EXHIBIT 10.1
MANAGEMENT AGREEMENT
THIS AGREEMENT, entered into and made effective as of July __, 1997,
the closing date of the rights offering of Common Stock on a Registration
Statement Form S-11 of IMPERIAL CREDIT COMMERCIAL HOLDINGS, INC., a Maryland
corporation (the "Company"), is by and between the Company, and REIT ADVISORS,
INC. (the "Manager");
WITNESSETH:
WHEREAS, the Company is a recently-formed corporation that intends to
be taxed as a real estate investment trust;
WHEREAS, the Company operates the Long-Term Investment Operations,
which invests primarily in Commercial Mortgages and CMBSs, and the Conduit
Operations, conducted by Imperial Commercial Capital Corporation ("ICCC"), which
originates, purchases and sells or securitizes Commercial Mortgages;
WHEREAS, the Manager's personnel have substantial experience in the
purchase, financing, servicing and administration of mortgage loans and mortgage
securities, and the Company would like to benefit from such experience in
conducting its operations;
WHEREAS, in order to obtain the benefit of the Manager's experience
and to enhance the success of its operations, the Company desires to retain the
Manager, at competitive rates and fees, primarily to perform capital, asset and
operations management services in the manner and on the terms hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto agree as follows:
1. Definitions. Whenever used in this Agreement, the following
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terms, unless the context otherwise requires, shall have the following meanings:
(a) "Affiliate" of any entity means (i) any person directly or
indirectly owning, controlling or holding with power to vote, five percent (5%)
or more of the outstanding voting securities of such entity; (ii) any person
five percent (5%) or more of whose outstanding voting securities are directly
or indirectly owned, controlled, or held with power to vote, by such entity;
(iii) any person directly or indirectly controlling, controlled by, or under
common control with, such entity; or (iv) any officer, director, partner or
employee of such entity or any person set forth in (i) - (iii) above. Any
person who owns beneficially, either directly or through one or more controlled
companies, more than twenty-five percent (25%) of the voting securities of any
entity shall be presumed to control such entity. Any person who does not so own
more than twenty-five percent (25%) of the voting securities of any entity shall
be presumed not to control such entity. A natural person shall be presumed not
to be a controlled entity.
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(b) "Affiliated REIT" means any other REIT that may have been or
will be affiliated with the Company or IMH and for which the Manager will
provide services pursuant to a management agreement that is similar to this
Agreement.
(c) "Agreement" means this Management Agreement.
(d) "Average Net Worth" for any period means the arithmetic
average of the sum of the gross proceeds from any sale of the Company's equity
securities, before deducting any underwriting discounts and commissions and
other expenses and costs relative to the offering, plus the Company's retained
earnings less dividends declared (without taking into account any losses
incurred in prior periods) computed by taking the daily average of such values
during such period.
(e) "Board of Directors" means the Board of Directors of the
Company.
(f) "CMBSs" means (1) Pass-Through Certificates and (2) REMICs.
(g) "CMO" means an adjustable or fixed-rate debt obligation
(bond) that is collateralized by Commercial Mortgages or mortgage certificates
and issued by private institutions.
(h) "Code" means the Internal Revenue Code of 1986, as amended.
(i) "Commercial Mortgages" mean commercial mortgage assets
including condo-conversion, multi-family property and cooperative apartment
mortgage loans on commercial real property such as industrial and warehouse
properties, office buildings, retail space and shopping malls, hotels and
motels, nursing homes, hospitals, congregate care facilities and senior living
centers.
(j) "Commitment" means the document containing the terms
pursuant to which the Company purchases on a forward basis Mortgage Loans from
various originators, including Affiliates of the Manager.
(k) "Company" means Imperial Credit Commercial Holdings, Inc., a
Maryland corporation.
(l) "GAAP" means generally accepted accounting principles.
(m) "Governing Instruments" means the articles of incorporation
or charter, as the case may be, and bylaws of the Company or its subsidiary.
(n) "ICCC" means Imperial Commercial Capital Corporation, a
California corporation that conducts the Conduit Operations.
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(o) "ICIFC" means ICI Funding Corporation, a California
corporation.
(p) "ICII" means Imperial Credit Industries, Inc., a California
corporation.
(q) "IMH" means Imperial Credit Mortgage Holdings, Inc., a
Maryland corporation.
(r) "Manager" means REIT Advisors, Inc., a California _________.
(s) "Net Income" means the net income of the Company as
determined by the Code before the Manager's incentive compensation, the
deduction for dividends paid and any net operating loss deductions arising from
losses in prior periods. The Company's interest expenses for borrowed money
shall be deducted in calculating Net Income.
(t) "Offering" means the rights offering on a Registration
Statement Form S-11 of Common Stock of the Company to holders of record of IMH.
(u) "Pass-Through Certificates" means securities (or interests
therein) which are Qualified REIT Assets evidencing undivided ownership
interests in a pool of mortgage loans, the holders of which receive a "pass-
through" of the principal and interest paid in connection with the underlying
mortgage loans in accordance with the holders' respective, undivided interests
in the pool. Pass-Through Certificates evidence interests in loans secured by
single family, but not multifamily or commercial, real estate properties.
(v) "Qualified REIT Assets" means (i) real property (including
interests in real property and interests in mortgages on real property), (ii)
shares (or transferable certificates of beneficial interest) in other REITs
which meet the requirements of Sections 856-859 of the Code, (iii) stock or debt
instruments (not otherwise described in (i), (ii) or (iv)) held for not more
than one year that were purchased with the proceeds of (a) an offering of stock
in ICH (other than amounts received pursuant to a dividend reinvestment plan) or
(b) a public offering of debt obligations of the Company which have maturities
of at least 5 years, and (iv) a regular or residual interest in a REMIC, but
only if 95% or more of the assets of such REMIC are assets described in (i)
through (iii).
(w) "REIT" means Real Estate Investment Trust as defined under
Section 856 of the Code.
(x) "REMICs" means serially maturing debt securities secured by
a pool of mortgage loans, the payments on which bear a relationship to the debt
securities, and the issuer of which qualifies as a Real Estate Mortgage
Investment Conduit under Section 860D of the Code.
(y) "Reimbursable Expenses" shall have the meaning set forth in
Section 7 hereof.
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(z) "Reimbursable Executive Amounts" means that amount which the
Company will reimburse the Manager, on a dollar for dollar basis, for the actual
costs of the services provided by the officers of the Company to the Manager
based upon the compensation payable to them by ICIFC pursuant to employment
agreements.
(aa) "Return on Equity" means return calculated for any quarter
by dividing the Company's Net Income for such quarter by the Company's Average
Net Worth for such quarter.
(bb) "Stockholders" shall mean the owners of the stock of the
Company.
(cc) "Ten Year U.S. Treasury Rate" for a quarterly period shall
mean the arithmetic average of the weekly per annum Ten Year Average Yields
published by the Federal Reserve Board during such quarter. In the event that
the Federal Reserve Board does not publish a weekly per annum Ten Year Average
Yield during any week in a quarter, then the Ten Year U.S. Treasury Rate for
such week shall be the weekly per annum Ten Year Average Yields published by any
Federal Reserve Bank or by any U.S. Government department or agency selected by
the Company for such week. In the event that the Company determines in good
faith that for any reason the Company cannot determine the Ten Year U.S.
Treasury Rate for any quarter as provided above, then the Ten Year U.S. Treasury
Rate for such quarter shall be the arithmetic average of the per annum average
yields to maturity based upon the daily closing bids during such quarter for
each of the issues of actively traded marketable U.S. Treasury fixed interest
rate securities (other than securities which can, at the option of the holder,
be surrendered at face value in payment of any federal estate tax) with a final
maturity date not less than eight nor more than twelve years from the date of
each such quotation, as chosen and for each business day (or less frequently if
daily quotations shall not be generally available) in each such quarterly period
in New York City to the Company by at least three recognized dealers in U.S.
Government securities selected by the Company.
(dd) "Unaffiliated Director" means a Director who is independent
of the Company, any manager of the Company (including the Manager) and IMH and
its Affiliates.
2. General Duties of the Manager. Subject to the supervision of the
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Board of Directors, the Manager shall provide services to the Company, and to
the extent directed by the Board of Directors, shall provide similar services to
any subsidiary or Affiliate of the Company, which includes ICCC and may also
include Affiliated REITs, as follows:
(a) serve as the Company's consultant with respect to
formulation of investment criteria by the Board of Directors;
(b) advise as to the issuance of Commitments on behalf of the
Company to purchase Commercial Mortgages or purchasing Commercial Mortgages and
CMBSs meeting the investment criteria set from time to time by the Board of
Directors;
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(c) advise, negotiate and oversee the securitization of the
Company's Commercial Mortgages in REMICs or CMOs and negotiate terms with rating
agencies and coordinate with investment-bankers as to structure and pricing of
the securities formed by the Company;
(d) advise the Company in connection with and assist in its
Long-Term Investment Operations;
(e) furnish reports and statistical and economic research to the
Company regarding the Company's activities and the services performed for the
Company by the Manager;
(f) monitor and provide to the Board of Directors on an on-going
basis price information and other data, obtained from certain nationally-
recognized dealers who maintain markets in Commercial Mortgages identified by
the Board of Directors from time to time, and provide data and advice to the
Board of Directors in connection with the selection and identification of such
dealers.
(g) provide the executive and administrative personnel, office
space and services required in rendering services to the Company, which includes
contracting with appropriate third parties, which may include IMH and its
Affiliates, or any Affiliated REIT, to provide various services including
facilities and costs related therewith, technology, management information
systems, human resource administration, general ledger accounts, check
processing, accounts payable and other similar operational or administrative
services;
(h) oversee the day-to-day operations of the Company and
supervise the performance of such other administrative functions necessary in
the management of the Company as directed by the Board of Directors;
(i) advise and negotiate agreements on behalf of the Company
with banking institutions and other lenders to provide for the short-term
borrowing of funds by the Company;
(j) communicate on behalf of the Company with the holders of the
equity and debt securities of the Company as required to satisfy the reporting
and other requirements of any governmental bodies or agencies and maintain
effective relations with such holders of the Company's securities;
(k) subject to an agreement executed by the Company, advise as
to the designation of a servicer for those loans sold by ICCC whereby ICCC has
elected not to service such loans;
(l) counsel the Company in connection with policy decision to be
made by the Board of Directors;
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(m) upon request by and in accordance with the direction of the
Board of Directors, invest or reinvest any money of the Company; and
(n) as approved and directed by the Board of Directors, perform
such other services as may be required for management and other activities
relating to the assets of the Company as the Manager shall deem appropriate
under the particular circumstances.
3. Additional Activities of Manager. Subject to the Non-Competition
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Agreement by and between the Company, ICCC, IMH and ICIFC, and the Right of
First Refusal Agreement by and among the Company, ICCC, the Manager, IMH and
ICIFC, nothing herein shall prevent the Manager or its Affiliates from engaging
in other businesses or from rendering services of any kind to any other person
or entity, including investment in or advisory service to others investing in
any type of real estate investment, including investments which meet the
principal investment objectives of the Company, ICCC or their Affiliates.
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, any subsidiary or Affiliate of the Company or any
Affiliated REIT, to the extent permitted by its Governing Instruments, as from
time to time amended, or by any resolutions duly adopted by the Board of
Directors pursuant to its Governing Instruments. When executing documents or
otherwise acting in such capacities for the Company, such persons shall use
their respective titles in the Company.
4. Records; Confidentiality. The Manager shall maintain appropriate
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books of account and records relating to services performed hereunder, which
books of account and records shall be accessible for inspection by officers of
the Company or officers of any subsidiary of the Company at any time during
normal business hours. The Manager agrees to keep confidential any and all
information it obtains from time to time in connection with the services it
renders hereunder and shall not disclose any portion thereof to non-affiliated
third parties except with the prior written consent of the Company, any
subsidiary of the Company and any entity of which the Company owns an economic
interest.
In addition, to the extent executive officers of the Manager provide
services to the Company and its Affiliates through this Agreement, the Manager
will cause such executive officers to enter into non-competition and
confidentiality agreements so that they will not, directly or indirectly,
compete with the business of the Company and its Affiliates, including ICCC;
provided, however, that the executive officers may provide services to IMH, any
Affiliated REIT, the Manager, and the executive officers may perform the duties
set forth in their respective employment agreements with ICIFC.
5. Obligations of Manager. Anything else in this Agreement to the
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contrary notwithstanding, the Manager shall refrain from any action which in its
sole judgment made in good faith (i) would adversely affect the status of the
Company and any subsidiary of the Company as a real estate investment trust as
defined and limited in sections 856 through 860 of the Code, (ii) which in its
sole judgment made in good faith would violate any law, rule or regulation of
any
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governmental body or agency having jurisdiction over the Company and such
subsidiary, or (iii) which would otherwise not be permitted by the Company's or
its subsidiary's Governing Instruments, except if any of such actions shall be
ordered by the Board of Directors, in which event 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 and shall refrain from taking such action pending further
clarification or instructions from the Board of Directors. If the Board of
Directors thereafter instructs the Manager, despite the Manager's notification
as provided herein, to take any such action and the Manager so acts upon the
instructions given, the Manager shall not be responsible for any loss of the
Company's or its subsidiary's status as a REIT or violation of any law, rule or
regulation or the Governing Instruments caused thereby.
6. Compensation.
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(a) If the Company's annualized Return on Equity during any
fiscal quarter (computed by multiplying the Return on Equity for such fiscal
quarter by four) is in excess of the Ten Year U.S. Treasury Rate plus 2%, the
Company will pay the Manager, for such quarter, an amount equal to 25% of such
excess, but in no event shall any payment of compensation under this subsection
reduce the Company's annualized Return on Equity for such quarter to less than
the Ten Year U.S. Treasury Rate plus 2%.
(b) The Manager shall compute the compensation payable under
Subsection (a) within 60 days after the end of each calendar quarter, with the
exception of the fourth quarter for which compensation shall be computed within
30 days. In any event, the compensation payable under Subsection (a) shall be
calculated before any income distributions are made to stockholders for the
corresponding period. A copy of the computations made by the Manager to
calculate its compensation shall thereafter be promptly delivered to any
executive officer of the Company and, upon such delivery, payment of the
compensation earned under Subsection (a) shown therein shall be due and payable
within 90 days after the end of such calendar quarter. The compensation due and
payable to the Manager under Subsection (a) shall be paid to the Manager in the
subsequent quarter in which the incentive compensation was earned. The aggregate
amount of the Manager's compensation for each fiscal year shall be adjusted
within 120 days after the end of such fiscal year so as to provide compensation
for such year in the annual amounts stated in Subsection (a) and any excess owed
to, or shortfall owed by, the Manager with respect to such compensation,
collectively, shall be promptly remitted by, or paid to, the Company. In the
event that the time in which the compensation is paid by the Company to the
Manager violates the Company's status to be taxed as a REIT, both parties shall
mutually agree to modify the time set forth in this Section in which the Manager
will be paid the compensation earned under Subsection (a).
7. Reimbursable Expenses of the Manager. Without regard to the
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compensation received hereunder by the Manager, the Company or any subsidiary of
the Company shall reimburse the Manager of its expenses, as set forth in
Section 8, and without limiting the generality of the foregoing, it is
specifically agreed that the following expenses of the Company or any
subsidiary of the
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Company (including ICCC) shall not be paid by the Manager (collectively,
"Reimbursable Expenses"):
(a) The pro rata employment expenses of the personnel and
executive officers (who are governed by employment agreements with ICIFC, and
thus, deemed "Reimbursable Executive Amounts") employed by the Manager,
including, but not limited to, salaries, wages, payroll taxes, and the cost of
employee benefit plans;
(b) Travel and other expenses of directors, officers and
employees of the Manager and of directors, officers, or employees of the Company
or any subsidiary of the Company who are also directors, officers or employees
of the Manager, except expenses of such persons who are directors of the Company
or any subsidiary of the Company incurred in connection with attending meetings
of the Board of Directors or meetings of holders of the securities of the
Company or any subsidiary of the Company or expenses of persons who are
directors, officers, or employees of the Company or any subsidiary of the
Company incurred in connection with attending meetings, conferences or
conventions which relate solely to the business affairs of the Company or any
subsidiary of the Company;
(c) Rent, telephone, utilities, office furniture, equipment and
machinery (including computers, to the extent utilized) and other office
expenses (such as asset/liability software, modeling software and other software
and hardware) of the Manager needed in order to perform its duties as set forth
in Section 2 herein;
(d) Bookkeeping fees and expenses of the Company and the Manager
including any costs of computer services in connection with this function;
(e) amounts payable by the Manager pursuant to submanagement
agreements with outside third parties to provide various services to the Company
including facilities and costs related therewith, technology, management
information systems, human resource administration, general ledger accounts,
check processing, accounts payable and other similar operational services ;
(f) Miscellaneous administrative expenses incurred in
supervising and monitoring the Company's investments or any subsidiary's
investments of relating to performance by the Manager of its functions
hereunder;
(g) The cost of borrowed money of the Company;
(h) All taxes applicable to the Company or any subsidiary of the
Company including interest and penalties thereon;
(i) Legal audit, accounting, underwriting, brokerage, listing,
rating agency, registration and other fees, printing, engraving and other
expenses and taxes incurred in con-
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nection with the issuance, distribution, transfer, registration and stock
exchange listing of the Company's or any subsidiary's equity securities or debt
securities;
(j) Fees and expenses paid to independent contractors,
consultants, managers, and other agents employed directly by the Company or any
subsidiary of the Company or by the Manager at the Company's or such
subsidiary's request for the account of the Company or any subsidiary of the
Company (other than the Manager);
(k) Expenses connected with the acquisition, disposition and
ownership of the Company's or any subsidiary's investment assets (including
without limitation commitment fees, brokerage fees, guaranty fees and hedging
fees), including but not limited to ad valorem taxes, costs of foreclosure,
maintenance, repair and improvement of property and premiums for insurance on
property owned by the Company or any subsidiary of the Company; and with regard
to brokerage fees, it is understood that neither the Manager nor any of its
Affiliates shall charge a brokerage commission or similar fee to the Company or
any subsidiary of the Company in connection with the acquisition, disposition or
ownership of the Company's or any subsidiary's investment assets;
(l) The expenses of organizing, modifying or dissolving the
Company or any subsidiary of the Company;
(m) All insurance costs incurred in connection with the Company
or any subsidiary of the Company;
(n) Expenses connected with payments of dividends or interest or
distributions in each or any other form made or caused to be made by the Board
of Directors to holders of the securities of the Company or any subsidiary of
the Company;
(o) Expenses connected with the structuring of the issuance of
CMBSs by the Company or any subsidiary of the Company, including but not limited
to trustee's fees, insurance premiums, and costs of required credit
enhancements;
(p) All expenses by third parties connected with communications
to holders of equity securities or debt securities of the Company or any
subsidiary of the Company and the other bookkeeping and clerical work necessary
in maintaining relations with holders of such securities and in complying with
the continuous reporting and other requirements of governmental bodies or
agencies, including any costs of computer services in connection with this
function, the cost of printing and mailing certificates for such securities and
proxy solicitation materials and reports to holders of the Company's or any
subsidiary's securities and reports to third parties required under any
indenture to which the Company or any subsidiary of the Company is a party;
(q) Transfer agent's and registrar's fees and charges;
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(r) Fees and expenses paid to directors of the Company or any
subsidiary of the Company, the cost of director and officer liability insurance
and premiums for fidelity and errors and omissions insurance;
(s) Legal, accounting and auditing fees and expenses relating to
the Company's or any subsidiary's operations;
(t) Any judgment rendered against the Company or any subsidiary
of the Company, or against any director of the Company or any subsidiary of the
Company in his capacity as such for which the Company or any subsidiary of the
Company is required to indemnify such director, by any court or governmental
agency;
(u) Expenses relating to any office or office facilities
maintained by the Company or any subsidiary of the Company separate from the
office of the Manager;
(v) Expenses related to the servicing and subservicing of
Commercial Mortgages;
(w) All offering expenses (including accounting, legal,
printing, clerical, personnel, filing and other expenses) incurred by the
Company, the Manager or its Affiliates on behalf of the Company in connection
with the Offering; and
(x) Other miscellaneous expenses of the Company or any
subsidiary of the Company.
8. Computation of Reimbursable Expenses.
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(a) The Company shall reimburse the Manager for all Reimbursable
Expenses and Reimbursable Executive Amounts on a dollar for dollar basis.
Furthermore, with respect to Reimbursable Expenses and Reimbursable Executive
Amounts owed by the Manager to IMH for costs and services rendered under any
submanagement agreement with the Manager, the Company shall pay an additional
service charge of 15% on such amounts. Pursuant to submanagement agreements,
the Manager shall pay all third party service providers, on a dollar-for-dollar
basis, the aforementioned amounts received by the Manager from the Company,
provided, however, that no such 15% service charge will be paid to third party
service providers other than ICIFC.
(b) For the first three years of this Agreement, there will be a
minimum amount of $500,000 per annum (which includes the 15% service charge)
payable by the Company to the Manager for Reimbursable Expenses and Reimbursable
Executive Amounts. Thereafter, the Company shall only be responsible for the
Reimbursable Expenses and Reimbursable Executive Amounts incurred, plus the
additional 15% service charge amount due to the Manager in connection with
services rendered by ICIFC under any submanagement agreement.
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(c) The Manager shall compute the Reimbursable Expenses and
Reimbursable Executive Amounts payable under Subsections (a) and (b) within 10
days after the end of each month. A copy of the computations made by the
Manager to calculate its compensation shall thereafter be promptly delivered to
any executive officer of the Company and, upon such delivery, payment of the
compensation earned under Subsection (a) and (b) shown therein shall be due and
payable within 15 days after the end of such month. The Reimbursable Expenses
and Reimbursable Executive Amounts due and payable to the Manager under
Subsections (a) and (b) shall be paid to the Manager in the subsequent month in
which the Reimbursable Expenses and the Reimbursable Executive Amounts were
incurred.
9. Limits of Manager Responsibility. (a) The Manager assumes no
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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 5 above. The Manager, its
directors, officers, shareholders and employees will not be liable to the
Company, any subsidiary of the Company (including ICCC), the Unaffiliated
Directors or the Company's or its subsidiary's stockholders for any acts
performed by the Manager, its directors, officers, shareholders and employees in
accordance with this Agreement, except by reason of acts or omissions
constituting bad faith, willful misconduct, gross negligence or reckless
disregard of their duties. The Company or its subsidiaries (including ICCC)
shall reimburse, indemnify and hold harmless the Manager, its shareholders,
directors, officers and employees of and from any and all expenses, losses,
damages, liabilities, demands, charges and claims of any nature whatsoever in
respect of or arising from any acts or omissions of the Manager, its
shareholders, 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.
(b) The Manager shall reimburse, indemnify and hold harmless the
Company, any subsidiaries (including ICCC), or any of their stockholders,
directors, officers and employees of and from any and all expenses, losses,
damages, liabilities, demands, charges and claims (including, without
limitation, reasonable attorneys fees) arising out of any willful and
intentional misstatements of fact made by the Manager in connection with this
Agreement and the services to be rendered hereunder.
10. No Joint Venture. The Company and the Manager are not partners
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or joint venturers with each other and nothing herein shall be construed to make
them such partners or joint venturers or impose any liabilities as such on
either of them.
11. Term. This Agreement shall continue in force until December 31,
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2002 and thereafter it may be extended with the consent of the Manager and by
the affirmative vote of a majority of the Unaffiliated Directors or by a vote of
the holders of a majority of the outstanding shares of Common Stock of the
Company. Each extension shall be executed in writing by all parties hereto
before the expiration of this Agreement or of any extension thereof. Each such
extension
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shall be effective for a period corresponding to the fiscal year of the Company,
but in no case exceeding twelve months.
12. Termination for Cause. This Agreement, or any extension hereof,
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may be terminated by either party for cause immediately upon written notice, (i)
by a majority vote of the Unaffiliated Directors or by a vote of a majority of
the holders of the Company's Common Stock, in the case of termination by the
Company, or, (ii) in the case of termination by the Manager, by a majority vote
of the directors of the Manager. Grounds for termination for cause will occur
with respect to a party if:
(a) Such party shall have violated any provision of this
Agreement and, after notice of such violation, shall not cure such default
within 30 days; or
(b) There is entered an order for relief or similar decree or
order with respect to such party by a court having jurisdiction in the premises
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 such party (A) ceases or 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 such 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 such 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 such
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 suffer 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.
(c) Each party agrees that if any of the events specified in
this Section 12 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, such
termination shall be without any further liability or obligation of either party
to the other, except as provided in Section 15.
13. Termination Without Cause. The Company may terminate this
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Agreement without cause upon 60 days prior written notice, by a majority vote of
the Unaffiliated Directors or
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by a vote of the holders of a majority of the outstanding shares of the
Company's Common Stock. In the event this Agreement is terminated by the Company
without cause, or in the event this Agreement is not renewed by the Company
without cause, the Company, in addition to its obligations under Section 15,
shall pay the Manager a termination or non-renewal 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 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 a nationally-recognized independent appraisal firm to conduct an
appraisal. In such event, (i) the termination fee shall be deemed to be the
average of the appraisals as conducted by each party's chosen appraiser and (ii)
each party shall pay the costs of its appraiser so chosen. Any appraisal
conducted hereunder shall be performed no later than 45 days following selection
of the appraiser or appraisers.
14. 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 consented to in writing by the Company with
the consent of a majority of the Unaffiliated 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 real estate
investment trust 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.
(b) Notwithstanding the foregoing, the Company and the Manager
agree that the Manager may enter into a subcontract with any third party,
including IMH, 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
IMH or any third party shall relieve the Manager of any of its duties or
obligations hereunder.
15. Action Upon Termination. From and after the effective date of
-----------------------
termination of this Agreement, pursuant to Sections 12, 13 and 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, subject
to adjustments on an annualized basis in accordance with Section 6(b) and
subject to the minimum amount of $500,000 per annum for the first three years.
The Manager shall forthwith upon such termination deliver to the Board of
Directors all property and documents, corporate records, reports and software of
the Company or any subsidiary of the Company then in the custody of the Manager.
13
16. Representations and Warranties.
------------------------------
(a) The Company hereby represents and warrants to the Manager as
follows:
(i) Corporate Existence. The Company is duly organized,
-------------------
validly existing and in good standing under the laws of Maryland, 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 such jurisdictions 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.
(ii) Corporate Power; Authorization; Enforceable
-------------------------------------------
Obligations. The Company has the corporate power, authority and legal right 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 the Company, 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, except as such enforcement may be limited by bankruptcy, insolvency,
moratorium or similar laws now or hereafter in effect relating to the rights and
remedies of creditors generally, and general principles of equity.
(iii) No Legal Bar to This Agreement. 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 Company, or any order, judgment, award or decree of
any court, arbitrator or governmental authority binding on the Company, or the
charter or Bylaws of, or any securities issued by the Company or any mortgage,
indenture, lease, contract or other agreement, instrument or undertaking to
which the Company is a party or by which the Company 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 Company 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.
14
(b) The Manager hereby represents and warrants to the Company as
follows:
(i) Corporate Existence. The Manager is duly organized,
-------------------
validly existing and in good standing under the laws of California, 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 Manager and its subsidiaries, taken as a whole. The Manager
does not do business under any fictitious business name.
(ii) Corporate Power; Authorization; Enforceable
-------------------------------------------
Obligations. The Manager has the corporate power, authority and legal right 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 its execution, delivery and
performance of this Agreement and all obligations required hereunder. No consent
of any other person including, without limitations, shareholders 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, 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 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) No Legal Bar to This Agreement. 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
certificate of incorporation or by-laws 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 provision of any such mortgage,
indenture, lease, contract or other agreement, instrument or undertaking.
17. Arbitration.
------------
(a) Each controversy, dispute or claim between the parties arising
out of or relating to this Agreement, which controversy, dispute or claim is not
settled in writing within thirty
15
(30) days after the "Claim Date" (defined as the date on which a party subject
to this Agreement gives written notice to the other that a controversy, dispute
or claim exists), will be settled by binding arbitration in Orange County,
California in accordance with the provisions of the Judicial Arbitration and
Mediation Services, which shall constitute the exclusive remedy for the
settlement of any controversy, dispute or claim, and the parties waive their
rights to initiate any legal proceedings against each other in any court or
jurisdiction other than the Superior Court of Orange County (THE "COURT"). Any
decision rendered by the arbitrator and such arbitration will be final, binding
and conclusive and judgment shall be entered pursuant to the California Code of
Civil Procedure Section 644 in any court in the State of California having
jurisdiction.
(b) Except as expressly set forth in this Agreement, the arbitrator
shall determine the manner in which the proceeding is conducted, including the
time and place of all hearings, the order of presentation of evidence, and all
other questions that arise with respect to the course of the proceeding. All
proceedings and hearings conducted before the arbitrator, except for trial,
shall be conducted without a court reporter, except that when any party so
requests, a court reporter will be used at any hearing conducted before the
arbitrator. The party making such a request shall have the obligation to
arrange for any pay for the court reporter. The costs of the court reporter
shall be borne equally by the parties.
(c) The arbitrator shall be required to determine all issues in
accordance with existing case law and the statutory laws of the State of
California. The rules of evidence applicable to proceedings at law in the state
of California will be applicable to the reference proceeding. The arbitrator
shall be empowered to enter equitable as well as legal relief, to provide all
temporary and/or provisional remedies and to enter equitable orders that will be
binding upon the parties. The arbitrator shall issue a single judgment at the
close of the proceeding which shall dispose of all of the claims of the parties
that are the subject of the proceeding. The parties hereto expressly reserve
the right to contest or appeal from the final judgment or any appealable order
or appealable judgment entered by the arbitrator. The parties hereto expressly
reserve the right to findings of fact, conclusions of law, a written statement
of decision, and the right to move for a new trial or a different judgment,
which new trial, if granted, is also to be a proceeding governed under this
provision.
18. Notices. All notices, requests, demands and other communications
-------
provided for hereunder shall be in writing (including telegraphic or facsimile
communications) and shall be in mailed (return receipt requested), telegraphed,
sent by facsimile, overnight courier or hand delivered to each party at the
address set forth as follows, or at such other address as either party may
designate by notice to the others, and any such notice, request, demand or other
communication shall be effective upon receipt:
16
The Company: Imperial Credit Commercial Holdings, Inc.
00000 Xxxxxx Xxxxxx
Xxxxx Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx,
Chief Executive Officer
The Manager: REIT Advisors, Inc.
00000 Xxxxxx Xxxxxx
Xxxxx Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
President
Either party may at any time give notice in writing to the other party
of a change of its address for the purpose of this Section 18.
19. Amendments. This Agreement shall not be amended, changed,
----------
modified, terminated or discharged in whole or in part except by an instrument
in writing signed by all parties hereto, or their respective successors or
assigns, or otherwise as provided herein. The parties hereto agree that in no
event shall an oral modification of this Agreement be enforceable or valid.
20. Successors and Assigns. This Agreement shall become effective
----------------------
when it is executed by all parties and thereafter shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
21. Attorneys' Fees. In the event that any party shall bring an
---------------
action or proceeding in connection with the performance, breach or
interpretation hereof, then the prevailing party in such action as determined by
the court or other body having jurisdiction shall be entitled to recover from
the losing party in such action, as determined by the court or other body having
jurisdiction, all reasonable costs and expense of litigation or arbitration,
including reasonable attorney's fees, court costs, costs of investigation and
other costs reasonably related to such proceeding.
22. Governing Law. This Agreement shall be governed, construed and
-------------
interpreted in accordance with the laws of the State of California.
23. Headings and Cross References. The section headings hereof have
-----------------------------
been inserted for convenience of reference only and shall not be construed to
affect the meaning,
17
construction or effect of this Agreement. Any reference in this Agreement to a
"Section" or "Subsection" shall be construed, respectively, as referring to a
section of this Agreement or a subsection of a section of this Agreement.
24. Severability. The invalidity or unenforceability of any
------------
provision of this Agreement shall not affect the validity of any other
provision, and all other provisions shall remain in full force and effect.
25. Entire Agreement. This Agreement contains the entire agreement of
----------------
the parties relating to the subject matter hereof, and the parties hereto have
made no agreements, representations or warranties relating to the subject matter
of this Agreement that are not set forth otherwise herein. This Agreement
supersedes any and all prior agreements, written or oral, between the parties
hereto.
26. Waiver. Any forbearance by a party to this Agreement in
------
exercising any right or remedy under this Agreement or otherwise afforded by
applicable law shall not by a waiver of or preclude the exercise of that or any
other right or remedy.
27. Execution in Counterparts. This Agreement may be executed in one
-------------------------
or more counterparts, any of which shall constitute an original as against any
party whose signature appears on it, and all of which shall together constitute
a single instrument. This Agreement shall become binding when one or more
counterpart, individually or taken together, bear the signatures of both
parties.
[The remainder of this page intentionally left blank.]
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers thereunto duly authorized as of the day and year
first above written.
IMPERIAL CREDIT COMMERCIAL HOLDINGS, INC.
By:_____________________________________
Name: Xxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer
REIT ADVISORS, INC.
By:_____________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer
19
