Exhibit 1.1
IMPERIAL CREDIT COMMERCIAL HOLDINGS, INC.
Up to 7,000,000/1/ Shares of Common Stock
Issuable upon Exercise of
Subscription Rights for Such Shares
DEALER MANAGER AGREEMENT
New York, New York
June [__], 1997
PAINEWEBBER INCORPORATED
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & COMPANY INCORPORATED
c/o PaineWebber Incorporated
1285 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Each of Imperial Credit Commercial Holdings, Inc., a Maryland
corporation (the "Company"), Imperial Credit Mortgage Holdings, Inc., a Maryland
corporation ("IMH"), Imperial Commercial Capital Corporation, a [California]
corporation ("ICCC"), and REIT Advisors, Inc., a _________ corporation (the
"Manager"), confirms its agreement with and appointment of PaineWebber
Incorporated and ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company Incorporated (the "Dealer Managers")
to act as dealer managers in connection with the offer of the Company to holders
of record ("IMH Holders") as of the close of business on June [ ], 1997 (the
"Record Date") of shares of common stock and options to purchase common stock
(collectively, the "IMH Shares") of IMH, of non-transferable rights to subscribe
(the "Subscription Rights") for an aggregate of up to 7,000,000 shares (the "ICH
Shares") of the Company's common stock, par value $.01 per share (the "Common
Stock"), at the Subscription Price (as hereinafter defined).
-----------------------------
/1/ Subject to increase in connection with the Minimum Standby Offer
Amount (as defined herein) in the event that the Maximum Sub-
scription Offer Amount is achieved.
The Subscription Rights entitle the IMH Holders to subscribe for ICH
Shares at the rate of one ICH Share for each IMH Share held on the Record Date
(the "Subscription Offer"). An IMH Holder's right to acquire at the
Subscription Price (as hereinafter defined) one ICH Share for every IMH Share
held is referred to as the "Primary Subscription Privilege." Holders of IMH
Shares who fully exercise all their Subscription Rights may be entitled to
subscribe for additional ICH Shares of the Company, subject to allotment,
proration and reduction (the "Over-Subscription Privilege") as provided for
herein. The opportunity for IMH Holders to subscribe for ICH Shares pursuant to
the Subscription Rights expires at 5:00 p.m., New York City time, on July [__],
1997 (the "Expiration Date").
The offer of Subscription Rights to the IMH Holders will commence on
June [__], 1997 (the "Commencement Date"). ICH Shares issued to IMH Holders
pursuant to exercise of Subscription Rights, including pursuant to requests for
additional ICH Shares pursuant to the Over-Subscription Privilege, duly received
on or prior to the Expiration Date will be at the subscription price (the
"Subscription Price") of $15.00 per Share. The trade date for the acceptance of
exercises of Subscription Rights for the ICH Shares shall be July [__], 1997
(the "Trade Date"), and the initial settlement date for the issuance of all or a
portion of such ICH Shares shall be July [__], 1997 (the "Initial Settlement
Date"). A portion of the ICH Shares requested pursuant to Primary Subscription
Privilege and the Over-Subscription Privilege may be issued on a date after the
Initial Settlement Date (the "Supplemental Settlement Date") to be determined
by the Company and the Dealer Managers, subject to proration, reduction or
cancellation by the Company, subject to the consent of the Dealer Managers, if
the Company believes, following the Expiration Date, that the issuance of such
additional ICH Shares will have an adverse effect upon the operations of the
Company or the market for the Company's Common Stock (the Initial Settlement
Date and the Supplemental Settlement Date are each referred to as a "Settlement
Date"). The Board of Directors has determined to limit the amount of ICH Shares
that may be subscribed for pursuant to the Subscription Offer to 7,000,000 (the
"Maximum Subscription Offer Amount").
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In addition to the Subscription Offer, the Company is offering (the
"Standby Offer" and, together with the Subscription Offer, the "Offering") to
certain persons that may or may not be IMH Holders as of the Record Date
("Standby Purchasers"), pursuant to Standby Purchase Agreements (as defined
herein), at least _____ shares of Common Stock (the "Minimum Standby Offer
Amount") but no more than [1,000,000] shares of Common Stock, subject to
increase to the extent that the Maximum Subscription Offer Amount is not
achieved (the "Maximum Standby Offer Amount") at a price per share equal to the
Subscription Price (the shares of Common Stock being offered pursuant to the
Standby Offer are hereinafter referred to as the "Standby Shares"; the Standby
Shares and the ICH Shares are hereinafter collectively referred to as the
"Shares").
The Board of Directors of the Company has determined not to proceed
with the Offering unless an aggregate amount of at least [2,500,000] Shares (the
"Minimum Offering Amount") are subscribed for (inclusive of Standby Shares that
may be subscribed for pursuant to the Standby Purchase Agreements).
In connection with the organization of the Company and of ICCC, the
following organizational transactions (the "Contribution Transactions") took
place in connection with a Contribution Agreement dated as of ________, 1997
among the Company, IMH and ICCC (the "Contribution Agreement"): (i) in February
1997, IMH purchased, for $500,000, all of the non-voting preferred stock of ICCC
(the "ICCC Preferred Stock"), which represents 95% of the economic interest in
ICCC, and certain of the Company's officers purchased all of the outstanding
common stock of ICCC, which represents 5% of the economic interest in ICCC; (ii)
in February 1997, the officers and directors of the Company, as a group,
purchased 300,000 shares of the Company's Common Stock and IMH purchased 299,000
shares of the Company's Common Stock (collectively, the "Company's Restricted
Shares"); (iii) in March 1997, IMH lent the Company $15.0 million evidenced by a
promissory note convertible into shares of the non-voting convertible preferred
stock of the Company (the "ICH Preferred Stock") at the rate of one share of ICH
Preferred Stock for each $5.00 principal amount of said note (the "Conversion
Rate"); (iv) in March 1997, IMH converted the aforementioned $15.0 million
principal amount promissory note into an aggregate of 3,000,000
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shares of ICH Preferred Stock; all ICH Preferred Stock is automatically
convertible upon the closing of the Offering into shares of the Company's
Common Stock determined by multiplying the number of shares of ICH Preferred
Stock to be converted by a fraction, the numerator of which is $5.00 and the
denominator of which is the Subscription Price; notwithstanding the foregoing,
consistent with the Company's classification as a REIT, IMH shall not be
entitled to have converted into the Company's Common Stock more than that number
of shares of ICH Preferred Stock whereby IMH would own, immediately after such
conversion, greater than 9.8% of the Company's outstanding Common Stock; any
shares of ICH Preferred Stock not converted into the Company's Common Stock upon
the closing of the Offering shall on such date automatically convert into
shares of the Company's non-voting Class A Common Stock (the "ICH Class A
Stock") at the same rate as the ICH Preferred Stock converted into Common Stock
on said date; and (v) in April 1997, IMH exchanged the 299,000 shares of the
Company's Restricted Shares held by it for an equivalent number of shares of ICH
Class A Stock.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-11 (File No. 333-_____)
including a prospectus relating to the Company for the registration of the
Shares under the Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations of the Commission under the Securities Act (the "Rules
and Regulations"), and has filed such amendments to such registration statement
on Form S-11 and such amended prospectuses as may have been required to the date
hereof. The term "Registration Statement" means the registration statement
declared effective by the Commission on June [__], 1997 (the "Effective Date"),
including financial statements and all exhibits and all documents, if any,
incorporated therein by reference and including any post-effective amendments
that become effective prior to the Expiration Date. The term "Prospectus" means
the prospectus of the Company in the form filed with the Commission pursuant to
Rule 424 of the Rules and Regulations as from time to time amended or
supplemented. The Prospectus, letters to IMH Holders, subscription certifi-
▇▇▇▇▇, brochures, wrappers and other materials preceded or accompanied by the
Prospectus, forms used to exercise Subscription Rights, any letters and other
informational
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material sent to securities dealers, commercial banks and other nominees and any
newspaper announcements, press releases and other offering materials and
information that the Company may use specifically in connection with the
solicitation contemplated by this Agreement, approve, prepare or authorize for
use in connection with the Offering, are collectively referred to hereinafter as
the "Offering Materials."
1. Representations and Warranties.
------------------------------
(a) Each of the Company, ICCC, the Manager and IMH represents and
warrants to, and agrees with, the Dealer Managers as of the Commencement Date
and on the Settlement Dates (each, a "Representation Date") that:
(i) The Company meets the requirements for use of Form S-11 under
the Securities Act and the Rules and Regulations. The Registration
Statement contains or will contain all statements required to be stated
therein in accordance with, and complies or will comply in all material
respects with, the requirements of the Securities Act and the Rules and
Regulations and does not or will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus and the other Offering Materials, together with the Prospectus,
do not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
are made, not misleading.
(ii) The only subsidiaries (as defined in the Rules and Regulations)
of the Company are ICCC and the other subsidiaries, if any, listed on
Exhibit 21.1 to the Registration Statement (the "Subsidiaries"). The
Company and each Subsidiary has been duly organized, is validly existing
and is in good standing under the laws of the jurisdiction of
incorporation; the Company and each Subsidiary has full power and authority
to conduct all the respective activities conducted by them, to own or
lease the assets owned or leased respectively by them and to conduct their
respective business as described in
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the Registration Statement and the Prospectus; the Company and each
Subsidiary and are duly qualified to do business in each jurisdiction
wherein they own or lease real property or in which the conduct of their
business requires such qualification, except where the failure to be so
qualified would not result in a material adverse effect upon the Company or
any of its Subsidiaries or their respective business, properties, business
prospects, condition (financial or otherwise) or results of operations (a
"Material Adverse Effect").
(iii) All of the outstanding shares of the capital stock of the
Subsidiaries, including but not limited to the ICCC Preferred Stock, have
been duly authorized and validly issued and are fully paid and non-
assessable and are owned by the Company to the extent as is described in
the Prospectus, free and clear of all liens, encumbrances and claims
whatsoever. Except for the stock of the Subsidiaries and as disclosed in
the Registration Statement, the Company does not own, directly or
indirectly, any shares of stock or any other equity or long-term debt
securities of any corporation or have any equity interest in any firm,
partnership, joint venture, association or other entity. Complete and
correct copies of the charter and of the by-laws of the Company and its
Subsidiaries and all amendments thereto have been filed as Exhibits to the
Registration Statement or delivered to the Dealer Managers, and no changes
therein will be made subsequent to the date hereof and prior to any
Representation Date, except such as the Dealer Managers shall approve and
as may be necessary for the Company to qualify as a REIT under the Code as
such term is hereinafter defined).
(iv) All of the outstanding shares of the capital stock of the
Company, including but not limited to the Company's Restricted Shares, the
ICH Class A Stock and the ICH Preferred Stock, have been duly authorized,
validly issued, fully paid and nonassessable and will not be subject to any
preemptive or similar right. The Subscription Rights have been duly
authorized by all requisite action on the part of the Company for delivery
to the IMH Holders pursuant to the Offering; the Shares have been duly
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authorized by all requisite action on the part of the Company for issuance
and sale pursuant to the terms of the Offering and, when issued and
delivered by the Company pursuant to the terms of the Offering against
payment of the consideration set forth in the Prospectus, will be validly
issued, fully paid and non-assessable; the Shares and the Subscription
Rights conform in all material respects to all statements relating thereto
contained in the Registration Statement and the Prospectus; and the
issuance of the Shares is not subject to any preemptive rights. Except as
set forth in the Prospectus, there are no options to purchase, or any
rights or warrants to subscribe for, or any securities or obligations
convertible into, or any contracts, commitments, plans or arrangements to
issue or sell, any shares of capital stock of the Company, any shares of
capital stock of any Subsidiary or any such warrants, convertible
securities or obligations. The description of the Company's dividend
reinvestment plan, stock option and other stock plans or arrangements, and
the options or other rights granted and exercised thereunder, set forth in
the Prospectus accurately presents the information required to be shown
with respect to such plans, arrangements, options and rights.
(v) The financial statements and schedules included in the
Registration Statement or the Prospectus present the consolidated
financial condition of the Company as of the respective dates thereof and
the consolidated results of operations and cash flows of the Company for
the respective periods covered thereby, all in conformity with generally
accepted accounting principles applied on a consistent basis throughout
the entire period involved, except as otherwise disclosed in the
Prospectus. The financial statements and other financial information
included in the Registration Statement or the Prospectus (A) present in all
material respects the information shown therein, (B) have been prepared in
accordance with the Commission's rules and guide lines with respect to pro
forma financial statements, and (C) have been properly computed on the
basis described therein. No other financial statements or schedules of the
Company are required by the Securities Act or the Rules and Regulations to
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be included in the Registration Statement or the Prospectus. KPMG Peat
Marwick (the "Accountants"), who have reported on such financial statements
and schedules, are independent accountants with respect to the Company as
required by the Securities Act and the Rules and Regulations. The
statements included in the Registration Statements with respect to the
Accountants pursuant to Item 509 of Regulation S-K of the Rules and
Regulations are true and correct in all material respects. The selected
financial data set forth in the Prospectus under the captions
"Capitalization" and "Selected Financial Data" fairly present the
information set forth therein on the basis stated in the Registration
Statement.
(vi) The Company and each Subsidiary maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management's general or
specific authorization; and (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets.
(vii) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the
respective Representation Date, except as set forth in or contemplated by
the Registration Statement and the Prospectus, (A) there has not been any
change in the capitalization of the Company, or in the business,
properties, business prospects, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, arising for any
reason whatsoever, (B) neither the Company nor any of its Subsidiaries has
incurred any material liabilities or obligations, direct or contingent,
nor has it entered into any material transactions other than pursuant to
this Agreement and the transactions referred to herein and (C) the Company
has not paid or declared any dividends or other distributions of any kind
on any class of its capital stock.
(viii) Neither the Company nor any of its Subsidiaries is, and if
operated in the manner described in the Prospectus under the caption "Busi-
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ness" will not be, an "investment company," an entity "controlled" by an
"investment company" or an "affiliated person" of, or "promotor" or
"principal underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act").
(ix) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or
any of its Subsidiaries or any of their respective officers in their
capacity as such, before or by any Federal or state court, commission,
regulatory body, administrative agency or other governmental body, domestic
or foreign, wherein an unfavorable ruling, decision or finding might result
in a Material Adverse Effect.
(x) The Company and each of its Subsidiaries has (A) all
governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to carry on its business as contemplated in the
Prospectus, (B) complied in all respects with all laws, regulations and
orders applicable to it or its business and (C) performed all its
obligations required to be performed by it, and is not in default, under
any indenture, mortgage, deed of trust, voting trust agreement, loan
agreement, bond, debenture, note agreement, lease, contract or other
agreement or instrument (collectively, a "contract or other agreement") to
which it is a party or by which its property is bound or affected, the
effect of any of which, individually or in the aggregate, might result in a
Material Adverse Effect. To the knowledge of the Company and each of its
Subsidiaries, no other party under any contract or other agreement to
which it is a party is in default in any respect thereunder. Neither the
Company nor any of its Subsidiaries is in violation of any provision of its
charter or by-laws.
(xi) The Company has full corporate power and authority to enter into
this Agreement, the Subscription Agency Agreement, dated June __, 1997
(the "Subscription Agency Agreement") between the Company and ____________
(the "Subscription Agent"),
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the Management Agreement, dated June __, 1997 (the "Management Agreement"),
between the Company and the Manager, the Servicing Agreement, dated June
__, 1997 (the "Servicing Agreement"), between the Company and ICCC, the
Tax Agreement, dated June __, 1997 (the "Tax Agreement"), between the
Company and IMH, the Non-Competition Agreement dated June __, 1997 (the
"Non-Competition Agreement") between the Company and IMH, the Right of
First Refusal Agreement, dated June __, 1997 (the "Right of First Refusal
Agreement") between the Company, the Manager and IMH and the Contribution
Agreement. The Subscription Agency Agreement, the Management Agreement, the
Servicing Agreement, the Tax Agreement, the Contribution Agreement, the
Right of First Refusal Agreement and the Non-Competition Agreement are
collectively referred to as the "Company Agreements." Each of this
Agreement and the Company Agreements has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of
the Company and is enforceable against the Company in accordance with its
terms, except as the enforceability hereof and thereof may be limited by
applicable bankruptcy, insolvency, reorganization and similar laws
affecting creditors' rights generally and moratorium laws in effect from
time to time and by equitable principles restricting the availability of
equitable remedies. The execution and delivery by the Company of, and the
performance by the Company of its obligations under, each of this Agreement
and the Company Agreements, the consummation of the transactions
contemplated hereby and thereby and the application of the net proceeds
from the offering and sale of the Shares to be sold by the Company in the
manner set forth in the Prospectus under the caption "Use of Proceeds"
will not result in the creation or imposition of any lien, charge or
encumbrance upon any of the assets of the Company or any of its
Subsidiaries pursuant to the terms or provisions of, or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, or give any other party a right to terminate any of its obligations
under, or result in the acceleration of any obligation under, the charter
or by-laws of the Company or any of its Subsidiaries, any contract or other
agreement to which the Company or any of its Subsidiaries is a
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party or by which the Company or any of its Subsidiaries or any of its
properties is bound or affected, or violate or conflict with any judgment,
ruling, decree, order, statute, rule or regulation of any court or other
governmental agency or body applicable to the business or properties of the
Company or any of its Subsidiaries the effect of any of which, individually
or in the aggregate, would be to have a Material Adverse Effect.
(xii) No consent, approval, authorization or order of, or any filing
or declaration with, any court or governmental agency or body is required
in connection with the authorization, issuance, transfer, sale or delivery
of the Shares by the Company, in connection with the execution, delivery
and performance of this Agreement or the Company Agreements by the Company
or in connection with the taking by the Company of any other action contem-
plated hereby or thereby, except such as have been obtained under the
Securities Act or the Rules and Regulations and such as may be required
under state securities or Blue Sky laws or the by-laws and rules of the
National Association of Securities Dealers, Inc. (the "NASD").
(xiii) The Company and each of its Subsidiaries has good and
marketable title to all properties and assets described in the Prospectus
as owned by it (including the assets contributed, sold or transferred to
the Company pursuant to the terms of the Contribution Agreement), free and
clear of all liens, charges, encumbrances, mortgages, security interests,
claims or restrictions, except such as are described in, or contemplated
by, the Prospectus. The Company and each of its Subsidiaries has valid,
subsisting and enforceable leases for the properties described in the
Prospectus as leased by it, with such exceptions as are not material and do
not materially interfere with the use made and proposed to be made of such
properties by the Company and the Subsidiaries.
(xiv) There is no document or contract of a character required to be
described in the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement which is
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not described or filed as required. All such contracts to which the
Company or any Subsidiary is a party have been duly authorized, executed
and delivered by the Company or such Subsidiary, constitute valid and
binding agreements of the Company or such Subsidiaries and are enforceable
against the Company or such Subsidiary in accordance with the terms
thereof.
(xv) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required
by this Agreement to be delivered to the Dealer Manager was or will be,
when made, inaccurate, untrue or incorrect.
(xvi) Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action intended,
or which might reasonably be expected, to cause or result, under the
Securities Act or otherwise, in, or which has constituted, stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares.
(xvii) No holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of the
Registration Statement.
(xviii) The Shares have been duly authorized for listing by the
American Stock Exchange upon official notice of issuance.
(xix) Neither the Company nor any of its Subsidiaries is involved in
any material labor dispute nor, to the knowledge of the Company, is any
such dispute threatened.
(xx) The Company and its Subsidiaries own, or are licensed or
otherwise have the full exclusive right to use, all material trademarks and
trade names which are used in or necessary for the conduct of their
respective businesses as described in the Prospectus. No claims have been
asserted by any person to the use of any such trademarks or trade names or
challenging or questioning the validity or
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effectiveness of any such trademark or trade name. The use, in connection
with the business and operations of the Company and its Subsidiaries of
such trademarks and trade names does not, to the Company's knowledge,
infringe on the rights of any person.
(xxi) Neither the Company nor to the knowledge of the Company any
officers, directors, employees or agents acting on behalf of the Company
has at any time (A) made any contributions to any candidate for political
office in violation of law, or failed to disclose fully any contributions
to any candidate for political office in accordance with any applicable
statute, rule, regulation or ordinance requiring such disclosure, (B) made
any payment to any local, state, Federal or foreign governmental officer or
official, or other person charged with similar public or quasi-public
duties, other than payments required or allowed under applicable law, (C)
made any payment outside the ordinary course of business to any purchasing
or selling agent or person charged with similar duties of any entity to
which the Company sells or from which the Company buys products for the
purpose of influencing such agent or person to buy products from or sell
products to the Company, or (D) except as described in the Prospectus,
engaged in any transaction, maintained any bank account or used any
corporate funds except for transactions, bank accounts and funds which have
been and are reflected in the normally maintained books and records of the
Company.
(xxii) As of the Expiration Date, the Company and its Subsidiaries
will be insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and customary in
the business in which it proposes to engage as described in the Prospectus;
the Company has not been refused any insurance coverage sought or applied
for; and the Company has no reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue its proposed business at a cost that would not result in a
Material Adverse Effect.
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(xxiii) The Company has conducted its operations in a manner so as
to enable it to elect to be qualified as a real estate investment trust
("REIT") under Sections 856 through 860 of the Internal Revenue Code of
1986, as amended (the "Code"), and intends to operate in a manner so as to
continue to remain to be able to be so qualified.
(xxiv) The Company has complied with all of the provisions of
(including, without limitation, filing all forms required by) Section
517.075 of the Florida Securities and Investor Protection Act and
Regulation 3E900.001 issued thereunder with respect to the offering and
sale of the Shares.
(xxv) Neither the Company nor any of its Subsidiaries is, and if
operated in the manner described in the Prospectus under the caption
"Business" will not be, a "broker" within the meaning of Section 3(a)(4) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or a
"dealer" within the meaning of Section 3(a)(5) of the Exchange Act or
required to be registered pursuant to Section 15(a) of the Exchange Act.
(b) Each of the Company, ICCC, the Manager and IMH represents and
warrants to, and agrees with, the Dealer Managers as of each Representation Date
that:
(i) ICCC has full corporate power and authority to enter into this
Agreement, the Servicing Agreement, the Lease Agreement dated as of _____,
1997 between ICCC and ______ (the "Lease Agreement") and the Contribution
Agreement. The Servicing Agreement, the Lease Agreement, the Contribution
Agreement, and any other Company Agreements to which ICCC is a party are
collectively referred to as the "ICCC Agreements." Each of this Agreement
and the ICCC Agreements has been duly authorized, executed and delivered by
ICCC and constitutes a valid and binding agreement of ICCC and is
enforceable against ICCC in accordance with its terms, except as the
enforceability hereof and thereof may be limited by applicable bankruptcy,
insolvency, reorganization and similar laws affecting creditors' rights
generally and moratorium laws in effect from time to time
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and by equitable principles restricting the availability of equitable
remedies. The execution and delivery by ICCC of, and the performance by
ICCC of its obligations under, each of this Agreement and the ICCC
Agreements, the consummation of the transactions contemplated hereby and
thereby and the application of the net proceeds from the offering and sale
of the Shares to be sold by the Company in the manner set forth in the
Prospectus under the caption "Use of Proceeds" will not result in the
creation or imposition of any lien, charge or encumbrance upon any of the
assets of ICCC pursuant to the terms or provisions of, or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, or give any other party a right to terminate any of its
obligations under, or result in the acceleration of any obligation under,
the charter or by-laws of ICCC, any contract or other agreement to which
ICCC is a party or by which ICCC or any of its properties is bound or
affected, or violate or conflict with any judgment, ruling, decree, order,
statute, rule or regulation of any court or other governmental agency or
body applicable to the business or properties of ICCC the effect of any of
which, individually or in the aggregate, would be to have a Material
Adverse Effect.
(ii) No consent, approval, authorization or order of, or any filing
or declaration with, any court or governmental agency or body is required
in connection with the execution, delivery and performance of this
Agreement or the ICCC Agreements by ICCC or in connection with the taking
by ICCC of any other action contemplated hereby or thereby, except such as
have been obtained.
(iii) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or, to the
knowledge of ICCC, threatened against or affecting ICCC or any of its
officers in their capacity as such, before or by any Federal or state
court, commission, regulatory body, administrative agency or other
governmental body, domestic or foreign, wherein an unfavorable ruling,
decision or finding might result in a Material Adverse Effect.
15
(iv) No statement, representation, warranty or covenant made by ICCC
in this Agreement or made in any certificate or document required by this
Agreement to be delivered to the Dealer Manager was or will be, when made,
inaccurate, untrue or incorrect.
(v) Neither ICCC nor any of its directors, officers or controlling
persons has taken, directly or indirectly, any action intended, or which
might reasonably be expected, to cause or result, under the Securities Act
or otherwise, in, or which has constituted, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Shares.
(vi) No holder of securities of ICCC has rights to the registration
of any securities of the Company or ICCC because of the filing of the
Registration Statement.
(vii) Neither ICCC nor to the knowledge of ICCC any officers,
directors, employees or agents acting on behalf of ICCC has at any time (A)
made any contributions to any candidate for political office in violation
of law, or failed to disclose fully any contributions to any candidate for
political office in accordance with any applicable statute, rule,
regulation or ordinance requiring such disclosure, (B) made any payment to
any local, state, Federal or foreign governmental officer or official, or
other person charged with similar public or quasi-public duties, other than
payments required or allowed under applicable law, (C) made any payment
outside the ordinary course of business to any purchasing or selling agent
or person charged with similar duties of any entity to which ICCC sells or
from which ICCC buys products for the purpose of influencing such agent or
person to buy products from or sell products to ICCC, or (D) except as
described in the Prospectus, engaged in any transaction, maintained any
bank account or used any corporate funds except for transactions, bank
accounts and funds which have been and are reflected in the normally
maintained books and records of ICCC.
16
(c) The Manager represents and warrants to, and agrees with, the
Dealer Managers as of each Representation Date that:
(i) The Manager has been duly organized, is validly existing and is
in good standing under the laws of the jurisdiction of incorporation, has
full power and authority to conduct all the activities conducted by it, to
own or lease the assets owned or leased by it and to conduct its business
as described in the Registration Statement and the Prospectus and is duly
qualified to do business in each jurisdiction wherein it own, or leases
real property or in which the conduct of its business requires such
qualification, except where the failure to be so qualified would not result
in a Material Adverse Effect.
(ii) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the
respective Representation Date, except as set forth in or contemplated by
the Registration Statement and the Prospectus, (A) there has not been any
change in the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Manager, arising
for any reason whatsoever and (B) the Manager has not incurred any
material liabilities or obligations, direct or contingent, nor has it
entered into any material transactions other than pursuant to this
Agreement and the transactions referred to herein.
(iii) The Manager, if operated in the manner described in the
Prospectus under the caption "Business" and "REIT Advisors, Inc." will not
be an "investment adviser," as such term is defined in the Investment
Advisers Act of 1940.
(iv) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or, to the
knowledge of the Manager, threatened against or affecting the Manager or
any of its officers in their capacity as such, before or by any Federal or
state court, commission, regulatory body, administrative agency or other
governmental body, domestic or foreign,
17
wherein an unfavorable ruling, decision or finding might result in a
Material Adverse Effect.
(v) The Manager has (A) all governmental licenses, permits,
consents, orders, approvals and other authorizations necessary to carry on
its business as contemplated in the Prospectus, (B) complied in all
respects with all laws, regulations and orders applicable to it or its
business and (C) performed all its obligations required to be performed by
it, and is not in default, under any indenture, mortgage, deed of trust,
voting trust agreement, loan agreement, bond, debenture, note agreement,
lease, contract or other agreement or instrument (collectively, a "contract
or other agreement") to which it is a party or by which its property is
bound or affected, the effect of any of which, individually or in the
aggregate, might result in a Material Adverse Effect. To the knowledge of
the Manager, no other party under any contract or other agreement to which
it is a party is in default in any respect thereunder. The Manager is not
in violation of any provision of its charter or by-laws.
(vi) The Manager has full corporate power and authority to enter into
this Agreement, the Right of First Refusal Agreement, the Submanagement
Agreement dated as of June ___, 1997 between the Manager and ICH and the
Submanagement Agreement dated as of June ___, 1997 between the Manager and
Imperial Credit Industries, Inc. (collectively the "Submanagement
Agreements"). The Management Agreement, the Right of First Refusal
Agreement, the Submanagement Agreements and each other Company Agreement
to which the Manager is a party are collectively referred to as the
"Manager Agreements." Each of this Agreement and the Manager Agreements has
been duly authorized, executed and delivered by the Manager and constitutes
a valid and binding agreement of the Manager and is enforceable against the
Manager in accordance with its terms, except as the enforceability hereof
and thereof may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws affecting creditors' rights generally and
moratorium laws in effect from time to time and by equitable principles
restricting the availability of equitable
18
remedies. The execution and delivery by the Manager of, and the performance
by the Manager of its obligations under, each of this Agreement and the
Manager Agreements, the consummation of the transactions contemplated
hereby and thereby and the application of the net proceeds from the
offering and sale of the Shares to be sold by the Manager in the manner set
forth in the Prospectus under the caption "Use of Proceeds" will not result
in the creation or imposition of any lien, charge or encumbrance upon any
of the assets of the Manager pursuant to the terms or provisions of, or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or give any other party a right to terminate
any of its obligations under, or result in the acceleration of any
obligation under, the charter or by-laws of the Manager, any contract or
other agreement to which the Manager is a party or by which the Manager or
any of its properties is bound or affected, or violate or conflict with
any judgment, ruling, decree, order, statute, rule or regulation of any
court or other governmental agency or body applicable to the business or
properties of the Manager the effect of any of which, individually or in
the aggregate, would be to have a Material Adverse Effect.
(vii) No consent, approval, authorization or order of, or any filing
or declaration with, any court or governmental agency or body is required
in connection with the execution, delivery and performance of this
Agreement or the Manager Agreements by the Manager or in connection with
the taking by the Manager of any other action contemplated hereby or
thereby, except such as have been obtained.
(viii) No statement, representation, warranty or covenant made by the
Manager in this Agreement or made in any certificate or document required
by this Agreement to be delivered to the Dealer Manager was or will be,
when made, inaccurate, untrue or incorrect.
(ix) Neither the Manager nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action intended,
or which might reasonably be expected, to cause or
19
result, under the Securities Act or otherwise, in, or which has
constituted, stabilization or manipulation of the price of any security of
the Manager to facilitate the sale or resale of the Shares.
(d) IMH represents and warrants to, and agrees with, the Dealer
Managers as of each Representation Date that:
(i) IMH has been duly organized, is validly existing and is in good
standing under the laws of the jurisdiction of incorporation, has full
power and authority to conduct all the activities conducted by it, to own
or lease the assets owned or leased by it and to conduct its business as
described in the Registration Statement and the Prospectus, and is duly
qualified to do business in each jurisdiction wherein it owns or leases
real property or in which the conduct of its business requires such
qualification, except where the failure to be so qualified would not result
in a Material Adverse Effect.
(ii) IMH has full corporate power and authority to enter into this
Agreement, the Tax Agreement, Non-Competition Agreement, the Right of First
Refusal Agreement, the Contribution Agreement and the Submanagement
Agreement with the Manager. The Tax Agreement, the Contribution Agreement,
the Right of First Refusal Agreement, the Non-Competition Agreement, the
Submanagement Agreement and any other Company Agreements to which IMH is a
party are collectively referred to as the "IMH Agreements." Each of this
Agreement and the IMH Agreements has been duly authorized, executed and
delivered by IMH and constitutes a valid and binding agreement of IMH and
is enforceable against IMH in accordance with its terms, except as the
enforceability hereof and thereof may be limited by applicable bankruptcy,
insolvency, reorganization and similar laws affecting creditors' rights
generally and moratorium laws in effect from time to time and by equitable
principles restricting the availability of equitable remedies. The
execution and delivery by IMH of, and the performance by IMH of its
obligations under, each of this Agreement and IMH Agreements, the
consummation of the transactions contemplated hereby
20
and thereby and the application of the net proceeds from the offering and
sale of the Shares to be sold by the Company in the manner set forth in the
Prospectus under the caption "Use of Proceeds" will not result in the
creation or imposition of any lien, charge or encumbrance upon any of the
assets of IMH pursuant to the terms or provisions of, or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, or give any other party a right to terminate any of its obligations
under, or result in the acceleration of any obligation under, the charter
or by-laws of IMH, any contract or other agreement to which IMH is a party
or by which IMH or any of its properties is bound or affected, or violate
or conflict with any judgment, ruling, decree, order, statute, rule or
regulation of any court or other governmental agency or body applicable to
the business or properties of IMH the effect of any of which, individually
or in the aggregate, would be to have a Material Adverse Effect.
(iii) No consent, approval, authorization or order of, or any filing
or declaration with, any court or governmental agency or body is required
in connection with the execution, delivery and performance of this
Agreement or the IMH Agreements by or in connection with the taking by IMH
of any other action contemplated hereby or thereby, except such as have
been obtained.
(iv) No statement, representation, warranty or covenant made by IMH
in this Agreement or made in any certificate or document required by this
Agreement to be delivered to the Dealer Manager was or will be, when made,
inaccurate, untrue or incorrect.
(v) Neither IMH nor any of its directors, officers or controlling
persons has taken, directly or indirectly, any action intended, or which
might reasonably be expected, to cause or result, under the Securities Act
or otherwise, in, or which has constituted, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Shares.
21
(e) Any certificate required by this Agreement that is signed by any
officer of the Company, ICCC, the Manager of IMH and delivered to the Dealer
Managers or counsel for the Dealer Managers shall be deemed a representation
and warranty by the Company, ICCC, the Manager or IMH, as the case may be, to
the Dealer Managers, as to the matters covered thereby.
2. Agreement to Act as Dealer Managers.
-----------------------------------
(a) On the basis of the representations and warranties contained
herein, and subject to the terms and conditions of the Offer:
(i) The Company hereby appoints the Dealer Managers and other
soliciting dealers entering into a Soliciting Dealer Agreement, in the form
attached hereto as Exhibit A, with the Dealer Managers (the "Soliciting
Dealers"), to solicit, in accordance with the Securities Act and the
Exchange Act, and their customary practice, the exercise of the
Subscription Rights, subject to the terms and conditions of this
Agreement, the procedures described in the Registration Statement, the
Prospectus and, where applicable, the terms and conditions of the
Soliciting Dealer Agreement; and
(ii) IMH agrees to furnish, or cause to be furnished, to the Dealer
Managers lists showing the names and addresses of IMH Holders as of the
Record Date and the Dealer Managers agree to use such information only in
connection with the Offering, and not to furnish the information to any
other person except for securities brokers and dealers that have been
requested by the Dealer Managers to solicit exercises of Subscription
Rights.
(b) The Dealer Managers agree to provide to the Company, in addition
to the services described in paragraph (a) of this Section 2, financial advisory
and marketing services in connection with the Offering.
(c) The Company and the Dealer Managers agree that the Dealer
Managers are independent contractors with respect to the solicitation of the
exercise of Subscription Rights, and the performance of financial advisory
22
and marketing services for the Company contemplated by this Agreement.
(d) In rendering the services contemplated by this Agreement, the
Dealer Managers will not be subject to any liability to the Company, ICCC, the
Manager, IMH or any of their affiliates, for any act or omission on the part of
any soliciting broker or dealer (except with respect to the Dealer Managers
acting in such capacity) or any other person, and the Dealer Managers will not
be liable for acts or omissions in performing its obligations under this
Agreement, except, on a several basis and not a joint basis, for any losses,
claims, damages, liabilities and expenses that are finally judicially determined
to have resulted primarily from the bad faith, willful misconduct or gross
negligence of a respective Dealer Manager or by reason of the reckless disregard
of the obligations and duties of such respective Dealer Manager under this
Agreement.
(e) Each of the Dealer Managers (and each Soliciting Dealer who
executes a Soliciting Dealer Agreement) severally acknowledges that the Board
of Directors of IMH has authorized and directed that the Prospectus be delivered
to each beneficial owner of IMH Shares, and each of the Dealer Managers (and
each Soliciting Dealer who executes a Soliciting Dealer Agreement) severally
agrees to deliver or cause to be delivered the Prospectus to each beneficial
owner of IMH Shares for which such Dealer Manager (or such Soliciting Dealer)
holds such shares of record or as nominee, consistent with the applicable
provisions of the Exchange Act and the rules of the American Stock Exchange.
3. Dealer Manager and Solicitation Fees. In full payment for the
------------------------------------
financial advisory, marketing and soliciting services rendered and to be
rendered hereunder by the Dealer Managers, the Company agrees to pay the Dealer
Managers an aggregate fee (the "Transaction Fee") of 4.25% of the aggregate
Subscription Price for all Shares sold in the Offering. From the Transaction
Fee, the Dealer Managers will pay, or direct the Company to pay, each Soliciting
Dealer, in full payment for their soliciting efforts, 2.50% of the aggregate
Subscription Price ("Solicitation Fees") of all ICH Shares sold in connection
with an exercise of Subscription Rights solicited by the respective Soliciting
Dealer during the
23
Subscription Offer. The Dealer Managers shall retain that portion of the
Transaction Fee representing Solicitation Fee attributable to ICH Shares sold in
connection with an exercise of Subscription Rights solicited by the respective
Dealer Manager and shall retain that portion of the Transaction Fee attributable
to the Standby Shares sold pursuant to the Standby Offer. Solicitation Fees with
respect to ICH Shares sold in connection with an exercise of Subscription Rights
shall be payable to the broker-dealer designated on the applicable portion of
the form used by the IMH Holder to exercise Subscription Rights, and if no
broker-dealer is so designated or a broker-dealer is otherwise not entitled to
receive compensation pursuant to the terms of the Soliciting Dealer Agreement,
then to the Dealer Managers. Payment of the Transaction Fee to the Dealer
Manager by the Company shall be made on each date on which the Company issues
Shares in the form of a wire transfer of same day funds to an account or
accounts identified by the Dealer Managers. Payment to each Soliciting Dealer
will be made by, or as directed by, the Dealer Managers by check, wire or other
means as may be agreed to by the Company and such Soliciting Dealer to an
address identified by such Soliciting Dealer.
4. Other Agreements.
----------------
(a) The Company covenants with the Dealer Managers as follows:
(i) The Company will use its best efforts to maintain the
effectiveness of the Registration Statement under the Securities Act from
the Commencement Date through the Supplemental Settlement Date, and will
advise the Dealer Managers promptly as to the time at which any amendments
to the Registration Statement become effective. The Company will comply
with all the provisions of any undertakings contained in the Registration
Statement.
(ii) The Company will notify the Dealer Managers immediately, and
confirm the notice in writing, (A) of the filing of any amendments to the
Registration Statement or any amendment or supplement to the Prospectus
from the Commencement Date through the Supplemental Settlement Date and the
effectiveness of any amendment to the Registration Statement, (B)
24
of the receipt of any comments from the Commission with respect
to the Registration Statement or the Prospectus, (C) of any
request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for
additional information, (D) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose
and (E) of the suspension of the qualification of the Shares or
the Subscription Rights for offering or sale in any jurisdiction.
The Company will make every reasonable effort to prevent the
issuance of any stop order described in subsection (D) hereunder
and, if any such stop order is issued, to obtain the lifting
thereof at the earliest possible moment.
(iii) The Company will give the Dealer Managers notice
of its intention to file any amendment to the Registration
Statement or any amendment or supplement to the Prospectus from
the Commencement Date through the Supplemental Settlement Date,
and will furnish the Dealer Managers with copies of any such
amendment or supplement a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file any
such amendment or supplement to which the Dealer Managers or
counsel for the Dealer Managers shall reasonably object.
(iv) The Company will, without charge, deliver to the
Dealer Managers, as soon as practicable, the number of copies of
the Registration Statement in effect as of the Commencement Date
and of each amendment thereto as it may reasonably request
through the Supplemental Settlement Date, in each case with the
exhibits filed therewith.
(v) The Company will, without charge, furnish to the
Dealer Managers, from time to time during the period when the
Prospectus is required to be delivered in connection with the
Offering under the Securities Act, such number of copies of the
Prospectus (as amended or supplemented) as the Dealer Managers
may reasonably request for the purposes contemplated by the
Securities Act or the Rules and Regulations.
(vi) If any event shall occur as a result of which it is
necessary, in the reasonable opinion of
25
counsel for the Dealer Managers, to amend or supplement the
Registration Statement or the Prospectus in order to make the
Prospectus not misleading in the light of the circumstances
existing at the time it is delivered to an IMH Holder or a
Standby Purchaser, the Company will forthwith amend or
supplement the Prospectus by preparing and filing with the
Commission (and furnishing to the Dealer Managers a reasonable
number of copies of) an amendment or amendments of the
Registration Statement or an amendment or amendments of or a
supplement or supplements to, the Prospectus (in form and
substance reasonably satisfactory to counsel for the Dealer
Managers), at the Company's expense, which will amend or
supplement the Registration Statement or the Prospectus so that
the Prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
the light of the circumstances existing at the time the
Prospectus is delivered to an IMH Holder or Standby Purchaser,
not misleading.
(vii) The Company will endeavor, in cooperation with the
Dealer Managers and their counsel, to assist such counsel to
qualify the Shares for offering and sale under the applicable
securities laws of such states and other jurisdictions of the
United States as the Dealer Managers may designate and maintain
such qualifications in effect for the duration of the Offering;
provided, however, that the Company will not be obligated to file
-------- -------
any general consent to service of process, or to qualify as a
foreign corporation or as a dealer in securities in any
jurisdiction in which it is not now so qualified. The Company
will file such statements and reports as may be required by the
laws of each jurisdiction in which the Subscription Rights and
the Shares have been qualified as above provided.
(viii) The Company will make generally available to
holders of its securities as soon as may be practicable but in no
event later than the last day of the fifteenth full calendar
month following the calendar quarter in which the Commencement
Date falls, an earnings statement (which need not be audited but
shall be in reasonable detail) for a
26
period of 12 months ended commencing after the Commencement
Date, and satisfying the provisions of Section 11(a) of the
Securities Act (including Rule 158 of the Rules and Regulations).
(ix) During the period of five years commencing on the
Effective Date, the Company will furnish to the Dealer Managers
copies of such financial statements and other periodic and
special reports as the Company may from time to time distribute
generally to the holders of any class of its capital stock, and
will furnish to the Dealer Managers a copy of each annual or
other report it shall be required to file with the Commission.
(x) For a period of 180 days from the Supplemental
Settlement Date, the Company will not, without the prior consent
of the Dealer Managers, offer or sell, or enter into any
agreement to sell, any equity or equity related securities of the
Company, other than the Shares pursuant to the Subscription
Rights and Shares issued in reinvestment of dividends or
distributions.
(xi) The Company will use the net proceeds from the
Offering as set forth under "Use of Proceeds" in the Prospectus
and shall file such reports with the Commission with respect to
the sale of the Shares and the application on the proceeds
therefrom as may be required in accordance with Rule 463 under
the Securities Act.
(xii) The Company will use its best efforts to cause the
Shares to be duly authorized for listing by the American Stock
Exchange prior to the time the Shares are issued.
(xiii) The Company will use its best efforts to qualify as
a REIT under the Code.
(xiv) The Company will advise or cause the Subscription
Agent to advise the Dealer Managers from day to day during the
period of the Subscription Offer and promptly after the
termination of the Subscription Offer, as to the names and
addresses of all IMH Holders exercising Subscription Rights, the
total number of Subscription Rights exercised and
27
the number of Shares related thereto by each IMH Holder during
the immediately preceding day, indicating the total number of
Subscription Rights verified to be in proper form for exercise,
rejected for exercise and being processed and, for the Dealer
Managers and each Soliciting Dealer, the number of Subscription
Rights exercised and the number of Shares related thereto on
subscription certificates indicating the Dealer Managers or such
Soliciting Dealer, as the case may be, as the broker-dealer with
respect thereto, and as to such other information as the Dealer
Managers may reasonably request; and will notify the Dealer
Managers and each Soliciting Dealer, not later than 5:00 P.M.,
New York City time, on the [third] business day following the
Expiration Date of the total number of Subscription Rights
exercised during the respective subscription period and the
number of Shares related thereto, the total number of
Subscription Rights verified to be in proper form for exercise,
rejected for exercise and being processed and, for the Dealer
Managers and each Soliciting Dealer, the number of Subscription
Rights exercised and the number of Shares, including Shares
requested pursuant to the Over-Subscription Privilege, related
thereto on subscription certificates indicating the Dealer
Managers or such Soliciting Dealer, as the case may be, as the
broker-dealer with respect thereto, and as to such other
information as the Dealer Managers may reasonably request.
(xv) In the event that the Minimum Offering Amount is
achieved, the Company and the Dealer Managers shall determine the
number of Shares to be issued on the Initial Settlement Date and
the number of Shares, if any, to be issued on the Supplemental
Settlement Date.
(xvi) The Company will not use the proceeds of the sale
of the Shares in such a manner as to require the Company to be
registered under the Investment Company Act.
(xvii) The Company will not at any time, directly or
indirectly, take any action intended, or which might reasonably
be expected, to cause or result in, or which shall constitute,
stabilization
28
of the price of the shares of Common Stock to facilitate the
sale or resale of any of the Shares.
(xviii) During the period of 180 days commencing at the
latest Settlement Date, the Company will not, without the prior
written consent of PaineWebber Incorporated, grant options to
purchase shares of Common Stock at a price less than the market
price of the Common Stock at the time such options are granted.
(xix) The Company will not, and the Company will cause
each beneficial owner of more than 5% of the outstanding shares
of Common Stock to enter into agreements with Dealer Managers in
the form set forth in Exhibit B to the effect that they will not,
for a period of 180 days commencing at the latest Settlement
Date, without prior written consent of PaineWebber Incorporated,
sell, contract to sell, grant any option to sell or otherwise
dispose of, or require the Company to file with the Commission a
registration statement under the Securities Act to register, any
shares of Common Stock or securities convertible into or
exchangeable for Common Stock or warrants or other rights to
acquire shares of Common Stock of which they are, or may in the
future become, the "beneficial owner" (within the meaning of
Rule 13d-3 under the Exchange Act), other than pursuant to stock
option plans or in connection with other employee incentive
compensation arrangements or the Company's dividend reinvestment
plan.
(xx) The Company will not invest in future contracts,
options on future contracts or options on commodities unless the
Company and the Manager are exempt from the registration
requirements of the Commodity Exchange Act, as amended (the
"Commodity Act"), or otherwise comply with the Commodity Act.
Neither the Company nor the Manager will engage in any activities
bearing on the Commodity Act, unless such activities are exempt
from the Commodity Act or otherwise comply with the Commodity
Act.
(xxi) Any servicing agreements entered into by the
Company after the Effective Date will contain terms consistent
with those described for "Servicing Agreements" (as such term is
defined in the Prospec-
29
tus under the caption "Business -- Servicing and Master
Servicing").
(b) The Company, ICCC, the Manager and IMH, as the case
may be, covenants with the Dealer Managers as follows:
(i) The Company, ICCC, the Manager and IMH will not
take, directly or indirectly, any action designed to cause or to
result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or
resale of the Shares; provided, that any action in connection
with the Company's dividend reinvestment plan will not be deemed
to be within the meaning of this Section 4(b).
(ii) Each of ICCC, the Manager and IMH shall notify the
Dealer Manager and the Company of the occurrence of any material
events respecting (A) any of the operations or assets subject to
the Contribution Transactions or (B) the Manager, ICCC or IMH,
as the case may be, and, if as the result of any such event it is
necessary, in the reasonable opinion of counsel, to amend or
supplement the Prospectus in order to make the Prospectus not
misleading in light of the circumstances existing at the time it
is delivered to a purchaser, ICCC, the Manager or IMH, as the
case may be, will forthwith supply such information to the
Company as shall be necessary for the Company to prepare an
amendment or supplement to the Prospectus so that, as so amended
or supplemented, the Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of
the circumstances existing at the time it is delivered to a
purchaser, not misleading.
(iii) IMH will not, for a period of 180 days commencing
at the latest Settlement Date, without the prior written consent
of PaineWebber Incorporated, sell, contract to sell, grant any
option to sell, or otherwise dispose of, or require the Company
to file with the Commission a registration statement under the
Securities Act to register, any
30
shares of Common Stock or securities convertible into or
exchangeable for Common Stock or warrants or other rights to
acquire shares of Common Stock of which they are, or may in the
future become, the "beneficial owner" (within the meaning of Rule
13d-3 under the Exchange Act), other than pursuant to employee
stock option plans or in connection with other employee incentive
compensation arrangements.
(iv) The Manager will not engage in any activity which
would require the Manager to register as an investment adviser
under the Investment Advisers Act of 1940 or to register as a
commodity trading advisor under the Commodity Act.
5. Payment of Expenses.
-------------------
(a) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including, but not limited
to, expenses relating to (i) the printing and filing of the Registration
Statement as originally filed and of each amendment thereto, (ii) the
preparation, issuance and delivery of the certificates for the Shares and
subscription certificates relating to the Subscription Rights, (iii) the fees
and disbursements of the Company's counsel (including the fees and disbursements
of local counsel, if any) and accountants, (iv) the qualification of the Shares
under securities laws in accordance with the provisions of Section 4(a)(vii) of
this Agreement, including filing fees and the fees relating to the preparation
of the Blue Sky Survey by counsel to the Dealer Managers, (v) the printing or
other production and delivery to the Dealer Managers of copies of the
Registration Statement as in effect on the Commencement Date and of each
amendment thereto and of the Prospectus and any amendments or supplements
thereto, (vi) the printing and other production and delivery of copies of the
Blue Sky Survey, (vii) the fees and expenses incurred with respect to filing
with the National Association of Securities Dealers, Inc., (viii) the fees and
expenses incurred in connection with the listing of the Shares on the American
Stock Exchange, (ix) the printing or other production, mailing and delivery
expenses incurred in connection with Offering Materials and (x) the fees and
expenses incurred with respect to the Subscription Agent.
31
(b) In addition to any fees that may be payable to the
Dealer Managers under this Agreement, the Company agrees to reimburse the Dealer
Managers upon request made from time to time for its reasonable expenses
incurred in connection with their activities under this Agreement, including the
reasonable fees and disbursements of their legal counsel (excluding Blue Sky
fees and expenses which are paid directly by the Company), in an amount up to
$250,000.
(c) If this Agreement is terminated by the Dealer
Managers in accordance with the provisions of Section 6, the Company agrees to
reimburse the Dealer Managers for their reasonable out-of-pocket expenses
incurred in connection with its performance hereunder, including the reasonable
fees and disbursements of counsel for the Dealer Managers. In the event the
transactions contemplated hereunder are not consummated, the Company agrees to
pay all of the costs and expenses set forth in paragraphs (a) and (b) of this
Section 5 which the Company would have paid if such transactions had been
consummated.
6. Conditions of the Dealer Managers' Obligations. The
----------------------------------------------
obligations of the Dealer Managers hereunder are subject to the accuracy of the
respective representations and warranties of the Company, ICCC, the Manager and
IMH contained herein, to the performance by such parties of their respective
obligations hereunder, and to the following further conditions:
(a) Notification that the Registration Statement has
become effective shall be received by the Dealer Managers not later than 5:00
p.m., New York City time, on the date of this Agreement or at such later date
and time as shall be consented to in writing by the Dealer Managers and all
filings required by Rule 424 of the Rules and Regulations shall have been made.
(b)(i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall be pending or threatened by the Commission; (ii) no
order suspending the effectiveness of the Registration Statement or the
qualification or registration of the Shares under the securities or
Blue Sky laws of any jurisdiction shall be in effect and no
32
proceeding for such purpose shall be pending before or threatened or
contemplated by the Commission or the authorities of any such
jurisdiction, (iii) any request for additional information on the part
of the staff of the Commission or any such authorities shall have been
complied with to the satisfaction of the staff of the Commission or
such authorities and (iv) after the date hereof no amendment or
supplement to the Registration Statement or the Prospectus shall have
been filed unless a copy thereof was first submitted to the Dealer
Managers and the Dealer Managers did not object thereto in good faith,
and the Dealer Managers shall have received certificates, dated the
respective Representation Date, and signed by the Chief Executive
Officer or the Chairman of the Board of Directors of the Company and
the Chief Financial Officer of the Company (who may, as to proceedings
threatened, rely upon the best of their information and belief, to the
effect of clauses (i), (ii) and (iii)).
(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there shall not have
been a material adverse change in the general affairs, capital stock,
indebtedness, business, business prospects, properties, management, condition
(financial or otherwise) or results of operations of the Company, and its
Subsidiaries, taken as a whole, whether or not arising from transactions in the
ordinary course of business, in each case other than as set forth in or
contemplated by the Registration Statement and the Prospectus and (ii) none of
the Company or any of its Subsidiaries shall have sustained any material loss or
interference with its business or properties from fire, explosion, flood or
other casualty, whether or not covered by insurance, or from any labor dispute
or any court or legislative or other governmental action, order or decree, which
is not set forth in the Registration Statement and the Prospectus, if in the
judgment of the Dealer Managers any such development makes it impracticable or
inadvisable to consummate the sale and delivery of the Shares pursuant to the
Offering.
(d) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against IMH, the Manager or
33
the Company or any of the Subsidiaries or any of their respective officers or
directors in their capacities as such, before or by any Federal, state or local
court, commission, regulatory body, administrative agency or other governmental
body, domestic or foreign, in which litigation or proceeding, an unfavorable
ruling, decision or finding could materially and adversely affect the business,
properties, business prospects, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries, taken as a whole, or the ability
of the (i) Company, ICCC and IMH to consummate the transactions contemplated by
the Contribution Agreement, (ii) the Company to fulfill its obligation under
the Company Agreements, (iii) ICCC to fulfill its obligations under the ICCC
Agreements, (iv) the Manager to fulfill its obligations under the Manager
Agreements, or (v) IMH to fulfill its obligations under the IMH Agreements.
(e) Each of the representations and warranties of the
Company, ICCC, the Manager and IMH contained herein shall be true and correct in
all material respects on each Representation Date, as if made at such
Representation Date and all covenants and agreements herein contained to be
performed on the part of the Company, ICCC, the Manager or IMH and all
conditions herein contained to be fulfilled or complied with by the Company,
ICCC, the Manager or IMH at or prior to such Representation Date, shall have
been duly performed, fulfilled or complied with.
(f) On each Representation Date, the Dealer Managers shall
have received an opinion, dated the respective Representation Date, and
satisfactory in form and substance to counsel for the Dealer Managers, from
Freshman, Marantz, Orlanski, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Company, ICCC, the
Manager and IMH, to the effect set forth in Exhibit B.
(g) On each Representation Date, the Dealer Managers shall
have received an opinion, dated the respective Representation Date, from
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), counsel to the Dealer Managers,
with respect to the Registration Statement, the Prospectus and this Agreement,
which opinion shall be satisfactory in all respects to the Dealer Managers.
34
(h) On the date of the Prospectus, the Accountants shall
have furnished to the Dealer Managers a letter, dated the date of its delivery,
addressed to the Dealer Managers and in form and substance satisfactory to the
Dealer Managers, confirming that they are independent accountants with respect
to the Company as required by the Securities Act and the Rules and Regulations
and with respect to the financial and other statistical and numerical
information contained in the Registration Statement. On each Representation
Date, the Accountants shall have furnished to the Dealer Managers a letter,
dated the respective Representation Date, which shall confirm, on the basis of a
review in accordance with the procedures set forth in the letter from the
Accountants, that nothing has come to their attention during the period from
the date of the letter referred to in the prior sentence to a date (specified in
the letter) not more than five days prior to the respective Representation Date,
which would require any change in their letter dated the date of the Prospectus.
(i) On each Representation Date, there shall be furnished to
the Dealer Managers an accurate certificate, dated the date of its delivery,
signed by each of the Chief Executive Officer and the Chief Financial Officer of
the Company, in form and substance satisfactory to the Dealer Managers, to the
effect that:
(i) Each signer of such certificate has carefully examined
the Registration Statement and the Prospectus and (A) as of the date of
such certificate, such documents are true and correct in all material
respects and do not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not untrue
or misleading and (B) in the case of the certificates delivered at the
Initial Settlement Date, the Supplemental Settlement Date, since the
Effective Date no event has occurred as a result of which it is necessary
to amend or supplement the Prospectus in order to make the statements
therein not untrue or misleading in any material respect.
(ii) Each of the representations and warranties of the
Company contained in this Agreement were, when originally made, and are,
at the time
35
such certificate is delivered, true and correct in all material respects.
(iii) Each of the covenants required herein to be performed
by the Company on or prior to the delivery of such certificate has been
duly, timely and fully performed and each condition herein required to
be complied with by the Company on or prior to the date of such
certificate has been duly, timely and fully complied with.
(j) On each Representation Date, there shall be furnished
to the Dealer Managers an accurate certificate, dated the date of its delivery,
signed by each of the Chief Executive Officer and Chief Financial Officer of
ICCC, in form and substance satisfactory to the Dealer Managers to the effect
that:
(i) Each signer of such certificate has carefully examined
the Registration Statement and the Prospectus and (1) as of the date of
such certificate, such documents are true and correct in all material
respects insofar as they relate to ICCC, and do not omit to state a
material fact relating to ICCC required to be stated therein or necessary
in order to make the statements therein relating to ICCC not untrue or
misleading and (2) in the case of the certificate delivered at the
Initial Settlement Date and the Supplemental Settlement Date, since the
Effective Date no event has occurred as a result of which it is necessary
to amend or supplement the Prospectus in order to make the statements
therein relating to ICCC not untrue or misleading in any material
respect.
(ii) Each of the representations and warranties of ICCC
contained in this Agreement were, when originally made, and are, at the
time such certificate is delivered, true and correct in all material
respects.
(iii) Each of the covenants required herein to be performed
by ICCC on or prior to the delivery of such certificate has been duly,
timely and fully performed and each condition herein required to be
complied with by ICCC on or prior to the date of
36
such certificate has been duly, timely and fully complied with.
(k) On each Representation Date there shall be furnished to
the Dealer Managers an accurate certificate, dated the date of its delivery,
signed by each of the Chief Executive Officer and the Chief Financial Officer of
the Manager, in form and substance satisfactory to the Representatives, to the
effect that:
(i) Each signer of such certificate has carefully examined
the Registration Statement and the Prospectus and (A) as of the date of
such certificate, such documents are true and correct in all material
respects insofar as they relate to the Manager and do not omit to state a
material fact relating to the Manager required to be stated therein or
necessary in order to make the statements therein relating to the Manager
not untrue or misleading and (B) in the case of the certificate
delivered at the Initial Settlement Date and the Supplemental Settlement
Date, since the Effective Date no event has occurred as a result of which
it is necessary to amend or supplement the Prospectus in order to make
the statements therein relating to the Manager not untrue or misleading
in any material respect.
(ii) Each of the representations and warranties of the
Manager contained in this Agreement were, when originally made, and are,
at the time such certificate is delivered, true and correct in all
material respects.
(iii) Each of the covenants required herein to be performed
by the Manager on or prior to the delivery of such certificate has been
duly, timely and fully performed and each condition herein required to
be complied with by ICCC on or prior to the date of such certificate has
been duly, timely and fully complied with.
(l) On each Representation Date, there shall be furnished
to the Dealer Managers an accurate certificate, dated the date of its delivery,
signed by each of the Chief Executive Officer and the Chief Financial
37
Officer of IMH, in form and substance satisfactory to the Representatives, to
the effect that:
(i) Each signer of such certificate has carefully examined
the Registration Statement and the Prospectus and (A) as of the date of
such certificate, such documents are true and correct in all material
respects insofar as they relate to IMH and do not omit to state a
material fact relating to IMH required to be stated therein relating to
IMH not untrue or misleading and (B) in the case of the certificate
delivered at the Initial Settlement Date and, as to any Option Shares,
the Supplemental Settlement Date, since the Effective Date no event has
occurred as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein relating to IMH not
untrue or misleading on any material respect.
(ii) Each of the representations and warranties of IMH
contained in this Agreement were, when originally made, and are, at the
time such certificate is delivered, true and correct in all material
respects.
(iii) Each of the covenants required herein to be performed
by IMH on or prior to the delivery of such certificate has been duly,
timely and fully performed and each condition herein required to be
complied with by III on or prior to the date of such certificate has been
duly, timely and fully complied with.
(m) The Shares shall be qualified for sale in such states
as the Dealer Managers may reasonably request, each such qualification shall be
in effect and not subject to any stop order or other proceeding on the Initial
Settlement Date or the Supplemental Settlement Date.
(n) Prior to the Commencement Date, the Shares shall have
been duly authorized for listing by the American Stock Exchange upon official
notice of issuance.
(o) The Company, ICCC, the Manager and IMH shall have
executed and delivered to each other party thereto the Company Agreements, the
ICCC Agreements, the
38
Manager Agreements and the IMH Agreements, as the case may be.
(p) The Company, ICCC, the Manager and IMH shall have
furnished to the Dealer Managers such certificates, in addition to those
specifically mentioned herein, as the Dealer Managers may have reasonably
requested as to the accuracy and completeness at a Representation Date of any
statement in the Registration Statement or the Prospectus, as to the accuracy at
such Representation Date, of the representations and warranties of the Company,
ICCC, the Manager and IMH herein, as to the performance by the Company, ICCC,
the Manager and IMH of their respective obligations hereunder, or as to the
fulfillment of the conditions concurrent and precedent to its obligations
hereunder of the Dealer Managers.
7. Indemnification and Contribution.
--------------------------------
(a) Each of the Company and the Manager, jointly and
severally, will indemnify and hold harmless each Dealer Manager, the directors,
officers, employees and agents of each Dealer Manager and each person, if any,
who controls each Dealer Manager within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, liabilities, expenses and damages (including, but not limited
to, any and all investigative, legal and other expenses reasonably incurred in
connection with, and any and all amounts paid in settlement of, any action, suit
or proceeding between any of the indemnified parties and any indemnifying
parties or between any indemnified party and any third party, or otherwise, or
any claim asserted), as and when incurred, to which any Dealer Manager, or any
such person, may become subject under the Securities Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, liabilities, expenses or damages arise out of or
are based on (i) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus, the Registration Statement, the
Prospectus or the Offering Materials or any amendment or supplement to the
Registration Statement, the Prospectus or the offering Materials or in any
documents filed under the Exchange Act and deemed to be incorporated by
reference into the Prospectus, or in any application or other document executed
by or on behalf of
39
the Company or based on written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Shares under the
securities laws thereof or filed with the Commission, (ii) the omission or
alleged omission to state in such document a material fact required to be stated
in it or necessary to make the statements in it not misleading or (iii) any act
or failure to act or any alleged act or failure to act by any Dealer Manager in
connection with, or relating in any manner to, the Shares or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, liability, expense or damage arising out of or based upon matters
covered by clause (i) or (ii) above (provided that neither the Company nor the
Manager shall be liable under this clause (iii) to the extent it is finally
judicially determined by a court of competent jurisdiction that such loss,
claim, liability, expense or damage resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Dealer Manager through
its gross negligence or willful misconduct); provided that the Company will not
be liable to the extent that such loss, claim, liability, expense or damage
arises from the sale of the Shares in the public offering to any person by a
Dealer Manager and is based on an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
relating to any Dealer Manager furnished in writing to the Company by the Dealer
Managers expressly for inclusion in the Registration Statement, any
preliminary prospectus or the Prospectus. This indemnity agreement will be in
addition to any liability that the Company and the Manager might otherwise have.
(b) Each Dealer Manager will indemnify and hold harmless the Company,
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, each director of the
Company and each officer of the Company who signs the Registration Statement to
the same extent as the foregoing indemnity from the Company to each Dealer
Manager, but only insofar as losses, claims, liabilities, expenses or damages
arise out of or are based on any untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
relating to any Dealer Manager furnished in writing to the Company by the
Dealer Managers expressly for use in the Registration Statement,
40
any preliminary prospectus or the Prospectus. This indemnity will be in addition
to any liability that each Dealer Manager might otherwise have; provided,
however, that in no case shall any Dealer Manager be liable or responsible for
any amount in excess of the underwriting discounts and commissions received by
such Dealer Manager.
(c) Any party that proposes to assert the right to be indemnified
under this Section 7 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 7, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
the foregoing provisions of this Section 7 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel satisfactory to the indemnified party, and after notice
from the indemnifying party to the indemnified party of its election to assume
the defense, the indemnifying party will not be liable to the indemnified party
for any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the indemnified party
in connection with the defense. The indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(1) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based on advice of counsel) that there may be legal defenses
available to it or other indemnified parties that are different from or in
addition to those available to the indemnifying party,
41
(3) a conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying
party has not in fact employed counsel to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
separate firm admitted to practice in such jurisdiction at any one time for all
such indemnified party or parties. All such fees, disbursements and other
charges will be reimbursed by the indemnifying party promptly as they are
incurred. An indemnifying party will not be liable for any settlement of any
action or claim effected without its written consent (which consent will not be
unreasonably withheld). No indemnifying party shall, without the prior written
consent of each indemnified party, settle or compromise or consent to the entry
of any judgment in any pending or threatened claim, action or proceeding
relating to the matters contemplated by this Section 7 (whether or not any
indemnified party is a party thereto), unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising or that may arise out of such claim, action or proceeding.
Notwithstanding any other provision of this Section 7(c), if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement effected without its written
consent if (i) such settlement is entered into more than 45 days after receipt
by such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
42
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 7 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company and the Manager or the
Dealer Managers, the Company and the Manager and the Dealer Managers will
contribute to the total losses, claims, liabilities, expenses and damages
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted, but after deducting any contribution received
by the Company and the Manager from persons other than the Dealer Managers, such
as persons who control the Company or the Managers within the meaning of the
Securities Act, officers of the Company who signed the Registration Statement
and directors of the Company, who also may be liable for contribution) to which
the Company and the Manager and any one or more of the Dealer Managers may be
subject in such proportion as shall be appropriate to reflect the relative
benefits received by the Company and the Manager on the one hand and the Dealer
Managers on the other. The relative benefits received by the Company and the
Manager (treated jointly for this purpose as one person) on the one hand and the
Dealer Managers on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company bear to the total fees received by the Dealer Managers in each case as
set forth in the table on the cover page of the Prospectus. If, but only if, the
allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company and the Manager
(treated jointly for this purpose as one person), on the one hand, and the
Dealer Managers, on the other, with respect to the statements or omissions which
resulted in such loss, claim, liability, expense or damage, or action in respect
thereof, as well as any other relevant equitable considerations with respect to
such offering. Such relative fault shall be determined by reference to whether
the untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Manager or the Dealer
43
Managers, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Dealer Managers agree that it would not be just and
equitable if contributions pursuant to this Section 7(d) were to be determined
by pro rata allocation (even if the Dealer Managers were treated as one entity
for such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, liability,
expense or damage, or action in respect there of, referred to above in this
Section 7(d) shall be deemed to include, for purpose of this Section 7(d), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(d), no Dealer Manager shall be
required to contribute any amount in excess of the fees received by it and no
person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) will be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Dealer
Managers' obligations to contribute as provided in this Section 7(d) are several
and not joint. For purposes of this Section 7(d), any person who controls a
party to this Agreement within the meaning of the Securities Act will have the
same rights to contribution as that party, and each officer of the Company who
signed the Registration Statement will have the same rights to contribution as
the Company, subject in each case to the provisions hereof. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim for contribution may be made
under this Section 7(d), will notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 7(d). Except for a settlement entered
into pursuant to the last sentence of Section 7(d) hereof, no party will be
liable for contribution with respect to any action or claim settled with out its
written consent (which consent will not be unreasonably withheld).
44
(e) The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company contained in
this Agreement shall remain operative and in full force and effect regardless of
(i) any investigation made by or on behalf of the Dealer Managers, (ii)
acceptance of the Shares and payment therefore or (iii) any termination of this
Agreement.
(f) The Company and the Manager acknowledge that the statements under
the caption "Distribution Arrangements" in the Prospectus constitute the only
information furnished in writing to the Company by the Dealer Managers expressly
for use in such document, and the Dealer Managers confirm that such statements
are true and correct in all material respects.
8. Representations, Warranties and Agreements to Survive Delivery.
--------------------------------------------------------------
The respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers, of ICCC, of the Manager, of IMH and
of the Dealer Managers set forth in or made pursuant to this Agreement shall
survive the Initial Settlement Date and the Supplemental Settlement Date and
will remain in full force and effect, regardless of any investigation made by or
on behalf of Dealer Managers or the Company or any of the officers, directors or
controlling persons referred to in Section 7 hereof, and will survive delivery
of and payment for the Shares pursuant to the Offer. The provisions of Sections
5 and 7 hereof shall survive the termination or cancellation of this Agreement.
9. Termination of Agreement. (a) This Agreement shall be subject to
------------------------
termination in the absolute discretion of the Dealer Managers, by notice given
to the Company prior to the expiration of the Offering, if prior to such time
(i) financial, political, economic, currency, banking or social conditions in
the United States shall have undergone any material change the effect of which
on the financial markets makes it, in the judgment of the Dealer Managers,
impracticable or inadvisable to proceed with the Offering, (ii) there has
occurred any outbreak or material escalation of hostilities or other calamity or
crisis the effect of which on the financial markets of the United States is such
as to make it, in the judgment of the Dealer Managers, impracticable or
45
inadvisable to proceed with the Offering, (iii) trading in securities generally
on the New York Stock Exchange or American Stock Exchange or American Stock
Exchange shall have been suspended or limited, (iv) a banking moratorium shall
have been declared either by Federal or New York State authorities, or (v)
trading in any of the Equity Securities of the Company shall have been suspended
by the Commission, by an Exchange that lists the Shares or by the National
Association of Securities Dealers Automated Quotation National Market System.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except
as provided in Section 5.
10. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to the Dealer Managers, will be mailed,
delivered or telegraphed and confirmed to PaineWebber Incorporated, Attn: ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; or if sent to the
Company or ICCC will be mailed, delivered or telegraphed and confirmed to them
at: Imperial Credit Commercial Holdings, ▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chief Executive Officer; or if
sent to the Manager, will be mailed, delivered or telegraphed and confirmed in
writing to: REIT Advisors, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chief Executive Officer, or if sent
to IMH, will be mailed, delivered or telegraphed and confirmed in writing to:
Imperial Credit Mortgage Holdings, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chief Executive Officer.
11. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and will inure
to the benefit of the officers, trustees, directors and controlling persons
referred to in Section 7 hereof, and no other person will have any right or
obligation hereunder.
12. Applicable Law. This Agreement will be governed by and construed
--------------
in accordance with the laws of the State of New York without reference to
conflict of law principles thereof.
46
13. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
47
If the foregoing is in accordance with your understanding of our
agreement, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among the Company,
ICCC, the Manager and IMH and the Dealer Managers.
Very truly yours,
IMPERIAL CREDIT COMMERCIAL IMPERIAL COMMERCIAL
HOLDINGS, INC. CAPITAL CORPORATION, INC.
By: By:
--------------------------- ---------------------------
Name: Name:
Title: Title:
REIT ADVISORS, INC. IMPERIAL CREDIT MORTGAGE
HOLDINGS, INC.
By: By:
--------------------------- ---------------------------
Name: Name:
Title: Title:
The foregoing Agreement is hereby confirmed and accepted, on behalf of the
Dealer Managers, as of the date first above written.
PAINEWEBBER INCORPORATED ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & COMPANY
INCORPORATED
By: By:
--------------------------- ---------------------------
Name: Name:
Title: Title:
EXHIBIT A
IMPERIAL CREDIT COMMERCIAL HOLDINGS, INC.
Up to 7,000,000 Shares of Common Stock
Issuable upon Exercise of
Subscription Rights for such Shares
SOLICITING DEALER AGREEMENT
To Securities Dealers and Brokers:
Imperial Credit Commercial Holdings, Inc. (the "Company") is offering
to holders of record ("IMH Holders") as of the close of business on June [ ],
1997 (the "Record Date") of shares of common stock and options to purchase
common stock (collectively, the "IMH Shares") of Imperial Credit Mortgage
Holdings, Inc. ("IMH"), of non-transferable rights to subscribe (the
"Subscription Rights") for an aggregate of up to 7,000,000 shares (the "ICH
Shares") of the Company's common stock, par value $.01 per share (the "Common
Stock"), at the Subscription Price (as hereinafter defined).
The Subscription Rights entitle the IMH Holders to subscribe for ICH
Shares at the rate of one ICH Share for each IMH Share held on the Record Date
(the "Subscription Offer"). An IMH Holder's right to acquire at the
Subscription Price (as hereinafter defined) one ICH Share for every IMH Share
held is referred to as the "Primary Subscription Privilege." Holders of IMH
Shares who fully exercise all their Subscription Rights may be entitled to
subscribe for additional ICH Shares of the Company, subject to allotment,
proration and reduction (the "Over-Subscription Privilege") as provided for in
the Company's Prospectus dated June [__], 1997 (the "Prospectus"). The
opportunity for IMH Holders to subscribe for ICH Shares pursuant to the
Subscription Rights
--------------------
Subject to increase in connection with the Minimum Standby Offer Amount (as
defined herein) in the event that the Maximum Subscription Offer Amount is
achieved.
A-1
expires at 5:00 p.m., New York City time, on July [__], 1997 (the "Expiration
Date").
The offer of Subscription Rights to the IMH Holders will commence on
June [__], 1997 (the "Commencement Date"). ICH Shares issued to IMH Holders
pursuant to exercise of Subscription Rights, including pursuant to requests for
additional ICH Shares pursuant to the Over-Subscription Privilege, duly received
on or prior to the Expiration Date will be at the subscription price (the
"Subscription Price") of $15.00 per Share. The trade date for the acceptance of
exercises of Subscription Rights for the ICH Shares shall be July [__], 1997
(the "Trade Date"), and the initial settlement date for the issuance of all or a
portion of such ICH Shares shall be July [__], 1997 (the "Initial Settlement
Date"). A portion of the ICH Shares requested pursuant to Primary Subscription
Privilege and the Over-Subscription Privilege may be issued on a date after the
Initial Settlement Date (the "Supplemental Settlement Date") to be determined
by the Company and the Dealer Managers, subject to proration, reduction or
cancellation by the Company, subject to the consent of the Dealer Managers, if
the Company believes, following the Expiration Date, that the issuance of such
additional ICH Shares will have an adverse effect upon the operations of the
Company or the market for the Company's Common Stock (the Initial Settlement
Date and the Supplemental Settlement Date are each referred to as a "Settlement
Date"). The Board of Directors has determined to limit the amount of ICH Shares
that may be subscribed for pursuant to the Subscription Offer to 7,000,000 (the
"Maximum Subscription Offer Amount").
In addition to the Subscription Offer, the Company is offering (the
"Standby Offer" and, together with the Subscription Offer, the "Offering") to
certain persons that may or may not be IMH Holders as of the Record Date
("Standby Purchasers"), pursuant to Standby Purchase Agreements (as defined
herein), at least _____ shares of Common Stock (the "Minimum Standby Offer
Amount") but no more than [1,000,000] shares of Common Stock, subject to
increase to the extent that the Maximum Subscription Offer Amount is not
achieved (the "Maximum Standby Offer Amount") at a price per share equal to the
Subscription Price (the shares of Common Stock being offered pursuant to the
Standby Offer are hereinafter referred to as the "Standby Shares"; the Standby
Shares
A-2
and the ICH Shares are hereinafter collectively referred to as the
"Shares").
The Board of Directors of the Company has determined not to proceed
with the Offering unless an aggregate amount of at least [2,500,000] Shares (the
"Minimum Offering Amount") are subscribed for (inclusive of Standby Shares that
may be subscribed for pursuant to the Standby Purchase Agreements).
For the duration of the Offer, the Company has agreed to pay
Solicitation Fees to any qualified broker or dealer executing a Soliciting
Dealer Agreement who solicits the exercise of Subscription Rights (which
exercise includes exercises pursuant to the Over-Subscription Privilege) in
connection with the Subscription Offer and who complies with the procedures
described below (a "Soliciting Dealer"). Upon timely delivery to the
subscription agent (discussed below) for the Subscription Offer, of payment for
Shares purchased pursuant to the exercise of Subscription Rights and of properly
completed and executed documentation as set forth in this Soliciting Dealer
Agreement, a Soliciting Dealer will be entitled to receive Solicitation Fees
equal to 2.50% of the Subscription Price per Share so purchased; provided,
however, that no payment shall be due with respect to the issuance of any Shares
until payment therefor is actually received. A qualified broker or dealer is a
broker or dealer which is a member of a registered national securities exchange
in the United States or the National Association of Securities Dealers, Inc.
("NASD") or any foreign broker or dealer not eligible for membership who agrees
to conform to the Rules of Fair Practice of the NASD, including Sections 2720,
2730, 2740 and 2750 thereof, in making solicitations in the United States to
the same extent as if it were a member thereof.
The Company has agreed to pay the Solicitation Fees payable to the
undersigned Soliciting Dealer on the terms set forth in the Dealer Managers
Agreement, dated as of June [__], 1997, among PaineWebber Incorporated and
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company Incorporated (the "Dealer Managers"), the Company,
IMH and others (the "Dealer Managers Agreement"). Solicitation and other
activities by Soliciting Dealers may be undertaken only in accordance with the
applicable rules and regulations of the Securities and Exchange Commission and
only in those states and other jurisdictions where such solicitations and other
activities may lawfully be undertaken and in
A-3
accordance with the laws thereof. Compensation will not be paid for
solicitations in any state or other jurisdiction in which the opinion of
counsel to the Company or the Dealer Managers, such compensation may not
lawfully be paid. No Soliciting Dealer shall be paid Solicitation Fees with
respect to Shares purchased pursuant to an exercise of Subscription Rights and
the Over-Subscription Privilege for its own account or for the account of any
affiliate of the Soliciting Dealer, except that the Dealer Managers shall
receive the Solicitation Fees with respect to Shares purchased pursuant to an
exercise of Subscription Rights and the Over-Subscription Privilege for its own
account provided that such Shares are offered and sold by the Dealer Managers to
its clients.
No Soliciting Dealer or any other person is authorized by the Company
or the Dealer Managers to give any information or make any representations in
connection with the Offer other than those contained in the Prospectus and
other authorized solicitation material furnished by the Company through the
Dealer Managers. No Solicit ing Dealer is authorized to act as agent of the
Company or the Dealer Managers in any connection or transaction. In addition,
nothing herein contained shall create a partnership among the Soliciting Dealers
and the Dealer Managers or with one another, or agents of the Dealer Managers or
the Company, or create any association between such parties, or shall render
the Dealer Managers or the Company liable for the obligations of any Soliciting
Dealer. The Dealer Managers shall be under no liability to make any payment to
any Soliciting Dealer, and shall be subject to no other liabilities to any
Soliciting Dealer, and no obligations of any sort shall be implied.
[_______________] is the subscription agent for the exercise of
Subscription Rights by IMH Holders (the "Subscription Agent"). In order for a
Soliciting Dealer to receive Solicitation Fees for the exercise of Subscription
Rights by IMH Holders, the manner and timing of the exercise of the Subscription
Rights must conform with the procedures set forth in the Prospectus. In order
for a Soliciting Dealer to receive Solicitation Fees, the Subscription Agent
must have received from such Soliciting Dealer no later than 5:00 p.m., New
York time, on the Expiration Date, either (i) a properly completed and duly
executed Subscription Certificate with respect to Shares purchased pursuant to
the exercise of Subscription Rights and full payment for such Shares; or (ii) a
Notice of
A-4
Guaranteed Delivery guaranteeing delivery to the Subscription Agent by the
close of business on the fifth business day after the Expiration Date, of (a)
full payment for such Shares and (b) a properly completed and duly executed
Subscription Certificate with respect to Shares purchased pursuant to the
exercise of Subscription Rights.
Solicitation Fees will only be paid after receipt by the Subscription
Agent of a properly completed and duly executed copy (or a facsimile thereof) of
this Soliciting Dealer Agreement. In the case of a Notice of Guaranteed
Delivery, Solicitation Fees will only be paid after delivery in accordance with
such Notice of Guaranteed Delivery has been effected. Solicitation Fees will
be paid by the Company to the Soliciting Dealer to an account or address
designated by the Soliciting Dealer below by the tenth business day after final
payment for Shares is due.
All questions as to the form, validity and eligibility (including time
of receipt) of this Soliciting Dealer Agreement will be determined by the
Company, in its sole discretion, which determination shall be final and binding.
Unless waived, any irregularities in connection with a Soliciting Dealer
Agreement or delivery thereof must be cured within such time as the Company
shall determine. None of the Company, the Dealer Managers, Subscription Agent
or any other person will be under any duty to give notification of any defects
or irregularities in any Soliciting Dealer Agreement or incur any liability for
failure to give such notification.
The acceptance of Solicitation Fees from the Company by the
undersigned Soliciting Dealer shall constitute a representation by such
Soliciting Dealer to the Company that: (i) it has received and reviewed the
Prospectus; (ii) in soliciting purchases of Shares pursuant to the exercise of
the Subscription Rights it has complied with the applicable requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the applicable
rules and regulations thereunder, any applicable securities laws of any state or
jurisdiction where such solicitations may lawfully be made, and the applicable
rules and regulations of any self-regulatory organization or registered national
securities exchange; (iii) in soliciting purchases of Shares pursuant to the
exercise of the Subscription Rights and in filling orders for such Shares, it
has complied with the terms of the
A-5
Subscription Offer as set forth in the Prospectus; (iv) in soliciting purchases
of Shares pursuant to the exercise of the Subscription Rights it has not
published, circulated or used any soliciting materials other than the Prospectus
and any other authorized solicitation material furnished by the Company through
the Dealer Managers; (v) it has not purported to act as agent of the Company or
the Dealer Managers in any connection or transaction relating to the
Subscription Offer; (vi) the information contained in this Soliciting Dealer
Agreement is, to its best knowledge, true and complete; (vii) it is not
affiliated with the Company; (viii) it will not accept Solicitation Fees paid by
the Company pursuant to the terms hereof with respect to Shares purchased by the
Soliciting Dealer pursuant to an exercise of Subscription Rights for its own
account; (ix) it will not remit, directly or indirectly, any part of
Solicitation Fees paid by the Company pursuant to the terms hereof to any
beneficial owner of Shares purchased pursuant to the Subscription Offer; (x) it
acknowledges that the board of directors of IMH has authorized and directed that
the Prospectus be delivered to each beneficial owner of Shares, and it agrees to
deliver or cause to be delivered the Prospectus to each beneficial owner for
which it holds such shares of record or as nominee, consistent with the
applicable provisions of the Exchange Act and the rules of the New York Stock
Exchange and American Stock Exchange, as the case may be; and (xi) it has agreed
to the amount of the Solicitation Fees and the terms and conditions set forth
herein with respect to receiving such Solicitation Fees. By returning a
Soliciting Dealer Agreement and accepting Solicitation Fees, a Soliciting Dealer
will be deemed to have agreed to indemnify the Company and the Dealer Managers
against losses, claims, damages and liabilities to which the Company may become
subject as a result of the breach of such Soliciting Dealer's representations
made herein and described above.
Solicitation Fees due to eligible Soliciting Dealers will be paid
promptly after consummation of the Subscription Offer. Upon expiration of the
Subscription Offer, no Solicitation Fees will be payable to Soliciting Dealers
with respect to Shares purchased thereafter.
Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Dealer Manager Agreement or, if not defined therein, in
the Prospectus.
A-6
This Soliciting Dealer Agreement will be governed by the laws of the
State of New York without reference to the conflict of law principles thereof.
Please execute this Soliciting Dealer Agreement below accepting the
terms and conditions hereof and confirming that you are a member firm of a
registered national securities exchange or of the NASD or a foreign broker or
dealer not eligible for membership who has conformed to the Rules of Fair
Practice of the NASD, including Sections 2720, 2730, 2740 and 2750 thereof, in
making solicitations of the type being undertaken pursuant to the Subscription
Offer in the United States to the same extent as if you were a member thereof,
and certify ing that you have solicited the purchase of the Shares pursuant to
exercise of the Subscription Rights and the Over-Subscription Privilege, all as
described above, in accordance with the terms and conditions set forth in this
Soliciting Dealer Agreement. Soliciting Dealers may not participate in the
Subscription Offer without executing and returning this Soliciting Dealer
Agreement.
Please forward two copies of the confirmation page (Page A-8) of this
Soliciting Dealer Agreement to the Company at ▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (tel. number (___) ___.____; fax
number (___) ___.____). A signed copy of this Soliciting Dealer Agreement will
be promptly returned to the Soliciting Dealer at the address set forth below.
Very truly yours,
Imperial Credit Commercial
Holdings, Inc.
By:
---------------------------
Name:
Title:
A-7
================================================================================
PLEASE COMPLETE THE INFORMATION BELOW:
ACCEPTED AND CONFIRMED BY SOLICITING DEALER
Contact at Firm:
----------------------------------------------------------------
-------------------------------------- ----------------------------------------
Printed Firm Name Address
-------------------------------------- ----------------------------------------
Authorized Signature Area Code and Telephone Number
-------------------------------------- --------------------------------------
Name and Title Fax Number
Dated:
--------------------------------
Payment of the Solicitation Fee shall
be mailed by check or by wire to the
following address or account:
---------------------------------
---------------------------------
---------------------------------
ABA #
----------------------------
Routing #
------------------------
Account # to be credited:
---------------------
Attn:
------------------------
Telephone for Wire Instructions:
---------------------------------
A-8
EXHIBIT B
OPINION OF
FRESHMAN, MARANTZ, ORLANSKI, ▇▇▇▇▇▇ & ▇▇▇▇▇
1. The Company meets the requirements for use of Form S-11 under the Securities
Act and the Rules and Regulations.
2. The Company and each Subsidiary (including ICCC) has been duly organized, is
validly existing and is in good standing under the laws of the jurisdiction of
incorporation; the Company and each Subsidiary (including ICCC) has full power
and authority to conduct all the respective activities conducted by them, to
own or lease the assets owned or leased respectively by them and to conduct
their respective business as described in the Registration Statement and the
Prospectus; the Company and each Subsidiary (including ICCC) and are duly
qualified to do business in each jurisdiction wherein they own or lease real
property or in which the conduct of their business requires such qualification,
except where the failure to be so qualified would not result in a Material
Adverse Effect upon the Company or any of its Subsidiaries.
3. All of the outstanding shares of the capital stock of the Subsidiaries,
including but not limited to the ICCC Preferred Stock, have been duly authorized
and validly issued and are fully paid and non-assessable. Except for the stock
of the Subsidiaries and as disclosed in the Registration Statement, to our best
knowledge after due inquiry, the Company does not own, directly or indirectly,
any shares of stock or any other equity or long-term debt securities of any
corporation or have any equity interest in any firm, partnership, joint venture,
association or other entity.
4. All of the outstanding shares of the capital stock of the Company, including
but not limited to the Company's Restricted Shares, the ICH Class A Stock and
the ICH Preferred Stock, have been duly authorized, validly issued, fully paid
and nonassessable and are not subject to any preemptive or similar right. The
Subscription Rights have been duly authorized by all requisite action on the
part of the Company for delivery to the IMH Holders pursuant to the Offering;
the Shares have been duly authorized by all requisite action on the part of the
Company for issuance and sale pursuant to the terms of the Offering and, when
issued and delivered by the Company pursuant to the terms of the Offering
against payment of the consideration set forth in the Prospectus, will be
validly issued, fully paid and non-assessable; the Shares and the Subscription
Rights conform in all material re-
B-2
spects to all statements relating thereto contained in the Registration
Statement and the Prospectus; and the issuance of the Shares is not subject to
any preemptive rights. Except as set forth in the Prospectus, to our best
knowledge after due inquiry, there are no options to purchase, or any rights or
warrants to subscribe for, or any securities or obligations convertible into, or
any contracts, commitments, plans or arrangements to issue or sell, any shares
of capital stock of the Company, any shares of capital stock of any Subsidiary
or any such warrants, convertible securities or obligations. The description of
the Company's dividend reinvestment plan, stock option and other stock plans or
arrangements, and the options or other rights granted and exercised thereunder,
set forth in the Prospectus accurately presents the information required to be
shown with respect to such plans, arrangements, options and rights.
5. Subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus and prior to the respective
Representation Date, to our best knowledge after due inquiry (A) there has not
been any change in the capitalization of the Company, or in the business,
properties, business prospects, condition (financial or otherwise) or results
of operations of the Company and its Subsidiaries, arising for any reason
whatsoever, (B) neither the Company nor any of its Subsidiaries has incurred any
material liabilities or obligations, direct or contingent, nor has it entered
into any material transactions other than pursuant to the Dealer Manager
Agreement and the transactions referred to herein and (C) the Company has not
paid or declared any dividends or other distributions of any kind on any class
of its capital stock.
6. Neither the Company nor any of its Subsidiaries is, and if operated in the
manner described in the Prospectus under the caption "Business" will not be, an
"investment company," an entity "controlled" by an "investment company" or an
"affiliated person" of, or "promotor" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act.
7. Except as set forth in the Registration Statement and the Prospectus, there
are no actions, suits or proceedings pending or, to our knowledge after due
inquiry, threatened against or affecting the Company or any of its Subsidiaries
or any of their respective officers in their capacity as such, before or by any
Federal or state court, commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, wherein an unfavorable ruling,
decision or finding might result in a Material Adverse Effect.
B-3
8. The Company and each of its Subsidiaries has (A) all governmental licenses,
permits, consents, orders, approvals and other authorizations necessary to carry
on its business as contemplated in the Prospectus, (B) complied in all respects
with all laws, regulations and orders applicable to it or its business and (C)
performed all its obligations required to be performed by it, and is not in
default, under any indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond, debenture, note agreement, lease, contract or other
agreement or instrument (collectively, a "contract or other agreement") to
which it is a party or by which its property is bound or affected, the effect of
any of which, individually or in the aggregate, might result in a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries is in violation
of any provision of its charter or by-laws.
9. The Company has full corporate power and authority to enter into the Dealer
Manager Agreement, the Subscription Agency Agreement, dated June __, 1997 (the
"Subscription Agency Agreement") between the Company and ____________ (the
"Subscription Agent"), the Management Agreement, dated June __, 1997 (the
"Management Agreement"), between the Company and the Manager, the Servicing
Agreement, dated June __, 1997 (the "Servicing Agreement"), between the Company
and ICCC, the Tax Agreement, dated June __, 1997 (the "Tax Agreement"), between
the Company and IMH, the Non-Competition Agreement dated June __, 1997 (the
"Non-Competition Agreement") between the Company and IMH, the Right of First
Refusal Agreement, dated June __, 1997 (the "Right of First Refusal Agreement")
between the Company, the Manager and IMH and the Contribution Agreement. The
Subscription Agency Agreement, the Management Agreement, the Servicing
Agreement, the Tax Agreement, the Contribution Agreement, the Right of First
Refusal Agreement and the Non-Competition Agreement are collectively referred
to as the "Company Agreements." Each of the Dealer Manager Agreement and the
Company Agreements has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding agreement of the Company and is
enforceable against the Company in accordance with its terms, except as the
enforceability hereof and thereof may be limited by applicable bankruptcy,
insolvency, reorganization and similar laws affecting creditors' rights
generally and moratorium laws in effect from time to time and by equitable
principles restricting the availability of equitable remedies. The execution
and delivery by the Company of, and the performance by the Company of its
obligations under, each of the Dealer Manager Agreement and the Company
Agreements, the consummation of the transactions contemplated hereby and
thereby and the application of the net proceeds from the offering and sale of
the Shares to be sold by the Company in the manner set forth in the Prospectus
under the caption "Use of Proceeds" will not result in the creation
B-4
or imposition of any lien, charge or encumbrance upon any of the assets of the
Company or any of its Subsidiaries pursuant to the terms or provisions of, or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or give any other party a right to terminate any of
its obligations under, or result in the acceleration of any obligation under,
the charter or by-laws of the Company or any of its Subsidiaries, any contract
or other agreement to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries or any of its properties is
bound or affected, or violate or conflict with any judgment, ruling, decree,
order, statute, rule or regulation of any court or other governmental agency or
body applicable to the business or properties of the Company or any of its
Subsidiaries the effect of any of which, individually or in the aggregate, would
be to have a Material Adverse Effect.
10. No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the authorization, issuance, transfer, sale or delivery of the
Shares by the Company, in connection with the execution, delivery and
performance of the Dealer Manager Agreement or the Company Agreements by the
Company or in connection with the taking by the Company of any other action
contemplated hereby or thereby, except such as have been obtained under the
Securities Act or the Rules and Regulations and such as may be required under
state securities or Blue Sky laws or the by-laws and rules of the NASD.
11. The Company and each of its Subsidiaries has good and marketable title to
all properties and assets described in the Prospectus as owned by it (including
the assets contributed, sold or transferred to the Company pursuant to the terms
of the Contribution Agreement), free and clear of all liens, charges,
encumbrances, mortgages, security interests, claims or restrictions, except such
as are described in, or contemplated by, the Prospectus. The Company and each
of its Subsidiaries has valid, subsisting and enforceable leases for the
properties described in the Prospectus as leased by it, with such exceptions as
are not material and do not materially interfere with the use made and proposed
to be made of such properties by the Company and the Subsidiaries.
12. There is no document or contract of a character required to be described
in the Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement which is not described or filed as required. All
such contracts to which the Company or any Subsidiary is a party have been duly
authorized, executed and delivered by the Company or such Subsidiary, con-
B-5
stitute valid and binding agreements of the Company or such Subsidiaries and are
enforceable against the Company or such Subsidiary in accordance with the terms
thereof.
13. The Shares have been duly authorized for listing by the American Stock
Exchange upon official notice of issuance.
14. To our knowledge after due inquiry, no claims have been asserted by any
person to the use of any such trademarks or trade names or challenging or
questioning the validity or effectiveness of any such trademark or trade name;
and the use, in connection with the business and operations of the Company and
its Subsidiaries of such trademarks and trade names does not, to the Company's
knowledge, infringe on the rights of any person.
[15. Based upon our knowledge of the operations of the Company, the Company has
conducted its operations in a manner so as to enable it to elect to be qualified
as a real estate investment trust ("REIT") under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended (the "Code").]
16. The Company has complied with all of the provisions of (including, without
limitation, filing all forms required by) Section 517.075 of the Florida
Securities and Investor Protection Act and Regulation 3E900.001 issued
thereunder with respect to the offering and sale of the Shares.
17. Neither the Company nor any of its Subsidiaries, if operated in the manner
described in the Prospectus under the caption "Business," will be a "broker"
within the meaning of Section 3(a)(4) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or a "dealer" within the meaning of Section
3(a)(5) of the Exchange Act or required to be registered pursuant to Section
15(a) of the Exchange Act.
18. ICCC has full corporate power and authority to enter into the Dealer
Manager Agreement, the Servicing Agreement, the Lease Agreement dated as of
_____, 1997 between ICCC and ______ (the "Lease Agreement") and the Contribution
Agreement. The Servicing Agreement, the Lease Agreement, the Contribution
Agreement, and any other Company Agreements to which ICCC is a party are
collectively referred to as the "ICCC Agreements." Each of the Dealer Manager
Agreement and the ICCC Agreements has been duly authorized, executed and
delivered by ICCC and constitutes a valid and binding agreement of ICCC and is
enforceable against ICCC in accordance with its terms, except as the
enforceability hereof and thereof may be limited by applicable bankruptcy,
insolvency, reorganization and similar laws affecting creditors' rights gener-
B-6
ally and moratorium laws in effect from time to time and by equitable principles
restricting the availability of equitable remedies. The execution and delivery
by ICCC of, and the performance by ICCC of its obligations under, each of the
Dealer Manager Agreement and the ICCC Agreements, the consummation of the
transactions contemplated hereby and thereby and the application of the net
proceeds from the offering and sale of the Shares to be sold by the Company in
the manner set forth in the Prospectus under the caption "Use of Proceeds" will
not result in the creation or imposition of any lien, charge or encumbrance upon
any of the assets of ICCC pursuant to the terms or provisions of, or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, or give any other party a right to terminate any of its
obligations under, or result in the acceleration of any obligation under, the
charter or by-laws of ICCC, any contract or other agreement to which ICCC is a
party or by which ICCC or any of its properties is bound or affected, or violate
or conflict with any judgment, ruling, decree, order, statute, rule or
regulation of any court or other governmental agency or body applicable to the
business or properties of ICCC the effect of any of which, individually or in
the aggregate, would be to have a Material Adverse Effect.
19. No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the execution, delivery and performance of the Dealer Manager
Agreement or the ICCC Agreements by ICCC or in connection with the taking by
ICCC of any other action contemplated hereby or thereby, except such as have
been obtained.
20. Except as set forth in the Registration Statement and the Prospectus, there
are no actions, suits or proceedings pending or, to our best knowledge after
due inquiry, threatened against or affecting ICCC or any of its officers in
their capacity as such, before or by any Federal or state court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, wherein an unfavorable ruling, decision or finding might result in a
Material Adverse Effect.
21. The Manager has been duly organized, is validly existing and is in good
standing under the laws of the jurisdiction of incorporation, has full power and
authority to conduct all the activities conducted by it, to own or lease the
assets owned or leased by it and to conduct its business as described in the
Registration Statement and the Prospectus and is duly qualified to do business
in each jurisdiction wherein it own, or leases real property or in which the
conduct of its business requires such qualification, except where the failure to
be so qualified would not result in a Material Adverse Effect.
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22. Subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus and prior to the respective
Representation Date, to our knowledge after due inquiry, (A) there has not been
any change in the business, properties, business prospects, condition (financial
or otherwise) or results of operations of the Manager, arising for any reason
whatsoever and (B) the Manager has not incurred any material liabilities or
obligations, direct or contingent, nor has it entered into any material
transactions other than pursuant to the Dealer Manager Agreement and the
transactions referred to herein.
23. The Manager, if operated in the manner described in the Prospectus under
the caption "Business" and "REIT Advisors, Inc." will not be an "investment
adviser," as such term is defined in the Investment Advisers Act of 1940.
24. Except as set forth in the Registration Statement and the Prospectus, there
are no actions, suits or proceedings pending or, to our knowledge after due
inquiry, threatened against or affecting the Manager or any of its officers in
their capacity as such, before or by any Federal or state court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, wherein an unfavorable ruling, decision or finding might result in a
Material Adverse Effect.
25. The Manager has (A) all governmental licenses, permits, consents, orders,
approvals and other authorizations necessary to carry on its business as
contemplated in the Prospectus, (B) complied in all respects with all laws,
regulations and orders applicable to it or its business and (C) performed all
its obligations required to be performed by it, and is not in default, under any
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement, lease, contract or other agreement or
instrument (collectively, a "contract or other agreement") to which it is a
party or by which its property is bound or affected, the effect of any of which,
individually or in the aggregate, might result in a Material Adverse Effect.
The Manager is not in violation of any provision of its charter or by-laws.
25. The Manager has full corporate power and authority to enter into the Dealer
Manager Agreement, the Right of First Refusal Agreement, the Submanagement
Agreement dated as of June ___, 1997 between the Manager and ICH and the
Submanagement Agreement dated as of June ___, 1997 between the Manager and
Imperial Credit Industries, Inc. (collectively the "Submanagement Agreements").
The Management Agreement, the Right of First Refusal Agree-
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ment, the Submanagement Agreements and each other Company Agreement to which the
Manager is a party are collectively referred to as the "Manager Agreements."
Each of the Dealer Manager Agreement and the Manager Agreements has been duly
authorized, executed and delivered by the Manager and constitutes a valid and
binding agreement of the Manager and is enforceable against the Manager in
accordance with its terms, except as the enforceability hereof and thereof may
be limited by applicable bankruptcy, insolvency, reorganization and similar
laws affecting creditors' rights generally and moratorium laws in effect from
time to time and by equitable principles restricting the availability of
equitable remedies. The execution and delivery by the Manager of, and the
performance by the Manager of its obligations under, each of the Dealer Manager
Agreement and the Manager Agreements, the consummation of the transactions
contemplated hereby and thereby and the application of the net proceeds from
the offering and sale of the Shares to be sold by the Manager in the manner set
forth in the Prospectus under the caption "Use of Proceeds" will not result in
the creation or imposition of any lien, charge or encumbrance upon any of the
assets of the Manager pursuant to the terms or provisions of, or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, or give any other party a right to terminate any of its
obligations under, or result in the acceleration of any obligation under, the
charter or by-laws of the Manager, any contract or other agreement to which the
Manager is a party or by which the Manager or any of its properties is bound or
affected, or violate or conflict with any judgment, ruling, decree, order,
statute, rule or regulation of any court or other governmental agency or body
applicable to the business or properties of the Manager the effect of any of
which, individually or in the aggregate, would be to have a Material Adverse
Effect.
26. No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the execution, delivery and performance of the Dealer Manager
Agreement or the Manager Agreements by the Manager or in connection with the
taking by the Manager of any other action contemplated hereby or thereby, except
such as have been obtained.
27. IMH has been duly organized, is validly existing and is in good standing
under the laws of the jurisdiction of incorporation, has full power and
authority to conduct all the activities conducted by it, to own or lease the
assets owned or leased by it and to conduct its business as described in the
Registration Statement and the Prospectus, and is duly qualified to do business
in each jurisdiction wherein it owns or leases real property or
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in which the conduct of its business requires such qualification, except where
the failure to be so qualified would not result in a Material Adverse Effect.
28. IMH has full corporate power and authority to enter into the Dealer Manager
Agreement, the Tax Agreement, Non-Competition Agreement, the Right of First
Refusal Agreement, the Contribution Agreement and the Submanagement Agreement
with the Manager. The Tax Agreement, the Contribution Agreement, the Right of
First Refusal Agreement, the Non-Competition Agreement, the Submanagement
Agreement and any other Company Agreements to which IMH is a party are
collectively referred to as the "IMH Agreements." Each of the Dealer Manager
Agreement and the IMH Agreements has been duly authorized, executed and
delivered by IMH and constitutes a valid and binding agreement of IMH and is
enforceable against IMH in accordance with its terms, except as the
enforceability hereof and thereof may be limited by applicable bankruptcy,
insolvency, reorganization and similar laws affecting creditors' rights
generally and moratorium laws in effect from time to time and by equitable
principles restricting the availability of equitable remedies. The execution and
delivery by IMH of, and the performance by IMH of its obligations under, each of
the Dealer Manager Agreement and IMH Agreements, the consummation of the
transactions contemplated hereby and thereby and the application of the net
proceeds from the offering and sale of the Shares to be sold by the Company in
the manner set forth in the Prospectus under the caption "Use of Proceeds" will
not result in the creation or imposition of any lien, charge or encumbrance upon
any of the assets of IMH pursuant to the terms or provisions of, or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, or give any other party a right to terminate any of its
obligations under, or result in the acceleration of any obligation under, the
charter or by-laws of IMH, any contract or other agreement to which IMH is a
party or by which IMH or any of its properties is bound or affected, or violate
or conflict with any judgment, ruling, decree, order, statute, rule or
regulation of any court or other governmental agency or body applicable to the
business or properties of IMH the effect of any of which, individually or in
the aggregate, would be to have a Material Adverse Effect.
29. No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the execution, delivery and performance of this Agreement or
the IMH Agreements by or in connection with the taking by IMH of any other
action contemplated hereby or thereby, except such as have been obtained.
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In addition, while we have not ourselves checked the accuracy and completeness
of or otherwise verified, and are not passing upon and assume no responsibility
for the accuracy or completeness of, the statements contained in the
Registration Statement or the Prospectus, in the course of our review and
discussion of the contents of the Registration Statement and the Prospectus with
certain officers and employees of the Company, ICCC, the Manager and IMH and
their independent accountants, no facts have come to our attention which cause
us to believe that the Registration Statement, on the respective Representation
Date, contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
contained therein not misleading or that the Prospectus, as of its date and on
the respective Representation Date, contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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