connection with this Agreement, except by reason of acts constituting bad
faith, willful misconduct, gross negligence or reckless disregard of their
duties. The Company and its Subsidiaries shall reimburse, indemnify,
defend and hold harmless the Manager, its stockholders, directors, officers
and employees of and from any and all expenses, losses, damages,
liabilities, demands, charges and claims of any nature whatsoever,
(including attorneys' fees) in respect of or arising from any acts or
omissions of the Manager, its stockholders, directors, officers and
employees made in good faith in the performance of the Manager's duties
under this Agreement and not constituting bad faith, willful misconduct,
gross negligence or reckless disregard of its duties.
SECTION 12. No Joint Venture. The Company and the Manager are not
partners or joint venturers with each other and nothing herein shall be
construed to make them such partners or joint venturers or impose any
liability as such on either of them.
SECTION 13. Term. This Agreement shall continue in force and effect
until October 22, 1999, subject to being terminated for cause as provided
in Section 14 herein. After October 22, 1999, the term of this Agreement
may be extended with the consent of the Manager and with the affirmative
vote of a majority of the Independent Directors. Each extension shall be
executed in writing by all parties hereto before the expiration of this
Agreement or, if applicable, the most recent extension thereof. Each such
extension shall be effective for a period of one year. At any time after
October 22, 1999, this Agreement may be terminated without cause by a
majority vote of the Independent Directors, which termination shall first
become effective as of the 60th day after the receipt by the Manager of a
written notice of such termination from the Company. A failure to extend
the term of this Agreement at the expiration of its term (or, if the term
of this Agreement shall have been extended pursuant to this Section 13, at
the expiration of the most recent extension) shall be deemed for all
purposes of this Agreement to be a termination of this Agreement pursuant
to this Section 13. If this Agreement is terminated pursuant to this
Section 13, the unvested Options granted to the Manager and directors and
executive officers of the Manager pursuant to Section 8(e) shall continue
to vest in the manner described in Section 8(e) and in the Company's 1997
Stock Option Plan.
SECTION 14. Termination for Cause. This Agreement, or any extension
hereof, may be terminated by either party for cause immediately upon
written notice, (i) by a majority vote of the Independent Directors in the
case of termination by the Company, or (ii) by a majority vote of the
directors of the Manager, in the case of termination by the Manager.
Grounds for termination for cause will occur with respect to a party if:
(i) Such party shall have violated any provision of this
Agreement and, after notice of such violation, shall not have cured
such default within 30 days; or
8
(ii) There is entered an order for relief or similar decree or
order with respect to the other party by a court having jurisdiction
in an involuntary case under the federal bankruptcy laws as now or
hereafter constituted or under any applicable federal or state
bankruptcy, insolvency or other similar laws; or the other party (A)
admits in writing its inability to pay its debts as they become due
and payable, or makes a general assignment for the benefit of, or
enters into any composition or arrangement with, creditors; (B)
applies for, or consents (by admission of material allegations of a
petition or otherwise) to the appointment of a receiver, trustee,
assignee, custodian, liquidator or sequestrator (or other similar
official) of the other party or of any substantial part of its
properties or assets, or authorizes such an application or consent, or
proceedings seeking such appointment are commenced without such
authorization, consent or application against the other party and
continue undismissed for 30 days; (C) authorizes or files a voluntary
petition in bankruptcy, or applies for or consents (by admission of
material allegations of a petition or otherwise) to the application of
any bankruptcy, reorganization, arrangement, readjustment of debt,
insolvency, dissolution, liquidation or other similar law of any
jurisdiction, or authorizes such application or consent, or
proceedings to such end are instituted against the other party without
such authorization, application or consent and are approved as
properly instituted and remain undismissed for 30 days or results in
adjudication of bankruptcy or insolvency; or (D) permits or suffers
all or any substantial part of its properties or assets to be
sequestered or attached by court order and the order remains
undismissed for 30 days.
Each party agrees that if any of the events specified in this Section
14 shall occur, it will give prompt written notice thereof to the other
party's Board of Directors after the happening of such event.
If this Agreement is terminated pursuant to this Section 14, such
termination shall be without any further ability or obligation of either
party to the other, except as provided in Section 16 of this Agreement.
Upon the proper termination of this Agreement pursuant to this Section 14,
the Options granted to the Manager and directors and executive officers of
the Manager pursuant to Section 8(e) that are unvested as of the date of
termination shall expire.
SECTION 15. Buyout of Agreement. If, at any time after October 22,
1999, this Agreement is not renewed by the Company, or if this Agreement is
terminated by the Company at any time pursuant to Section 13 of this
Agreement, then the Company, in addition to its obligations under Section
16, shall pay the Manager a termination fee determined by an independent
appraisal. Such appraisal shall be conducted by a nationally-recognized
appraisal firm mutually agreed upon by the parties and the costs of such
appraisal shall be borne equally by the parties. If the parties are unable
to agree upon such appraisal firm within 30 days following notice of
9
termination or, in the event of non-renewal, the termination date, then
each party shall as soon as reasonably practicable, but in no event more
than 45 days following notice of termination or, in the event of
non renewal, the termination date, choose an independent appraisal firm to
conduct an appraisal. In such event, (i) if the appraisals prepared by the
two appraisers so selected are the same or differ by an amount that does
not exceed 20% of the higher of the two appraisals, the termination fee
shall be deemed to be the average of the appraisals as prepared by each
party's chosen appraiser, and (ii) if these two appraisals differ by more
than 20% of such higher amount, the two appraisers together shall, as soon
thereafter as is reasonably practicable but in no event more than 45 days
after the date of the later of such two appraisals, select a third
appraisal firm to conduct an appraisal. If they are unable to agree as to
the identity of such third appraiser within such 45 day period, either
party can request that the American Arbitration Association ("AAA") select
the third appraiser, and in that event the appraiser selected by the AAA
shall be the third appraiser. The termination fee shall be the amount
determined by such third appraiser, but in no event less than the lower of
the two initial appraisals or more than the higher of such two initial
appraisals. Each party shall pay the costs of the appraiser chosen by it,
and each party shall pay one half of the costs of the third appraiser. Any
appraisal conducted hereunder shall be performed no later than 45 days
following selection of the appraiser or appraisers. The Company's
obligation to pay the termination fee pursuant to this Section 15 shall
survive the expiration or earlier termination of this Agreement.
SECTION 16. Assignment, Subcontract.
(a) This Agreement shall terminate automatically in the event of
its assignment, in whole or in part, by the Manager, unless such
assignment is to a corporation, association, trust or other
organization which shall acquire the property and carry on the
business of the Manager, if at the time of such assignment a majority
of the voting stock of such assignee organization shall be owned,
directly or indirectly, by Imperial Credit or unless such assignment
is consented to in writing by the Company with the consent of a
majority of the Independent Directors. Such an assignment shall bind
the assignee hereunder in the same manner as the Manager is bound
hereunder and, to further evidence its obligations hereunder, the
assignee shall execute and deliver to the Company a counterpart of
this Agreement. This Agreement shall not be assignable by the Company
without the consent of the Manager, except in the case of assignment
by the Company to a REIT or other organization which is a successor
(by merger, consolidation or purchase of assets) to the Company, in
which case such successor organization shall be bound hereunder and by
the terms of said assignment in the same manner as the Company is
bound hereunder.
10
(b) Notwithstanding the foregoing, the Company and the Manager
agree that the Manager may enter into a subcontract with any third
party, which third party shall be approved by the Company's Board of
Directors, pursuant to which such third party will provide such of the
management services required hereunder as the Manager deems necessary,
and the Company hereby consents to the entering into and performance
of such subcontract; provided, however, that no such arrangement
between the Manager and any third party shall relieve the Manager of
any of its duties or obligations hereunder.
SECTION 17. Action Upon Termination. From and after the effective date of
termination of this Agreement pursuant to Sections 13 or 14 hereof, the Manager
shall not be entitled to compensation for further services hereunder, but
shall be paid all compensation accruing to the date of termination and,
if such termination is not pursuant to Section 14, the termination fee
determined pursuant to Section 15 and, if applicable, the unvested Options
granted to the Manager and directors and executive officers of the
Manager pursuant to Section 8(e) shall vest in the manner described in
Section 8(e) and in the Company's 1997 Stock Option Plan. The Manager shall
forthwith upon such termination deliver to the Board of Directors all funds
and property, documents, corporate records, reports and software of the
Company or any Subsidiary of the Company then in the custody of Manager.
SECTION 18. Release of Money or Other Property Upon Written Request.
The Manager agrees that any money or other property of the Company and its
Subsidiaries held by the Manager under this Agreement shall be held by the
Manager as custodian for the Company and its Subsidiaries, and the
Manager's records shall be appropriately marked clearly to reflect the
ownership of such money or other property by the Company and its
Subsidiaries. Upon the receipt by the Manager of a written request signed
by a duly authorized officer of the Company requesting the Manager to
release to the Company or any such Subsidiary, respectively, any money or
other property then held by the Manager for the account of the Company or
any such Subsidiary under this Agreement, the Manager shall release such
money or other property to the Company or any of its Subsidiaries within a
reasonable period of time, but in no event later than 60 days following
such request. The Manager shall not be liable to the Company, the
Independent Directors, or the Company's or any of its Subsidiaries'
stockholders or partners for any acts performed or omissions to act by the
Company or any of its Subsidiaries in connection with the money or other
property released to the Company or any of its Subsidiaries in accordance
with this Section. The Company and its Subsidiaries jointly and severally
shall indemnify, defend and hold harmless the Manager, its directors,
officers, stockholders and employees against any and all expenses, losses,
damages, liabilities, demands, charges and claims of any nature whatsoever,
which arise in connection with the Manager's release of such money or other
property to the Company or any of its Subsidiaries in accordance with the
terms of this Section 17 of this Agreement. Indemnification pursuant to
this provision shall be in addition to any right of the Manager to
indemnification under Section 11 of this Agreement.
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SECTION 19. Representations and Warranties.
(a) The Company hereby represents and warrants to the Manager as follows:
(i) Each of ICCMIC and ICMSC is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its respective
incorporation, each of them has the corporate power to own its assets and
to transact the business in which it is now engaged and is duly qualified
as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification, except for failures to be so
qualified, authorized or licensed that could not in the aggregate have a
material adverse effect on the business operations, assets or financial
condition of the Company and its Subsidiaries. taken as a whole. The
Company does not do business under any fictitious business name.
(ii) Each of ICCMIC and ICMSC has the corporate power and
authority to execute, deliver and perform this Agreement and all
obligations required hereunder and has taken all necessary corporate action
to authorize this Agreement on the terms and conditions hereof and the
execution, delivery and performance of this Agreement and all obligations
required hereunder. No consent of any other person including, without
limitation, stockholders and creditors of the Company, and no license,
permit, approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental authority is
required by the Company in connection with this Agreement or the execution,
delivery, performance, validity or enforceability of this Agreement and all
obligations required hereunder. This Agreement has been, and each
instrument or document required hereunder will be, executed and delivered
by a duly authorized officer of each of ICCMIC and ICMSC, and this Agreement
constitutes, and each instrument or document required hereunder when
executed and delivered hereunder will constitute, the legally valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms.
(iii) The execution, delivery and performance of this Agreement
and the documents or instruments required hereunder will not violate any
provision of any existing law or regulation binding on ICCMIC or any of its
subsidiaries, or any order, judgment, award or decree of any court,
arbitrator or governmental authority binding on ICCMIC or any of its
subsidiaries, or the Governing Instruments of, or any securities issued by
ICCMIC or any of its subsidiaries, or of any mortgage, indenture, lease,
contract or other agreement, instrument or undertaking to which ICCMIC or
any of its subsidiaries is a party or by which ICCMIC or any of its
subsidiaries, or any of their respective assets, may be bound, the
violation of which would have a material adverse effect on the business
operations, assets or financial condition of ICCMIC and its subsidiaries,
taken as a whole, and will not result in, or require, the creation or
imposition of any lien on any of its property, assets or revenues pursuant
12
to the provisions of any such mortgage, indenture, lease, contract or other
agreement, instrument or undertaking.
(b) The Manager hereby represents and warrants to the Company as
follows:
(i) the Manager is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power to own its assets and to transact the business in which it
is now engaged and is duly qualified to do business and is in good standing
under the laws of each jurisdiction where its ownership or lease of
property or the conduct of its business requires such qualification, except
for failures to be so qualified, authorized or licensed that could not in
the aggregate have a material adverse effect on the business operations,
assets or financial condition of the Manager and its subsidiaries, taken as
a whole. The Manager does not do business under any fictitious business
name.
(ii) The Manager has the corporate power and authority to
execute, deliver and perform this Agreement and all obligations required
hereunder and has taken all necessary corporate action to authorize,
execute and deliver this Agreement and perform all obligations required
hereunder. No consent of any other person including, without limitation,
stockholders and creditors of the Manager, and no license, permit, approval
or authorization of, exemption by, notice or report to, or registration,
filing or declaration with, any governmental authority is required by the
Manager in connection with this Agreement or the execution and delivery of
this Agreement and the performance of all of the obligations required
hereunder. This Agreement has been, and each instrument or document
required hereunder will be, executed and delivered by a duly authorized
agent of the Manager, and this Agreement constitutes, and each instrument
or document required hereunder when executed and delivered hereunder will
constitute, the legally valid and binding obligation of the Manager
enforceable against the Manager in accordance with its terms.
(iii) The execution, delivery and performance of this Agreement
and the documents or instruments required hereunder will not violate any
provision of any existing law or regulation binding on the Manager, or any
order, judgment, award or decree of any court, arbitrator or governmental
authority binding on the Manager, or the Governing Instruments of, or any
securities issued by, the Manager or of any mortgage, indenture, lease,
contract or other agreement, instrument or undertaking to which the Manager
is a party or by which the Manager or any of its assets may be bound, the
violation of which would have a material adverse effect on the business
operations, assets or financial condition of the Manager and its
subsidiaries, taken as a whole, and will not result in, or require, the
creation or imposition of any lien on any of its property, assets or
revenues pursuant to the provisions of any such mortgage, indenture, lease,
contract or other agreement, instrument or undertaking.
13
SECTION 20. Notices. Unless expressly provided otherwise herein, all
notices, requests, demands and other communications required or permitted
under this Agreement shall be in writing and shall be deemed to have been
duly given, made and received when delivered against receipt or upon actual
receipt of registered or certified mail, postage prepaid, return receipt
requested, addressed as set forth below:
(a) If to the Company:
Imperial Credit Commercial Mortgage Investment Corp.
11601 Wilshire Boulevard, Suite 2080
Los Angeles, California 90025
Attention: Mark S. Karlan, President
with a copy given in the manner prescribed above to:
Jay A. Shafran, Esq.
Sonnenschein Nath & Rosenthal
601 South Figueroa Street
Suite 1500
Los Angeles, California 90017
(b) If to the Manager:
Imperial Credit Commercial Asset Management Corp.
11601 Wilshire Boulevard, Suite 2080
Los Angeles, California 90025
Attention: Mark S. Karlan, President
with a copy given in the manner prescribed above to:
J. A. Shafran, Esq.
Sonnenschein Nath & Rosenthal
601 South Figueroa Street
Suite 1500
Los Angeles, California 90017
Either party may alter the address to which communications or copies
are to be sent by giving notice of such change of address in conformity
with the provisions of this Section 20 for the giving of notice.
SECTION 21. Entire Agreement. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous
agreements, understandings, inducements and conditions, express or implied,
oral or written, of any nature whatsoever with respect to the subject
matter hereof. The express terms hereof control and supersede any course
of performance and/or usage of the trade inconsistent with any of the terms
hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
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SECTION 22. Binding Nature of Agreement, Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, personal representatives,
successors and assigns as provided herein.
SECTION 23. Third Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto, and
nothing this Agreement, express or implied, is intended to confer upon any
other rights or remedies of any nature whatsoever under or by reason of
this Agreement.
SECTION 24. Schedules and Exhibits. All Schedules and Exhibits
referred to herein or attached hereto are hereby incorporated by reference
into, and made a part of, this Agreement.
SECTION 25. Indulgences, Not Waivers. Neither the failure nor any
delay on the part of a party to exercise any right, remedy, power or
privilege under this Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, remedy, power or privilege
preclude any other or further exercise of the same or of any other right,
remedy, power or privilege, nor shall any waiver of any right, remedy,
power or privilege with respect to any occurrence be construed as a waiver
of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is
signed by the party asserted to have granted such waiver.
SECTION 26. Costs and Expenses. Each party hereto shall bear its own
costs and expenses (including the fees and disbursements of counsel and
accountants) incurred in connection with the negotiations and preparation
of and the closing under this Agreement, and all matters incidental
thereto.
SECTION 27. Not to Affect Interpretation. The titles of paragraphs
and subparagraphs contained in this Agreement are for convenience only, and
they neither form a part of this Agreement nor are they to be used in the
construction or interpretation hereof.
SECTION 28. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be
an original as against any party whose signature appears thereon, and all
of which shall together constitute one and the same instrument. This
Agreement shall become binding when one or more counterparts hereof,
individually or taken together, shall bear the signatures of all of the
parties reflected hereon as the signatories.
SECTION 29. Provisions Separable. The provisions of this Agreement
are independent of and separable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that
for any reason any other or others of them may be invalid or unenforceable
in whole or in part.
15
SECTION 30. Gender. Words used herein regardless of the number and
gender specifically used, shall be deemed and construed to include any
other number, singular or plural, and any other gender, masculine, feminine
or neuter, as the context requires.
SECTION 31. Computation of Interest. Interest will be computed on
the basis of a 360-day year consisting of twelve months of thirty days
each.
SECTION 32. Professional Fees. If any party becomes involved in
litigation (including bankruptcy proceedings) or arbitration against any
other party arising out of or relating to this Agreement, the court in the
litigation (including bankruptcy proceedings) or arbitrator in the
arbitration shall award legal expenses (including, but not limited to
attorneys' fees, court costs and other legal expenses) to the prevailing
party. The award for legal expenses shall not be computed in accordance
with any court schedule, but shall be as necessary to fully reimburse all
attorneys' fees and other legal expenses actually incurred in good faith,
regardless of the size of the judgment, it being the intention of the
parties to fully compensate for all the attorneys' fees and other legal
expenses paid in good faith. For the purpose of this Agreement, the terms
"attorneys' fees" or "attorneys' fees and costs" shall mean the reasonable
fees and expenses of counsel to the parties hereto (including, without
limitation, the cost of in-house counsel employed by such party, such cost
to be determined by imputing a cost for those services commensurate with
such counsel's skills and experience) , which may include printing,
duplicating and other expenses, air freight charges, and fees billed for
law clerks, paralegals, librarians and others not admitted to the bar but
performing services under the supervision of an attorney. The terms
"attorneys' fees" or "attorneys' fees and costs" shall also include,
without limitation, all reasonable fees and expenses incurred with respect
to appeals, arbitrations and bankruptcy proceedings, and whether or not any
action or proceeding is brought with respect to the matter for which said
fees and expenses were incurred.
SECTION 33. Controlling Law. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement shall
be governed by and construed, interpreted and enforced in accordance with
the laws of the State of California, notwithstanding any California or
other conflict-of-law provisions to the contrary.
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.
By: /s/ Mark S. Karlan
Mark S. Karlan
President
IMPERIAL CREDIT MORTGAGE SECURITIZATION CORP.
By: /s/ Mark S. Karlan
Mark S. Karlan
President
IMPERIAL CREDIT COMMERCIAL ASSET MANAGEMENT CORPORATION
By: /s/ Mark S. Karlan
Mark S. Karlan
President
17
Exhibit 10.3
AGREEMENT FOR PURCHASE AND SALE OF REAL ESTATE LOANS
THIS AGREEMENT FOR PURCHASE AND SALE OF REAL ESTATE LOANS (this
"Agreement"), is made and entered into as of October 1, 1997 (the
"Effective Date") by and between SOUTHERN PACIFIC BANK, a California
corporation ("Seller") and IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT
CORP., a Maryland corporation ("Buyer"). IMPERIAL CREDIT INDUSTRIES, INC.,
a California corporation ("ICII") that owns all of the issued and
outstanding stock of Seller, has executed and delivered this Agreement
solely for the purpose of confirming its representation and warranty, and
memorializing its covenant, set forth in Paragraph 5.3 below.
Recitals
A. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, on the terms and subject to the conditions set forth herein,
certain loans originated and held by Seller.
B. Buyer and Seller desire to enter into this Agreement to govern the
purchase by Buyer from Seller, and sale by Seller to Buyer, of those loans.
Agreement
Therefore, in consideration of the mutual covenants, terms, and conditions
set forth herein, the parties agree as follows:
1. Certain Material Definitions. As used in this Agreement, the following
terms shall have the meanings given to them below:
1.1. "Closing Date" shall mean October 22, 1997.
1.2. "Cut-Off Date" shall mean October 1, 1997.
1.3. "Loans" shall mean, collectively, all of those mortgage loans
described in the table attached as Exhibit A hereto (the "Loan Table"),
which mortgage loans have an aggregate outstanding principal balance as of
the Effective Date hereof of approximately $104,000,000: and "Loan" means
one of such Loans.
1.4. "Purchase Price" shall mean $109,128,177.
2. Purchase and Sale of Loans; Right of First Offer.
1
2.1. Purchase and Sale of Loans. On the Closing Date, Seller shall convey,
assign, transfer, set over and deliver to Buyer, and Buyer shall purchase
and take from Seller, all of Seller's right, title and interest in each of
the Loans, including, without limitation:
2.1.1. The outstanding principal balance thereof, accrued interest and all
other sums due as of and after the Cut-Off Date, all related promissory
notes or other writings evidencing the Loans (the "Notes" or a "Note"), and
the related original mortgages, deeds of trust, security agreements and
assignments ("Security Instruments");
2.1.2. Seller's right, title and interest as a holder of the lien in all
real property encumbered by one or more of the Security Instruments (the
"Subject Real Property") and personal property (including without
limitation impound or holdback accounts) encumbered by one or more of the
Security Instruments (the "Subject Personal Property"; the Subject Real
Property and Subject Personal Property are sometimes collectively referred
to as the "Subject Property");
2.1.3. Any and all documents, instruments, powers of attorney, surety
agreements, guarantees and security agreements referred to in the Loans, or
related thereto, including without limitation written copies of the
complete payment history on each Loan, credit applications, credit reports
and appraisals, engineering reports (if any), environmental reports and
analyses (if any), financial statements, borrower and guarantor
organizational and authorizing documents (including without limitation
articles of incorporation, statements of partnership, certificates of
limited partnership, by-laws, corporate resolutions, partnership
agreements, operating agreements, and the like), original insurance
policies (or, if policies have not been delivered to Seller, insurance
certificates), documentation regarding impound or holdback accounts (if
any), original title insurance policies and commitments, surveys, maps,
site plans, copies of permits and other entitlements, zoning letters,
utility service or "will serve" letters, files (including loan files and
correspondence), books, papers, ledger cards, and computer, electronic and
written reports and records (the "Related Documentation"); and
2.1.4. Any and all rights, benefits, payments and proceeds arising from or
related to any of the foregoing, and funds in an amount equal to any and
all unapplied impounds and other unapplied holdbacks and borrower deposits
delivered to Seller (collectively, the "Ancillary Rights").
2.2 Right of First Offer.
2.2.1. Grant of Right of First Offer. Seller hereby grants and conveys to
Buyer, in addition to the Loans and as additional consideration for the
Payment Price, a right of first offer to purchase from Seller, in addition
to those Loans being or to be purchased pursuant hereto, those multifamily
and commercial mortgage loans typical of those originated and to be
originated by Seller ("Typical Loans") and designated by Seller as loans to
2
which the right of first offer described in this Paragraph 2.2.1 applies;
provided, however, that during each 12 month period commencing with the
Effective Date and with each anniversary thereof, but only so long as that
certain Management Agreement entered into by and between Imperial Credit
Commercial Asset Management Corp., a California corporation, and Buyer
dated as of the Effective Date remains in effect, Seller shall offer to
sell to Buyer not less than $150 million in the aggregate of Typical Loans
(for that purpose, the amount of each such Typical Loan shall be deemed to
be equal to its then outstanding principal balance) pursuant to the right
of first offer described in this Paragraph 2.2.1; and provided further,
that if Seller fails to offer to sell to Buyer pursuant to such right of
first offer at least $150 million in the aggregate of such Typical Loans
during any such 12 month period in which Seller is required to do so,
Seller thereafter shall offer to sell to Buyer all Typical Loans originated
by Seller following the end of such 12 month period until such time as the
aggregate amount of such Typical Loans that Seller shall have offered for
sale to Buyer pursuant to this further proviso is equal to the difference
obtained by subtracting (i) the aggregate amount of all Typical Loans that
were offered for sale by Seller to Buyer pursuant to the right of first
offer described in this Paragraph 2.2.1 during such 12 month period from
(ii) $150 million, and in determining the aggregate amount of Typical Loans
offered by Seller to Buyer pursuant to the right of first offer granted by
this Paragraph 2.2.1 in the immediately succeeding 12 month period, the
Typical Loans offered to Buyer pursuant to Seller's obligations under
clause (a) of this Paragraph 2.2.1 shall not be included.
Notwithstanding the foregoing, Seller only shall be required to offer
Typical Loans to Buyer to the extent that Seller originates Typical Loans
substantially as contemplated by this Agreement and, therefore, Buyer shall
not exercise any remedies against Seller solely as a result of Seller's
failure thereafter to offer such Typical Loans to Buyer; provided, however,
that if Seller at any time thereafter again is able to offer Typical Loans
to Buyer substantially as contemplated by this Agreement, Seller 's
obligation to offer such Typical Loans to Buyer shall recommence at that
time.
2.2.2. Process to be Followed. The process by which Seller is to offer to
Buyer the Typical Loans to which the right of first offer described herein
applies, and by which Buyer shall, if it chooses to do so, purchase some or
all of such Typical Loans pursuant to such right of first offer, is as
follows:
2.2.2.1. When Seller has identified specific Typical Loans to which the
right of first offer described in this Paragraph 2.2 shall apply, it shall
give a written notice to Buyer (the "Offer Notice") (i) describing each of
those Typical Loans (including without limitation the material economic
terms thereof) and the Subject Property that has been pledged as collateral
security therefor, all in reasonable detail, (ii) stating Seller's good
faith estimate of the cash price at which a willing and sophisticated buyer
would purchase each of those Typical Loans from a willing and sophisticated
3
seller, and such a seller would sell such Typical Loans to such a buyer, in
a transaction in which no broker or other finder is involved and as to
which neither such buyer nor such seller is under any actual or perceived
compulsion to purchase or sell, respectively, such Typical Loans (such
price is referred to as the "Offered Price"), and (iii) stating that such
Typical Loans are being offered for sale to Buyer pursuant to such right of
first offer.
2.2.2.2. Buyer and its agents, representative and designees may review and
underwrite the loans identified in Seller's Offer Notice and Seller's
servicing and origination operations, upon reasonable prior notice to
Seller, and Seller shall cooperate with such review and underwriting to the
extent Buyer or any such agents, representatives and designees request
information or documents that are reasonably available and can be produced
without unreasonable expense. Seller shall make the loan files related to
those loans available at Seller's offices for review by Buyer and any such
agents, representatives and designees during normal business hours upon
reasonable prior notice to Seller, and Buyer may conduct property
inspections (to the extent that Seller could do so), obtain appraisal
recertification and otherwise underwrite the loans described in the Offer
Notice and to reject any such loan that, in Buyer's opinion based on its
reasonable business judgment is not a Typical Loan, or that it determines
is an unacceptable investment based on customary practices in the industry.
Any loan so rejected by Buyer shall be deemed not to have been the subject
of a right of first offer pursuant to this Paragraph 2.2, and the price to
be paid by Buyer to Seller for the remaining Typical Loans described in
Seller's Offer Notice shall be recomputed to be equal to the cash price at
which a willing and sophisticated buyer would purchase each of those
remaining Typical Loans from a willing and sophisticated seller, and such a
seller would sell such remaining Typical Loans to such a buyer, in a
transaction in which no broker or other finder is involved and as to which
neither such buyer nor such seller is under any actual or perceived
compulsion to purchase or sell, respectively, such remaining Typical Loans.
2.2.2.3. If Buyer desires to purchase some or all of the Typical Loans
described in Seller's Offer Notice, it shall give a written notice to that
effect to Seller (the "Acceptance Notice") within thirty (30) days after
Buyer's receipt of the Offer Notice setting forth its intention to purchase
those Typical Loans for their Offered Price on a date (the "Purchase Date")
on which such purchase and sale is to occur, which Purchase Date shall be a
business day that is not fewer than forty five (45) nor more than ninety
(90) days after the date on which it gives such Acceptance Notice. In
addition, Buyer shall enclose with the Acceptance Notice a completed
Agreement for Purchase and Sale of Real Estate Loans in the form of this
Agreement, except that this Paragraph 2.2 and the heading for Paragraph 2
shall be deleted in their entirety therefrom; Paragraphs 2.1, 2.1.1, 2.1.2,
2.1.3 and 2.1.4 shall be renumbered as set forth in the following table:
4
Old Paragraph Number New Paragraph Number
Paragraph 2.1 Paragraph 2
Paragraph 2.1.1 Paragraph 2.1
Paragraph 2.1.2 Paragraph 2.2
Paragraph 2.1.3 Paragraph 2.3
Paragraph 2.1.4 Paragraph 2.4
and such conforming changes as are necessary to reflect the identity of the
Typical Loans in Exhibit A and the correct information in Paragraph 1 shall
be made.
2.2.2.4. On the Purchase Date, the Seller shall sell, and the Buyer or its
designee shall purchase, the Typical Loans described in the Offer Notice
(and not rejected by Buyer pursuant to Paragraph 2.2.2.2) for the Offered
Price pursuant to the agreement described in the last sentence of Paragraph
2.2.2.3.
2.2.2.5. Each of the Seller and Buyer shall cooperate with the other with
respect to the purchase and sale of Typical Loans pursuant to this
Paragraph 2.2.
2.2.2.6. The obligations of the Seller set forth in this Paragraph 2.2
(i.e., the covenant of the Seller to provide to Buyer a right of first
offer pursuant to the terms and conditions set forth in this Agreement and
to perform its related obligations set forth herein) shall survive the
Closing of the sale of the Loans described in Exhibit A annexed to this
Agreement.
3. Payment of Purchase Price; Adjustments to Purchase Price. Buyer shall
pay to Seller at the time of the Closing (as defined in Paragraph 4.1
below) the Purchase Price, increased by an amount equal to the accrued
interest on the Loans at the mortgage loan interest rate, and reduced by an
amount equal to the servicing fee rate on the Loans, each such amount to be
computed for the period of time commencing with and including the Cut-Off
Date and ending with and excluding the Closing Date. Buyer shall pay the
Purchase Price as so increased and decreased in United States Dollars in
cash or by federal funds wire transfer to such account or accounts as
Seller may designate in writing. At the Closing, the parties shall
calculate the Purchase Price based on the status of each Loan on the Cut-
Off Date.
4. Closing.
4.1. Time and Place. The closing of the purchase and sale transaction (the
"Closing") shall be held at the offices of Seller or at such other
locations as the parties may agree in writing, on the Closing Date.
4.2. Delivery of Assignment and Other Documents. At Closing, Seller shall
deliver to Buyer, or as Buyer may direct in writing, the following for each
Loan:
5
4.2.1. Note, endorsed in such manner as Buyer reasonably may request, and
Security Instruments, together with individual assignments in recordable
form, in form satisfactory to Buyer in the exercise of its reasonable
business judgment, and otherwise sufficient under the laws of the
jurisdiction in which the Security Instruments are recorded and filed to
reflect of record or in the appropriate files, as applicable, the sale or
transfer of the Loan and of Seller's beneficial interest in the Security
Instruments, the Subject Property encumbered thereby and all Related
Documentation that may be assigned (such assignments are referred to
collectively as the "Assignments").
4.2.2. All Related Documentation.
4.2.3. An assignment of all insurance policies, including, but not limited
to, hazard insurance, and lender's policy of title insurance.
4.2.4. Such other documents, instruments, agreements and assurances as may
be necessary or appropriate, or as Buyer reasonably may request, to vest,
or to confirm the vesting, in Buyer of the ownership of each Loan.
Notwithstanding the foregoing, Buyer may request that Seller retain the
Note, so endorsed, the Security Instruments and Assignments thereof and the
Related Documentation or portions thereof if Buyer engages Seller to act as
servicer with respect to that Loan and such retention is consistent with
that engagement.
In addition to the foregoing, Seller shall deliver to Buyer on the Closing
Date an opinion of counsel to Seller, dated as of the Closing Date and in
form and substance satisfactory to the Buyer and its counsel in their
reasonable judgment to the effect that: (1) Seller is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, with full entity power and authority
under such laws to own its properties and to conduct its business; (2)
Seller is qualified to do business as a foreign corporation or depository
institution in all jurisdictions in which its activities as originator and
servicer of the Loans require such qualification; (3) this Agreement has
been duly authorized, executed and delivered on the part of the Seller and
is a legal, valid and binding obligation of the Seller enforceable in
accordance with its terms, subject to applicable bankruptcy,
reorganization, receivership, conservatorship, insolvency, moratorium and
other laws relating to or affecting creditors' rights generally and to
general principles of equity (whether such enforceability is considered in
a proceeding in equity or at law); (4) no consent of any other party or any
consent, license, approval or authorization, or filing or registration with
any governmental authority, bureau or agency is required to be obtained in
connection with the execution, delivery or performance of this Agreement or
the sale of the Loans that has not been duly obtained; and (5) the
execution, delivery and performance of this Agreement and the sale of the
Loans does not violate any provision of any existing federal, state or
local law or regulation applicable to the Seller, or, to the best knowledge
6
of such counsel, any order or decree of any court to which the Seller is
subject or the articles of incorporation or by-laws of the Seller, or any
mortgage, indenture, contract or other agreement for money borrowed, to
which the Seller is a party or by which it or any significant portion of
its properties is bound, other than violations, breaches or defaults which
individually and in the aggregate are not reasonably expected to have a
material adverse effect on the Seller and its subsidiaries, if any, taken
as a whole.
4.3. Recording and Filing of Assignments. At Buyer's request, the
Assignments promptly shall be recorded or filed, as applicable, in the name
of Buyer or in the name of a person or entity designated by Buyer in all
appropriate public offices, files and records. If any such Assignment is
lost or returned unrecorded or unfiled because of a defect therein, Seller
promptly shall prepare substitute Assignments to cure such defects and
thereafter cause each such substitute Assignment to be duly recorded or
filed, as applicable. Each of Seller and Buyer shall pay one half of all
recording and filing fees related to such a one-time recordation or filing,
as applicable, of the Assignments.
4.4. Status of Items Retained by Seller. Any Notes, Security Instruments,
Related Documentation or Ancillary Rights with respect to one or more of
the Loans that are in Seller's possession from and after the Closing shall
be retained and maintained by the Seller in trust for the benefit of Buyer
and in a custodial capacity only, and subject in all events to the will of
Buyer. Seller shall segregate all of such Notes, Security Instruments,
Related Documentation and Ancillary Rights from Seller's other books and
records and shall appropriately mark each of them to reflect clearly the
sale of the related Loan to Buyer and the ownership of each Loan by Buyer.
Seller shall release its custody of the contents of any thereof only in
accordance with written instructions from Buyer except where such release
is required as incidental to the Seller's servicing of the Loans (if and to
the extent Seller is engaged to provide servicing with respect thereto), or
is in connection with a repurchase of any such Loan as contemplated by
Paragraph 8.1 below.
4.5. Seller's Books and Records. Seller shall reflect the sale of each
Loan sold pursuant to this Agreement on the Seller's balance sheet and
other financial statements as a sale of assets by Seller. Seller shall be
responsible for maintaining, and shall maintain, a complete set of books
and records for the Loans which shall be clearly marked to reflect the sale
of each Loan to Buyer and the ownership of each Loan by Buyer.
5. Representations and Warranties:
5.1. General Representations and Warranties of Seller. Seller hereby
represents and warrants to Buyer as follows:
5.1.1. Seller is a corporation duly organized, existing and in good
standing under the laws of the state of its incorporation or formation; and
7
it possesses the requisite corporate or other authority to enter into this
Agreement and consummate all transactions contemplated hereby.
5.1.2. The execution, delivery and performance of this Agreement has been
duly authorized and all corporate or other action necessary to consummate
the transactions contemplated by this Agreement have been taken by Seller.
5.1.3. The execution and delivery of this Agreement and the sale of any and
all Loans hereunder are not and will not be a breach, violation or event of
default (or an event which would become an event of default with the lapse
of time or notice or both) under any judgment, decree, agreement, or other
instrument to which Seller is a party or otherwise subject.
5.1.4. Neither the sale of Loans, nor the consummation of the transactions
contemplated by this Agreement, are or will result in violation of any
applicable federal, state or local law, rule or regulation.
5.1.5. Upon execution and delivery of this Agreement, it shall be a valid
and binding obligation of Seller, and enforceable against Seller in
accordance with its terms.
5.1.6. To the best of Seller's knowledge, as of the date of this Agreement,
other than that certain Memorandum of Understanding entered into as of
September 26, 1996 by and among Seller, the Federal Deposit Insurance
Corporation and the California Department of Corporations, a copy of which
has been provided to Buyer, there is no pending or threatened litigation,
adverse claim or action of any kind or nature which, if decided against
Seller, would materially and adversely affect Seller's ability to perform
its obligations pursuant to this Agreement. Seller agrees to promptly
notify Buyer of the subsequent existence of any such pending or threatened
litigation, adverse claim or action.
5.1.7. Seller has not, in connection with this transaction, entered into
any agreement, incurred any obligation, made any commitment, or taken any
action which might result in a claim for or an obligation to pay a sales
brokerage commission, finder's fee, or similar fee in respect to the
transactions described in this Agreement. Seller agrees to indemnify and
hold Buyer harmless from and against any claims, liabilities, damages, or
costs (including reasonable attorneys' fees) relating to any broker, agent,
or finder or other person, who shall claim to have dealt on behalf of
Seller in connection with the transactions contemplated by this Agreement.
5.2 Representations and Warranties of Seller as to Each Loan. Seller
represents and warrants to Buyer as of the Closing Date, with respect to
each Loan being purchased by Buyer pursuant hereto, that:
5.2.1. Seller has sole, full and complete title to each Loan, free and
clear of all claims of or assignments or pledges to any other person or
entity; and Seller has full power and authority to sell, assign, transfer
and convey the same to Buyer as provided herein.
8
5.2.2. Each Note, Security Instrument and other document, instrument or
agreement executed and delivered by Seller or the borrower in connection
with the Loan (individually, a "Loan Document" and collectively, the "Loan
Documents") for each Loan, including each Note, Security Instrument,
Related Documentation and Ancillary Rights, is the legal, valid and binding
obligation of the parties thereto (subject to any nonrecourse provisions
therein), enforceable in accordance with its terms, except as such
enforceability may be limited by anti-deficiency laws or bankruptcy,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally, and by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in
equity or at law), and except that certain provisions of such Loan
Documents are or may be unenforceable in whole or in part under applicable
federal or state laws, but the inclusion of such provisions does not render
any of the Loan Documents invalid as a whole, and such Loan Documents taken
as a whole are enforceable to the extent necessary and customary for the
practical realization of the rights and benefits afforded thereby and,
subject to the foregoing qualifications, there is no offset, defense,
counterclaim or right of rescission with respect to any of such Loan
Documents;
5.2.3. Each Loan purchased hereunder, including without limitation, all
forms and documents used in connection with that Loan, is and as of the
Closing Date will be in full compliance with all federal and state laws and
regulations.
5.2.4. In respect of each Loan, (A) in reliance on certified copies of the
incorporation or partnership or other entity documents, as applicable,
delivered in connection with the origination of such Loan, the related
borrower is an individual who is a permanent resident of, or an entity
organized under the laws of, a state of the United States of America, and
(B) to Seller's knowledge, the related borrower is not a party to any
bankruptcy, reorganization, insolvency or similar proceeding.
5.2.5. Each Loan sold hereunder is and as of the Closing Date will be an
adjustable rate loan secured by a mortgage, deed of trust, deed to secure
debt or similar instrument (each, a "Mortgage") that is and as of the
Closing Date will be a valid and subsisting first priority lien on the
Subject Real Property purported to be encumbered thereby free and clear of
any liens, claims, encumbrances, participation interests, pledges, charges
or security interests, subject only to certain permitted encumbrances
described in Schedule D annexed hereto and certain encumbrances previously
disclosed in writing to Buyer, if any; no Subject Real Property is in whole
or in part a leasehold estate; except as set forth in Schedule A annexed
hereto, no Loan is secured by any collateral other than the Mortgage and
any separate security documents related thereto or as otherwise set forth
on the Loan Table; and except as set forth in Schedule B annexed hereto, no
portion of any Subject Property secures any other mortgage loan not
represented by the related Note; and, with respect to each Loan, either (i)
substantially all of the proceeds of such Loan were used to acquire or
9
improve or protect an interest in real property (as that term is used in
United States Treasury Regulations Section 1.860G-2(a)(4)) that, at date of
origination (or, if the Loan has been significantly modified within the
meaning of United States Treasury Regulations Section 1.860G-2(b)(1), at
the time of such modification), was the only security for such Loan, or
(ii) the fair market value of such interest in real property was at least
equal to 80% of the principal amount of such Loan at origination (or such
modification);
5.2.6. Except as disclosed in the Loan Table, no Loan is cross-defaulted
with any loan (other than a Loan), and no Loan is secured by any property
that secures another loan (other than a Loan);
5.2.7. Each such Mortgage, together with any separate security agreements
and related documents, establishes a perfected first priority security
interest in favor of the Seller in all the related borrower's fixtures and
personal property used in, and reasonably necessary to operate, the Subject
Real Property and, to the extent a security interest may be created
therein, the proceeds arising from the Subject Real Property and any other
collateral securing such Mortgage, subject only to certain encumbrances
described in Schedule D annexed hereto and other encumbrances previously
disclosed in writing to Buyer, if any;
5.2.8. There is an assignment of leases and rents provision in the Security
Instruments for each Loan creating a perfected first priority security
interest in leases and rents arising in respect of the related Subject Real
Property, subject only to certain permitted encumbrances set forth in
Schedule D annexed hereto and certain other encumbrances previously
disclosed in writing to Buyer, if any;
5.2.9. There are no mechanics' or other similar liens which have been filed
for work, labor or materials (nor, to Seller's knowledge, are any rights
outstanding that under applicable law could give rise to any such lien)
affecting any Subject Real Property which are or may be prior or equal to
the lien of the related Mortgage, except those insured against pursuant to
the applicable title insurance policy;
5.2.10. The mortgagor specified in each Mortgage has and as of the Closing
Date will have good and indefeasible title to the related Subject Real
Property;
5.2.11. With respect to each Mortgage that is a deed of trust, a trustee,
duly qualified under applicable law to serve as such (if such qualification
is required), currently so serves and is named in the deed of trust or has
been substituted of record in accordance with applicable law, and no fees
or expenses are or will become payable to the trustee thereunder except in
connection with a trustee's sale or reinstatement after default under the
related Loan or in connection with a release of the related Subject
Property upon satisfaction of the Loan;
10
5.2.12. Each Subject Real Property securing a Loan is covered by a title
insurance policy insuring that the Mortgage recorded against that Subject
Real Property is a valid and perfected first lien in the fee interest
therein, subject only to certain permitted encumbrances; no claims have
been or, as of the Closing Date, will have been made under the related
title insurance policy; and such policy is and as of the Closing Date will
be in full force and effect and insures and will as of the Closing Date
insure the Seller as the owner of the Loan;
5.2.13. Seller has and, at the time of the assignment of each Loan to
Buyer, Seller will have, good title to and was and, at the time of the
assignment of each Loan to Buyer, will be, the sole owner of such Loan free
and clear of any pledge, lien or encumbrance;
5.2.14. Each Assignment to be executed and delivered, recorded or filed by
or on behalf of Seller pursuant hereto is and will be in recordable form
and legal, valid and binding and will be recorded or filed, or submitted
for recording or filing, in the appropriate records or files of the
applicable jurisdiction;
5.2.15. Seller's endorsement of the Note evidencing each Loan, which Note
is secured by the related Mortgage, will constitute the legal and binding
assignment of such Note and together with an Assignment of mortgage and
Assignment of the assignment of leases and rents, legally and validly will
convey all right, title and interest in such Loan to Buyer;
5.2.16. Each Loan Document is and as of the Closing Date will be a legal,
valid and binding obligation of the party or parties thereto, enforceable
in accordance with its terms, except as the enforceability thereof may be
limited by applicable state law and bankruptcy, insolvency, reorganization
or other loss relating to creditors' rights and general equitable
principles, and while certain provisions of such Loan Documents are and may
be unenforceable in whole or in part, the inclusion of such provisions does
not render any of those Loan Documents invalid as a whole, and such Loan
Documents taken as a whole are enforceable to the extent necessary and
customary for the practical realization of the rights and benefits
(including realization on the related Subject Property) purported to be
afforded thereby, and there is no exemption available to the related
borrower that would interfere with such realization through foreclosure
except any statutory right of redemption or as may be limited by anti-
deficiency laws or by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally, and
by general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
5.2.17. The principal amount of each Loan stated on the related Note has
been fully disbursed as of the origination date specified therein, there
are no future advances required to be made by the lender under any of the
related Loan Documents, all requirements under the related Loan Documents,
if any, for disbursements of additional Loan proceeds have been satisfied
11
fully, and any construction of improvements on the related Subject Real
Property that has not been completed will not impair the value of that
Subject Real Property relative to the value reflected in the most recent
appraisal thereof;
5.2.18. Other than as set forth in the Loan Table, no Loan is as of the
date hereof, will be as of the Closing Date, or shall have been at any time
during the 12 month period preceding the Cut-Off Date, more than 30 days
delinquent in payments of principal or interest; no other material default
or breach under any Loan either has been waived by Seller or on its behalf;
no such other material default now exists and is continuing beyond the cure
period, if any, applicable thereto; no Loan has been accelerated and no
foreclosure or proceeding under a power of sale has been initiated under
any Mortgage;
5.2.19. Seller has not modified, and shall not on or prior to the Closing
Date modify, the terms of any Loan and none of the Loan Documents have been
modified or waived, or shall be modified or waived on or prior to the
Closing Date, in each case in any material respect except as previously
disclosed in writing by Seller to Buyer; with respect to each Loan, the
applicable interest rate and the related monthly payment have been
calculated correctly (or have been recalculated correctly, in the case of
certain Loans for which one or both of such amounts previously was
calculated incorrectly, each of which incorrect calculations previously has
been disclosed to Buyer in writing) pursuant to the terms of the applicable
Loan Documents for all purposes; and all information set forth in the Loan
Table with respect to each Loan is true and correct in all material
respects;
5.2.20. No Loan has capitalized interest included in its principal
balance, or provides for any shared appreciation rights or other equity
participation therein;
5.2.21. No Loan is an interest-only loan the documents governing which
provide only for interest accruing on that Loan to be paid on a periodic
basis, with no periodic payment on account of amortization of principal;
5.2.22. No Loan has been, and as of the Closing Date no Loan shall be,
satisfied, canceled, subordinated, released or rescinded, in whole or in
part, and the related mortgagor has not been and shall not be released by
Seller from any of such mortgagor's obligations under any Loan Documents;
5.2.23. None of the Loan Documents is or, on or prior to the Closing Date,
will be subject to any right of rescission, set-off, valid counterclaim or
defense, no exercise of any of the rights and remedies under the Loan
Documents and in accordance with procedures permitted under applicable law
will render any of such Loan Documents subject to any right of rescission,
set-off, valid counterclaim or defense, and no right of rescission, set-
off, valid counterclaim or defense has been asserted with respect to any
Loan;
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5.2.24. All of the Subject Property securing each Loan being or to be sold
by Seller pursuant to this Agreement is, and as of the Closing Date will
be, in all material respects, in compliance with, and is used and occupied
in accordance with, all applicable statutes, rules, laws, regulations and
ordinances and all restrictive covenants of record applicable to the
Subject Property; and all inspections, licenses and certificates of
occupancy required by any of such statutes, rules, laws, regulations and
ordinances to be made or issued with regard to the Subject Property have
been obtained and are in full force and effect (except to the extent the
failure to obtain and maintain any thereof do not materially impair the
current use of the Subject Property or the rights of a holder of the
related Loan);
5.2.25. All of the Subject Property securing each Loan being or to be sold
by Seller pursuant to this Agreement is, and as of the Closing Date will
be, in good repair and free and clear of any damage or condition that would
materially adversely affect the value of such Subject Real Property as
security for the related Mortgage, other than damage and conditions that
have been fully repaired; each Subject Real Property is comprised of one or
more separate and lawfully created parcels; each Subject Real Property
securing a Loan abuts or has access to, and as of the Closing Date will
abut or will have access to, a dedicated, physically open road; each
Subject Real Property is served by public utilities and services generally
available in the surrounding community; each Subject Real Property is
serviced by well or public water and sewer systems (or septic facilities);
each Subject Real Property has parking required under applicable law for
the operation of the businesses currently conducted thereon; no part of any
improvement that is a part of a Subject Real Property lies outside the
boundaries of, or building setback and other restriction lines applicable
to, that Subject Real Property; no improvements on adjoining properties
encroach onto any Subject Real Property except for encroachments that do
not materially adversely affect the security intended to be provided by the
related Mortgage or the use, enjoyment, value or marketability of such
Subject Real Property; Seller has no knowledge of any condemnation
proceedings with respect to any Subject Real Property securing a Loan that
are or as of the Closing Date will be pending; and each Subject Real
Property is owned by the borrower named as the mortgagor in the Mortgage
and is used and occupied for income producing purposes;
5.2.26. There are no delinquent property taxes, ground rents, water
charges, sewer rents, assessments including assessments payable in future
installments, or other outstanding charges materially adversely affecting
the related Subject Property, and premiums for all insurance policies
required to be maintained pursuant to each Mortgage with respect to each
Subject Real Property have been, and through the Closing Date will be, paid
to the extent such amounts have become or shall become due;
5.2.27. Seller either has received no notice of cancellation or non-
renewal with respect to any of the insurance policies required to be
maintained pursuant to the Mortgage or has provided for insurance coverage
13
against the perils and in the amounts required by such Mortgage to be
covered by insurance through one or more insurance policies maintained by
the Seller, with respect to each Subject Real Property; Seller has no
knowledge that any action, omission, misrepresentation, negligence, fraud
or other similar occurrence has taken place that reasonably would be
expected to result in the failure or impairment of full and timely coverage
under any such insurance policy; and each such insurance policy contains a
clause providing that it is not terminable and may not be reduced without
30 days' prior written notice to the mortgagee;
5.2.28. Each Mortgage requires that the related Subject Real Property and
all improvements thereon be covered by insurance policies reasonably
prescribed by the related mortgagee or providing coverage against loss or
damage sustained by (A) fire and extended perils included within the
classification "All Risk of Physical Loss" in an amount sufficient to
prevent the mortgagor from being deemed a coinsurer and to provide
coverage on a full replacement cost basis (in some cases exclusive of
foundations and footings) or some other predetermined value basis; such
policies contain a standard mortgagee clause naming mortgagee and its
successor in interest as additional insureds; (B) business interruption or
rental loss insurance in an amount at least equal to 12 months of
operations (or in some cases all rents and additional rents); (C) flood
insurance (if any portion of the improvements on a Subject Real Property is
located in an area identified by the Federal Emergency Management Agency,
with respect to certain Loans, and the Secretary of Housing and Urban
Development, with respect to other Loans, as having special flood hazards);
(D) worker's compensation; (E) comprehensive general liability insurance in
amounts as generally are required by commercial mortgage lenders; all such
insurance policies contain clauses providing they are not terminable and
may not be terminated or expire without 30 days' prior written notice to
the mortgagee (except where applicable law requires a shorter period), and
all premiums due and payable through the Closing Date have been made; and
no notice of termination, cancellation or non-renewal with respect to any
of such policies has been received by Seller;
5.2.29. Seller has inspected or caused to be inspected each Subject Real
Property within the last 12 months;
5.2.30. Seller did not engage in an adverse selection process in selecting
the Loans for sale, assignment and transfer to Buyer.
5.2.31. No more than 5% of the aggregate outstanding principal amount of
the Loans have the same borrower or, to Seller's best knowledge, are to
borrowers, which are affiliates of each other;
5.2.32. Except as set forth on Schedule C annexed hereto, each Mortgage
(A) contains a "due-on-sale" clause, which provides for the acceleration of
the payment of the unpaid principal balance of the related Loan if, without
the prior written consent of the holder, the related Subject Real Property
or any interest therein is directly or indirectly transferred or sold
14
(except that the Mortgage may provide for a one-time assignment subject to
the holder's approval of the transferee); and (B) prohibits any further
pledge or lien on the Subject Real Property, whether of equal or
subordinate priority to the lien of the Mortgage, unless the prior written
consent of the holder is obtained or certain conditions set forth in the
Mortgage are satisfied;
5.2.33. If so indicated to Buyer in writing on or prior to the date
hereof, with respect to each Loan, either an environmental site assessment
was prepared in connection with the origination of such Loan or Seller has
reviewed a compilation of data bases made available by several regulatory
agencies constructed by a private service with respect to an area within a
certain radius surrounding the related Subject Real Property, and no such
assessment or review revealed any known circumstances or conditions and the
Seller has no knowledge of any circumstances or conditions with respect to
such Subject Real Property (including any Subject Real Property with
respect to which neither an assessment was prepared nor was a review
performed as described above), that would constitute or result in a
material violation of any environmental laws or require any expenditure
material in relation to the principal balance of such Loan to achieve or
maintain compliance in all material respects with any and all environmental
laws;
5.2.34. The Seller's loan file for each Loan contains the insurance policy
with respect to the related Subject Property required by the relevant Loan
Documents, or a certificate of insurance for such insurance policy;
5.2.35. All amounts required to be deposited by the borrower with respect
to each Loan at the origination of such Loan have been deposited, and there
are no deficiencies with regard thereto;
5.2.36. To Seller's best knowledge, all significant leases with respect to
each Subject Real Property are and as of the Closing Date will be in full
force and effect, there has been and as of the Closing Date will be no
material default by the related borrower or, to Seller's knowledge, except
as disclosed on Schedule D, the lessee, and no person or entity other than
the related borrower owns any interest in any payments due or to become due
under the related leases;
5.2.37. To Seller's best knowledge, there are and as of the Closing Date
will be no pending or threatened actions, suits or proceedings by or before
any court or other governmental authority against or affecting the related
borrower under each Loan or the Subject Real Property securing such Loan
which, if determined against such mortgagor or Subject Real Property, would
materially and adversely affect the value of such Subject Real Property or
the ability of the borrower to pay principal, interest and other amounts
due under such Loan; and
5.2.38. Each appraisal obtained in connection with the origination of a
Loan was obtained from an independent third-party appraiser in the business
15
of making appraisals of real properties such as the Subject Real Property
securing that Loan.
5.3 Representation, Warranty and Covenant of ICII. For the purpose of
inducing Buyer to enter into this Agreement, with the intent that Buyer
rely hereon, and with the understanding and expectation that Buyer will
rely hereon, ICII hereby represents and warrants to Buyer that, as of the
Closing Date, there are no circumstances or conditions with respect to any
Subject Real Property securing any Loan that would constitute or result in
a material violation of any applicable environmental laws or require an
expenditure material in relation to the principal balance of that Loan to
achieve or maintain compliance in all material respects with all such
environmental laws. If the representation and warranty of ICII set forth
in the preceding sentence is breached and if such breach materially and
adversely affects the interests of the Buyer in that Loan, ICII shall
purchase the Loan from the Buyer, within 30 days after receipt of written
notice from the Buyer of such breach and requesting that ICII complete such
purchase.
5.4. General Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
5.4.1. Buyer is a corporation duly organized, existing and in good standing
under the laws of the state of its incorporation or formation; and it
possesses the requisite corporate or other authority to enter into this
Agreement and consummate all transactions contemplated hereby.
5.4.2. The execution, delivery and performance of this Agreement has been
duly authorized and all corporate or other action necessary to consummate
the transactions contemplated by this Agreement have been taken by Buyer.
5.4.3. The execution and delivery of this Agreement and the sale of any and
all Loans hereunder are not and will not be a breach, violation or event of
default (or an event which would become an event of default with the lapse
of time or notice or both) under any judgment, decree, agreement, or other
instrument to which Buyer is a party or otherwise subject.
5.4.4. Neither the sale of Loans, nor the consummation of the transactions
contemplated by this Agreement, are or will result in a violation of any
applicable federal, state or local law, rule or regulation.
5.4.5. Upon execution and delivery of this Agreement, it shall be a valid
and binding obligation of Buyer, and enforceable against Buyer in
accordance with its terms.
5.4.6. To the best of Buyer's knowledge, as of the date of this Agreement,
there is no pending or threatened litigation, adverse claim or action of
any kind or nature, which, if decided against Buyer, would materially and
adversely affect Buyer's ability to perform its obligation pursuant to this
Agreement. Buyer agrees to promptly notify Seller of the subsequent
16
existence of any such pending or threatened litigation, adverse claim or
action.
5.4.7. Buyer has not, in connection with this transaction, entered into any
agreement, incurred any obligation, made any commitment, or taken any
action which might result in a claim for or an obligation to pay a sales
brokerage commission, finder's fee, or similar fee in respect to the
transactions described in this Agreement. Buyer agrees to indemnify and
hold Seller harmless from and against any claims, liabilities, damages, or
costs (including reasonable attorneys' fees) relating to any broker, agent,
or finder or other person, who shall claim to have dealt on behalf of Buyer
in connection with the transactions contemplated by this Agreement.
6. Certain Covenants of Seller.
6.1. Assistance in Securitization. Seller shall take all reasonable steps,
at Buyer's sole expense, to assist Buyer if Buyer so requests in
securitizing the Loans and selling undivided interests in such Loans in a
public offering or private placement or selling participating interests in
such Loans, which steps shall include, but not be limited to, (i) providing
any information relating to the Loans necessary to assist in the
preparation of any disclosure documents, (ii) providing information
(including accounting comfort thereon) relating to delinquencies and
defaults with respect to Seller's servicing portfolio (or such portion
thereof as is similar to the Loans), (iii) entering into any other
servicing, custodial or other similar agreements, that are consistent with
Seller's servicing obligations to Buyer (if any), together with such
changes as may be customary in securitizations rated "AAA" (including
without limitation, a securitization involving a REMIC) (a
"Securitization"), (iv) providing as of the date of such Securitization an
opinion of counsel to Seller in form and substance satisfactory to Buyer
and its counsel to the effect that the sale of the Loans by Seller to Buyer
as contemplated by this Agreement constitutes a true sale of the Loans, and
(v) providing to Buyer as of the date of such Securitization
representations and warranties as to Seller and the Loans, which are
consistent with the representations and warranties contained in this
Agreement, together with such changes therein as are customary in a
Securitization, subject only to events, conditions or changes in the
characteristics of the Loans occurring or arising after the Closing Date
that (A) are specified in writing by Seller, and (B) did not result in
whole or in part from the failure of Seller to perform its obligations
under this Agreement or under any servicing agreement to which it may be a
party. If any of the representations and warranties contemplated in clause
(v) above is breached, Buyer shall have, in addition to any other remedies
which may be available to it, the remedies provided in Paragraph 8.1
hereof.
6.2. No Solicitation of Prepayments. For a period of one (1) year from the
date of sale, Seller shall not actively solicit any borrowers with respect
to any of the Loans (in writing or otherwise) to refinance any of the
17
Loans; provided that neither mass advertising (such as placing
advertisements on television, on radio, in magazines or in newspapers), nor
responding to an inquiry initiated by a borrower without active inducement
from Seller, shall constitute "direct solicitation" in violation of this
covenant.
6.3. Maintenance of Seller's Status; Successors. Seller will keep in full
effect its existence, rights and franchises as a corporation under the laws
of the state of its incorporation, and will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction
in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement, or any of the Loans and to
perform its duties under this Agreement. Any person or entity into which
Seller may be merged or consolidated, or any corporation resulting from any
merger, conversion or consolidation (including, without limitation, by
means of the sale of substantially all of the Seller's assets to such
corporation) to which the Seller shall be a party, or any person or entity
succeeding to the business of the Seller, shall be the successor of the
Seller hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding; provided, however, that the successor or
surviving entity shall have a net worth of at least $25 million and shall
not cause a rating on any security backed by a Loan to be downgraded by any
rating agency of recognized standing.
7. Survival of Representations, Warranties and Covenants. All of the
representations, warranties and covenants contained in Paragraphs 5 and 6
of this Agreement shall survive Closing for all purposes.
8. Breach of Representations and Repurchase:
8.1. Remedy for Breach. In addition to rights or remedies Buyer may have
at law or in equity, if at any time any material representation or warranty
set forth in this Agreement proves to be inaccurate or incomplete in any
material respect, or if any signature, name, address, amount, Loan balance
or other statement of fact appearing on the Note, Security Instrument or
Related Documentation is not true and correct or the obligors and
guarantors named thereon are not of majority age, or do not have legal
capacity to enter into the transaction purported to be governed thereby,
and provided Buyer has not modified or altered the terms of the relevant
obligation so as to materially impair the collectibility thereof, Seller
shall, upon demand of Buyer, either (a) cure the defect within thirty (30)
days; provided, that if such defect is curable, Seller has commenced to
cure such defect within ten (10) days after its receipt of Buyer's demand,
and thereafter Seller vigorously and continuously prosecutes such cure to
completion, such thirty (30) day period shall be extended for an additional
sixty (60) days if, during such sixty (60) day period each of those
conditions is met, and thereafter for additional successive periods of
sixty (60) days so long as each of such conditions continues to be met and
Seller has obtained Buyer's written consent to each such additional cure
18
period, such consent of Buyer not to be unreasonably withheld, conditioned
or delayed, or (b) repurchase the Loan affected by such defect for the Buy-
Back Price (as that term is defined in Paragraph 8.3 below), such
obligation of Seller to survive the Closing.
8.2. Reassignment. Upon receipt of the Buy-Back Price, in full, in
immediately available funds, Buyer shall reassign the Loan to Seller free
and clear of all liens, encumbrances, claims or interests of any person or
entity (except those that existed at the time that the Loan was assigned to
Buyer), without recourse, and shall execute and deliver to the Seller an
assignment of Buyer's interest in the Loan, as well as other documents
necessary to reflect the reassignment of any insurance policies.
8.3. Buy-Back Price. The term "Buy-Back Price" shall mean an amount equal
to the sum of (i) the product of the Purchase Price (including any premium)
paid for the Loan by Buyer multiplied by the quotient obtained by dividing
(x) the then outstanding principal balance of the Loan by (y) the
outstanding principal balance of the Loan at the time it was purchased by
Buyer pursuant to this Agreement (i.e., the then outstanding principal
balance of the Loan plus the unamortized portion of any premium paid by
Buyer therefor), plus (ii) all amounts reasonably paid or incurred by Buyer
with respect to or reasonably allocable to the Loan (including amounts
reasonably paid to preserve the collateral securing repayment of the Loan)
and not previously reimbursed to Buyer from any source, plus (iii) all
accrued but unpaid interest on the amounts described in clauses (i) and
(ii) hereof, computed at the rate at which interest accrues on the Loan
from time to time.
8.4. Indemnity by Seller. Seller shall indemnify, defend and hold harmless
Buyer from and against any and all losses, damages, liabilities, costs,
claims and expenses (including attorneys' fees and costs) arising from or
related to any untruth or inaccuracy in any representation or warranty of
Seller, act or omission of Seller, or violation of any law or regulation in
connection with the origination (or other handling of the Loan prior to the
Closing Date) of any Loan.
8.5. Indemnity of Buyer. Buyer shall indemnify, defend and hold Seller
harmless against any and all losses, damages, liabilities or expenses
(including attorneys' fees and costs) arising from any act or omission of
Buyer, or violation of any law or regulation in connection with the
handling by Buyer of any Loan after Closing Date.
8.6. Tender of Defense. Before asserting any claim or pursuing any remedy
provided in this Paragraph 8, the indemnified party shall give the
indemnifying party fifteen (15) days prior written notice of any event for
which indemnity may be required or requested and an opportunity, by tender
of defense where applicable, to cure or defend the action or alleged
breach, misrepresentation, or other claim; provided such defense shall be
with counsel reasonably acceptable to the indemnified party. Additionally,
without the prior written consent of the indemnifying party, which consent
19
shall not be unreasonably withheld, the indemnified party shall not settle
or compromise any claim for which the indemnified party seeks indemnity
hereunder so long as the indemnifying party is performing its indemnity
responsibilities hereunder.
9. Buyer's Collection Rights.
9.1. Collections. Unless Buyer engages Seller in writing to act as
servicer of the Loans or some portion thereof, Buyer or another party
designated by Buyer shall have the sole right to make collections on all
Loans, and Seller shall execute and deliver to Buyer or another party
designated by Buyer and each obligor and guarantor of each Loan a notice in
a form satisfactory to Buyer advising each such party of the assignment and
directing all future payments made to Buyer. Seller will not solicit or
accept any collections with respect to any Loan sold to Buyer hereunder
unless requested to do so by Buyer in writing. Seller shall hold in trust
for the benefit of Buyer and promptly deliver to Buyer in the form
received, all checks, drafts, money orders, insurance proceeds and other
instruments relating to any Loan sold hereunder that may come into the
possession of Seller from and after the Cut-Off Date.
9.2. Limited Power of Attorney. Seller irrevocably constitutes and
appoints Buyers as its lawful attorney-in-fact, with the power to sign
Seller's name to all checks, money orders, drafts or payment of money
issued in connection with the Loans, to exercise all rights and remedies as
holder of the Loans, and to take all other acts with respect to the Loans
which Buyer deems proper to protect its rights hereunder.
10. Further Assurances. At any time and from time to time Seller shall
take such further actions as Buyer reasonably deems to be necessary or
desirable to carry out the intent of this Agreement and the transactions
contemplated hereby, including, without limitation, the execution and
delivery of such agreements, documents, certificates, instruments and
notifications as may be necessary to evidence the vesting in Buyer of its
rights, titles and interests as contemplated by this Agreement.
11. Default by Obligor. In the event of any default by the obligor on any
Loan, Buyer shall have all rights against such defaulting obligor or its
guarantor, if any, provided for under the Loan Documents and permitted by
law, including, but not limited to, imposition of late charges, commencing
of suit, and/or foreclosure. Buyer may, in its sole discretion, and
without the consent of Seller grant extensions, and other indulgences in
the collection of all Loan payments and other sums due or to become due
under the Loans. The foregoing shall be without limitation of Buyer's
other rights under this Agreement or as provided by law.
12. Notices. Any notices or other communications with respect to the
matters set forth in this Agreement shall be in writing and shall be
delivered to the parties at the following addresses, or such other address
or addresses as may be specified in a notice served in accordance herewith:
20
If to Seller: Southern Pacific Bank
12300 Wilshire Boulevard
Los Angeles, CA 90025
Attn: Mr. Stephen J. Shugerman
Telephone: 310/442-3300
Telefax: 310/442-5160
With a copy to: Brown & Wood, LLP
One World Trade Center, 58th Floor
New York, New York 10048
Attn: Carlos Rodriguez, Esq.
Telephone: 212/839-5857
Telefax: 212/839-5598
If to Buyer: Imperial Credit Commercial Mortgage Investment Corp.
11601 Wilshire Blvd., Suite 2080
Los Angeles, CA 90025
Attn: Mr. Mark Karlan
Telephone: 310/231-1280
Telefax: 310/231-1281
All such notices may be hand delivered to the addresses, sent by certified
U.S. mail, with return receipt requested and postage prepaid, sent by
overnight courier, or sent by facsimile transmission with an original copy
mailed the same day, and shall be deemed received upon the earlier of
actual receipt by the addressee or four (4) business days from the date so
sent.
13. Independent Contractors. This Agreement shall not be deemed to
constitute the parties hereto as partners or joint venturers, nor shall any
party be deemed to constitute the other party as its agents.
14. Entire Agreement. This Agreement (including the Schedules and Exhibits
annexed hereto or referred to herein) and the documents submitted in
connection herewith contain the entire Agreement among the parties hereto
with respect to the subject matter hereof and supersedes any and all prior
arrangements, proposals or understandings, written or oral, by or between
the parties hereto with respect to all transactions contemplated under this
Agreement. In the event of any conflict or inconsistency between any
provision of this Agreement and any provision of any other document or
writing executed by Buyer and Seller, the provision of this Agreement shall
take precedence and shall control, unless the conflicting or inconsistent
provision in such other document or writing specifically refer to this
Agreement and specifically state that it shall prevail. No amendment or
modification of this Agreement shall be effective for any purpose unless
the same in writing and duly executed by the parties hereto.
15. Successors. This Agreement shall bind and benefit the respective
successors and assigns of Buyer and Seller. No other person or entity is
intended to be benefited hereby.
21
16. Remedies Cumulative. The rights and remedies of the parties hereunder
shall be cumulative and Buyer may exercise any right or remedy, whether
against the Borrowers under Loans, guarantors or the security thereof, any
sums withheld or retained by Seller hereunder, Seller, or any combination
of the foregoing, in such order as Buyer shall determine in its absolute
discretion without thereby releasing any other right Buyer may have.
17. Amendment; Waiver. This Agreement may be amended, superseded,
canceled, renewed or extended and the terms hereof may be waived, only by a
written instrument signed by authorized representatives of the parties or,
in the case of a waiver, by an authorized representative of the party
waiving compliance. No such written instrument shall be effective unless
it expressly recites that it is intended to amend, supersede, cancel, renew
or extend this Agreement or to waive compliance with one or more of the
terms hereof, as the case may be. Buyer's omission or delay to exercise
any of its optional or absolute rights or remedies, or other rights, powers
or privileges, under this Agreement shall not constitute a waiver by Buyer,
nor operate to bar Buyer from the exercise of any such rights, powers or
privileges. Any waiver of Buyer of any default, right, power or privilege
shall not operate as a waiver of any other subsequent default, right, power
or privilege, respectively. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party
may otherwise have at law or in equity.
18. Choice of Law. The validity of this Agreement, its construction,
interpretation and enforcement, and the rights of the parties hereunder,
shall be determined under, governed by and construed in accordance with the
laws of the State of California.
19. Interpretation of Agreement.
19.1. Number, Gender. The terms defined in this Agreement have the
meanings assigned to them in this Agreement and include the plural as well
as the singular, and the use of any gender herein shall be deemed to
include the other gender.
19.2. Accounting Terms. Accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles.
19.3. References to Paragraphs, etc. References herein to "Articles",
"Sections", "Paragraphs", and other subdivisions without reference to a
document are to designated Paragraphs and other subdivisions of this
Agreement, unless the context shall otherwise require.
19.4. Construction of Certain Terms. The words "herein", "hereof",
"hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular provision, and the term "include" or
"including" shall mean "include without limitation" and "including without
limitation."
22
19.5. Fully Negotiated Agreement. Neither this Agreement nor any
uncertainty or ambiguity herein or of any provision hereof shall be
construed or resolved against Buyer or Seller, whether under any rule of
construction or otherwise. The terms and conditions contained in this
Agreement have been fully negotiated and reviewed by all parties and their
respective counsel, and shall be construed and interpreted according to the
ordinary meanings of the words used so as to fairly accomplish the purposes
and intentions of all parties hereto.
19.6. Headings and Captions. All section headings and captions contained
in this Agreement or in any Schedule or Exhibit annexed hereto or referred
to herein are for convenience only, shall not be deemed a part of this
Agreement and shall not affect the meaning or interpretation of this
Agreement.
20. Severability of Provisions. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
21. Counterparts. This Agreement may be executed in any number of
counterparts, and by the different parties hereto on the same or separate
counterparts, each of which counterparts, when so executed and delivered,
shall be deemed to be an original instrument and all of which counterparts,
taken together, shall constitute one and the same Agreement.
22. Setoff. Buyer hereby irrevocably and unconditionally waives all rights
of setoff that it may have under contract (including this Agreement),
applicable law or otherwise with respect to any funds or moneys of Seller
at any time held by or in the possession of Buyer.
23. Amendment. Any provision of this Agreement may be amended,
supplemented, restated, discharged, waived or terminated, in writing duly
executed by Seller and Buyer.
24. Attorneys' Fees. If any legal action, arbitration or other proceeding
is brought for the enforcement or interpretation of this Agreement, or
because of an alleged dispute, breach, default or misrepresentation in
connection with any of the provisions of this Agreement, the successful or
prevailing party or parties shall be entitled to recover reasonable
attorneys' fees and any other relief to which it or they may be entitled.
The court or arbitrator before which such action or proceeding is brought
shall determine which party is the successful or prevailing party within
the meaning of this section, taking into account all bona fide settlement
offers of all parties, and such determination shall be binding upon the
parties hereto.
23
25. Arbitration. Any dispute between the parties arising out of or by
reason of this Agreement or regarding its construction shall be submitted
for arbitration in Los Angeles, California, and shall be settled in
accordance with the rules and regulations then existing of the American
Arbitration Association, to which shall be added the provisions of the
California Civil Discovery Act. Judgment upon any award rendered in such
proceedings may be obtained by either party in any court of competent
jurisdiction.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their respective duly authorized representatives on the date
first above set forth.
Buyer: IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP., a Maryland
corporation
By /s/ Mark S. Karlan
Seller: SOUTHERN PACIFIC BANK, a California corporation
By /s/ Stephen J. Shugerman
IMPERIAL CREDIT INDUSTRIES, INC. has executed and delivered this Agreement
in the space indicated below solely to confirm its representation, warranty
and covenant set forth in Paragraph 5.3 above. IMPERIAL CREDIT INDUSTRIES,
INC. has so executed and delivered this Agreement solely for the purpose of
inducing Buyer to enter into this Agreement, with the intent that Buyer
rely on the representation, warranty and covenant of IMPERIAL CREDIT
INDUSTRIES, INC. set forth in said Paragraph 5.3, and with the
understanding and expectation that Buyer will rely thereon.
ICII: IMPERIAL CREDIT INDUSTRIES, INC., a California corporation
By /s/ H. Wayne Snavely
Exhibit A
[ATTACH LOAN TAPE]
24
Exhibit 10.4
THIS INITIAL INVESTMENTS SALE AGREEMENT (this "Agreement"), dated as of
October 22, 1997, by and between Imperial Credit Commercial Mortgage
Investment Corp., a Maryland corporation (the "Purchaser") and Southern
Pacific Bank, a California licensed industrial loan company (the
"Seller"), recites and provides as follows:
RECITALS
WHEREAS, the Seller owns certain commercial mortgage-backed securities
identified on Schedule 1 hereto (the "Initial Investments");
WHEREAS, the Seller desires to sell its right, title and interest in and
to the Initial Investments to the Purchaser pursuant to the terms hereof;
WHEREAS, capitalized terms used and not defined herein shall have the
meanings assigned to them in the Purchaser's Prospectus, dated October 16,
1997 (the "Prospectus");
AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual covenants,
representations and warranties herein made and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged,
the parties hereto hereby agree as follows:
SECTION 1. Sale and Purchase.
(a) The Seller hereby sells, conveys, assigns and transfers, and the
Purchaser hereby purchases, all of the Seller's right, title and interest
in and to the Initial Investments, having the respective outstanding
principal balances or notional amounts as of the close of business on
September 25, 1997 (the "Information Date") set forth on Schedule 1,
including the Seller's right to any and all payments to be received on the
Initial Investments beginning in October 1997;
(b) The sale of the Initial Investments shall be effected by endorsement
and delivery of the Initial Investments.
SECTION 2. Purchase Price. On the Closing Date, as full consideration
for the Seller's sale of the Initial Investments to the Purchaser, the
Purchaser shall deliver to the Seller immediately available funds in the
amount of $5,698,147, which equals the aggregate of the purchase prices of
the related Classes of Certificates set forth on Schedule I hereto, plus
accrued interest from October 1, 1997. The Seller shall deliver to the
Purchaser in immediately available funds the full amount of the
distribution that will be payable on such Initial Investments on October
25, 1997, on the same day that such amount is paid to the Seller.
1
SECTION 3. Transfer of the Initial Investments and Endorsement of the
Initial Investments. Upon the closing of the sale of the Initial
Investments to the Purchaser by the Seller, ownership thereof shall be
vested in the Purchaser. As soon as possible prior to the Closing Date of
the sale of the Initial Investments to the Purchaser, the Seller shall
deliver to LaSalle National Bank, as trustee (the "Underlying Trustee")
of the underlying trusts pursuant to which the Initial Investments were
issued (the "Underlying Trusts"), the Initial Investments together with
bond powers executed in favor of "IMPERIAL CREDIT COMMERCIAL MORTGAGE
INVESTMENT CORP." and any transferor documents and opinions of counsel
required by the pooling and servicing agreements or other documents (the
"Underlying Agreements") under which the Initial Investments were issued.
SECTION 4. Representations and Warranties of the Seller. The Seller
hereby represents and warrants to the Purchaser, as of the date of this
Agreement or as of such other date as is specifically provided herein, as
follows:
(a) the Seller acquired the Initial Investments in the ordinary course
of its business, in good faith, for value and without notice of any claim
against or claim to any of the Initial Investments on the part of any
person;
(b) the Seller does not have any actual or constructive knowledge or
notice of any interest in the Initial Investments that upon sale to the
Purchaser and transfer in accordance herewith will be contrary to the
interest of the Purchaser;
(c) the Seller is duly organized and validly existing and in good
standing under the laws of the United States and has the full power,
authority and legal right to transfer and convey the Initial Investments to
the Purchaser and has the full power, authority (corporate and other) and
legal right to execute and deliver, engage in the transactions contemplated
by, and perform and observe the terms and conditions of, this Agreement;
(d) the execution and delivery by the Seller of this Agreement are
within the legal power of and have been duly authorized by all necessary
action on the part of the Seller; neither the execution and delivery of
this Agreement by the Seller, nor the consummation by the Seller of the
transactions contemplated hereby, nor compliance by the Seller with the
provisions hereof, will (i) conflict with or result in a breach of, or
constitute a default under, any of the provisions of the charter or bylaws
of, or any law, governmental rule or regulation, or any judgment, decree or
order binding on, the Seller or its properties, or any of the provisions of
any indenture, mortgage, deed of trust, contract or other instrument to
which it is a party or by which it is bound, or (ii) result in the creation
or imposition of any lien, charge or encumbrance upon any of its properties
pursuant to the terms of any such indenture, mortgage, deed of trust,
contract or other instrument;
2
(e) this Agreement has been duly executed and delivered by the Seller
and constitutes a legal, valid and binding agreement of the Seller,
enforceable in accordance with its terms subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency or other
similar laws affecting creditors' rights generally from time to time in
effect, and to general principles of equity;
(f) no consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required
for the execution, delivery and performance of or compliance by the Seller
with this Agreement or the consummation by the Seller of any other
transaction contemplated hereby;
(g) no certificate of an officer furnished pursuant hereto in writing
to the Purchaser or the Trustee by the Seller contains any untrue statement
of a material fact, or omits a material fact necessary to make the
certificate not misleading;
(h) the Seller has not dealt with any broker, investment banker, or
agent or other person that may be entitled to any commission or
compensation in connection with the sale of the Initial Investments to the
Purchaser;
(i) there is no litigation pending or, to the Seller's knowledge,
threatened against the Seller, which would reasonably be expected to affect
adversely the transfer of the Initial Investments or the execution,
delivery, performance or enforceability of this Agreement;
(j) no default exists on the part of the Seller, and no event has
occurred which, with notice, lapse of time or both, would constitute a
default on the part of the Seller in the due performance and observance of
any term, covenant or condition of any agreement to which the Seller is a
party or by which it is bound, which default would have a have a materially
adverse effect on the Seller's performance of this Agreement;
(k) the transfer of the Initial Investments to the Purchaser will be
classified as a sale under generally accepted accounting principles on the
books and records of the Seller;
(l) immediately prior to the sale of the Initial Investments to the
Purchaser, the Seller will be the sole owner of, and will have good and
marketable title to, the Initial Investments, subject to no prior lien,
mortgage, security interest, pledge, charge or other encumbrance or any
such encumbrance will be discharged, and on the Closing Date, the Seller
shall duly and validly endorse the Initial Investments as described in
Section 3 hereof and deliver the Initial Investments as described in
Section 3 hereof, together with any other documents or certificates as may
be required by this Agreement. Following the sale of the Initial
Investments to the Purchaser, the Purchaser will own such Initial
Investments free and clear of any prior lien, mortgage, security interest,
pledge, charge or other encumbrance;
3
(m) the transfer, assignment and conveyance of the Initial Investments
by the Seller pursuant to this Agreement is not subject to bulk transfer
laws or any similar statutory provisions in effect in any applicable
jurisdiction;
(n) the information set forth in Schedule 1 hereto is true and correct
in all material respects as of the Information Date;
(o) all conditions precedent and any restrictions upon the transfer of
the Initial Investments provided for in the Underlying Agreements have been
satisfied and the transfer of the Initial Investments to the Purchaser will
be complete upon the execution and delivery of this Agreement by the
parties hereto (provided that transfer of registered ownership will only be
complete after the Underlying Trustees have issued new certificates,
representing the Initial Investments, registered in the name of the
Purchaser);
(p) the Seller intends to relinquish all ownership rights in the
Initial Investments sold pursuant to this Agreement; after the Closing
Date, the Seller will have no right to the Initial Investments, and the
Seller will have no right or obligation to repurchase or substitute any
Initial Investments;
(q) the Seller's principal place of business and chief executive
office are located in Los Angeles, California; and
(r) the Seller is not a "benefit plan investor" described in or
subject to the Department of Labor Regulations set forth in 29 C.F.R.
section 2510.3-101.
SECTION 5. The Seller hereby covenants to the Purchaser as follows:
(a) the Seller shall reflect and treat its transfer of the Initial
Investments to the Purchaser as a sale of its entire interest therein under
generally accepted accounting principles; and
(b) the Seller will cooperate with the Purchaser and perform all acts
necessary to enable the Purchaser to cause the Initial Investments to be
registered in the name of the Purchaser.
SECTION 6. Representations, Warranties and Covenants of the Purchaser.
As of the date of this Agreement, the Purchaser represents and warrants to
the Seller as follows:
(a) the Purchaser has been duly incorporated and is validly existing
and in good standing under the laws of the State of Maryland;
(b) the execution and delivery by the Purchaser of this Agreement are
within the legal power of the Purchaser and have been duly authorized by
all necessary action on the part of the Purchaser; neither the execution
and delivery of this Agreement by the Purchaser, nor the consummation by
4
the Purchaser of the transactions contemplated hereby, nor compliance by
the Purchaser with the provisions hereof, will (i) conflict with or result
in a breach of, or constitute a default under, any of the provisions of the
Purchaser's articles of incorporation or bylaws, or any law, governmental
rule or regulation, or any judgment, decree or order binding on, the
Purchaser or its properties, or any of the provisions of any indenture,
mortgage, deed of trust, contract or other instrument to which it is a
party or by which it is bound, or (ii) result in the creation or imposition
of any lien, charge or encumbrance upon any of its properties pursuant to
the terms of any such indenture, mortgage, deed of trust, contract or other
instrument;
(c) this Agreement has been duly executed and delivered by the
Purchaser and constitutes a legal, valid and binding agreement of the
Purchaser, enforceable in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency or other similar laws affecting creditors' rights generally from
time to time in effect, and to general principles of equity; and
(d) no consent, approval, authorization or order of any court or
governmental agency or body or official is required for the consummation by
the Purchaser of the transactions contemplated hereby, except such as have
been obtained.
SECTION 7. Further Assurances. Upon request from time to time, the
Seller shall execute and deliver all documents, make all truthful oaths,
testify in any proceedings and do all other acts that may be reasonably
necessary or desirable, in the reasonable opinion of the Purchaser, to
carry out the terms of this Agreement and to effect the sale of the Initial
Investments to the Purchaser.
SECTION 8. Conditions to Obligations of the Purchaser. The obligation
of the Purchaser hereunder to purchase the Initial Investments is subject
to:
(a) the accuracy in all material respects of all of the
representations and warranties of the Seller under this Agreement and
compliance in all material respects by the Seller with all of its covenants
and obligations under this Agreement;
(b) except as otherwise provided herein, the Seller shall have
delivered to the Purchaser, in escrow, all documents required to be
delivered hereunder and shall have released its interest therein to the
Purchaser or its designee; and
(c) the Seller shall have delivered to the Purchaser, letters from
each of the legal counsel that delivered opinions (the "Underlying
Opinions") in connection with the issuance of the Initial Investments
pursuant to the Underlying Agreements, which letters permit reliance on the
Underlying Opinions by (i) the Purchaser and (ii) each of Friedman,
Billings, Ramsey & Co., Inc. and Jefferies & Company, Inc., as
5
representatives of the underwriters of the Purchaser's shares of common
stock, which are being sold pursuant to the Prospectus.
SECTION 9. Conditions to Obligations of the Seller. The obligation of
the Seller hereunder to sell the Initial Investments is subject to receipt
of the Purchase Price in immediately available funds.
SECTION 10. Indemnification; Assignment of Claims. In the event the
Seller breaches its representations, warranties, covenants or obligations
set forth herein in any material respect, the Seller shall indemnify and
hold harmless the Purchaser from and against any loss, damages, penalties,
fines, forfeiture, legal fees and related costs, judgments, and other costs
and expenses resulting from any claim, demand, defense or assertion based
on or grounded upon, or resulting from, such breach. Promptly after
receipt by the Purchaser of notice of the commencement of any such action,
the Purchaser will, if a claim in respect thereof is to be made against the
Seller under this Section, notify the Seller in writing of the commencement
thereof, but the omission so to notify the Seller will not relieve the
Seller from any liability hereunder unless such omission materially
prejudices the rights of the Seller. In case any such action is brought
against the Purchaser, and the Purchaser notifies the Seller of the
commencement thereof, the Seller will be entitled to participate therein,
and to assume the defense thereof, with counsel reasonably satisfactory to
the Purchaser, and after notice from the Seller to the Purchaser of its
election so to assume the defense thereof, the Seller will not be liable to
the Purchaser under this Section for any legal or other expenses
subsequently incurred by the Purchaser in connection with the defense
thereof other than reasonable costs of investigation.
SECTION 11. Repurchase Obligation. It is understood and agreed that the
representations and warranties set forth in Section 4 herein shall survive
delivery of the Initial Investments to the Purchaser, and shall inure to
the benefit of the Purchaser notwithstanding any restrictive or qualified
endorsement or assignment. Upon the discovery by a party hereto of a
breach of any of the foregoing representations and warranties that
materially and adversely affects the interests of the Purchaser, the party
discovering such breach shall give prompt written notice to the other
parties thereto, whereupon the Seller shall promptly take such action as is
necessary to cure such breach. Within 90 days of its discovery or its
receipt of notice of any breach of the representations and warranties
contained in Section 4 above, the Seller shall cause such breach to be
cured in all material respects or, in the event the Seller is unable to
cure such breach, the Seller shall repurchase the affected Initial
Investment at its Purchase Price plus accrued interest through the date of
repurchase and reimburse the Purchaser for any out-of-pocket loss incurred
by the Purchaser as a result of such breach.
The obligations of the Seller set forth in this Section 11 with respect
to a breach of a representation contained in Section 4 hereof shall
constitute the sole remedy respecting such breach available to the
Purchaser.
6
SECTION 12. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by telex or telegraph and confirmed by a similar mailed
writing, as follows:
(a) If to the Purchaser:
Imperial Credit Commercial Mortgage Investment Corp.
11601 Wilshire Blvd., Suite 2080
Los Angeles, California 90025
Fax: (310) 231-1281
Attn: Norbert Seifert, Esq.
(b) If to the Seller:
Southern Pacific Bank
12300 Wilshire Blvd. 2nd floor
Los Angeles, CA 90025
Fax: (310) 442-5160
Attn: Michael Lombardo
Any party may alter the address to which communications or copies are to
be sent by giving notice of such change of address in conformity with the
provisions of this Section for the giving of notice.
SECTION 13. Severability of Provisions. Any part, provision,
representation or warranty contained in this Agreement that is prohibited
or that is held to be void or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining parts, provisions, representations or warranties hereof. Any
part, provision, representation or warranty contained in this Agreement
that is prohibited or unenforceable or is held to be void or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining parts, provisions, representations or warranties hereof, and any
such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties
hereto waive any provision of law which prohibits or renders void or
unenforceable any provision hereof.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA,
NOTWITHSTANDING ANY CALIFORNIA OR OTHER CONFLICT OF LAWS PROVISIONS TO THE
CONTRARY.
SECTION 15. Survival. Each of the Seller and the Purchaser agrees that
the representations, warranties and agreements made by it herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed
have been relied upon by the Purchaser or the Seller, respectively,
notwithstanding any investigation heretofore or hereafter made by the other
party or on the other party's behalf, and that the representations,
7
warranties and agreements made by the Seller herein or in any such
certificate or other instrument shall survive the delivery of and payment
for the Initial Investments.
SECTION 16. Miscellaneous.
(a) This Agreement may be executed in two or more counterparts, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and
their respective successors and assigns.
(b) Any person into which the Seller may be merged or consolidated or
any person resulting from a merger or consolidation involving the Seller or
any person succeeding to the business of the Seller shall be considered the
successor of the Seller hereunder, without the further act or consent of
either party. This Agreement cannot be assigned, pledged or hypothecated
by any party without the written consent of each other party to this
Agreement.
(c) This Agreement supersedes all prior agreements and understandings
relating to the subject matter hereof. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought. The headings in
this Agreement are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof.
(d) The Purchaser shall immediately effect the redelivery of the Initial
Investments, and any security interest deemed to be created by this Section
16 shall be released if, on the Closing Date, each of the conditions set
forth in Section 8 hereof shall not have been satisfied or waived and the
Purchaser shall not have paid the Purchase Price.
(e) It is the express intent of the parties hereto that the conveyance
of the Initial Investments by the Seller to the Purchaser as contemplated
by this Agreement be construed as a sale of the Initial Investments by the
Seller to the Purchaser. Further, it is not the intention of the parties
that such conveyances be deemed a pledge of the Initial Investments by the
Seller to the Purchaser to secure a debt or other obligation of the Seller.
However, in the event that, notwithstanding the intent of the parties, the
Initial Investments are held to continue to be property of the Seller, then
(i) this Agreement shall also be a security agreement within the meaning of
the Uniform Commercial Code of the State of California and any other state
as is necessary; (ii) the Seller hereby grants to the Purchaser a security
interest in all of the Seller's right, title and interest in and to the
Initial Investments; (iii) the possession by the Purchaser or its agent of
the Initial Investments and such other items of property as constitute
instruments, money, negotiable documents or chattel paper shall be deemed
to be "possession by the secured party" for purposes of perfecting the
security interest pursuant to Section 9-305 of the Uniform Commercial Code
8
of the State of California; and (iv) notifications to, and acknowledgments,
receipts or confirmations from, persons holding such property shall be
deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the
Purchaser for the purpose of perfecting such security interest under
applicable law. Any assignment of the interest of the Purchaser pursuant
to any provision hereof shall also be deemed to be an assignment of any
security interest created hereby. The Seller and the Purchaser shall, to
the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a
security interest in the Initial Investments, such security interest would
be deemed to be a perfected security interest of first priority under
applicable law and will be maintained as such throughout the term of this
Agreement.
IN WITNESS WHEREOF, Imperial Credit Commercial Mortgage Investment Corp.
and Southern Pacific Bank have caused their names to be signed to this
Initial Investment Sales Agreement by their respective officers thereunto
duly authorized as of the first date above written.
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.,
a Maryland corporation
By: /s/ Mark S. Karlan
Its: President
SOUTHERN PACIFIC BANK,
a California industrial loan company
By: /s/ Stephen J. Shugerman
Its: President
LIST OF SCHEDULES AND EXHIBITS
SCHEDULE I: Initial Investments
9
SCHEDULE 1
Initial Investments
Series
Class / Original Principal Purchase Proceeds Accrued Gross
Principal Balance or Price Interest Proceeds
Balance or Notional
Notional Amount
Amount (As of
September
25, 1997)
J.P. Morgan Commercial Mortgage Finance Corp.,
Commercial Mortgage Pass-Through Certificates, Series 1997-SPTL-C1
E 10,153,000 10,153,000 82.5925% 8,385,612 93,492 8,479,104
F 6,092,000 6,092,000 74.5576% 4,542,048 56,097 4,598,145
G 2,030,000 2,030,000 57.5704% 1,168,679 18,693 1,187,372
H 3,046,000 3,046,000 7.4889% 228,111 - 228,111
NR 7,112,453 7,112,453 0.2522% 17,937 - 17,937
14,342,388 168,282 14,510,670
Southern Pacific Thrift & Loan Association,
Commercial Mortgage Pass-Through Certificates, Series 1996-C1
A1X2 48,743,200 39,359,831 2.9500% 1,160,328 202,299 1,362,627
DX2 56,053,800 56,053,800 11.8100% 6,621,366 256,554 6,877,921
NRX2 17,061,043 17,017,905 10.2300% 1,740,467 274,731 2,015,198
E 12,462,000 12,462,000 97.9500% 12,206,232 62,966 12,269,199
F 11,078,000 11,078,000 69.6000% 7,710,348 55,973 7,766,321
NR 15,235,097 15,137,057 29.3200% 4,437,466 62,608 4,500,074
33,876,208 915,132 34,791,339
TOTAL 48,218,595 1,083,414 49,302,009
Exhibit 10.5
THIS INITIAL INVESTMENTS SALE AGREEMENT (this "Agreement"), dated as of
October 22, 1997, by and between Imperial Credit Commercial Mortgage
Investment Corp., a Maryland corporation (the "Purchaser") and Imperial
Credit Industries, Inc., a California corporation (the "Seller"), recites
and provides as follows:
RECITALS
WHEREAS, the Seller owns certain commercial mortgage-backed securities
identified on Schedule 1 hereto (the "Initial Investments");
WHEREAS, the Seller desires to sell its right, title and interest in and
to the Initial Investments to the Purchaser pursuant to the terms hereof;
WHEREAS, capitalized terms used and not defined herein shall have the
meanings assigned to them in the Purchaser's Prospectus, dated October 16,
1997 (the "Prospectus");
AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual covenants,
representations and warranties herein made and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. Sale and Purchase.
(a) The Seller hereby sells, conveys, assigns and transfers, and the
Purchaser hereby purchases, all of the Seller's right, title and interest in
and to the Initial Investments, having the respective outstanding principal
balances as of the close of business on September 25, 1997 (the
"Information Date") set forth on Schedule 1, including the Seller's right
to any and all payments to be received on the Initial Investments beginning
in October 1997;
(b) The sale of the Initial Investments shall be effected by endorsement
and delivery of the Initial Investments.
SECTION 2. Purchase Price. On the Closing Date, as full consideration
for the Seller's sale of the Initial Investments to the Purchaser, the
Purchaser shall deliver to the Seller immediately available funds in the
amount of $49,302,009, which equals the aggregate of the purchase prices of
the related Classes of Certificates set forth on Schedule I hereto, plus
accrued interest from October 1, 1997. The Seller shall deliver to the
Purchaser in immediately available funds the full amount of the distribution
that will be payable on such Initial Investments on October 25, 1997, on the
same day that such amount is paid to the Seller.
1
SECTION 3. Transfer of the Initial Investments and Endorsement of the
Initial Investments. Upon the closing of the sale of the Initial
Investments to the Purchaser by the Seller, ownership thereof shall be
vested in the Purchaser. As soon as possible prior to the Closing Date of
the sale of the Initial Investments to the Purchaser, the Seller shall
deliver to LaSalle National Bank, as trustee (the "Underlying Trustee") of
the underlying trusts pursuant to which the Initial Investments were issued
(the "Underlying Trusts"), the Initial Investments together with bond
powers executed in favor of "IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT
CORP." and any transferor documents and opinions of counsel required by the
pooling and servicing agreements or other documents (the "Underlying
Agreements") under which the Initial Investments were issued.
SECTION 4. Representations and Warranties of the Seller. The Seller
hereby represents and warrants to the Purchaser, as of the date of this
Agreement or as of such other date as is specifically provided herein, as
follows:
(a) the Seller acquired the Initial Investments in the ordinary course
of its business, in good faith, for value and without notice of any claim
against or claim to any of the Initial Investments on the part of any
person;
(b) the Seller does not have any actual or constructive knowledge or
notice of any interest in the Initial Investments that upon sale to the
Purchaser and transfer in accordance herewith will be contrary to the
interest of the Purchaser;
(c) the Seller is duly organized and validly existing and in good
standing under the laws of the United States and has the full power,
authority and legal right to transfer and convey the Initial Investments to
the Purchaser and has the full power, authority (corporate and other) and
legal right to execute and deliver, engage in the transactions contemplated
by, and perform and observe the terms and conditions of, this Agreement;
(d) the execution and delivery by the Seller of this Agreement are
within the legal power of and have been duly authorized by all necessary
action on the part of the Seller; neither the execution and delivery of this
Agreement by the Seller, nor the consummation by the Seller of the
transactions contemplated hereby, nor compliance by the Seller with the
provisions hereof, will (i) conflict with or result in a breach of, or
constitute a default under, any of the provisions of the charter or bylaws
of, or any law, governmental rule or regulation, or any judgment, decree or
order binding on, the Seller or its properties, or any of the provisions of
any indenture, mortgage, deed of trust, contract or other instrument to
which it is a party or by which it is bound, or (ii) result in the creation
or imposition of any lien, charge or encumbrance upon any of its properties
pursuant to the terms of any such indenture, mortgage, deed of trust,
contract or other instrument;
2
(e) this Agreement has been duly executed and delivered by the Seller
and constitutes a legal, valid and binding agreement of the Seller,
enforceable in accordance with its terms subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency or other
similar laws affecting creditors' rights generally from time to time in
effect, and to general principles of equity;
(f) no consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required
for the execution, delivery and performance of or compliance by the Seller
with this Agreement or the consummation by the Seller of any other
transaction contemplated hereby;
(g) no certificate of an officer furnished pursuant hereto in writing
to the Purchaser or the Trustee by the Seller contains any untrue statement
of a material fact, or omits a material fact necessary to make the
certificate not misleading;
(h) the Seller has not dealt with any broker, investment banker, or
agent or other person that may be entitled to any commission or compensation
in connection with the sale of the Initial Investments to the Purchaser;
(i) there is no litigation pending or, to the Seller's knowledge,
threatened against the Seller, which would reasonably be expected to affect
adversely the transfer of the Initial Investments or the execution,
delivery, performance or enforceability of this Agreement;
(j) no default exists on the part of the Seller, and no event has
occurred which, with notice, lapse of time or both, would constitute a
default on the part of the Seller in the due performance and observance of
any term, covenant or condition of any agreement to which the Seller is a
party or by which it is bound, which default would have a have a materially
adverse effect on the Seller's performance of this Agreement;
(k) the transfer of the Initial Investments to the Purchaser will be
classified as a sale under generally accepted accounting principles on the
books and records of the Seller;
(l) immediately prior to the sale of the Initial Investments to the
Purchaser, the Seller will be the sole owner of, and will have good and
marketable title to, the Initial Investments, subject to no prior lien,
mortgage, security interest, pledge, charge or other encumbrance or any such
encumbrance will be discharged, and on the Closing Date, the Seller shall
duly and validly endorse the Initial Investments as described in Section 3
hereof and deliver the Initial Investments as described in Section 3 hereof,
together with any other documents or certificates as may be required by this
Agreement. Following the sale of the Initial Investments to the Purchaser,
the Purchaser will own such Initial Investments free and clear of any prior
lien, mortgage, security interest, pledge, charge or other encumbrance;
3
(m) the transfer, assignment and conveyance of the Initial Investments
by the Seller pursuant to this Agreement is not subject to bulk transfer
laws or any similar statutory provisions in effect in any applicable
jurisdiction;
(n) the information set forth in Schedule 1 hereto is true and correct
in all material respects as of the Information Date;
(o) all conditions precedent and any restrictions upon the transfer of
the Initial Investments provided for in the Underlying Agreements have been
satisfied and the transfer of the Initial Investments to the Purchaser will
be complete upon the execution and delivery of this Agreement by the parties
hereto (provided that transfer of registered ownership will only be complete
after the Underlying Trustees have issued new certificates, representing the
Initial Investments, registered in the name of the Purchaser);
(p) the Seller intends to relinquish all ownership rights in the
Initial Investments sold pursuant to this Agreement; after the Closing Date,
the Seller will have no right to the Initial Investments, and the Seller
will have no right or obligation to repurchase or substitute any Initial
Investments;
(q) the Seller's principal place of business and chief executive office
are located in Los Angeles, California; and
(r) the Seller is not a "benefit plan investor" described in or
subject to the Department of Labor Regulations set forth in 29 C.F.R.
section 2510.3-101.
SECTION 5. The Seller hereby covenants to the Purchaser as follows:
(a) the Seller shall reflect and treat its transfer of the Initial
Investments to the Purchaser as a sale of its entire interest therein under
generally accepted accounting principles; and
(b) the Seller will cooperate with the Purchaser and perform all acts
necessary to enable the Purchaser to cause the Initial Investments to be
registered in the name of the Purchaser.
SECTION 6. Representations, Warranties and Covenants of the Purchaser.
As of the date of this Agreement, the Purchaser represents and warrants to
the Seller as follows:
(a) the Purchaser has been duly incorporated and is validly existing
and in good standing under the laws of the State of Maryland;
(b) the execution and delivery by the Purchaser of this Agreement are
within the legal power of the Purchaser and have been duly authorized by all
necessary action on the part of the Purchaser; neither the execution and
delivery of this Agreement by the Purchaser, nor the consummation by the
Purchaser of the transactions contemplated hereby, nor compliance by the
4
Purchaser with the provisions hereof, will (i) conflict with or result in a
breach of, or constitute a default under, any of the provisions of the
Purchaser's articles of incorporation or bylaws, or any law, governmental
rule or regulation, or any judgment, decree or order binding on, the
Purchaser or its properties, or any of the provisions of any indenture,
mortgage, deed of trust, contract or other instrument to which it is a party
or by which it is bound, or (ii) result in the creation or imposition of any
lien, charge or encumbrance upon any of its properties pursuant to the terms
of any such indenture, mortgage, deed of trust, contract or other
instrument;
(c) this Agreement has been duly executed and delivered by the
Purchaser and constitutes a legal, valid and binding agreement of the
Purchaser, enforceable in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency or other similar laws affecting creditors' rights generally from
time to time in effect, and to general principles of equity; and
(d) no consent, approval, authorization or order of any court or
governmental agency or body or official is required for the consummation by
the Purchaser of the transactions contemplated hereby, except such as have
been obtained.
SECTION 7. Further Assurances. Upon request from time to time, the
Seller shall execute and deliver all documents, make all truthful oaths,
testify in any proceedings and do all other acts that may be reasonably
necessary or desirable, in the reasonable opinion of the Purchaser, to carry
out the terms of this Agreement and to effect the sale of the Initial
Investments to the Purchaser.
SECTION 8. Conditions to Obligations of the Purchaser. The obligation of
the Purchaser hereunder to purchase the Initial Investments is subject to:
(a) the accuracy in all material respects of all of the representations
and warranties of the Seller under this Agreement and compliance in all
material respects by the Seller with all of its covenants and obligations
under this Agreement;
(b) except as otherwise provided herein, the Seller shall have
delivered to the Purchaser, in escrow, all documents required to be
delivered hereunder and shall have released its interest therein to the
Purchaser or its designee; and
(c) the Seller shall have delivered to the Purchaser, letters from each
of the legal counsel that delivered opinions (the "Underlying Opinions")
in connection with the issuance of the Initial Investments pursuant to the
Underlying Agreements, which letters permit reliance on the Underlying
Opinions by (i) the Purchaser and (ii) each of Friedman, Billings, Ramsey &
Co., Inc. and Jefferies & Company, Inc., as representatives of the
underwriters of the Purchaser's shares of common stock, which are being sold
pursuant to the Prospectus.
5
SECTION 9. Conditions to Obligations of the Seller. The obligation of
the Seller hereunder to sell the Initial Investments is subject to receipt
of the Purchase Price in immediately available funds.
SECTION 10. Indemnification; Assignment of Claims. In the event the
Seller breaches its representations, warranties, covenants or obligations
set forth herein in any material respect, the Seller shall indemnify and
hold harmless the Purchaser from and against any loss, damages, penalties,
fines, forfeiture, legal fees and related costs, judgments, and other costs
and expenses resulting from any claim, demand, defense or assertion based on
or grounded upon, or resulting from, such breach. Promptly after receipt by
the Purchaser of notice of the commencement of any such action, the
Purchaser will, if a claim in respect thereof is to be made against the
Seller under this Section, notify the Seller in writing of the commencement
thereof, but the omission so to notify the Seller will not relieve the
Seller from any liability hereunder unless such omission materially
prejudices the rights of the Seller. In case any such action is brought
against the Purchaser, and the Purchaser notifies the Seller of the
commencement thereof, the Seller will be entitled to participate therein,
and to assume the defense thereof, with counsel reasonably satisfactory to
the Purchaser, and after notice from the Seller to the Purchaser of its
election so to assume the defense thereof, the Seller will not be liable to
the Purchaser under this Section for any legal or other expenses
subsequently incurred by the Purchaser in connection with the defense
thereof other than reasonable costs of investigation.
SECTION 11. Repurchase Obligation. It is understood and agreed that the
representations and warranties set forth in Section 4 herein shall survive
delivery of the Initial Investments to the Purchaser, and shall inure to the
benefit of the Purchaser notwithstanding any restrictive or qualified
endorsement or assignment. Upon the discovery by a party hereto of a breach
of any of the foregoing representations and warranties that materially and
adversely affects the interests of the Purchaser, the party discovering such
breach shall give prompt written notice to the other parties thereto,
whereupon the Seller shall promptly take such action as is necessary to cure
such breach. Within 90 days of its discovery or its receipt of notice of
any breach of the representations and warranties contained in Section 4
above, the Seller shall cause such breach to be cured in all material
respects or, in the event the Seller is unable to cure such breach, the
Seller shall repurchase the affected Initial Investment at its Purchase
Price plus accrued interest through the date of repurchase and reimburse the
Purchaser for any out-of-pocket loss incurred by the Purchaser as a result
of such breach.
The obligations of the Seller set forth in this Section 11 with respect to
a breach of a representation contained in Section 4 hereof shall constitute
the sole remedy respecting such breach available to the Purchaser.
SECTION 12. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
6
transmitted by telex or telegraph and confirmed by a similar mailed writing,
as follows:
(a) If to the Purchaser:
Imperial Credit Commercial Mortgage Investment Corp.
11601 Wilshire Blvd., Suite 2080
Los Angeles, California 90025
Fax: (310) 231-1281
Attn: Norbert Seifert, Esq.
(b) If to the Seller:
Imperial Credit Industries, Inc.
23550 Hawthorne Boulevard
Building 1, Suite 210
Torrance, CA 90505
Fax: (310) 791-8230
Attn: Irwin Gubman, Esq.
Any party may alter the address to which communications or copies are to
be sent by giving notice of such change of address in conformity with the
provisions of this Section for the giving of notice.
SECTION 13. Severability of Provisions. Any part, provision,
representation or warranty contained in this Agreement that is prohibited or
that is held to be void or unenforceable shall be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
parts, provisions, representations or warranties hereof. Any part,
provision, representation or warranty contained in this Agreement that is
prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
parts, provisions, representations or warranties hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the
extent permitted by applicable law, the parties hereto waive any provision
of law which prohibits or renders void or unenforceable any provision
hereof.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA,
NOTWITHSTANDING ANY CALIFORNIA OR OTHER CONFLICT OF LAWS PROVISIONS TO THE
CONTRARY.
SECTION 15. Survival. Each of the Seller and the Purchaser agrees that
the representations, warranties and agreements made by it herein and in any
certificate or other instrument delivered pursuant hereto shall be deemed
have been relied upon by the Purchaser or the Seller, respectively,
notwithstanding any investigation heretofore or hereafter made by the other
party or on the other party's behalf, and that the representations,
7
warranties and agreements made by the Seller herein or in any such
certificate or other instrument shall survive the delivery of and payment
for the Initial Investments.
SECTION 16. Miscellaneous.
(a) This Agreement may be executed in two or more counterparts, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns.
(b) Any person into which the Seller may be merged or consolidated or any
person resulting from a merger or consolidation involving the Seller or any
person succeeding to the business of the Seller shall be considered the
successor of the Seller hereunder, without the further act or consent of
either party. This Agreement cannot be assigned, pledged or hypothecated by
any party without the written consent of each other party to this Agreement.
(c) This Agreement supersedes all prior agreements and understandings
relating to the subject matter hereof. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought. The headings in this
Agreement are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof.
(d) The Purchaser shall immediately effect the redelivery of the Initial
Investments, and any security interest deemed to be created by this Section
16 shall be released if, on the Closing Date, each of the conditions set
forth in Section 8 hereof shall not have been satisfied or waived and the
Purchaser shall not have paid the Purchase Price.
(e) It is the express intent of the parties hereto that the conveyance of
the Initial Investments by the Seller to the Purchaser as contemplated by
this Agreement be construed as a sale of the Initial Investments by the
Seller to the Purchaser. Further, it is not the intention of the parties
that such conveyances be deemed a pledge of the Initial Investments by the
Seller to the Purchaser to secure a debt or other obligation of the Seller.
However, in the event that, notwithstanding the intent of the parties, the
Initial Investments are held to continue to be property of the Seller, then
(i) this Agreement shall also be a security agreement within the meaning of
the Uniform Commercial Code of the State of California and any other state
as is necessary; (ii) the Seller hereby grants to the Purchaser a security
interest in all of the Seller's right, title and interest in and to the
Initial Investments; (iii) the possession by the Purchaser or its agent of
the Initial Investments and such other items of property as constitute
instruments, money, negotiable documents or chattel paper shall be deemed to
be "possession by the secured party" for purposes of perfecting the
security interest pursuant to Section 9-305 of the Uniform Commercial Code
of the State of California; and (iv) notifications to, and acknowledgments,
8
receipts or confirmations from, persons holding such property shall be
deemed notifications to, or acknowledgments, receipts or confirmations from,
financial intermediaries, bailees or agents (as applicable) of the Purchaser
for the purpose of perfecting such security interest under applicable law.
Any assignment of the interest of the Purchaser pursuant to any provision
hereof shall also be deemed to be an assignment of any security interest
created hereby. The Seller and the Purchaser shall, to the extent
consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in
the Initial Investments, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will
be maintained as such throughout the term of this Agreement.
IN WITNESS WHEREOF, Imperial Credit Commercial Mortgage Investment Corp.
and Imperial Credit Industries, Inc. have caused their names to be signed to
this Initial Investment Sales Agreement by their respective officers
thereunto duly authorized as of the first date above written.
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.,
a Maryland corporation
By: /s/ Mark S. Karlan
Its: President
IMPERIAL CREDIT INDUSTRIES, INC.,
a California corporation
By: /s/ Kevin Villani
Its: Chief Financial Officer
LIST OF SCHEDULES AND EXHIBITS
SCHEDULE I: Initial Investments
SCHEDULE 1
Initial Investments
Series
Class / Original Principal Purchase Proceeds Accrued Gross
Principal Balance or Price Interest Proceeds
Balance or Notional
Notional Amount
Amount (As of
September
25, 1997)
J.P. Morgan Commercial Mortgage Finance Corp.,
Commercial Mortgage Pass-Through Certificates, Series 1997-SPTL-C1
X2 40,689,605 39,738,361 13.8800% 5,517,558 180,589 5,698,147
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-START> JUL-31-1997
<PERIOD-END> SEP-30-1997
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<CASH> 2
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 214
<CURRENT-LIABILITIES> 212
<BONDS> 0
<COMMON> 2
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 214
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
