MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of the __ day of
_______________, 1997 (the "Effective Date"), by and between (i) APEX MORTGAGE
CAPITAL, INC., a Maryland corporation (the "Company"), and (ii) TCW INVESTMENT
MANAGEMENT COMPANY, a California corporation (the "Manager").
THE PARTIES ENTER THIS AGREEMENT on the basis of the following facts,
understandings and intentions:
A. The Company intends to invest in Mortgage Assets (defined herein)
using the proceeds of borrowings and equity offerings and to qualify as a "real
estate investment trust" under the Internal Revenue Code of 1986, as amended
(the "Code").
B. The Company desires to have the Manager undertake, on the Company's
behalf, the duties and responsibilities set forth in this Agreement, subject to
the direction and oversight of the Board of Directors of the Company (the "Board
of Directors") on the terms and conditions set forth in this Agreement.
C. The Manager desires to undertake, on the Company's behalf, the duties
and responsibilities set forth in this Agreement, subject to the direction and
oversight of the Board of Directors, on the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual agreements set forth in this
Agreement, the Company and the Manager agree as follows:
1. Definitions. Capitalized terms used but not defined in this Agreement
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shall have the respective meanings assigned to them below:
1.1 "Affiliate" means, when used with reference to a specified person, any
person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with the specified person. For
purposes of this definition, the term "person" means and includes individuals,
corporations, general and limited partnerships, stock companies, land trusts,
business trusts and other entities and governments and agencies and political
subdivisions thereof. For purposes of this definition, "control" (including the
correlative meanings of the terms "controlled by" and "under common control
with"), as used with respect to any person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such person, through the ownership of voting securities,
partnership interests or other equity interests.
1.2 "Agency Certificates" means GNMA Certificates, ▇▇▇▇▇▇ ▇▇▇ Certificates
and FHLMC Certificates.
1.3 "Agreement" means this Management Agreement.
1.4 "Average Net Invested Capital" means for any period (i) the arithmetic
average of the sum of the gross proceeds of the offerings of its equity
securities by the Company, after deducting any underwriting discounts and
commissions and other expenses and costs relating to such offerings, plus (A)
the Company's retained earnings (taking into account any losses incurred) and
(B) any non-cash charges or reserves, including depreciation, ▇▇▇▇-to-market
adjustments and unrealized credit loss, computed by taking the average of such
values at the end of each month during such period, plus (ii) any unsecured debt
approved by a majority of the Unaffiliated Directors to be included in Average
Net Invested Capital.
1.5 "Average Net Worth" means for any period the arithmetic average of
the sum of the gross proceeds from the offerings of its equity securities by the
Company, before deducting any underwriting discounts and commissions and other
expenses and costs relating to the offerings, plus the Company's retained
earnings (without taking into account any losses incurred in prior periods)
computed by taking the average of such values at the end of each month during
such period.
1.6 "Base Management Compensation" has the meaning set forth in Section
6.1 of this Agreement.
1.7 "Board of Directors" has the meaning set forth in Recital B of this
Agreement.
1.8 "Code" has the meaning set forth in Recital A of this Agreement.
1.9 "Company" means Apex Mortgage Capital, Inc., a Maryland corporation,
and its successors.
1.10 "Conforming Mortgage Loans" means conventional Mortgage Loans that
either comply with requirements for inclusion in credit support programs
sponsored by FHLMC, ▇▇▇▇▇▇ ▇▇▇ or GNMA or are FHA or VA Loans, all of which are
secured by first mortgages or deeds of trust on single-family (one to four
units) residences.
1.11 "CMOs" means debt obligations (bonds) that are collateralized by
mortgage loans or mortgage certificates other than Mortgage Derivative
Securities and Subordinated Interests. CMOs are structured so that principal
and interest payments received on the collateral are sufficient to make
principal and interest payments on the bonds. Such bonds may be issued by
United States government agencies or private issuers in one or more classes with
fixed or variable interest rates, maturities and degrees of subordination that
are characteristics designed for the investment objectives of different bond
purchasers.
1.12 "FHLMC" means the Federal Home Loan Mortgage Corporation.
1.13 "FHLMC Certificates" means mortgage participation certificates issued
by FHLMC, either in certificated or book-entry form.
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1.14 "▇▇▇▇▇▇ Mae" means the federally chartered and privately owned
corporation organized and existing under the Federal National Mortgage
Association Charter Act (12 U.S.C. (S)1716 et seq.), formerly known as the
Federal National Mortgage Association.
1.15 "▇▇▇▇▇▇ ▇▇▇ Certificates" means guaranteed mortgage pass-through
certificates issued by ▇▇▇▇▇▇ Mae either in certified or book-entry form.
1.16 "Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
1.17 "FHA Loans" means Mortgage Loans insured by the United States Federal
Housing Administration.
1.18 "GAAP" means generally accepted accounting principles.
1.19 "GNMA" means the Governmental National Mortgage Association.
1.20 "GNMA Certificates" means fully modified pass-through mortgage-backed
certificates guaranteed by GNMA and issued either in certificated or book-entry
form.
1.21 "Governing Instruments" means the articles or certificate of
incorporation or charter, as the case may be, and the bylaws of the Company and
its subsidiaries.
1.22 "Incentive Management Compensation" has the meaning set forth in
Section 6.2 of this Agreement.
1.23 "Investment Advisers Act" means the Investment Advisers Act of 1940,
as amended from time to time.
1.24 "Limited Expenses" means the following expenses of the Company or any
subsidiary of the Company:
1.24.1 all insurance costs incurred by the Company or any subsidiary
of the Company, including any costs to obtain liability or other insurance to
indemnify the Manager and underwriters of any securities of the Company;
1.24.2 expenses connected with payments of dividends or interest or
distributions in 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;
1.24.3 all expenses of 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
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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;
1.24.4 custodian's, transfer agent's and registrar's fees and
charges;
1.24.5 compensation, fees and expenses paid to trustees or
Unaffiliated 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;
1.24.6 legal, accounting and auditing fees and expenses relating to
the Company's or any subsidiary's operations (excluding litigation-related fees
and expenses described in Section 7.2.15 hereof);
1.24.7 expenses relating to any office or office facilities
maintained by the Company or any subsidiary of the Company exclusive of the
office of the Manager and its Affiliates;
1.24.8 travel and related expenses of directors, officers and
employees of the Manager and of directors, officers and employees of the Company
or any subsidiary of the Company who are also directors, officers or employees
of the Manager, incurred in connection with attending meetings of the Board of
Directors or holders of securities of the Company or any subsidiary of the
Company or performing other business activities that relate to the Company or
any subsidiary of the Company, including expenses allocable to such meetings or
business activities;
1.24.9 costs associated with computer hardware and software, third
party information services and office expenses that relate solely to the
business activities of the Company; and
1.24.10 all other expenses of every character regarded as ordinary
operating expenses in accordance with generally accepted accounting principles,
exclusive of those expenses referred to in Sections 7.2.1, 7.2.2, 7.2.3, 7.2.4,
7.2.5, 7.2.6, 7.2.7, 7.2.9, 7.2.10, 7.2.15, 7.2.16 and 7.2.21.
1.25 "Manager" means TCW Investment Management Company, a California
corporation, and its successors hereunder.
1.26 "Mortgage Assets" means (i) Mortgage Securities, (ii) Mortgage Loans
and (iii) Short-Term Investments.
1.27 "Mortgage Derivative Securities" means Mortgage Securities that
provide for the holder to receive interest only, principal only, or interest and
principal in amounts that
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are disproportionate to those payable on the underlying Mortgage Loans and may
include other derivative instruments.
1.28 "Mortgage Loans" means Conforming and Nonconforming Mortgage Loans,
FHA Loans and VA Loans.
1.29 "Mortgage Securities" means (i) Pass-Through Certificates, (ii) CMOs,
and (iii) Other Mortgage Securities.
1.30 "Mortgage Warehouse Participations" means participations in lines of
credit to mortgage originators that are secured by recently originated Mortgage
Loans that are in the process of being either securitized or sold to permanent
investors.
1.31 "Net Income" means the taxable income of the Company (including net
capital gains, if any) before the Manager's incentive compensation, net
operating loss deductions arising from losses in prior periods and deductions
permitted by the Code in calculating taxable income for a REIT plus the effects
of adjustments, if any, necessary to record hedging and interest transactions in
accordance with GAAP. A deduction for all of the Company's interest expenses
for borrowed funds is taken into account in calculating Net Income.
1.32 "Nonconforming Mortgage Loans" means conventional Mortgage Loans that
do not conform to one or more requirements of United States Federal Housing
Administration, FHLMC, ▇▇▇▇▇▇ ▇▇▇, GNMA or United States Veterans Administration
for participation in one or more of such agencies' mortgage loan credit support
programs, such as the principal amounts financed or the underwriting guidelines
used in making the loan.
1.33 "Other Mortgage Securities" means securities representing interests
in, or secured by mortgages on real property other than Pass-Through
Certificates and CMOs and may include certificates and other securities
collateralized by single-family loans, Mortgage Warehouse Participations,
Mortgage Derivative Securities, Subordinated Interests and other mortgage-backed
and mortgage-collateralized obligations.
1.34 "Pass-Through Certificates" means securities (or interests therein)
other than Mortgage Derivative Securities and Subordinated Interests 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 include Agency
Certificates, as well as other certificates evidencing interests in loans
secured by single-family properties.
1.35 "Qualified REIT Real Estate Assets" means Pass-Through Certificates,
Mortgage Loans, Agency Certificates and other assets of the type described in
Section 856(c)(6)(B) of the Code.
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1.36 "REIT" means real estate investment trust as defined under Section
856 of the Code.
1.37 "REIT Provisions of the Code" means Sections 856 through 860 of the
Code.
1.38 "Return on Equity" means an amount calculated for any quarter by
dividing the Company's Net Income for the quarter by its Average Net Worth for
the quarter.
1.39 "Short-Term Investments" means short-term bank certificates of
deposit, short-term United States Treasury securities, short-term United States
government agency securities, commercial paper, repurchase agreements, short-
term CMOs, short-term asset-backed securities and other similar types of short-
term investment instruments, all of which will have maturities or average lives
of less than one (1) year.
1.40 "Subordinated Interests" means a class of Mortgage Securities that is
subordinated to one or more other classes of Mortgage Securities, all of which
classes share the same collateral.
1.41 "TCW" means The TCW Group, Inc.
1.42 "TCW Group" means TCW and its subsidiaries and Affiliates.
1.43 "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 a constant maturity 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 New York City by
at least three recognized dealers in U.S. government securities selected by the
Company.
1.44 "Unaffiliated Directors" means a director who is not affiliated,
directly or indirectly, with the Manager or the TCW Group, whether by ownership
of, ownership interest in, employment by, any material business or professional
relationship with, or serving as an officer or director of the Manager or the
TCW Group, and are not employed by or officers of the Company.
1.45 "VA Loans" means Mortgage Loans partially guaranteed by the United
States Veterans Administration under the Serviceman's Readjustment Act of 1944,
as amended.
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2. General Duties of the Manager.
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2.1 Services to be Provided by the Manager. Subject to the direction and
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oversight of the Board of Directors and in accordance with the Governing
Instruments, the Manager shall manage and provide services to the Company, and
to the extent directed by the Board of Directors, shall provide similar services
to any subsidiary of the Company. Without limiting the foregoing, the Manager
shall perform other services as may be required from time to time for management
and other activities relating to the assets of the Company as the Board of
Directors shall reasonably request or the Manager shall deem appropriate under
the particular circumstances, including the following:
2.1.1 serving as the Company's consultant with respect to formulation
of investment criteria and preparation of policy guidelines by the Board of
Directors;
2.1.2 assisting the Company in developing criteria for Mortgage Asset
purchase commitments that are specifically tailored to the Company's long-
term investment objectives and making available to the Company its
knowledge and experience with respect to Mortgage Assets;
2.1.3 representing the Company in connection with the purchase and
commitment to purchase or sell Mortgage Assets, including the accumulation
of Mortgage Loans for securitization and the incurrence of debt;
2.1.4 arranging for the issuance of Mortgage Securities from a pool of
Mortgage Loans;
2.1.5 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;
2.1.6 monitoring and providing to the Board of Directors on an ongoing
basis price information and other data, obtained from certain nationally
recognized dealers that maintain markets in Mortgage 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;
2.1.7 investing or reinvesting any money of the Company in accordance
with its policies and procedures;
2.1.8 providing the executive and administrative personnel, office
space and services required in rendering services to the Company;
2.1.9 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 as may be agreed upon
by the Manager and the
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Board of Directors, including the collection of revenues and the payment of
the Company's debts and obligations and maintenance of appropriate computer
systems to perform such administrative functions;
2.1.10 providing the Company with general data processing, legal and
administrative services to the extent required to implement the business
strategy of the Company;
2.1.11 counseling the Company in connection with policy decisions made
by the Board of Directors;
2.1.12 communicating 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
to maintain effective relations with such holders;
2.1.13 evaluating and recommending hedging strategies to the Board of
Directors and, upon approval by the Board of Directors, engaging in hedging
activities on behalf of the Company, consistent with the Company's status
as a REIT;
2.1.14 supervising compliance with the REIT Provisions of the Code and
maintenance of an exemption from the Investment Company Act;
2.1.15 qualifying and causing the Company to qualify to do business in
all applicable jurisdictions;
2.1.16 causing the Company to retain qualified accountants and tax
experts to assist in developing appropriate accounting procedures and
testing systems and to conduct quarterly compliance reviews;
2.1.17 providing all actions necessary for compliance by the Company
with all federal, state and local regulatory requirements applicable to the
Company in respect of its business activities, including preparing or
causing to be prepared all financial statements required under applicable
regulations and contractual undertakings and all reports and documents, if
any, required under the Securities Exchange Act of 1934, as amended;
2.1.18 providing all actions necessary to enable the Company to make
required federal, state and local tax filings and reports and generally
enable the Company to maintain its status as a REIT, including soliciting
stockholders for required information to the extent provided in the REIT
Provisions of the Code;
2.1.19 performing such other services as may be required from time to
time for management and other activities relating to the assets of the
Company as the
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Board of Directors shall reasonably request or the Manager shall deem
appropriate under the particular circumstances; and
2.1.20 complying with and using commercially reasonable efforts to
cause the Company to comply with all applicable laws.
2.2 Obligations of the Manager.
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2.2.1 Verify Conformity with Acquisition Criteria. The Manager shall
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use commercially reasonable efforts to provide that each Mortgage Asset conforms
to the acquisition criteria of the Company and shall require each seller or
transferor of Mortgage Assets to the Company to make such representations and
warranties regarding such Mortgage Assets as may, in the judgment of the
Manager, be necessary and appropriate. With respect to Mortgage Loans and
consistent with prevailing industry practices, the Manager shall use
commercially reasonable efforts to require the seller or transferor to
repurchase any Mortgage Loan with respect to which there is fraud or
misrepresentation. In addition, the Manager shall take such other action as it
deems necessary or appropriate with regard to the protection of the Company's
investments.
2.2.2 Conduct Activities in Conformity with REIT Status and All
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Applicable Restrictions. The Manager shall refrain from any action which, in
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its sole judgment made in good faith, would adversely affect the status of the
Company or, if applicable, any subsidiary of the Company as a REIT or which, in
its sole judgment made in good faith, would violate any material law, rule or
regulation of any governmental body or agency having jurisdiction over the
Company or any such subsidiary or which would otherwise not be permitted by the
Company's or such subsidiary's Governing Instruments; any operating policies
adopted by the Company; or any agreements provided to the Manager. 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; operating policies adopted by
the Company; or any agreements provided to the Manager. Notwithstanding the
foregoing, the Manager, its directors, officers, stockholders and employees
shall not be liable to the Company, any subsidiary of the Company, the
Unaffiliated Directors or any Stockholders of the Company or any of its
subsidiaries for any act or omission by the Manager, its directors, officers,
stockholders or employees except as provided in Section 8 of this Agreement.
2.2.3 Reports. The Manager shall cause an annual compliance report
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to be prepared for the first two fiscal years of the Company, commencing with
fiscal year 1997, by a firm independent of the Manager and its Affiliates and
having the proper expertise to determine compliance with the REIT Provisions of
the Code and related matters. The Manager shall deliver each report for a
fiscal year to the Company no later than March 31 of the following year. In
addition, the Manager will prepare regular reports for the Company's Board of
Directors that will review the Company's acquisitions of Mortgage Assets,
portfolio
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composition and characteristics, credit quality, performance and compliance with
the policies approved by the Company's Board of Directors.
2.2.4 Portfolio Transactions. In placing portfolio transactions and
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selecting brokers or dealers, the Manager shall endeavor to obtain on behalf of
the Company commercially reasonable terms. In assessing commercially reasonable
terms for any transaction, the Manager shall consider all factors it deems
relevant, including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis.
2.3 Compliance with the Investment Advisers Act. The Manager shall
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operate in compliance with the provisions of the Investment Advisers Act
applicable to the performance of the Manager's duties hereunder.
2.4 Cooperation of the Company. The Company agrees to take all actions
--------------------------
reasonably required to permit the Manager to carry out its duties and
obligations under this Agreement. The Company further agrees to make available
to Manager all materials reasonably requested by Manager to enable the Manager
to satisfy its obligations to deliver financial statements and any other
information or reports with respect to the Company.
2.5 Fidelity Bond. During the term of this Agreement the Manager shall
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obtain and maintain a fidelity bond in such amount and with an issuer as the
Manager shall determine, which shall cover, among other things, losses resulting
directly from dishonest or fraudulent acts committed by an employee of the
Manager and certain other losses. The premium for such bond is to be paid by
the Manager or its Affiliates.
3. Additional Activities of the Manager and its Affiliates.
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3.1 Other Activities of the Manager. Nothing in this Agreement shall
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prevent the Manager, its Affiliates, or any of the officers, directors or
employees of the Manager or its Affiliates, from engaging in other businesses or
from rendering services of any kind to any other person or entity, including the
purchase of, or advisory service to others investing in, any type of real estate
investment, including investments that meet the principal investment objectives
of the Company. Notwithstanding the foregoing, members of the Mortgage Backed
Securities Group of the TCW Group or any equivalent or successor group of the
TCW Group during their employment by the TCW Group will not provide any direct
management services to a residential mortgage REIT that invests primarily in
high quality Mortgage Securities other than the Company. Directors, officers,
employees and agents of the Manager and of Affiliates of the Manager may serve
as trustees, directors, officers, employees, agents, nominees or signatories for
the Company or any subsidiary of the Company, 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 Governing
Instruments. When executing documents or otherwise acting in such capacities
for the Company, such persons shall use their respective titles in the Company.
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3.2 Other Investment Advisory Activities of the Manager. Except as
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provided in Section 3.1 of this Agreement, nothing contained in this Agreement
shall prevent the Manager, or any Affiliate of the Manager, from acting as
investment advisor or manager for any other person, firm or corporation
(including any investment company), whether or not the investment objectives or
policies of any such other person, firm or corporation are similar to those of
the Company, and shall not in any way bind or restrict the Manager or any such
Affiliate from buying, selling or trading any securities or commodities for
their own accounts or for the account of others for whom the Manager or any such
Affiliate may be acting. The Company acknowledges that the Manager will base
allocation decisions on the procedures the Manager considers fair and equitable,
including, without limitation, such considerations as investment objectives,
restrictions and time horizon, availability of cash and the amount of existing
holdings. While information and recommendations supplied to the Company shall,
in the Manager's judgment, be appropriate under the circumstances and in light
of the investment objectives and policies of the Company, they may be different
from the information and recommendations supplied by the Manager or its
Affiliates to investment companies, funds and advisory accounts. The Company
shall be entitled to equitable treatment under the circumstances in receiving
information, recommendations and any other services, but the Company recognizes
that it is not entitled to receive preferential treatment as compared with the
treatment given by the Manager to any investment company, fund or advisory
account.
4. Bank Accounts. At the direction of the Board of Directors, the Manager
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may establish and maintain one or more bank accounts in the name of the Company
or any subsidiary of the Company, and may collect and deposit 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. 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 the
Company or any subsidiary of the Company.
5. Records; Confidentiality. The Manager shall maintain appropriate books
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of account and records relating to services performed under this Agreement, and
such books of account and records shall be accessible for inspection by
representatives of the Company or any subsidiary of the Company at any time
during normal business hours. Except in the ordinary course of business of the
Company, the Manager shall keep confidential any and all information it obtains
from time to time in connection with the services it renders under this
Agreement and shall not disclose any portion thereof to non-affiliated third-
parties (other than lenders to, and holders of stock or warrants of, the
Manager) except with the prior written consent of the Company.
6. Compensation of the Manager.
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6.1 Base Management Compensation. For services rendered under this
----------------------------
Agreement, the Company shall pay to the Manager, commencing on the Effective
Date and payable as described below, base management compensation equal to 3/4
of 1% of the Average Net Invested Capital of the Company (the "Base Management
Compensation"). The
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Base Management Compensation for each month shall be calculated by the Manager
within 15 days after the end of such month, and such calculation shall be
promptly delivered to the Company. The Company shall pay any amount payable
pursuant to this Section 6.1 for such month within 15 days after the receipt of
Manager's written statement setting forth the computation of the Base Management
Compensation.
6.2 Incentive Management Compensation. In addition to the Base Management
---------------------------------
Compensation, the Manager shall receive as incentive compensation for each
fiscal quarter an amount equal to 30% of the Net Income of the Company, before
incentive compensation, for such fiscal quarter in excess of the amount that
would produce an annualized Return on Equity (calculated by multiplying the
Return on Equity for such fiscal quarter by four) equal to the Ten-Year U.S.
Treasury Rate for such fiscal quarter plus 1% (the "Incentive Management
Compensation"). The Incentive Management Compensation calculation and payment
shall be made quarterly in arrears. The Manager shall compute the quarterly
Incentive Management Compensation within 45 days after the end of each fiscal
quarter. The Company shall pay the Incentive Management Compensation with
respect to each fiscal quarter within 15 days following the delivery to the
Company of the Manager's written statement setting forth the computation of the
Incentive Management Compensation for such quarter. In connection with the
Company's annual audit, the Manager shall compute any final adjustments to the
Incentive Management Compensation payable under this Section 6.2 within 45 days
after the end of each fiscal year and any required adjustments shall be paid by
the Company within 15 days after delivery of such computation to the Company by
the Manager and any amounts payable by the Manager shall be deducted from the
next succeeding payment(s) of Base Management Compensation or Incentive
Management Compensation payable to Manager, unless the Agreement has terminated,
in which case the payment shall be made by Manager within 15 days following
delivery of such statement.
6.3 Annual Reconciliation Beginning in 1999. Beginning in calendar year
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1999, the quarterly Incentive Management Compensation will be subject to annual
reconciliation so that the Incentive Management Compensation is based on the
Manager's performance for a calendar year rather than on a quarter-by-quarter
basis. Such reconciliation shall be determined as part of the Company's annual
audit and any reconciling payments shall be paid as provided in Section 6.2.
7. Expenses of the Manager and the Company.
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7.1 Expenses of the Manager. Without regard to the compensation received
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under this Agreement by the Manager, the Manager shall bear the following
expenses:
7.1.1 employment expenses of the personnel employed by the Manager
and/or its Affiliates (including, but not limited to, officers of the Company
employed by the Manager and/or its Affiliates), including, but not limited to,
salaries, wages, payroll taxes and the cost of employee benefit plans of such
personnel;
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7.1.2 rent, telephone, utilities, office furniture, equipment,
machinery, and other office expenses of the Manager and/or its Affiliates
required for the Company's day-to-day operations, including bookkeeping,
clerical and back-office services provided by the Manager or its Affiliates;
7.2 Expenses of the Company. The Company or any subsidiary of the Company
-----------------------
shall pay all of its expenses except those that are the responsibility of the
Manager pursuant to Section 7.1 of this Agreement, and without limiting the
generality of the foregoing, it is specifically agreed that the following
expenses of the Company or any subsidiary of the Company shall be paid by the
Company and shall not be paid by the Manager or Affiliates of the Manager:
7.2.1 the cost of money borrowed by the Company, including interest;
7.2.2 all taxes and license fees applicable to the Company or any
subsidiary of the Company, including interest and penalties thereon;
7.2.3 legal, audit, accounting, underwriting, brokerage, listing,
filing, rating agency, registration and other fees, printing, engraving,
clerical, personnel and other expenses and taxes incurred in connection with the
issuance, distribution, transfer, registration and stock exchange listing of
the Company's or any subsidiary's equity securities or debt securities;
7.2.4 fees and expenses paid to advisors and independent contractors,
consultants, managers, and other agents engaged 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 or its Affiliates);
7.2.5 expenses connected with the acquisition, disposition, financing
and ownership of the Company's or any subsidiary's investment assets, including,
but not limited to, commitment fees, brokerage fees, guaranty fees, 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;
7.2.6 costs related to hedging transactions;
7.2.7 the expenses of organizing, modifying or dissolving the Company
or any subsidiary of the Company;
7.2.8 all insurance costs incurred by the Company or any subsidiary of
the Company, including any costs to obtain liability or other insurance to
indemnify the Manager and underwriters of any securities of the Company;
13
7.2.9 expenses connected with payments of dividends or interest or
distributions in 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;
7.2.10 expenses connected with the structuring, issuance and
administration of Mortgage Securities by the Company or any subsidiary of the
Company, including, but not limited to, legal fees, trustee's fees, insurance
premiums, and costs of required credit enhancements;
7.2.11 all expenses of third parties connected with communications to
holders of equity securities or debt securities issued by 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;
7.2.12 custodian's, transfer agent's and registrar's fees and charges;
7.2.13 compensation, fees and expenses paid to trustees or
Unaffiliated Directors of the Company or any subsidiary of the Company, the cost
of director and officer liability insurance and premiums for errors and
omissions insurance;
7.2.14 legal, accounting and auditing fees and expenses relating to
the Company's or any subsidiary's operations (excluding litigation-related fees
and expenses described in Section 7.2.15);
7.2.15 legal, expert and other fees and expenses relating to any
actions, proceedings, lawsuits, demands, causes of action and claims, whether
actual or threatened, made by or against the Company, or which the Company is
authorized or obligated to pay under applicable law or its Governing Instruments
or by the Board of Directors;
7.2.16 any judgment rendered against the Company or any subsidiary of
the Company, or against any trustee, director or officer 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 trustee, director, or
officer by any court or governmental agency, or settlement of pending or
threatened litigation;
7.2.17 expenses relating to any office or office facilities maintained
by the Company or any subsidiary of the Company exclusive of the office of the
Manager and/or its Affiliates;
14
7.2.18 expenses related to the accumulation, servicing and
subservicing of Mortgage Loans;
7.2.19 travel and related expenses of directors, officers and
employees of the Manager and of directors, officers and employees of the Company
or any subsidiary of the Company who are also directors, officers or employees
of the Manager, incurred in connection with attending meetings of the Board of
Directors or holders of securities of the Company or any subsidiary of the
Company or performing other business activities that relate to the Company or
any subsidiary of the Company, including, where applicable, a proportionate
share of such expenses as reasonably determined by Manager where such expenses
were not incurred solely for the benefit of the Company;
7.2.20 costs associated with computer hardware and software, third
party information services and office expenses that relate solely to the
business activities of the Company;
7.2.21 any extraordinary or non-recurring costs or charges incurred by
the Company; and
7.2.22 other expenses of the Company or any subsidiary of the Company
that are not expenses of the Manager under Section 7.1 of this Agreement.
7.3 Limitation on Expenses Payable by the Company. Notwithstanding
---------------------------------------------
Sections 7.1 and 7.2 of this Agreement, the Limited Expenses required to be paid
by the Company shall be limited to an aggregate amount per year equal to the
greater of (i) 2% of the Average Net Invested Capital of the Company and (ii)
25% of its Net Income for that year. The determination of Net Income for
purposes of calculating such expense limitation will be the same as for
calculating the Manager's Incentive Management Compensation, except that it will
include any Incentive Management Compensation payable for such period. Expenses
of the Company that are not Limited Expenses shall be payable by the Company
regardless of the foregoing limit. Limited Expenses in excess of such limit
will be paid by the Manager, unless the Unaffiliated Directors determine that,
based upon extraordinary or non-recurring factors, a higher level of expenses is
justified for such fiscal year. In that event, such expenses may be recovered
by the Manager in succeeding years to the extent that Limited Expenses in
succeeding quarters are below the limitation on Limited Expenses for such
quarters.
7.4 Expense Reimbursement to the Manager. Expenses incurred by the
------------------------------------
Manager on behalf of the Company shall be reimbursed monthly to the Manager
within 30 days after the end of each month. 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 month, and shall deliver such
statement to the Company within 15 days after the end of each month. Expense
reimbursement to the Manager shall be subject to Section 7.3 hereof and
adjustment at the end of each fiscal year in connection with the annual audit of
the Company. Any amount that may become payable by the Manager pursuant to such
an annual adjustment
15
shall be offset against future amounts payable to the Manager as provided in
Section 6.2 hereof.
8. Limits of Manager Responsibility. The Manager assumes no
--------------------------------
responsibility under this Agreement other than to render the services
specifically called for under this Agreement 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
2.2.2 of this Agreement. The Manager, its directors, officers, stockholders and
employees will not be liable to the Company, any issuer of Mortgage Securities,
any subsidiary of the Company, its subsidiary's stockholders or the Unaffiliated
Directors for any acts or omissions, errors of judgment or mistakes of law by
the Manager, its directors, officers, stockholders or employees under or in
connection with this Agreement, except by reason of acts or omissions, errors of
judgment or mistakes of law constituting bad faith, willful misconduct, gross
negligence or reckless disregard of their duties under this Agreement. The
Company and its subsidiaries shall reimburse, indemnify and hold harmless the
Manager, its directors, officers, stockholders and employees of and from any and
all expenses, losses, damages, liabilities, demands, charges and claims of any
nature whatsoever (including, without limitation, attorneys' fees) in respect of
or arising from any acts or omissions, errors of judgment or mistakes of law of
the Manager, its stockholders, directors, officers and employees made in good
faith in the performance of the Manager's duties under this Agreement or
pursuant to any underwriting agreement or similar agreement to which Manager is
a party in connection with any debt or equity sales of the Company's securities
and not constituting bad faith, willful misconduct, gross negligence or reckless
disregard of their duties under this Agreement or any such underwriting
agreement. The Manager shall be indemnified by the Company as an agent of the
Company in accordance with the terms of the Company's Governing Instruments.
9. No Joint Venture. The Company and the Manager are not partners or
----------------
joint venturers with each other, and nothing in this Agreement shall be
construed to make them such partners or joint venturers or impose any liability
as such on any of them. The Manager is an independent contractor and, except as
expressly provided or authorized in this Agreement, shall have no authority to
act for or represent the Company.
10. Term; Termination; Termination Fee.
----------------------------------
10.1 Term. This Agreement shall commence on the Effective Date and shall
----
continue in force until December 31, 1999 and thereafter it shall be subject to
successive one-year renewal periods upon the review and approval of the
Unaffiliated Directors. If the Unaffiliated Directors do not resolve to renew
or terminate this Agreement, within at least 60 days prior to the end of the
then-current period of this Agreement, this Agreement shall be automatically
extended for a one-year period. The Company, subject to Section 10.2, and the
Manager shall have the right, following the initial term of this Agreement, to
terminate this Agreement at any time upon not less than 60 days prior written
notice.
16
10.2 Termination; Termination Fee. In addition to such further liability
----------------------------
or obligation of either party to the other provided in Section 13 of this
Agreement, if this Agreement is terminated without cause (as "cause" is defined
in Section 12 of this Agreement) by delivery of a notice of non-renewal pursuant
to Section 10.1 or because the Company does not consent to an assignment of this
Agreement by the Manager in connection with any acquisition, consolidation or
merger of TCW (to the extent such consent is required pursuant to the Investment
Advisers Act), the Company, in addition to its obligations under Section 13,
shall pay the Manager a termination fee in an amount equal to the fair market
value of this Agreement determined by an independent appraisal. For the
purposes of determining the fair market value of this Agreement, it will be
assumed that this Agreement is unlimited in term and not subject to termination
or non-renewal. Such appraisal shall be conducted by a nationally recognized
appraisal firm selected (but not previously engaged) by the Manager, subject to
the approval by a majority of the Unaffiliated Directors, which approval shall
not be unreasonably withheld or delayed, and the costs of such appraisal shall
be borne equally by the parties. Any appraisal conducted under this Agreement
shall be performed no later than 45 days following selection of the appraiser or
appraisers. The termination fee payable by the Company shall be paid within 30
days following receipt of the final appraisal to be obtained under this
Agreement.
11. Assignments. Upon not less than sixty (60) days prior written notice
-----------
to the Board of Directors of the Company, this Agreement may be assigned by the
Manager to an Affiliate of TCW without the consent of the Company. Except in
the event of an assignment by the Manager to an Affiliate of TCW or as otherwise
set forth in this Section 11, this Agreement shall terminate automatically in
the event of its assignment, in whole or in part, by the Manager (other than the
pledge of amounts payable to the Manager under this Agreement to secure the
Manager's obligations to its lenders), unless such assignment is consented to in
writing by the Company with the consent of a majority of the Unaffiliated
Directors. The Company shall not withhold its consent to any assignment of this
Agreement by the Manager in connection with any acquisition, consolidation or
merger of TCW, to the extent such consent is required by the Investment Advisers
Act. Any assignment shall bind the assignee under this Agreement in the same
manner as the Manager is bound. In addition, the assignee shall execute and
deliver to the Company a counterpart of this Agreement naming such assignee as
Manager. This Agreement shall not be assigned by the Company without the prior
written 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 under this Agreement and by the terms of such assignment in the
same manner as the Company is bound under this Agreement.
12. Termination by Company for Cause. At the option of the Company, this
--------------------------------
Agreement shall be and become terminated upon 60 days' written notice of
termination from the Board of Directors to the Manager if any of the following
events shall occur (termination for any of such events shall constitute
termination for "cause"):
17
12.1 if a majority of the Unaffiliated Directors determines that the
Manager has violated this Agreement in any material respect and, after written
notice of such violation, the Manager has failed to cure such violation within
30 days, unless during such 30-day period the Manager has commenced to cure such
violation and thereafter diligently prosecutes to cure such violation; or
12.2 there is entered an order for relief or similar decree or order with
respect to the Manager by a court having competent 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 Manager (i) 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; (ii) 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 Manager 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 Manager and continue undismissed for 30 days; (iii) 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 Manager without such authorization, application or
consent and are approved as properly instituted and remain undismissed for 30
days or result in adjudication of bankruptcy or insolvency; or (iv) 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; provided, however, that in the event the Manager becomes the subject of a
case under federal bankruptcy or similar federal or state laws and remains in
possession of its property and continues to operate its business (as a debtor in
possession or otherwise), the Company shall not have the option to terminate
this Agreement unless the Unaffiliated Directors determine in good faith that as
a result of such proceeding the Manager cannot reasonably be expected to fulfill
its obligations under this Agreement. If any of the events specified in Section
12.2 of this Agreement shall occur, the Manager shall give prompt written notice
thereof to the Board of Directors upon the happening of such event.
13. Action Upon Termination. From and after the effective date of
-----------------------
termination of this Agreement, pursuant to Sections 10, 11 or 12 of this
Agreement, except as otherwise specified in Section 10.2 of this Agreement, the
Manager shall not be entitled to compensation for further services under this
Agreement, but shall be paid all Base and Incentive Management Compensation
accruing to the date of termination. Upon such termination, the Manager shall
forthwith:
13.1 after deducting any accrued Base and Incentive Management Compensation
and reimbursement for its expenses to which it is then entitled, pay over to the
Company or
18
any subsidiary of the Company all money collected and held for the account of
the Company or any subsidiary of the Company pursuant to this Agreement;
13.2 deliver to the Board of Directors a full accounting, including a
statement showing all payments collected by it and a statement of all money held
by it, covering the period following the date of the last accounting furnished
to the Board of Directors with respect to the Company or any subsidiary of the
Company; and
13.3 deliver to the Board of Directors all property and documents of the
Company or any subsidiary of the Company then in the custody of the Manager.
14. Release of Money or Other Property Upon Written Request. The Manager
-------------------------------------------------------
agrees that any money or other property of the Company or any subsidiary of the
Company held by the Manager under this Agreement shall be held by the Manager as
custodian for the Company or such subsidiary, and the Manager's records shall be
appropriately marked clearly to reflect the ownership of such money or other
property by the Company or such subsidiary. 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 subsidiary of the Company any money
or other property then held by the Manager for the account of the Company or any
subsidiary of the Company under this Agreement, the Manager shall release such
money or other property to the Company or such subsidiary of the Company within
a reasonable period of time, but in no event later than the later to occur of
(i) 30 days following such request and (ii) the earliest time following such
request that remittance will not cause the Manager to violate any law or breach
any agreement to which it or the Company is a party. The Manager shall not be
liable to the Company, any subsidiaries of the Company, the Unaffiliated
Directors, or the Company's or its subsidiaries' stockholders for any acts
performed or omissions to act by the Company or any subsidiary of the Company in
connection with the money or other property released to the Company or any
subsidiary of the Company in accordance with this Section 14 and not
constituting bad faith, willful misconduct, gross negligence or reckless
disregard of its duties under this Agreement. The Company and any subsidiary of
the Company shall indemnify 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
subsidiary of the Company in accordance with the terms of this Section 14 unless
such expenses, losses, damages, liabilities, demands, charges and claims arise
in connection with acts or omissions which constitute bad faith, willful
misconduct, gross negligence or reckless disregard of its duties under this
Agreement. Indemnification pursuant to this provision shall be in addition to
any right of the Manager to indemnification under Section 8 of this Agreement.
15. Representations and Warranties.
------------------------------
15.1 Company in Favor of the Manager. The Company hereby represents and
-------------------------------
warrants to the Manager as follows:
19
15.1.1 Due Formation. The Company is duly organized, validly existing
-------------
and in good standing under the laws of Maryland, has the power to own its assets
and to transact the business in which it is now engaged and is duly qualified
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.
15.1.2 Power and Authority. The Company has the power and authority
-------------------
to execute, deliver and perform this Agreement and all obligations required
under this Agreement and has taken all necessary action to authorize this
Agreement on the terms and conditions hereof and the execution, delivery and
performance of this Agreement and all obligations required under this Agreement.
Except as shall have been obtained, 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 under this Agreement. This Agreement has been, and each instrument or
document required under this Agreement will be, executed and delivered by a duly
authorized officer of the Company, and this Agreement constitutes, and each
instrument or document required under this Agreement when executed and delivered
under this Agreement will constitute, the legally valid and binding obligation
of the Company enforceable against the Company in accordance with its terms.
15.1.3 Execution, Delivery and Performance. The execution, delivery
-----------------------------------
and performance of this Agreement and the documents or instruments required
under this Agreement 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
Governing Instruments of, or any securities issued by, the Company or of 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 (other than the pledge of amounts
payable to the Manager under this Agreement to secure the Manager's obligations
to its lenders).
15.2 Manager In Favor of the Company. The Manager hereby represents and
-------------------------------
warrants to the Company as follows:
20
15.2.1 Due Formation. 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 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.
15.2.2 Power and Authority. The Manager has the corporate power and
-------------------
authority to execute, deliver and perform this Agreement and all obligations
required under this Agreement 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 under
this Agreement. Except as shall have been obtained, 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, delivery, performance, validity or enforceability of this Agreement
and all obligations required under this Agreement. This Agreement has been and
each instrument or document required under this Agreement will be executed and
delivered by a duly authorized officer of the Manager, and this Agreement
constitutes, and each instrument or document required under this Agreement when
executed and delivered under this Agreement will constitute, the legally valid
and binding obligation of the Manager enforceable against the Manager in
accordance with its terms.
15.2.3 Execution, Delivery and Performance. The execution, delivery
-----------------------------------
and performance of this Agreement and the documents or instruments required
under this Agreement 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.
16. Notices. Unless expressly provided otherwise in this Agreement, 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 (1) delivered by hand, (2) otherwise delivered against
receipt therefor, or (3) upon actual receipt of registered or certified mail,
postage prepaid, return receipt requested. The parties may deliver to each
other notice by electronically transmitted facsimile copies, provided that
21
such facsimile notice is followed within 24 hours by any type of notice
otherwise provided for in this Section 16. Any notice shall be duly addressed
to the parties as follows:
(a) If to the Company:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy given in the manner prescribed above, to:
(b) If to the Manager:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy given in the manner prescribed above, to:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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 16 for the giving of notice.
17. 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
in this Agreement.
18. 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.
22
19. 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.
20. 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 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.
21. Titles 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.
22. 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.
23. 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.
24. 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.
25. Attorneys' Fees. Should any action or other proceeding be necessary
---------------
to enforce any of the provisions of this Agreement or the various transactions
contemplated hereby, the prevailing party will be entitled to recover its actual
reasonable attorneys' fees and expenses from the non-prevailing party.
26. Amendments. This Agreement may not be amended, modified or changed
----------
(in whole or in part), except by a formal, definitive written agreement
expressly referring to this
23
Agreement, which agreement is executed by all of the parties. The parties
hereto expressly acknowledge that no consent or approval of the Company's
stockholders is required in connection with any amendment, modification or
change to this Agreement.
27. Authority. Each signatory to this Agreement warrants and represents
---------
that he is authorized to sign on behalf of and to bind the party on whose behalf
he, she or it is signing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the effective date.
"COMPANY"
APEX MORTGAGE CAPITAL, INC.,
a Maryland corporation
By:______________________________________
Its:______________________________
"MANAGER"
TCW INVESTMENT MANAGEMENT COMPANY,
a California corporation
By:______________________________________
Its:______________________________
24