EXHIBIT 10.8
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SERVICING AGREEMENT
IMPERIAL CREDIT COMMERCIAL HOLDINGS, INC.
AND
IMPERIAL COMMERCIAL CAPITAL CORPORATION
DATED AS OF FEBRUARY 5, 1997
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SERVICING AGREEMENT
This SERVICING AGREEMENT (THE "AGREEMENT"), dated as of February 5,
1997, is by and between IMPERIAL CREDIT COMMERCIAL HOLDINGS, INC., a Maryland
corporation (THE "COMPANY"), and IMPERIAL COMMERCIAL CAPITAL CORPORATION, a
California corporation (THE "SERVICER").
R E C I T A L S :
A. The Company's Long-Term Investment Operation's purchases
Commercial Mortgages.
B. The Company and the Servicer desire that the Servicer service
certain of the Commercial Mortgages owned by the Company
C. The Company and the Servicer desire to execute this Agreement to
define the rights, duties and obligations of the Servicer to the Company.
NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Servicer agree as
follows:
ARTICLE I
Section 1.01 Definitions. For purposes of this Agreement the
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following capitalized terms shall have the respective meanings set forth below.
(a) "AVAILABLE DISTRIBUTION AMOUNT" has the meaning set forth in
Section 6.01(b) hereof.
(b) "BUSINESS DAY" means any day other than a Saturday or Sunday, or
a day on which banking and savings and loan institutions in the state of
California is authorized or obligated by law or executive order to remain
closed.
(c) "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 46 U.S.C. Section 9601 et. seq., as
amended.
(d) "COLLECTION PERIOD" means with respect to any Remittance Date,
the period commencing on the first day of the calendar month preceding the
calendar month in which such Remittance Date occurs and ending on the last day
of the preceding calendar month in which such Remittance Date occurs.
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(e) "COMMERCIAL MORTGAGES" means commercial mortgage assets including
condo-conversion, multi-family property and cooperative apartment mortgage loans
on commercial real property such as industrial and warehouse properties, office
buildings, retail space and shopping malls, hotels and motels, nursing homes,
hospitals, congregate care facilities and senior living centers.
(f) "CONDEMNATION PROCEEDS" means with respect to any Commercial
Mortgage, cash amounts (other than Insurance Proceeds and REO Revenues) received
in connection with the taking of all or part of a Mortgaged Property by exercise
of the power of eminent domain or condemnation.
(g) "DESIGNATED SUCCESSOR" has the meaning set forth in Section 9.03.
(h) "DETERMINATION DATE" means with respect to each Remittance Date,
the close of business on the immediately preceding Business Day.
(i) "ELIGIBLE ACCOUNT" means (i) an account or accounts maintained
with a depository institution the short-term debt obligations of which are rated
A-1 or better by S&P, or (ii) an account or accounts maintained with a
depository institution approved as such by the Federal National Mortgage
Association the deposits in which are insured by the Federal Deposit Insurance
Corporation, or (iii) a trust account or accounts maintained with a federal or
state chartered depository institution or trust company acting in its fiduciary
capacity.
(j) "ESCROW ACCOUNT" means the separate trust account or accounts
created and maintained pursuant to Section 5.04 which shall be entitled
"Servicer as servicer, in trust for The Company under Servicing Agreement, dated
as of February 5, 1997 between Imperial Credit Commercial Holdings, Inc. and
Imperial Commercial Capital Corporation."
(k) "ESCROW FUNDS" has the meaning set forth in Section 5.04(a).
(l) "ESCROW PAYMENTS" means the amounts required to be escrowed by
the Mortgagor with the Mortgagee pursuant to the terms of any Mortgage Note or
Mortgage or any other Mortgage document.
(m) "INSURANCE POLICY" means with respect to any Commercial Mortgage,
any hazard insurance policy, flood insurance policy, title policy or other
insurance policy that is maintained from time to time in respect of such
Commercial Mortgage or the related Mortgaged Property.
(n) "INSURANCE PROCEEDS" means proceeds paid under any Insurance
Policy, to the extent such proceeds are not (i) applied to, or deposited into
the Escrow Account for future application in respect of, the restoration of the
related Mortgaged Property, or (ii) released to the related Mortgagor, in each
case in accordance with the Servicing Standards.
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(o) "LIQUIDATION EVENT" means with respect to any Commercial
Mortgage, any of the following events: (a) such Commercial Mortgage is paid in
full, (b) a final recovery determination is made with respect to such Commercial
Mortgage. With respect to any REO Property, the occurrence of an REO
disposition.
(p) "LIQUIDATION PROCEEDS" means cash amounts (other than Insurance
Proceeds) received or paid by Servicer in connection with (a) the liquidation of
a Mortgaged Property or other collateral constituting security for a defaulted
Commercial Mortgage, through trustee's sale, foreclosure sale, REO disposition
or otherwise or (b) the sale of a defaulted Commercial Mortgage.
(q) "MONTHLY SERVICING REPORT" has the meaning set forth in Section
5.11(c).
(r) "MORTGAGE" means with respect to each Commercial Mortgage, the
mortgage(s), deed(s) of trust or other instrument(s) securing a Mortgage Note
and creating a lien on the related Mortgaged Property.
(s) "MORTGAGE FILE" means copies of all documents executed in
connection with and related to a Commercial Mortgage.
(t) "MORTGAGE INTEREST RATE" means with respect to each Commercial
Mortgage, the annual rate at which interest accrues thereon during the term
thereof in accordance with the provisions of the related Mortgage Note.
(u) "MORTGAGE NOTE" means the original executed note(s) or other
evidence of the Commercial Mortgage indebtedness of a Mortgagor.
(v) "MORTGAGED PROPERTY" means with respect to each Commercial
Mortgage, all property described in the related Mortgage, including the real
property, all improvements, fixtures, equipment and articles of personal
property located on such real property and all rents, issues, profits and income
derived from the operation of the real property, securing the related Mortgage
Note.
(w) "MORTGAGEE" means the mortgagee or beneficiary named in the
Mortgage and the successors and assigns of such mortgagee or beneficiary.
(x) "MORTGAGOR" means the obligor or obligors on a Mortgage Note.
(y) "NONRECOVERABLE SERVICING ADVANCE" means any Servicing Advance
previously made or proposed to be made in respect of a Commercial Mortgage
which, in the reasonable, prudent business judgment of the Servicer and in
accordance with the Servicing Standards will not ultimately be recoverable from
late payments, Insurance Proceeds, Liquidation Proceeds, Condemnation Proceeds,
REO Revenues or any other recovery on or in respect of such Commercial Mortgage.
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(z) "OFFICER'S CERTIFICATE" means a certificate signed by the
Chairman of the Board, the Vice Chairman of the Board, the President or a Vice
President and by the Treasurer, the General Counsel or the Secretary of the
Servicer, and delivered as required by this Agreement.
(aa) "PERSON" means an individual, corporation, partnership, joint
venture, limited liability company or partnership, association, joint-stock
company, trust, unincorporated organization or government or any agency or
policy subdivision thereof.
(bb) "PREPAYMENT PREMIUM" means any premium, consideration or fee paid
or payable, as the context requires, by a Mortgagor in connection with a
Principal Prepayment.
(cc) "PRINCIPAL PREPAYMENT" means any payment of principal made by the
Mortgagor on a Commercial Mortgage which is received in advance of its scheduled
due date.
(dd) "REMITTANCE DATE" means the 12th day of each month (or if such
day is not a Business Day, the next succeeding Business Day).
(ee) "REO PROPERTY" means a Mortgaged Property acquired by Servicer in
the name of the Company's designee through foreclosure, acceptance of a deed in
lieu of foreclosure or otherwise.
(ff) "REO REVENUES" means all income, rents and profits derived from
the ownership, operation or leasing of any REO Property.
(gg) "RESERVE PAYMENTS" means as to any Commercial Mortgage, any
payments made by the related mortgagor to mortgagee or Servicer pursuant to an
agreement between mortgagee and the related mortgagor for the purpose of
providing reserves for the costs associated with repairs to and replacement of
capital items, environmental costs and lease rollover on the related mortgaged
property.
(hh) "SERVICING ADVANCES" means all customary, reasonable and
necessary "out-of-pocket" costs and expenses incurred in connection with a
default, delinquency or other unanticipated event by Servicer in the performance
of its respective servicing obligations, including, but not limited to, the cost
of (a) preservation, restoration and repair of a Mortgaged Property, (b)
obtaining Insurance Proceeds, Condemnation Proceeds, or any Liquidation
Proceeds, (c) any enforcement or judicial proceedings with respect to any
Commercial Mortgage, including any foreclosure actions and (d) the management
and liquidation of any REO Property; provided, however, that the term shall be
exclusive of any costs incurred pursuant to Section 5.07(b) and (c); provided,
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further, that Servicer shall advise the Company promptly if Servicer wishes to
cease making Servicing Advances because it has determined in its reasonable
business judgment and in accordance with the Servicing Standards that such
Servicing Standards are not likely to be recoverable from a sale or disposition
of the Mortgaged Property or REO Property.
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(ii) "SERVICING FEE" has the meaning set forth in Section 3.01.
(jj) "SERVICING STANDARDS" has the meaning set forth in Section 5.01.
(kk) "SERVICING TRANSFER" has the meaning set forth in Section 9.03.
(ll) "SUBSERVICER" has the meaning set forth in Section 5.02(a).
(mm) "SUBSERVICING AGREEMENT" has the meaning set forth in Section
5.02(a).
ARTICLE II
Section 2.01. Possession and Safekeeping of Servicing Files.
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(a) The mortgage documents relating to each Commercial Mortgage shall
be retained by Servicer and shall be appropriately identified in Servicer's
computer system to clearly reflect the ownership of such Commercial Mortgage by
the Company. Servicer shall exercise due diligence and care in the safekeeping
of all of the Commercial Mortgage documents in accordance with the Servicing
Standards. Servicer shall not release from its custody any Commercial Mortgage
documents and any other related documents and servicing files except upon
written or approval of the Company or except that where such release is required
as incidental to the Servicer's servicing of the Commercial Mortgages. Upon
termination of this Agreement or of Servicer as servicer hereunder or if a
Commercial Mortgage ceases to be subject to this Agreement, Servicer shall
promptly deliver all Commercial Mortgage documents, servicing files and any
other related documents to the Company or the Company's designee.
(b) The contents of each Commercial Mortgage file delivered to the
Servicer are and shall be held by the Servicer for the benefit of the Company as
the owner thereof for the sole purpose of servicing the related Mortgage Loan,
and such retention by the Servicer is in a custodial capacity only. The
ownership of each Mortgage Note, the Mortgage and the other contents of the
related Commericial Mortgage file is vested in the Company and the ownership of
all records and documents with respect to the related Commercial Mortgage
prepared by or which come into the possession of the Servicer shall immediately
vest in the Company and shall be retained and maintained by the Servicer at the
will of the Company in such custodial capacity only. In addition, the Servicer
shall destroy or redeliver to the Company all documents comprising each
Commercial Mortgage file, whether in microfilm form or otherwise, as directed by
the Company.
(c) Books and Records. Record title in the name of the Servicer to
each Mortgage and the related Mortgage Note shall be retained by the Servicer
for the sole purpose of facilitating the servicing of the Commercial Mortgages.
All rights arising out of the Commercial Mortgages
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including, but not limited to, all funds received on or in connection with a
Commercial Mortgage shall be received and held by the Servicer for the benefit
of the Company as the owner of the Commercial Mortgages.
ARTICLE III
Section 3.01. Compensation.
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(a) Servicer's compensation for servicing the Commercial Mortgage
shall be 0.0125% per annum, payable monthly, of the declining outstanding
principal loan balance of each Commercial Mortgage as of the payment date of
each Commercial Mortgage in accordance with the amortization schedule of each
Commercial Mortgage serviced hereunder (THE "SERVICING FEE"). Servicer shall be
entitled to the monthly Servicing Fee from collection of each mortgage interest
payment from the Mortgagor as long as the Commercial Mortgage remains subject to
this Agreement and all sums due and payable thereunder are collected by Servicer
and remitted in accordance with the terms of this Agreement, subject, however,
to clause (b) below. In the event there is a Subservicer, any subservicer fee
shall be paid by Servicer in accordance with Section 5.02. Servicer
acknowledges and agrees that the Company shall have no obligation to pay such
subservicing fee.
(b) In the event Servicer manages or employs management and protects
Mortgaged Property pursuant to Section 5.08(a)(ii), Servicer, as full
compensation for such management, shall retain from rent payments collected a
fee equal to five percent (5%) of the amount of such rent payments.
Notwithstanding clause (a) above, during any period when a Mortgaged Property or
REO Property is being managed by Servicer, it shall not be entitled to the
monthly Servicing Fee.
Section 3.02. Servicer's Financial Statements.
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Servicer shall deliver or cause to be delivered to the Company, or
soon as available, and in any event within 120 days after the close of each
fiscal year of Servicer, a detailed certified copy of the report of its
independent auditors report complete with detailed balance statements (audited),
profit and loss statements, and supporting schedules.
ARTICLE IV
Section 4.01. Representations, Warranties and Covenants of Servicer.
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(a) Servicer represents, warrants and covenants to the Company as of
the date hereof or as of such date specifically provided herein, as follows:
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(i) Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the state of California, and Servicer is
and will remain in compliance with the laws of each state in which each
Mortgaged Property is located to the extent necessary to enforce the
related Commercial Mortgages and otherwise to perform its obligations under
this Agreement.
(ii) Servicer has the full power and authority to execute and deliver
this Agreement and consummate all applicable transactions contemplated by
this Agreement. Servicer has duly authorized the execution, delivery and
performance of this Agreement and has duly executed and delivered this
Agreement. This Agreement, assuming due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation
of Servicer, enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights in
general and by general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law.
(iii) The execution and delivery of this Agreement by Servicer and its
performance of and compliance with the terms of this Agreement will not
violate Servicer's articles of incorporation or by-laws or constitute a
default (or an event that, with notice or lapse of time or both, would
constitute a default) under or result in a breach of, any material
agreement or other instrument to which Servicer is a party or which may be
applicable to Servicer or its assets.
(iv) Servicer is not in violation of, and its execution and delivery
of this Agreement and its performance and compliance with the terms of this
Agreement will not constitute a violation of, any law, any order or decree
of any court, or any order or regulation of any federal, state or municipal
governmental agency having jurisdiction over Servicer or its assets, which
violation could materially and adversely affect the condition (financial or
otherwise) or the operation of Servicer or its assets or could materially
and adversely affect its ability to perform its obligations and duties
hereunder.
(v) Servicer is qualified to transact business in each jurisdiction
in which a Mortgaged Property is located where such qualification is
required under applicable law.
(vi) No litigation is pending, or to the best of Servicer's
knowledge, threatened against Servicer that could prohibit it from entering
into this Agreement or could materially and adversely affect either the
ability of Servicer to perform its obligations under this Agreement or its
financial condition.
(vii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Servicer of, or compliance by Servicer with, this Agreement
or the consummation of the transactions contemplated by this Agreement,
except for such consents, approvals, authorizations or
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orders, if any, that have been obtained; provided, however, that in the
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event of a breach of this clause (vii), the Servicer shall, within twenty
(20) days after the earlier of the discovery of such breach or receipt of
notice thereof, obtain such consent or approval or employ a Subservicer who
has obtained such consent or approval.
(b) The Company represents, warrants and covenants to the Servicer as of
the date hereof or as of such date specifically provided herein, as follows:
(i) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the state of Maryland.
(ii) The Company has the full power and authority to execute and
deliver this Agreement and consummate all applicable transactions
contemplated by this Agreement. The Company has duly authorized the
execution, delivery and performance of this Agreement and has duly executed
and delivered this Agreement. This Agreement, assuming due authorization,
execution and delivery by Servicer, constitutes a legal, valid and binding
obligation of the Company, enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights in general and by general principles of equity,
regardless of whether such enforcement is considered in a proceeding in
equity or at law.
(iii) The execution and delivery of this Agreement by the Company and
its performance of and compliance with the terms of this Agreement will
not violate the Company's charter or by-laws or constitute a default (or an
event that, with notice or lapse of time or both, would constitute a
default) under or result in a breach of, any material agreement or other
instrument to which the Company is a party or which may be applicable to
the Company or its assets.
(iv) The Company is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with the
terms of this Agreement will not constitute a violation of, any law, any
order or decree of any court, or any order or regulation of any federal,
state or municipal governmental agency having jurisdiction over the Company
or its assets, which violation could materially and adversely affect the
condition (financial or otherwise) or the operation of the Company or its
assets or could materially and adversely affect its ability to perform its
obligations and duties hereunder.
(v) No litigation is pending, or to the best of the Company's
knowledge, threatened against the Company that could prohibit it from
entering into this Agreement or could materially and adversely affect
either the ability of the Company to perform its obligations under this
Agreement or its financial condition.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Company of,
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or compliance by the Company with, this Agreement or the consummation of
the transactions contemplated by this Agreement, except for such consents,
approvals, authorizations or orders, if any, that have been obtained;
provided, however, that in the event of a breach of this clause (vii), the
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Company shall, within twenty (20) days after the earlier of the discovery
of such breach or receipt of notice thereof, obtain such consent or
approval.
Section 4.02. Remedies for Breach of Representations and Warranties.
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(i) Upon discovery by either Servicer or the Company of a breach of
any of the foregoing representations and warranties in Section 4.01 that
materially and adversely affects the value of the Commercial Mortgages or the
interest of the Company in the Commercial Mortgages (each, a "Breach"), the
party discovering such Breach shall give prompt written notice to the other.
(ii) Within 30 days of the earlier of either discovery by or notice
to Servicer of any such Breach of a representation or warranty, Servicer shall
use its best efforts promptly to cure such Breach in all material respects and,
if such breach cannot be cured within the applicable cure period, Servicer shall
promptly give written notice to the Company.
(iii) In addition to such cure obligation, Servicer shall indemnify
the Company and hold it harmless against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related judgments, and any
other costs and expenses resulting from a breach by Servicer of the
representations and warranties contained in this Article IV.
ARTICLE V
Section 5.01. Servicer to Act as Servicer; Administration of the
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Commercial Mortgages.
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(a) Servicer shall act as loan servicer for the Company for the
Commercial Mortgages purchased by the Company or others acceptable to the
Company and Servicer when requested by the Company. Servicer shall diligently
service and administer the Commercial Mortgages in accordance with the terms
hereof, the applicable laws, the terms and provisions of the mortgage loan
documents, and the customary and usual standards of practice of prudent
institutional mortgage loan servicers utilized with respect to Commercial
Mortgages comparable to the Commercial Mortgages (THE "SERVICING STANDARDS").
Subject to the above-described Servicing Standards, the further
provisions of this Agreement, and the terms of the respective Commercial
Mortgages, Servicer shall have full power and authority, to do or cause to be
done any and all things in connection with such servicing and administration
that it may deem necessary or desirable in connection with the servicing and
administration of the Commercial Mortgages. Without limiting the generality of
the foregoing, Servicer, in its own name, is hereby authorized and empowered by
the Company, to execute and deliver, on behalf of the Company, any and all
financing statements, continuation statements and other
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documents or instruments necessary to maintain the lien on the related Mortgaged
Property and related collateral created by any Mortgage or other security
document in the related Mortgage File and, subject to clause (b) below, any and
all modifications, waivers, amendments or consents to or with respect to any
documents contained in the related Mortgage File, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Commercial Mortgages and
the Mortgaged Properties. The Company shall furnish to Servicer any powers of
attorney and other documents necessary or appropriate to enable Servicer to
carry out its respective servicing and administrative duties hereunder.
(b) Without limiting the generality of clause (a) above, unless it
has obtained the prior written direction and consent of the Company, Servicer
shall not (i) increase, decrease or otherwise alter or modify the Mortgage
Interest Rate, the monthly payment, any prepayment premium or the term of any
Commercial Mortgage, (ii) agree to the forgiveness of any debt related to a
Commercial Mortgage or release or discharges of any Mortgage or lien, (iii)
release, or agree to the substitution or exchange of any collateral for, any
portion of any Mortgaged Property or related collateral, (iv) release from
liability any Person liable for the repayment of any Commercial Mortgage, (v)
consent (to the extent that the Mortgagee is entitled under the Mortgage or
other agreement to withhold such consent) to the transfer (direct or indirect)
or encumbrance of any Mortgaged Property, (vi) with respect to any commercial
lease, consent (to the extent that the Mortgagee is entitled under the Mortgage
or other agreement to withhold such consent) to the execution, assignment,
termination or modification of such lease, (vii) grant non-disturbance to any
tenant under any lease, (viii) apply insurance proceeds or proceeds of a
partial condemnation received with respect to a Commercial Mortgage to the
restoration or repair of the related Mortgaged Property unless required to do so
pursuant to the related Mortgage or applicable law, (ix) waive any prepayment
premium or otherwise waive, amend or modify any term or provision of any
Commercial Mortgage, (x) accelerate the maturity of any Commercial Mortgage,
(xi) take possession of or acquire title to any Mortgaged Property, (xii) sell
any Commercial Mortgage or (xiii) enter into any workout agreement or
arrangement with the Mortgagor or other party.
With respect to any action that Servicer proposes or has been
requested to take that would require the consent of the Company, Servicer shall,
by written notice to the Company, described such proposal or request and
recommend a course of action to the Company that is consistent with the
Servicing Standards. Unless the Company shall notify Servicer, within 30 days
following Servicer's giving of notice hereunder, that the Company objects to
such recommended course of action, consent shall be deemed given and Servicer
may take the action recommended to the Company at the expiration of such 30-day
period. If the Company shall give Servicer written objection to Servicer's
recommended course of action, Servicer shall take such action as is directed by
the Company.
(c) The Servicer shall make Servicing Advances with respect to the
Commercial Mortgages and, if any, REO Properties, in accordance with the terms
of this Agreement, prudent business judgment and the Servicing Standards.
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Section 5.02. Delegation of Servicing Duties.
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(a) The Servicer, in the ordinary course of its business, may at any
time, delegate any of its servicing duties hereunder with respect to servicing
the Commercial Mortgages to a subservicer, (who may be in geographic territories
outside of southern California) ("SUBSERVICER"); provided that (x) such
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Subservicer and Servicer enter into a subservicing agreement ("SUBSERVICING
AGREEMENT") in form and substance acceptable to the Company, (y) such
Subservicer agrees to conduct such servicing duties in accordance with this
Agreement, and (z) prior to such delegation Servicer shall have obtained the
Company's prior written consent thereof.
(b) Each Subservicer shall (i) satisfy the requirements of Section
5.07(d) with respect to fidelity bonds and errors and omissions policies and
(ii) be qualified to service Commercial Mortgages in accordance with this
Agreement and the Servicing Standards. The Servicer shall be obligated to pay
all fees and expenses of any Subservicer out of its Servicing Fee and amounts
paid to the Service by the Company in payment or reimbursement of expenses as
provided hereunder and each Subservicer shall waive any right to seek
compensation from the Company in the related Subservicing Agreement.
(c) Notwithstanding any Subservicing Agreement, the Servicer shall
remain obligated and liable to the Company for the servicing and administering
of the Commercial Mortgages in accordance with the provisions hereof without
diminution of such obligation or liability by virtue of such Subservicing
Agreement or arrangements or by virtue of indemnification from a Subservicer and
to the same extent and under the same terms and conditions as if the Servicer
alone were servicing and administering the Commercial Mortgages. No delegation
of such servicing duties shall relieve the Servicer of its liability and
responsibility with respect to any such servicing duties or shall constitute a
resignation by the Servicer.
(d) Any Subservicing Agreement may contain a provision entitling the
Servicer to terminate such Subservicing Agreement, without any termination fee,
and the rights and obligations of any Subservicer pursuant thereto. In the
event of termination of any Subservicer, all servicing obligations of such
Subservicer shall automatically be assumed simultaneously by the Servicer
without any act or deed on the part of such Subservicer or the Servicer, and the
Servicer either shall service directly the Commercial Mortgages or shall enter
into a Subservicing Agreement with a successor Subservicer that qualifies under
this Agreement and Servicing Standards and is approved by the Company. Any
Subservicing Agreement shall also include the provision that such agreement may
be (at the Company's option and for whatever reason) immediately terminated by
the Company without payment of any fee or penalty in the event that the current
Servicer shall, for any reason, no longer be the Servicer hereunder.
(e) Any Subservicing Agreement that may be entered into involving a
Subservicer in its capacity as such shall be deemed to be between the
Subservicer and the Service alone, and the
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Company (x) shall not be deemed a party thereto, (y) shall not be deemed to have
assumed any obligation to such Servicer and (z) shall not have any obligations,
duties or liabilities with respect to such Subservicer; provided that the
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Company shall be deemed to be a third-party beneficiary of such
Subservicing Agreement.
Section 5.03. Collection of Commercial Mortgage Payments.
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(a) The Servicer shall proceed diligently to collect all payments
called for under the terms and provisions of the Commercial Mortgages it is
obligated to service hereunder and shall follow such collection procedures as
are consistent with this Agreement, including without limitation, the Servicing
Standards. All amounts collected and received on any Commercial Mortgage in the
form of payments from Mortgagors, Insurance Proceeds, Liquidation Proceeds or
Condemnation Proceeds shall be applied to amounts due and owing under the
related Mortgage Note and Mortgage (including without limitation, for unpaid
principal and accrued interest) in accordance with the express provisions of the
related Mortgage Note and Mortgage and, in the absence of such express
provisions, in accordance with the Servicing Standards.
(b) Servicer shall maintain and keep a complete and accurate account
and record, in form reasonably satisfactory to the Company, of all sums
collected under clause (a) above and shall promptly submit such records to the
Company upon written request by the Company.
Section 5.04. Escrow Account: Collection of Taxes, Assessments and
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Similar Items.
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(a) Servicer shall establish and maintain one or more accounts (THE
"ESCROW ACCOUNTS") into which Escrow Account all proceeds paid under any
Insurance Policy, all Escrow Payments and any Reserve Payments shall be
deposited (COLLECTIVELY, THE "ESCROW FUNDS"), Escrow Accounts shall be Eligible
Accounts. The Company shall be entitled to, and the Servicer shall remit to the
Company on each Remittance Date, any interest or income paid on funds deposited
in the Escrow Account by the depository institution other than interest on
Escrowed Funds required by law to be paid to the Mortgagor and, to the extent
required by law, Servicer shall pay interest on Escrowed Funds to the Mortgagor
notwithstanding that the Escrow Account is non-interest bearing or that interest
paid thereon is insufficient for such purposes.
(b) Withdrawals of amounts so collected from an Escrow Account may be
made only to: (i) effect payment of taxes, assessments and comparable items
from related Escrow Payments; (ii) refund to Mortgagors any sums as may be
determined to be overages or release or apply any Reserve Payment pursuant to
the agreements pertaining thereto; (iii) apply any amounts on deposit in the
Escrow Account that were recovered under any insurance policy to costs and
expenses incurred in connection with the restoration of the related Mortgaged
Property, or to release any such amounts to the related Mortgagor, in each case
subject to applicable law and to the terms and conditions of the related
Mortgage Note and Mortgage; (iv) pay interest, if required and as described
below, to Mortgagors on balances in the Escrow Account; (vi) withdraw any amount
not required to be deposited therein; (viii) remit to the Company interest or
income paid on the Escrow
12
Funds in accordance with paragraph (c) below; or (ix) clear and terminate the
Escrow Account upon the transfer of the servicing of the related Commercial
Mortgage to a successor servicer as directed by the Company or at the
termination of this Agreement. Notwithstanding the immediately preceding
sentence, amounts on deposit in the Escrow Account representing amounts
recovered under any Insurance Policy, Escrow Payments, or Reserve Payments
received and maintained in respect of a Commercial Mortgage may be withdrawn or
used pursuant to any of the preceding clauses (i), (ii) or (iii) only to make
payments described therein in respect of such Commercial Mortgage and shall not
be withdrawn or used to make such payments in respect of any other Commercial
Mortgage. As part of its servicing duties, Servicer shall pay or cause to be
paid to the Mortgagors interest on funds in Escrow Accounts, but only if and to
the extent required by law or the terms of the related Commercial Mortgage.
(c) Servicer shall remit to the Company on each Remittance Date any
interest or income paid on the Escrow Funds by the depository institution other
than interest on such Escrow Funds required by law to be paid to the Mortgagor.
(d) The Servicer shall maintain accurate records with respect to each
related Mortgaged Property reflecting the status of taxes, assessments and
other similar items that are or may become a lien thereon and the status of
insurance premiums payable in respect thereof. The Servicer, shall obtain, from
time to time, all bills for the payment of such items (including renewal
premiums) and shall effect payment thereof prior to the applicable penalty or
termination date, employing for such purpose Escrow Payments as allowed under
the terms of the related Commercial Mortgage. Servicer shall deliver to the
Company satisfactory evidence of such payments.
(e) In accordance with the Servicing Standards, the Servicer shall
advance, with respect to each Mortgaged Property, all such funds as are
necessary for the purpose of effecting the payment of (i) real property taxes,
assessments and other similar items that are or may become a lien thereon and
(ii) premiums on Insurance Policies, in each instance if and to the extent
Escrow Payments collected from the related Mortgagor are insufficient to pay
such item when due and the related Mortgagor has failed to pay such item on a
timely basis; provided, however, that the Servicer shall not be obligated to
-------- -------
make any such advance, which would, if made, constitute a Nonrecoverable
Servicing Advance. All such advances shall be reimbursable in the first
instance from related collections from the Mortgagors, from the Escrow Account
and further as provided in Section 5.06. In the case of unreimbursed Servicing
Advances that are outstanding for more than 30 days, Servicer shall be entitled
to invoice the Company from time to time for its Servicing Advances describing
same in reasonable detail, and the Company shall pay the amount thereof to
Servicer within 30 days of receipt of such invoice.
Section 5.05. Collection Account.
------------------
(a) Servicer shall establish and maintain one or more accounts (EACH,
A "COLLECTION ACCOUNT") held in trust for the benefit of the Company. Each
Collection Account shall be an Eligible Account. The Servicer shall be entitled
to any benefit derived from the interest earned
13
on principal and interest payments held between the date of receipt and the
Remittance Date and from interest earned on tax and insurance impound funds to
the extent not payable to the Mortgagor. Servicer shall deposit or cause to be
deposited in the related Collection Account, when received (in the case of
payments by Mortgagors or other collections on the Commercial Mortgages) or as
otherwise required hereunder or by the Company, the following payments and
collections
(i) all payments on account of principal, including Principal
Prepayments, on the Commercial Mortgages;
(ii) all payments on account of interest (net of the Servicing Fee)
on the Commercial Mortgages and all payments on account of Prepayment
Premiums;
(iii) all Insurance Proceeds, Liquidation Proceeds, Condemnation
Proceeds and REO Revenues received in respect of any Commercial Mortgage;
(iv) all penalty charges received in respect of any Commercial
Mortgage;
(v) any other amounts collected from Mortgagors or under the
Commercial Mortgages except for the amounts collected and deposited into
the Escrow Account pursuant to Section 5.04; and
(vi) any amounts required to be deposited pursuant to
Section 5.07(b).
Section 5.06 Permitted Withdrawals From the Collection Account.
-------------------------------------------------
(a) Servicer shall remit any Principal Prepayments in accordance with
Section 6.01(a).
(b) Subject to clause (a) above and Subsection 3.01(b), Servicer
shall, on each Remittance Date and as directed by the Company, make withdrawals
from the related Collection Account for any of the following purposes in the
following order of priority:
(i) to refund to any Mortgagor any funds determined to be in excess
of the amounts required under the terms of the related Commercial Mortgage,
and to withdraw any other amounts deposited in error;
(ii) to reimburse itself for unpaid Servicing Fees, Servicer's right
to reimburse itself pursuant to this clause (ii) with respect to any
Commercial Mortgage being limited to related Liquidation Proceeds,
Insurance Proceeds, Condemnation Proceeds and REO Revenues;
(iii) to reimburse Servicer for any Servicing Advances made by
Servicer, the Servicer's right to reimbursement under this clause with
respect to any Commercial Mortgage
14
being limited to related Liquidation Proceeds, Insurance Proceeds,
Condemnation Proceeds and REO Revenues.
(iv) to pay Servicer for costs and expenses incurred pursuant to
Section 5.07(b) or (c), the Servicer's right to reimbursement under this
clause with respect to any Commercial Mortgage being limited to related
Liquidation Proceeds, Insurance Proceeds, Condemnation Proceeds and REO
Revenues;
(v) to reimburse Servicer for Nonrecoverable Servicing Advances,
provided that Servicer submits to The Company at least two (2) Business
Days prior to the Remittance Date on Officer's Certificate of Servicer
certifying the amount of such Nonrecoverable Servicing Advances and the
reasons why such Advances are deemed nonrecoverable;
(vi) to pay Servicer 50% of any late charges collected on a
Commercial Mortgage;
(vii) to pay the Company the Available Distribution Amount pursuant to
Section 6.01(b); and
(viii) if applicable, to transfer the amounts related to a Commercial
Mortgage to a successor servicer or to clear and terminate the Collection
Account at the termination of this Agreement.
If Servicer shall deposit in the related Collection Account any amount not
required to be deposited therein, it may, at any time, withdraw such amount from
such Collection Account, any provision herein to the contrary notwithstanding.
(c) Servicer shall keep and maintain separate accounting records, on
a Commercial Mortgage by Commercial Mortgage basis, for the purpose of
justifying any withdrawal from the related Collector Account. If Servicer shall
deposit in the Collection Account any amount not required to be deposited
therein, it may at any time withdraw such amount from such Collection Account,
any provision herein to the contrary notwithstanding.
Section 5.07. Maintenance of Insurance Policies; Errors and Omissions
-------------------------------------------------------
and Fidelity Coverage.
---------------------
(a) Servicer shall cause to be maintained, in accordance with the
Servicing Standards and as may be customary in the area where the Mortgaged
Property is located, on each Mortgage Property all insurance coverage for such
Mortgage Property's full insurable value on a replacement cost basis, against
loss or damage, or as may be required under the related Mortgage; provided that
--------
if any Mortgage permits the holders thereof to dictate to the Mortgagor the
insurance coverage to be maintained on such Mortgaged Property, Servicer shall
impose such requirements as it shall determine in accordance with the Servicing
Standard; provided, further, that Servicer shall require the related Mortgagor
--------
to obtain required coverage from qualified insurers. All such insurance
15
policies shall contain a "standard" mortgagee clause naming the Company as
mortgagee or loss payable clause naming the Company as loss payee, and shall be
named by an insurer satisfactory to the Company and authorized under applicable
law to issue such insurance. Any amounts collected by Servicer under any such
policies (other than amounts to be applied on the restoration or repair of the
related Mortgaged Property or amounts to be released or the related Mortgagor),
shall be deposited in the Collection Account.
(b) In lieu of maintaining the individual insurance policies referred
to in Section 5.07(a), Servicer may, in its sole discretion, obtain and
maintain, at its own expense without reimbursement thereof, a blanket policy,
mortgage impairment policy or equivalent form of coverage (A "BLANKET POLICY")
insuring against hazard losses on each individual Commercial Mortgage, providing
protection at least equivalent to the individual policies required under Section
5.07(a). Such policy may contain a deductible clause (not in excess of a
customary amount), in which case Servicer shall, if there shall have been one or
more losses that are not covered by the individual policies required under
Section 5.07(a), deposit into the Collection Account from its own funds the
amounts not otherwise payable under the Blanket Policy because of such
deductible clause. In connection with its activities as Servicer, Servicer
agrees to prepare and present on behalf of the Company, claims under any such
Blanket Policy in a timely fashion in accordance with the terms of such policy.
(c) Servicer agrees to notify the Company immediately upon learning
of any loss or damage by fire or other cause to any Mortgaged Property secured
by a Mortgage and to cooperate and assist the Company in the adjustment and
settlement of all claims in respect thereto. Whenever the Company shall agree to
the restoration of any such damaged Mortgaged Property, Servicer agrees to
verify that such Mortgaged Property has been restored to the Company's
satisfaction.
(d) (i) Servicer shall at all times during the term of this Agreement
maintain and keep in force a fidelity bond in the amounts and having the other
terms described below with broad coverage from an incorporated surety company
satisfactory to the Company. The fidelity bond may be in the form of either
individual bonds or a blanket bond. The amount of fidelity bond coverage shall
be not less than $1,000,000.00 per occurrence. The coverage of the fidelity bond
must explicitly insure the Servicer, its successors and assigns, against any
losses resulting from dishonest, fraudulent or criminal acts on the part of its
officers, employees or other persons acting on behalf of the Servicer. The
Servicer must maintain in effect the fidelity bond at all times and the fidelity
bond may not be cancelled, permitted to lapse or otherwise terminated without
thirty Business Day's prior written notice by registered mail to the Company.
Further, the fidelity bond must provide that, or the insurer must state in
writing to the Company that, the fidelity bond shall not be cancelable without
the giving of notice as provided for in the prior sentence.
(ii) In addition, Servicer at all times during the term of this
Agreement keep in force a policy or policies of insurance covering loss
occasioned by the errors and omissions of Servicer's officers, employees and
agents in connection with its obligation to service the Commercial Mortgages
hereunder, which policy or policies shall be obtained from an insurer
satisfactory to the
16
Company and be in an amount of not less than $5,000,000. Servicer must maintain
in effect the related errors and omissions policy at all times and such errors
and omissions policy may not be cancelled, permitted to lapse or otherwise
terminated without thirty Business Days' prior written notice by registered mail
to the Company. Further, each such errors and omissions policy must provide
that, or the insurer must state in writing to the owner that, such errors and
omissions policy shall nor be cancelable without the giving of notice as
provided for in the prior sentence.
5.08. Realization Upon Defaulted Commercial Mortgages.
-----------------------------------------------
(a) (i) If any payment due under any Commercial Mortgage and not
deferred with the consent of the Company is not paid when the same becomes due
and payable, or if the Mortgagor fails to perform any other material covenant or
obligation under any Commercial Mortgage, and in either case such delinquency or
failure continues beyond any applicable grace period, Servicer shall immediately
notify the Company in writing of such event. Servicer shall, when so directed
by the Company and subject to clauses (b) and (c) of this Section 5.08.
institute foreclosure proceedings for the benefit of the Company, proceed to
acquire for the Company title to the Mortgaged Property by deed in lieu of
foreclosure, or exercise such other remedies, including, but not limited to,
obtaining the appointment of a receiver to collect revenues, as the Company may
direct in writing. If the Company, for its own account, institutes foreclosure
proceedings or exercises any other remedies with respect to a defaulted
Commercial Mortgage, Servicer shall cooperate with and assist the Company with
respect to such proceedings or other exercise. In conducting any foreclosure on
behalf of the Company, Servicer shall follow such practices and procedures as it
shall deem necessary or advisable, in accordance with the Servicing Standard and
with written direction received from the Company. To the extent permitted by
applicable law and consistent with the Servicing Standard set Servicer shall
make reasonable efforts to preserve and protect the Mortgaged Property that
constitutes security for any defaulted Commercial Mortgage.
(ii) Whenever such proceedings have been instituted, Servicer
shall, if requested in writing by the Company, manage or employ management and
protect the Mortgaged Property or REO Property and perform such other duties and
servicing as are customary in the proper management of Mortgaged Property or REO
Property in the locality involved. These duties shall include, but are not
necessarily limited to, the collection of rentals in respect of such premises,
or, if vacant, the renting thereof and maintaining all appropriate insurance
thereon.
(b) If directed by the Company in anticipation of the foreclosure of
a Commercial Mortgage or the acquisition of title to or possession of a
Mortgaged Property, Servicer shall obtain an environmental site assessment
report prepared by a Person who is qualified to make such environmental site
assessments and is approved by the Company and, notwithstanding the foregoing
paragraph, Servicer shall not, on behalf of the Company, initiate foreclosure
proceedings, obtain title to a Mortgaged Property in lieu of foreclosure or
otherwise, have a receiver of rents appointed with respect to any Mortgaged
Property, or take any other action with respect to any Mortgaged Property, if,
as a result of any action, the Company would be considered to hold title to, to
be a "mortgagee-in-possession" of, or to be an "owner" or "operator" of such
Mortgaged Property within the meaning
17
of CERCLA or any comparable environmental law, unless Servicer has determined,
based on such environmental site assessment report, that:
(i) the Mortgaged Property is in compliance with applicable
environmental laws and regulations; and
(ii) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any chemicals, pollutants,
petroleum-based materials or other toxic or hazardous substances, materials
or wastes for which investigation, testing, monitoring, containment, clean-
up or remediation could be required under any federal, state or local law
or regulation.
The environmental site assessment shall be a "Phase I assessment". If any such
"Phase I assessment" so warrants, and the Company directs Servicer to do so,
Servicer shall cause to be performed such additional environmental testing as
directed by the Company. The cost of any "Phase I assessment" and any such
additional environmental testing shall be paid by the Company.
(c) If the environmental testing contemplated by subsection (b) above
reveals an unsatisfactory environmental and the Company determines to proceed
against such Mortgaged Property and, if title thereto is acquired, to take such
remedial, corrective or other action with respect to the unsatisfied condition
or conditions, then Servicer shall, at the direction of the Company, proceed
against such Mortgaged Property and arrange for the undertaking of such remedial
corrective or other actions as the Company shall direct and at the cost and
expense of the Company.
(d) Servicer shall report to the Internal Revenue Service and the
related Mortgagor, in the manner required by applicable law, the information
required to be reported regarding any Mortgaged Property which is abandonment or
foreclosed. Servicer shall promptly deliver a copy of any such report to the
Company.
Section 5.09. Inspections: Collection of Budgets, Rent Rolls and
---------------------------------------------------
Financial Statements.
--------------------
(a) Servicer shall inspect, or cause to be inspected, each Mortgaged
Property at such times and in such manner as are consistent with the Servicing
Standards; provided that (i) each Mortgaged Property shall be inspected at least
--------
once each calendar year. Servicer shall perform a physical inspection of a
Mortgaged Property as soon as practicable after a related Commercial Mortgage
becomes a defaulted Commercial Mortgage. In the course of each such inspection,
Servicer shall use its best efforts to determine the existence of any material
vacancy in the Mortgaged Property, of any sale, transfer or abandonment of the
Mortgaged Property, of any material change in the condition or value of the
Mortgaged Property, of any waste committed on the Mortgaged Property, of any
material failure on the part of the related Mortgagor to keep the Mortgaged
Property in good condition and repair, of any permanent or substantial injury to
the Mortgaged Property through unreasonable use, abuse or neglect or of any
other matter which would materially and
18
adversely affect or result in diminution of the security provided by the related
Mortgage. Servicer shall make a written report of each such inspection and shall
deliver a copy thereof to the Company within ninety (90) days of its
preparation.
(b) With respect to each Commercial Mortgage, as directed by the
Company, Servicer, shall promptly use commercially reasonable efforts to collect
from the related Mortgagor the periodic operating statements, budgets and rent
rolls and any other documents that the Company may reasonably request from time
to time of the related Mortgaged Property and the financial statements of the
related Mortgagor. Servicer shall promptly forward such documents to the
Company upon its receipt thereof.
Section 5.10. Title to REO Property; Management of REO Property.
-------------------------------------------------
(a) If title to an REO Property is acquired through foreclosure or
deed in lieu of foreclosure, the deed or certificate of sale shall be issued to
the Company's designee.
(b) Servicer shall manage, maintain and dispose of any REO Property
in accordance with the written instructions of the Company and the Servicing
Standards. Servicer shall keep and maintain separate records with respect to any
matters relating to REO Properties in form and substance satisfactory to the
Company.
Section 5.11. Access to Documentation; Special Reports.
----------------------------------------
(a) The Servicer shall provide to the Company or its duly authorized
representative access to any books, records or other documentation that pertains
to the Commercial Mortgages, this Agreement or the ability of Servicer to
perform its obligations hereunder that is in its possession or under its
control. Such access shall be afforded without charge but only upon reasonable
prior written request and during normal business hours at the offices of
Servicer.
(b) Servicer shall promptly notify the Company of (i) the failure of
any Mortgagor to make any Monthly Payment or Escrow Payment beyond any
applicable grace period, (ii) any unpaid ground rents, real estate taxes, water
charges, special assessments or other charges which may become a lien on the
Mortgaged Property, and (iii) any event of which Servicer has knowledge that
would (with or without the passage of time or the giving of notice) permit the
maturity of a Commercial Mortgage to be accelerated, including, without
limitation, (A) the vacating or any change in the occupancy of any Mortgaged
Property that would result in income from the Mortgaged Property being
insufficient to make debt service payments on the Commercial Mortgage, (B) the
sale or transfer of any Mortgaged Property, (C) the insolvency or bankruptcy of
any Mortgagor, (D) any actual or threatened loss of or damage to any Mortgaged
Property (in which event, Servicer shall also notify the appropriate insurer or
insurers) and (E) any lack of repair or other deterioration or waste committed
or suffered with respect to any Mortgaged Property. Servicer shall promptly
provide a written report with respect to such matters to the Company. In
addition, Servicer shall promptly furnish to the Company (1) copies of all
material correspondence between Servicer and any
19
Mortgagor and (2) such periodic, special or other reports, information or
documentation, whether or not provided for herein, as shall be reasonably
requested by the Company.
(c) Monthly Servicing Report. Notwithstanding anything to the
------------------------
contrary in Section 5.03(b), at least two (2) Business Days prior to each
Remittance Date, the Servicer shall provide to the Company a Monthly Servicing
Report with respect to the immediately preceding Collection Period setting forth
the information specified in Exhibit A hereto and such other information as the
Company may from time to time request.
Section 5.12. Further Assurances.
------------------
Servicer agrees to do such further acts and things and to provide to
the Company any information or documents reasonably required or requested by the
Company to carry into effect the servicing of the Commercial Mortgages.
Section 5.13. Confidentiality.
---------------
Except as otherwise provided herein, Servicer agrees to keep
confidential all records of any Mortgagor and agrees not to disclose such
records to any of its respective Affiliates or any Person other than the Company
or the Company's designee.
Section 5.14. Contribution of Commercial Mortgages or Undivided
-------------------------------------------------
Interests Therein.
-----------------
(a) Collateralized Mortgage Obligations. The Servicer acknowledges
-----------------------------------
that the Commercial Mortgages may be used to secure the issuance of
collateralized mortgage obligations or other mortgage collateralized bonds which
may require the retained servicing of such Commercial Mortgages to be performed
in a manner and on terms other than as set forth in this Agreement. In such
event, the Servicer agrees to enter into new servicing arrangements with the
Company and/or a trustee acting on behalf of the holders of the collateralized
mortgage obligations or mortgage colla teralized bonds so long as the
compensation to the Servicer is at least equivalent to the Servicing Fee payable
to it hereunder with respect to such Commercial Mortgages. Upon the execution
of any such new servicing agreement, this Agreement shall terminate as to the
Commercial Mortgages subject thereto.
(b) Sales to a Trustee. The Servicer acknowledges that the Company
------------------
may sell undivided interests in Commercial Mortgages for the issuance of pass-
through mortgage certificates which may require the servicing of such Commercial
Mortgages to be performed in a manner and on terms other than as set forth in
this Agreement. In such event, the Servicer agrees to enter into servicing
arrangements with the Company or a trustee acting on behalf of the holders of
the pass-through certificates so long as the compensation to the Servicer is at
least equivalent to the Servicing Fee payable to it hereunder with respect to
such Commercial Mortgages. Upon the execution of any such new servicing
agreement, this Agreement shall terminate as to the Commercial Mortgages
20
subject thereto.
(c) Partial Assignments. The Company and the Servicer acknowledge and
-------------------
agree that the Company may make partial assignments of this Agreement at any
time and from time to time in connection with the pooling of mortgage loans
being serviced hereunder and the assignment of undivided interests therein to a
third party, or in connection with the enforcement of this Agreement. In the
event that, pursuant to the terms and conditions of any applicable pooling and
administration agreement, a portion of this Agreement so assigned is terminated,
such termination shall not cause a termination of the remaining portion(s) of
this Agreement not assigned or assigned and subject to a different pooling and
administration agreement.
ARTICLE VI
Section 6.01. Remittances.
-----------
(a) Within two (2) Business Days of receipt, Servicer shall remit to
the Company all Principal Prepayments (together with related interest and any
Prepayment Premium) received by it, by wire transfer of immediately available
funds to the account designated by the Company.
(b) On each Remittance Date, Servicer shall remit the amounts in the
Collection Account net of the amounts to be paid pursuant to clause (a) of
Section 5.06 and clause (b)(i) through and including (vi) of Section 5.06
("AVAILABLE DISTRIBUTION AMOUNT") to the Company, by wire transfer of
immediately available funds to the account designated by the Company.
ARTICLE VII
Section 7.01. Indemnification by Servicer.
---------------------------
Servicer shall indemnify the Company and hold it harmless against any
and all claims, losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments, and any other costs, fees and
expenses that the Company may sustain in any way related to the failure of
Servicer or any Subservicer to perform its obligations under this Agreement or
Subservicing Agreement, as the case may be.
Section 7.02. Merger or Consolidation of Servicer.
-----------------------------------
Servicer each shall keep in full effect its existence, rights and
franchise as a corporation under the laws of the state of its incorporation
except as permitted herein, and will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Commercial Mortgages, and to
perform its duties under this Agreement.
Any Person into which Servicer may be merged or consolidated, or any corporation
resulting from
21
any merger, conversion or consolidation to which Servicer shall be a party, or
any Person succeeding to the business of Servicer, shall be the successor of
Servicer hereunder, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person is
-------- -------
acceptable to the Company.
Section 7.03. Servicer Resignation.
--------------------
It is understood and agreed that either the Company or Servicer, on
not less than thirty (30) days written notice without being required to state a
cause, or immediately in the event the other party has breached this Agreement,
may terminate this Agreement in its entirety, or may terminate all of Servicer's
responsibilities as servicer with respect to any Commercial Mortgage. Upon such
termination or discontinuance, the rights and duties of Servicer and its right
to compensation shall immediately terminate. Servicer shall forthwith deliver
to the Company or to any party the Company designates in writing; (i) all
documents relating to the Mortgage(s), including but not limited to ledger
cards, tax ▇▇▇▇ and accrual records; and (ii) a statement showing the monthly
payments collected and statement of all monies held in trust for the payment of
maintenance and other charges in respect of the Mortgage(s) and shall
immediately pay over to the Company all monies so held. Servicer shall, on
forms approved by the Company, release or assign to whomsoever the Company may
designate all Servicer's rights and interest in any management contracts, rental
assignments, agreements relating to the Mortgage(s). Servicer further agrees to
forthwith resign any trusteeship under any deed of trust or to procure for the
Company, the resignation of any individual who may be named as trustee under any
such deed of trust.
Section 7.04. Transfers of Servicing.
----------------------
Except as provided in Section 5.02, Servicer shall not assign this
Agreement or the servicing hereunder or delegate its rights or duties hereunder
or any portion thereof, without the prior written approval of the Company.
ARTICLE VII
Section 8.01. Events of Default.
-----------------
"Event of Default," whenever used herein, means any once of the
following events:
(a) any failure by Servicer to remit to the Company or its designee
any payment required to be made under the terms of this Agreement that is
unremedied as of the close of business on the Business Day immediately
succeeding the date on which written notice of such failure, requiring the
same to be remedied, shall be given to Servicer;
(b) any failure on the part of Servicer duly to observe or perform in
any material respect any other of the covenants or agreements on the part
of Servicer set forth in this
22
Agreement that continues unremedied for a period of 10 days after the date
on which written notice of such failure, requiring the same to be remedied,
shall have been given to Servicer by the Company;
(c) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, bankruptcy, readjustment of debt, marshalling
of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against Servicer and
such decree or order shall have remained in force undischarged and unstayed
for a period of sixty (60) days;
(d) Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating
to Servicer or of or relating to all or substantially all of its property;
(e) Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable bankruptcy, insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment
of its obligations; or
(f) Servicer shall be in default under, or an event has occurred
that, with notice or lapse of time or both, would constitute a default by
Servicer under, any of its contacts with third parties, which default or
occurrence could materially and adversely affect its ability to perform its
obligations and duties under this Agreement.
In each and every such case, so long as an Event of Default shall not have been
remedied, the Company, by notice in writing to Servicer may terminate all the
rights and obligations of Servicer to act as servicer under this Agreement.
Such right shall be in addition to whatever rights the Company may have at law
or equity to damages, including injunctive relief and specific performance. On
or after the receipt by Servicer, of such written notice, all authority and
power of Servicer to service the Commercial Mortgages under this Agreement shall
on the date set forth in such notice pass to and be vested in a successor
appointed by the Company.
ARTICLE IX
Section 9.01. Termination.
-----------
This Agreement shall terminate upon the written mutual consent of
Servicer and the Company at any time.
Section 9.02. Termination Without Cause.
-------------------------
23
(a) The Company may, without cause, upon thirty (30) days prior
written notice, terminate all of the rights and obligations of Servicer to act
as servicer under this Agreement with respect to any or all of the Commercial
Mortgages being serviced by it hereunder. On the 31st day following the date of
such notice or any later date set forth therein, all authority and power of
Servicer to service the Commercial Mortgages described in such notice shall pass
to and be vested in a successor appointed by the Company.
Section 9.03. Successor to Servicer.
---------------------
If the Company terminates the rights of Servicer to service any or all
of the Commercial Mortgages pursuant to Section 8.01, Section 9.01 or Section
9.02: (a) Servicer shall deliver the related servicing file and servicing
records to the Company or, at the Company's option, to a third party designated
by the Company (THE "DESIGNATED SUCCESSOR"), within two Business Days following
the Company's request; (b) Servicer shall transfer to the Company or the
Designated Successor all amounts held in the Collection Account, the Escrow
Account any other amounts related to the Commercial Mortgages on the date of the
transfer of servicing (THE "SERVICING TRANSFER"); (c) Servicer shall provide to
the Company or the Designated Successor the following information as of the date
of the Servicing Transfer: (i) a ledger accounting, dated as of the date of the
Servicing Transfer, which itemizes for the period during which Servicer serviced
such Commercial Mortgage hereunder the dates and amounts of all payments made,
received, or applied by Servicer with regard to such Commercial Mortgage,
itemizing principal and interest payments, tax payments, special assessments,
hazard insurance, and other payments and (ii) a current trail balance; (d)
Servicer shall notify the related Mortgagor of the Servicing Transfer and the
new address to which payments on such Commercial Mortgage should be sent after
the date of the Servicing Transfer; (e) Servicer shall promptly forward to the
Company or the Designated Successor all Mortgagor correspondence, insurance
notices, tax bills or any other correspondence or documentation related to such
Commercial Mortgage which is received by Servicer after the date of the
Servicing Transfer; and (f) Servicer, shall take any and all further actions and
execute and deliver such further documents and agreements as may be necessary or
advisable to effectuate the Servicing Transfer, as reasonably determined by the
Company.
9.04 The Servicer's Excused Performance. Notwithstanding any provision in
----------------------------------
this Agreement to the contrary, there shall be no termination of, and no
liability under, this Agreement with respect to the Servicer for its failure to
duly observe or perform in any material respect any covenant, condition or
practice of the Servicing Standards or this Agreement and required thereby or
hereby to be observed or performed by the Servicer hereunder if such failure on
the part of the Servicer is directly caused by the failure of the Company to
duly observe or perform in any material respect any covenant, condition or
practice of the Servicing Standards or this Agreement and required thereby or
hereby to be observed or performed by the Company hereunder.
ARTICLE X
Section 10.01. Notices.
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24
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party at the address as follows:
IMPERIAL CREDIT COMMERCIAL HOLDINGS, INC.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
IMPERIAL COMMERCIAL CAPITAL CORPORATION
▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
Section 10.02. Severability Clause.
-------------------
Any part, provision, representation or warranty of this Agreement
which is prohibited or which is held to be void or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof.
Section 10.03. Counterparts.
------------
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
Section 10.04. Governing Law.
-------------
The Agreement shall be governed by, and construed in accordance with,
the laws of the state of California and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with the laws of the
state of California without regard to conflicts of law principles.
Section 10.05. Successors and Assigns.
----------------------
25
This Agreement shall bind and inure to the benefit of and be
enforceable by Servicer and the Company and the respective successors and
assigns of Servicer and the Company. Servicer may not assign this Agreement
without the prior written consent of the Company.
Section 10.06. Waivers.
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No term or provision of this Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party against
whom such waiver or modification is sought to be enforced.
Section 10.07. No Partnership or Agency.
------------------------
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto, nor shall Servicer be
deemed an agent of the Company.
Section 10.08 Headings.
--------
The relationships of the Company to Servicer under this Agreement are
intended by the parties to be that of an independent contractor and not that of
a joint venturer, partner or agent. Servicer or any of its employees, officers,
or directors shall not own or acquire any interest in any property that secures
a Commercial Mortgage held by the Company without the prior written consent of
the Company.
Section 10.09. Further Agreements.
------------------
Servicer and the Company each agree to execute and deliver to the
other such reasonable and appropriate additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of this
Agreement.
Section 10.10. WAIVER OF JURY TRIAL.
--------------------
THE PARTIES, INCLUDING ANY ASSIGNEES, HEREBY WAIVE THEIR RIGHT TO
TRIAL BY JURY OF DISPUTES, CLAIMS OR CONTROVERSIES BETWEEN THEMSELVES ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY AGREEMENTS, INSTRUMENTS OR
TRANSACTIONS RELATING TO THIS AGREEMENT, WHETHER ARISING IN CONTRACT, TORT OR
OTHERWISE.
26
IN WITNESS WHEREOF; the Company and Servicer have caused their names
to be signed hereto by their respective officers thereunto duly authorized on
the date first above written.
IMPERIAL COMMERCIAL CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
IMPERIAL CREDIT COMMERCIAL HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
27
EXHIBIT A
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MONTHLY SERVICING REPORT
------------------------
With respect to the Commercial Mortgages serviced by Servicer pursuant
to the Interim Mortgage Servicing Agreement:
1) The aggregate of payments received on the Commercial
Mortgages during the preceding Collection Period allocable
to principal.
2) The aggregate of payments received on the Commercial
Mortgages during the preceding Collection Period allocable
to interest.
3) The aggregate of payments received on the Commercial
Mortgages during the preceding Collection Period allocable
to Escrow Funds.
4) The aggregate outstanding principal balance of such
Commercial Mortgages as the close of business on the last
day of the preceding Collection Period.
5) The number of Commercial Mortgages, and the outstanding
principal balance of such Commercial Mortgages, that were
(i) 1 to 30 days past due, (ii) 31 to 60 days past due,
(iii) 61 to 90 days past due, and (iv) 91 or more days past
due as of the end of the preceding Collection Period.
6) Gross charge-offs, recoveries and net losses for the
preceding Collection Period.
7) The number and aggregate principal balance of all Commercial
Mortgages in respect of which the related Mortgaged Property
has been repossessed or foreclosed upon during the preceding
Collection Period.
8) The number and aggregate principal balance of all Commercial
Mortgages that were liquidated (otherwise than pursuant to
voluntary prepayment) during such Collection Period).
9) First payment defaults for the preceding Collection Period.
10) Obligor bankruptcy filings for the preceding Collection
Period.
11) Repossession and liquidation expenses for the preceding
Collection Period.
12) Servicing Advances and unreimbursed Servicing Advances for
the preceding Collection Period.
13) Servicing Fees collected for the preceding Collection
Period.
14) Interest or income paid on funds in the Escrow Account and
the Collection Account.
15) The aggregate of payments received allocable to REO
Revenues.