EXHIBIT 10.12
SERVICING AGREEMENT
Dated as of July 31, 1998
between
IMPAC COMMERCIAL HOLDINGS, INC.
and
IMPAC COMMERCIAL CAPITAL CORPORATION,
"Owner"
and
MIDLAND LOAN SERVICES, INC.,
"Servicer"
TABLE OF CONTENTS
ARTICLE I.
DEFINITIONS
Section 1.01 Defined Terms................................................ 1
ARTICLE II.
RETENTION AND AUTHORITY OF SERVICER
Section 2.01 Engagement; Servicing Standard............................... 6
Section 2.02 Subservicing................................................. 7
Section 2.03 Authority of the Servicer.................................... 8
ARTICLE III.
SERVICES TO BE PERFORMED
Section 3.01 Services as Loan Servicer.................................... 8
Section 3.02 Escrow Accounts; Collection of Taxes, Assessments and
Similar Items................................................ 9
Section 3.03 Collection Accounts.......................................... 10
Section 3.03 Collection Accounts.......................................... 10
Section 3.04 Permitted Investments........................................ 10
Section 3.05 Maintenance of Insurance Policies............................ 11
Section 3.06 Delivery and Possession of Servicing Files................... 12
Section 3.07 Inspections.................................................. 12
Section 3.08 "Due-on-Sale" Clauses; Assumption Agreements................. 13
Section 3.09 Realization Upon Mortgaged Properties........................ 13
Section 3.10 Sale of Specially Serviced Mortgage Loans and REO Properties. 14
Section 3.11 Management of REO Property................................... 14
Section 3.12 Modifications, Waivers, Amendments and Consents.............. 15
ARTICLE IV.
STATEMENTS AND REPORTS
Section 4.01 Reporting by the Servicer.................................... 15
ARTICLE V.
SERVICER'S COMPENSATION AND EXPENSES
Section 5.01 Servicing Compensation....................................... 16
Section 5.02 Servicing Expenses........................................... 16
ARTICLE VI.
THE SERVICER AND THE OWNER
Section 6.01 Servicer Not to Assign; Merger or Consolidation of the
Servicer..................................................... 17
Section 6.02 Liability and Indemnification of the Servicer and the Owner.. 17
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES; DEFAULT
Section 7.01 Representations and Warranties............................... 17
Section 7.02 Events of Default............................................ 18
ARTICLE VIII.
TERMINATION; TRANSFER OF MORTGAGE LOANS
Section 8.01 Termination of Agreement..................................... 19
Section 8.02 Transfer of Mortgage Loans; Securitization................... 20
ARTICLE IX.
MISCELLANEOUS PROVISIONS
Section 9.01 Amendment; Waiver............................................ 21
Section 9.02 Governing Law................................................ 21
Section 9.03 Notices...................................................... 21
Section 9.04 Severability of Provisions................................... 22
Section 9.05 Inspection and Audit Rights.................................. 22
Section 9.06 Binding Effect; No Partnership; Counterparts................. 22
Section 9.07 Protection of Confidential Information; No Solicitation...... 22
Section 9.08 General Interpretive Principles.............................. 22
Section 9.09 Further Agreements........................................... 23
EXHIBIT "A" Mortgage Loan Schedule
EXHIBIT "B" Servicing File Listing
THIS SERVICING AGREEMENT dated as of July 31, 1998, is between IMPAC
Commercial Holdings, Inc., a Maryland corporation, IMPAC Commercial Capital
Corporation, a California corporation, and Midland Loan Services, Inc., a
Delaware corporation.
PRELIMINARY STATEMENT
The Owner desires to engage the Servicer, and the Servicer desires to
accept the Owner's engagement, to service the Mortgage Loans that the Owner
acquires from time to time in accordance with the provisions of this Agreement.
The Servicer is an independent contractor in the business of servicing
mortgage loans, and is not an Affiliate of the Owner.
This Agreement shall become effective with respect to each Mortgage Loan,
or appropriate group or portfolio of Mortgage Loans, upon the related Servicing
Transfer Date.
NOW, THEREFORE, in consideration of the recitals in this Preliminary
Statement which are made a contractual part hereof, and of the mutual promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I.
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DEFINITIONS
Section 1.01 Defined Terms.
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Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
"Accepted Servicing Practices": As defined in Section 2.01.
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"Accounts": The Escrow Accounts, REO Accounts and the Collection Accounts.
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"Additional Servicing Compensation": (i) amounts collected for checks or
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other items returned for insufficient funds, (ii) late payment charges (but not
default interest) with respect to the Mortgage Loans, (iii) to the extent the
Servicer has been engaged by the Owner under Section 3.08 or 3.12, any
modification fees, extension fees, assumption fees and similar processing fees
received from or on behalf of any Borrower, (iv) subject to Section 3.04 of the
Agreement, all income and gain realized from the investment of funds deposited
in the Accounts, and (v) any Termination Fees.
"Advance Rate": A per annum rate equal to the "Prime Rate" (as published
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from time to time in the "Money Rates" section of The Wall Street Journal).
"Affiliate": With respect to any specified Person, any other Person
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controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement": This Servicing Agreement, as the same may be modified,
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supplemented or amended from time to time.
"Best Efforts": Efforts determined to be reasonably diligent by the Owner
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or the Servicer, as the case may be, in its reasonable discretion, which efforts
do not require the Owner or the Servicer, as the case may be, to enter into any
litigation, arbitration or other legal or quasi-legal proceeding.
"Borrower": The obligor on a Note.
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"Business Day": Any day other than (i) a Saturday or Sunday, or (ii) a day
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in which depository institutions or trust companies in the State of Missouri or
in any of the States in which the Accounts or any accounts used by the Owner for
remittance purposes are located, are authorized or obligated by law, regulation
or executive order to remain closed.
"Collection Account": As defined in Section 3.03.
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"Corrected Mortgage Loan": Any Mortgage Loan which is no longer a
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Specially Serviced Mortgage Loan pursuant to the second sentence of the
definition of "Specially Serviced Mortgage Loan".
"Determination Date": The 12th day (or if such day is not a Business Day,
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the Business Day immediately preceding such day) of the month, beginning on
August 12, 1998.
"Disposition Fee": In connection with the sale of any Specially Serviced
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Mortgage Loan or REO Property pursuant to Section 3.10, the fee payable to the
Servicer in amount equal to the product of (x) the related Net Liquidation
Proceeds and (y) 1.00%; provided, however, that such fee shall not exceed
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$100,000 for each Mortgage Loan.
"Eligible Account": Either: (i) an account maintained with NationsBank,
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N.A. or PNC Bank, National Association, or (ii) an account maintained with a
depository institution or trust company which has been approved by the Owner in
writing.
"Environmental Laws": Any environmental law, ordinance, rule, regulation
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or order of a federal, state or local governmental authority, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S.C. (S)(S) 9601 et seq.), the Hazardous Material
Transportation Act, as amended (49 U.S.C. (S)(S) 1801 et seq.), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. (S)(S) 6901 et seq.), the
Federal Water Pollution Control Act, as amended (33 U.S.C. (S)(S) 1251 et seq.),
the Clean Air Act (42 U.S.C. (S)(S) 7401 et seq.) and the regulations
promulgated pursuant thereto.
"Escrow Account": As defined in Section 3.02.
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"Escrow Payment": Any payment received by the Servicer for the account of
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the Borrowers for application toward the payment of taxes, insurance premiums,
assessments, ground rents, deferred maintenance, environmental remediation,
rehabilitation costs, capital expenditures, and similar items in respect of the
related Mortgaged Property.
"Event of Default": As defined in Section 7.02.
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"Loan Servicing": As defined in Section 3.01.
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"Monthly Payment": With respect to any Mortgage Loan, the scheduled
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monthly payment of interest or the scheduled monthly payment of principal and
interest, as the case may be, on such Mortgage Loan which is payable by a
Borrower on the due date under the related Note.
"Mortgage": With respect to each Mortgage Loan, the mortgage, deed of
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trust or other instrument securing the related Note, which creates a lien on the
real property securing such Note.
"Mortgage Loan": Each of the mortgage loans identified on the Mortgage
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Loan Schedule.
"Mortgage Loan Documents": With respect to each Mortgage Loan, the related
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Note, the related Mortgage and any and all other documents executed and
delivered in connection with the origination or subsequent modification of such
Mortgage Loan.
"Mortgage Loan Schedule": A schedule of certain mortgage loans owned and
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held by the Owner which sets forth information with respect to such mortgage
loans, as amended from time to time by the parties. An initial Mortgage Loan
Schedule shall be attached hereto as Exhibit "A".
"Mortgaged Property": The real property and improvements thereon securing
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repayment of the debt evidenced by the related Note. Such term shall also
include any REO Property.
"Net Liquidation Proceeds": The amount of proceeds received in connection
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with the liquidation or sale of any Specially Serviced Mortgage Loan or REO
Property net of the amount of any liquidation expenses (including, without
limitation, legal fees and expenses, brokerage commissions and conveyance taxes)
incurred with respect to such liquidation or sale.
"Note": With respect to any Mortgage Loan, the promissory note or other
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evidence of indebtedness or agreements evidencing the indebtedness of a Borrower
under such Mortgage Loan.
"Owner": With respect to any Mortgage Loan, either (i) IMPAC Commercial
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Holdings, Inc. if such entity is the owner and holder of such Mortgage Loan, or
(ii) IMPAC Commercial Capital Corporation if such entity is the owner and holder
of such Mortgage Loan, as the same may be identified in the Mortgage Loan
Schedule.
"Permitted Investments": Any one or more of the following obligations or
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securities having at the time of purchase, or at such other time as may be
specified, the required ratings, if any, provided for in this definition:
(i) direct obligations of, or guaranteed as to timely payment of
principal and interest by, the United States of America or any agency
or instrumentality thereof provided that such obligations are backed
by the full faith and credit of the United States of America;
(ii) direct obligations of, or guaranteed as to timely payment of
principal and interest by, the Federal Home Loan Mortgage Corporation,
the Federal Home Loan Bank, the Federal National Mortgage Association
or the Federal Farm Credit System, provided that any such obligation,
at the time of purchase or contractual commitment providing for the
purchase thereof, is qualified by any Rating Agency as an investment
of funds backing securities rated "AAA" (or such comparable rating);
(iii) demand and time deposits in or certificates of deposit of, or
bankers' acceptances issued by, any bank or trust company, savings and
loan association or savings bank, provided that, in the case of
obligations that are not fully insured by the Federal Deposit
Insurance Corporation, the commercial paper and/or long-term unsecured
debt obligations of such depository institution or trust company (or
in the case of the principal depository institution in a holding
company system, the commercial paper or long-term unsecured debt
obligations of such holding company) have the highest rating available
for such securities by any Rating Agency;
(iv) general obligations of or obligations guaranteed by any state of
the United States or the District of Columbia receiving the highest
long-term debt rating available for such securities by any Rating
Agency;
(v) commercial or finance company paper (including both non-interest-
bearing discount obligations and interest-bearing obligations payable
on demand or on a specified date not more than one year after the date
of issuance thereof) that is rated by any Rating Agency in its highest
short-term unsecured debt rating category at the time of such
investment or contractual commitment providing for such investment,
and is issued by a corporation the outstanding senior long-term debt
obligations of which are then rated by any such Rating Agency in its
highest long-term unsecured debt rating category;
(vi) guaranteed reinvestment agreements issued by bank, insurance
company or other corporation rated in one of the two highest long-term
unsecured debt rating levels available to such issuers by any Rating
Agency at the time of such investment, provided that any such
agreement must by its terms provide that it is terminable by the
purchaser without penalty in the event any such rating is at any time
lower than such level;
(vii) repurchase obligations with respect to any security described in
clause (i) or (ii) above entered into with a depository institution or
trust company (acting as principal) described in clause (iii) above;
(viii) securities bearing interest or sold at a discount that are
issued by any corporation incorporated under the laws of the United
States of America or any state thereof and rated by any Rating Agency
in its highest long-term unsecured rating category at the time of such
investment or contractual commitment providing for such investment;
(ix) units of taxable money market funds which funds are regulated
investment companies, seek to maintain a constant net asset value per
share and invest solely in obligations backed by the full faith and
credit of the United States, and have been approved in writing by the
Owner as Permitted Investments with respect to this definition; and
(x) such other obligations as are acceptable as Permitted Investments
to the Owner.
"Person": Any individual, corporation, limited liability company,
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partnership, joint venture, estate, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Qualified Affiliate": Any Person (a) that is organized and doing business
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under the laws of any state of the United States or the District of Columbia,
(b) that is in the business of performing the duties of a servicer of commercial
mortgage loans, and (c) as to which 50% or greater of its outstanding voting
stock or equity ownership interest are directly or indirectly owned by the
Servicer or by any Person or Persons who directly or indirectly own equity
ownership interests in the Servicer.
"Rating Agency": Each of Standard & Poor's Ratings Services, a division of
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▇▇▇▇▇▇-▇▇▇▇, Inc., ▇▇▇▇▇'▇ Investors Service, Inc., Fitch IBCA, Inc., Duff and
▇▇▇▇▇▇ Credit Rating Co., or any other nationally recognized statistical rating
agency.
"Remittance Date": With respect to each Determination Date, the date which
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is five (5) Business Days after such Determination Date.
"REO Account": As defined in Section 3.11(a).
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"REO Mortgage Loan": A Mortgage Loan deemed for the purposes hereof to be
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outstanding with respect to each REO Property, as more particularly described in
Section 3.09(b).
"REO Property": A Mortgaged Property acquired by the Servicer on behalf of
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the Owner through foreclosure or by deed in lieu of foreclosure.
"Responsible Officer": Any officer or employee of the Owner or the
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Servicer, as the case may be, involved in or responsible for the administration,
supervision or management of this Agreement and whose name and specimen
signature appear on a list prepared by each party and delivered to the other
party, as such list may be amended from time to time by either party.
"Securitization": One or more transactions involving the issuance of
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certificates, bonds or other equity or debt instruments which are rated by one
or more of the Rating Agencies and are collateralized by or evidence interests
in a pool of one or more commercial mortgage loans that includes any or all of
the Mortgage Loans.
"Servicer": Midland Loan Services, Inc., a Delaware corporation, or any
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successor Servicer as herein provided.
"Servicing Expenses": All customary, reasonable and necessary out-of-
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pocket costs and expenses paid or incurred in connection with the Servicer's
obligations hereunder or in connection with any Special Services to be performed
by the Servicer pursuant to Section 3.01, including without limitation:
(a) real estate taxes, assessments and similar charges;
(b) insurance premiums;
(c) any expense necessary in order to prevent or cure any
violation of applicable laws, regulations, codes, ordinances, rules,
orders, judgments, decrees, injunctions or restrictive covenants;
(d) any cost or expense necessary in order to maintain or release the
lien on each Mortgaged Property and related collateral, including any
mortgage registration taxes, release fees, or recording or filing
fees;
(e) customary expenses for the collection, enforcement or foreclosure
of the Mortgage Loans and the collection of deficiency judgments
against Borrowers and guarantors (including but not limited to the
fees and expenses of any trustee under a deed of trust, foreclosure
title searches and other lien searches);
(f) subject to Section 3.07, costs and expenses of any appraisals,
valuations, inspections, environmental assessments (including but not
limited to the fees and expenses of environmental consultants), audits
or consultations, engineers, architects, accountants, on-site property
managers, market studies, title and survey work and financial
investigating services;
(g) customary expenses for liquidation, restructuring, modification or
loan workouts, such as sales brokerage expenses and other costs of
conveyance;
(h) costs and expenses related to travel and lodging, subject to
Section 3.07 with respect to property inspections; and
(i) any other reasonable costs and expenses, including without
limitation, legal fees and expenses, incurred by the Servicer under
this Agreement in connection with the enforcement, collection,
foreclosure, disposition, condemnation or destruction of the Mortgage
Loans or related Mortgaged Properties, the maintenance, leasing,
operation, management and sale of the REO Properties, and the
performance of Loan Servicing by the Servicer under this Agreement.
Notwithstanding the foregoing, Servicing Expenses shall not be deemed to include
costs and expenses incurred by the Servicer in the performance of its Loan
Servicing obligations hereunder that are in the nature of internal costs or
fixed overhead of the Servicer (including, without limitation, costs and
expenses relating to data processing, computer and telephone systems, office
space, equipment and supplies, and employee salaries and related expenses),
which shall be borne solely by the Servicer.
"Servicing Fee": With respect to each Mortgage Loan, an amount equal to
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the product of (a) the related Servicing Fee Rate and (b) the outstanding
principal balance of such Mortgage Loan, as calculated in accordance with
Section 5.01.
"Servicing Fee Rate": A rate equal to (a) 0.10% (10 basis points) for
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those Mortgage Loans with an original principal balance of less than $2,000,000,
and (b) 0.05% (5 basis points) for those Mortgage Loans with an original
principal balance greater than or equal to $2,000,000, but less than or equal to
$10,000,000. Notwithstanding the foregoing, for those Mortgage Loans which have
multiple properties which are cross-collateralized and cross-defaulted with
other mortgage loans or having lockbox or cash management arrangements, or for
Mortgage Loans with an original principal balance greater than $10,000,000.00,
the Servicing Fee Rate in any such event shall be negotiated in good faith by
the parties hereto on a case-by-case basis.
"Servicing File": With respect to each Mortgage Loan, (i) all Mortgage
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Loan Documents, (ii) to the extent not included as a Mortgage Loan Document, the
documents, information and records set forth in the file listing attached hereto
as Exhibit "B", and (iii) any additional documents or information related
thereto maintained or created by the Servicer.
"Servicing Transfer Date": With respect to each Mortgage Loan, the date of
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delivery by Owner to the Servicer of the related Servicing File
"Specially Serviced Mortgage Loan": Any Mortgage Loan with respect to
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which:
(a) the related Borrower is at least two months delinquent (without
giving effect to any grace periods permitted by the related Mortgage
Loan Documents) in the payment of a Monthly Payment;
(b) the related Borrower has expressed to the Servicer an inability to
pay or a hardship in paying the Mortgage Loan in accordance with its
terms;
(c) the Servicer has received notice that the related Borrower has
become the subject of any bankruptcy, insolvency or similar
proceeding, or has admitted in writing the inability to pay its debts
as they come due or made an assignment for the benefit of creditors;
(d) the Servicer has received notice of a foreclosure or threatened
foreclosure of any lien (other than the Mortgage Loan) on the related
Mortgaged Property;
(e) a default of which the Servicer has notice (other than a failure
by the related Borrower to pay principal or interest) and which
materially and adversely affects the interests of the Owner has
occurred and remains unremedied for the applicable grace period
specified in the Mortgage Loan; or
(f) the related Borrower has failed to make a balloon payment as and
when due and such default has not been cured within 30 days after such
due date;
provided, however, that with respect to the circumstances described in clauses
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(b), (d) and (e), the Servicer has received written confirmation from the Owner
that such Mortgage Loan shall be a Specially Serviced Mortgage Loan. To the
extent no other circumstances identified in clauses (a) through (f) above exist
that would cause the Mortgage Loan to continue to be characterized as a
Specially Serviced Mortgage Loan, a Mortgage Loan will cease to be a Specially
Serviced Mortgage Loan:
(i) with respect to the circumstances described in clauses (a) or (f)
above, when the related Borrower has brought the Mortgage Loan current
(or, with respect to the circumstances described in clause (f),
pursuant to any work-out of the Mortgage Loan) and thereafter made
three consecutive full and timely Monthly Payments (including pursuant
to such workout); or
(ii) with respect to the circumstances described in clauses (b), (c),
(d) and (e) above, when such circumstances cease to exist or such
default is cured, as applicable, in the good faith judgment of the
Servicer (as confirmed in writing by the Owner).
"Special Servicing Fee": With respect to each Specially Serviced Mortgage
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Loan or REO Mortgage Loan, an amount equal to the product of (a) the related
Special Servicing Fee Rate and (b) the outstanding principal balance of such
Mortgage Loan, as calculated in accordance with Section 5.01.
"Special Servicing Fee Rate": A rate equal to (a) 0.25% (25 basis points)
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for those Specially Serviced Mortgage Loans with a current principal balance
greater than or equal to $2,000,000 and (b) 0.35% (35 basis points) for those
Specially Serviced Mortgage Loans with a current principal balance less than
$2,000,000.
"Termination Fee": Subject to Section 8.01, an amount equal to the excess
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of (i) the product of (a) the Servicing Fees payable to the Servicer with
respect to the related Mortgage Loans during the month in which the effective
date of termination occurs and (b) six, over (ii) the amount of Servicing Fees
with respect to such Mortgage Loans received by the Servicer through such
effective date of termination.
"Workout Fee": In connection with the curing of any event of default under
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any Specially Serviced Mortgage Loan through a modification, restructuring
or work-out of such Mortgage Loan effected by the Servicer and evidenced by a
writing executed by the related Borrower, the fee payable to the Servicer in an
amount equal to the product of (x) the outstanding principal balance of such
Mortgage Loan at the time such Mortgage Loan becomes a Corrected Mortgage Loan
and (y) 0.50%; provided, however that such fee shall not exceed $50,000 for each
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Mortgage Loan.
ARTICLE II.
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RETENTION AND AUTHORITY OF SERVICER
Section 2.01 Engagement; Servicing Standard.
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The Owner hereby engages the Servicer to perform, and the Servicer hereby
agrees to perform, Loan Servicing with respect to each of the Mortgage Loans
throughout the term of this Agreement, upon and subject to the terms, covenants
and provisions hereof.
The Servicer shall perform its services hereunder (a) in accordance with
(i) applicable laws, (ii) the terms and provisions of the Mortgage Loan
Documents, (iii) the express terms hereof, and (iv) the customary and usual
standards of practice of prudent institutional commercial mortgage loan
servicers, and (b) to the extent consistent with the foregoing requirements, in
the same manner in which the Servicer services commercial mortgage loans for
other third party portfolios of mortgage loans similar to the Mortgage Loans,
but without regard to any relationship which the Servicer or any Affiliate of
the Servicer may have with the related Borrower or any Affiliate of such
Borrower or to the Servicer's right to receive compensation for its services
hereunder. The servicing standards described in the preceding sentence are
herein referred to as "Accepted Servicing Practices".
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Section 2.02 Subservicing.
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The Servicer may subservice to any Person any of its Loan Servicing
obligations hereunder only with the Owner's written consent or to the extent
necessary for the Servicer to comply with any applicable laws, regulations,
codes or ordinances relating to the Servicer's Loan Servicing obligations
hereunder; provided, however, that the Servicer shall provide oversight and
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supervision with regard to the performance of all subcontracted services and any
subservicing agreement shall be consistent with and subject to the provisions of
this Agreement. Neither the existence of any subservicing agreement nor any of
the provisions of this Agreement relating to subservicing shall relieve the
Servicer of its obligations to the Owner hereunder. Notwithstanding any such
subservicing agreement, the Servicer shall be obligated to the same extent and
under the same terms and conditions as if the Servicer alone was servicing the
related Mortgage Loans in accordance with the terms of this Agreement. The
Servicer shall be solely liable for all fees owed by it to any subservicer,
regardless of whether the Servicer's compensation hereunder is sufficient to pay
such fees.
Section 2.03 Authority of the Servicer.
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(a) In performing its Loan Servicing obligations hereunder, the Servicer
shall, except as otherwise provided herein and subject to the terms of this
Agreement, have full power and authority, acting alone or through others, to
take any and all actions in connection with such Loan Servicing that it deems
necessary or appropriate. Without limiting the generality of the foregoing, the
Servicer is hereby authorized and empowered by the Owner when the Servicer deems
it appropriate in its best judgment, to execute and deliver, on behalf of the
Owner, (a) any and all financing statements, continuation statements and other
documents or instruments necessary to maintain the lien of each Mortgage on the
related Mortgaged Property and any other related collateral; and (b) any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments with respect to each of the
Mortgage Loans; provided, however, that the Servicer shall notify the Owner in
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writing prior to entering into material discussions with the related Borrower
with respect to any such instrument referred to in clause (b) above, and, except
in connection with any payment in full of any Mortgage Loan, shall proceed with
such course of action only upon receipt of the Owner's written approval thereof.
The Owner agrees to cooperate with the Servicer by either executing and
delivering to the Servicer from time to time (i) powers of attorney evidencing
the Servicer's authority and power under this Section, or (ii) such documents or
instruments deemed necessary or appropriate by the Servicer to enable the
Servicer to carry out its Loan Servicing obligations hereunder.
(b) In the performance of its Loan Servicing obligations hereunder, the
Servicer shall take any action that is directed by the Owner which relates to
the Servicer's Loan Servicing obligations under this Agreement; provided,
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however, that the Servicer shall not be obligated to take, or to refrain from
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taking, any action which the Owner requests that the Servicer take or refrain
from taking to the extent that the Servicer determines in its reasonable and
good faith judgment that such action or inaction (i) may cause a violation of
applicable laws, regulations, codes, ordinances, court orders or restrictive
covenants with respect to any Mortgage Loan, Borrower, Mortgaged Property or REO
Property; or (ii) may cause a violation of any provision of a Mortgage Loan
Document.
ARTICLE III.
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SERVICES TO BE PERFORMED
Section 3.01 Services as Loan Servicer.
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The Servicer hereby agrees to serve as the loan servicer with respect to
each of the Mortgage Loans and to perform Loan Servicing as described below and
as otherwise provided herein, upon and subject to the terms of this Agreement.
Subject to any limitation of authority under Section 2.03, "Loan Servicing"
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shall mean those services pertaining to the Mortgage Loans which, applying
Accepted Servicing Practices, are required hereunder to be performed by the
Servicer, and which shall include:
(i) reviewing all available documents pertaining to the Mortgage
Loans, organizing, administering and maintaining the Servicing Files,
and inputting all relevant information into the Servicer's loan
servicing computer system;
(ii) preparing and filing or recording all financing statements,
continuation statements and other documents or instruments and taking
such other action necessary to maintain the lien of any Mortgage on
the related Mortgaged Property;
(iii) monitoring each Borrower's maintenance of insurance coverage on
each Mortgaged Property as required by the related Mortgage Loan
Documents and causing to be maintained adequate insurance coverage on
each Mortgaged Property in accordance with Section 3.05;
(iv) monitoring the status of real estate taxes, assessments and other
similar items and verifying the payment of such items for each
Mortgaged Property in accordance with Section 3.02;
(v) preparing and delivering all reports and information required
hereunder;
(vi) procuring and supervising the services of third parties (other
than subservicers pursuant to Section 2.02) necessary or appropriate
in connection with the servicing of the Mortgage Loans by the
Servicer;
(vii) performing payment processing, record keeping, administration of
escrow and other accounts, interest rate adjustment, and other routine
customer service functions;
(viii) monitoring any casualty losses or condemnation proceedings and
administering any proceeds related thereto in accordance with the
related Mortgage Loan Documents;
(ix) notifying all Borrowers of the appropriate place for
communications and payments, and collecting and monitoring all
payments made with respect to the Mortgage Loans;
(x) administering any requests for assumptions of a Mortgage Loan or
transfers of ownership of or placement of subordinate financing on a
Mortgaged Property in accordance with Section 3.08;
(xi) commencing on behalf of the Owner any litigation or proceeding
relating to the foreclosure or other realization upon the collateral
under any of the Mortgage Loans, and retaining legal counsel in
connection therewith, all in accordance with Section 3.09.
(xii) selling or disposing of each Specially Serviced Mortgage Loan or
REO Property in accordance with Section 3.10;
(xiii) managing and operating each REO Property in accordance with
Section 3.11;
(xiv) administering any proposals for modifications, waivers,
amendments or consents with respect to any term of a Mortgage Loan in
accordance with Section 3.12.
Notwithstanding anything herein to the contrary, the Servicer shall not be
required to undertake any lease approvals, loan modifications, workouts or
restructuring, loan assumptions or substitutions, processing partial releases of
collateral or subordinate financing requests, provided, however, that the
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Servicer shall be responsible for acting as the intermediary between the
Borrower and the Owner with respect to (x) processing Borrower requests for
consents to actions and (y) the administration of the terms and provisions of
the Mortgage Loan Documents, which includes, without limitation, collecting,
organizing and forwarding to the Owner any documents in the possession of the
Servicer which relate to the Servicer's obligation to act as such intermediary;
and provided, further, that, subject to the above proviso, the Owner shall be
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responsible for taking any actions regarding such Borrower requests and,
therefore, shall be entitled to retain any modification fees, extension fees,
assumption fees, and similar processing fees received from or on behalf of any
Borrower unless and until the Owner elects to engage the Servicer to perform
such services pursuant to Sections 3.08 and 3.12.
When determined to be appropriate by the Owner in accordance with such
reasonable policies, procedures and limitations as the parties may agree upon
from time to time, all notices, correspondence and any other communication from
or by the Servicer with the Borrowers shall be in the name of the Owner,
provided, however, that the foregoing requirement shall not be applicable to any
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Loan Servicing duties relating to any Specially Serviced Mortgage Loan or REO
Property. The Owner shall provide the Servicer with specifications for lettering
and symbols, including letterhead, to be used in any correspondence on other
communication to be given by the Servicer in the name of the Owner as provided
for herein, subject to the proviso in the second preceding sentence. At the
written request of the Owner, the Servicer shall maintain a dedicated "800"
telephone line for exclusive use with respect to Mortgage Loans, which telephone
shall be answered in the name of the Owner.
Section 3.02 Escrow Accounts; Collection of Taxes, Assessments and Similar
-------------------------------------------------------------
Items.
-----
(a) With respect to the Mortgage Loans described in the Mortgage Loan
Schedule, and subject to and as required by the terms of the related Mortgage
Loan Documents, the Servicer shall establish and maintain one or more Eligible
Accounts (each, an "Escrow Account") into which any or all Escrow Payments shall
--------------
be deposited promptly after receipt and identification. Escrow Accounts shall be
denominated "Midland Loan Services, Inc. in Trust for IMPAC Commercial
Capital Corporation and Various Borrowers" or in such other manner as the Owner
prescribes. The Servicer shall notify the Owner in writing of the location and
account number of each Escrow Account it establishes and shall notify the Owner
prior to any change thereof. Withdrawals of amounts from an Escrow Account may
be made, subject to any express provisions to the contrary herein, applicable
laws, and to the terms of the related Mortgage Loan Documents governing the use
of the Escrow Payments, only: (i) to effect payment of taxes, assessments,
insurance premiums, ground rents and other items required or permitted to be
paid from escrow; (ii) to refund to the Borrowers any sums determined to be in
excess of the amounts required to be deposited therein; (iii) to pay interest,
if required under the Mortgage Loan Documents, to the Borrowers on balances in
the Escrow Accounts; (iv) to pay to the Servicer from time to time any interest
or investment income earned on funds deposited therein pursuant to Section 3.04;
(v) to apply funds to the indebtedness of the Mortgage Loan in accordance with
the terms thereof; (vi) to reimburse the Owner for any Servicing Expense for
which Escrow Payments should have been made by the Borrowers, but only from
amounts received on the Mortgage Loan which represent late collections of Escrow
Payments thereunder; (vii) to withdraw any amount deposited in the Escrow
Accounts which was not required to be deposited therein; or (viii) to clear and
terminate the Escrow Accounts at the termination of this Agreement.
(b) The Servicer shall maintain accurate records with respect to each
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 with respect thereto as well as the payment of ground rents with respect
to each ground lease (to the extent such information is reasonably available).
To the extent that the related Mortgage Loan Documents require Escrow Payments
to be made by a Borrower, the Servicer shall use Best Efforts to obtain, from
time to time, all bills for the payment of such items, and shall effect payment
prior to the applicable penalty or termination date, employing for such purpose
Escrow Payments paid by the Borrower pursuant to the terms of the Mortgage Loan
and deposited in the related Escrow Account by the Servicer. To the extent that
the Mortgage Loan does not require a Borrower to make Escrow Payments, the
Servicer shall use its Best Efforts to require that any such payment be made by
the Borrowers prior to the applicable penalty or termination date. Subject to
Section 3.05 with respect to the payment of insurance premiums, if a Borrower
fails to make any such payment on a timely basis or collections from the
Borrower are insufficient to pay any such item when due, the amount of any
shortfall shall be paid by the Servicer as a Servicing Expense, provided that
the Servicer has consulted with the Owner regarding the timing for payment of
taxes, assessments and other similar items.
Section 3.03 Collection Accounts.
-------------------
(a) With respect to the Mortgage Loans, the Servicer shall establish and
maintain one or more Eligible Accounts (each, a "Collection Account") for the
------------------
benefit of the Owner for the purposes set forth herein. Collection Accounts
shall be denominated "Midland Loan Services, Inc. in Trust for IMPAC Commercial
Capital Corporation" or in such other manner as the Owner prescribes. The
Servicer shall deposit into the Collection Accounts within one (1) Business Day
after receipt all payments and collections received by it on or after the date
hereof with respect to the Mortgage Loans, other than payments and collections
with respect to any REO Property (which shall be deposited into the Collection
Account from amounts withdrawn from the related REO Account pursuant to Section
3.11(a)), Escrow Payments or payments in the nature of Additional Servicing
Compensation.
(b) The Servicer shall make withdrawals from the Collection Accounts only
as follows (the order set forth below not constituting an order of priority for
such withdrawals):
(i) to withdraw any amount deposited in the Collection Accounts which
was not required to be deposited therein;
(ii) pursuant to Section 5.01, to pay to the Servicer the Servicing
Fee, Special Servicing Fee, Workout Fee and Disposition Fee on each
Remittance Date;
(iii) pursuant to Section 5.02, to pay or reimburse the Servicer for
any Servicing Expenses;
(iv) to pay to the Servicer from time to time any interest or
investment income earned on funds deposited in the Collection Accounts
pursuant to Section 3.04;
(v) to remit to the Owner on each Remittance Date, pursuant to wiring
instructions from the Owner, all amounts on deposit in the Collection
Accounts (that represent good funds) as of the close of business on
the Determination Date, net of any withdrawals from the Collection
Account pursuant to this Section; and
(vi) to clear and terminate the Collection Accounts upon the
termination of this Agreement.
Section 3.04 Permitted Investments.
---------------------
The Servicer may direct any depository institution or trust company in
which the Accounts are maintained to invest the funds held therein in one or
more Permitted Investments; provided, however, that such funds shall be either
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(i) immediately available or (ii) available in accordance with a schedule which
will permit the Servicer to meet its payment obligations hereunder. The Servicer
shall be entitled to all income and gain realized from the investment of funds
deposited in the Accounts. The Servicer shall deposit from its own funds in the
applicable Account the amount of any loss incurred in respect of any such
investment of funds immediately upon the realization of such loss.
Notwithstanding the foregoing, the Servicer shall not direct the investment of
funds held in any Escrow Account and retain the income and gain realized
therefrom if the related Mortgage Loan Documents or applicable law permit the
Borrower to be entitled to the income and gain realized from the investment of
funds deposited therein. In such event, the Servicer shall direct the depository
institution or trust company in which such Escrow Accounts are maintained to
invest the funds held therein (1) in accordance with the Borrower's written
investment instructions, if the Mortgage Loan Documents or applicable law
require such funds to be invested in accordance with the Borrower's direction;
and (2) in accordance with the Owner's written investment instructions, if the
Mortgage Loan Documents and applicable law do not permit the Borrower to direct
the investment of such funds; provided, however, that in either event (i) such
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funds shall be either (y) immediately available or (z) available in accordance
with a schedule which will permit the Servicer to meet the payment obligations
for which the Escrow Account was established, and (ii) the Servicer shall have
no liability for any loss in investments of such funds that are invested
pursuant to such written instructions.
Section 3.05 Maintenance of Insurance Policies.
---------------------------------
(a) The Servicer shall use its Best Efforts to cause the Borrower of each
Mortgage Loan to maintain for each Mortgage Loan such insurance as is required
to be maintained pursuant to the related Mortgage Loan Documents. If the
Borrower fails to maintain such insurance, then the Servicer shall notify the
Owner of such breach and, to the extent available at commercially reasonable
rates, cause to be maintained (i) fire and hazard insurance with extended
coverage in an amount which is at least equal to the lesser of the current
principal balance of such Mortgage Loan and the replacement cost of the
improvements which are a part of the related Mortgaged Property and (ii) to the
extent that the Mortgaged Property is located in a federally designated special
flood hazard area, flood insurance in respect thereof. Such flood insurance
shall be in an amount equal to the lesser of (y) the unpaid principal balance of
the related Mortgage Loan or (z) the maximum amount of such insurance as is
available for the related Mortgaged Property under the National Flood Insurance
Act. After notifying the Owner pursuant to the second preceding sentence, the
Servicer shall take such action as the Owner reasonably requests with respect to
the maintenance of any other forms of insurance which are required to be
maintained pursuant to the related Mortgage Loan Documents, except to the extent
that such insurance is not available at commercially reasonable rates or the
Owner, as mortgagee, does not have an insurable interest. The Servicer shall, to
the extent available at commercially reasonable rates, maintain for each REO
Property no less insurance coverage than was previously required with respect to
the related Mortgaged Property or as may be required at any time by the Owner in
writing. All such policies shall be endorsed with standard mortgagee clauses
with loss payable to the Owner, and shall be in an amount sufficient to avoid
the application of any co-insurance clause. The costs of maintaining the
insurance policies which the Servicer is required to maintain pursuant to this
Section shall be paid by the Servicer as a Servicing Expense.
(b) The Servicer may fulfill its obligation to maintain insurance, as
provided in Section 3.05(a), through a master force placed insurance policy, the
cost of which shall be paid by the Servicer as a Servicing Expense, provided
that such cost is limited to the incremental cost of such policy allocable to
such Mortgaged Property or REO Property (i.e., other than any minimum or standby
premium payable for such policy whether or not any Mortgaged Property is then
covered thereby, which shall be paid by the Servicer). Such master force placed
insurance policy may contain a deductible clause, in which case the Servicer
shall, in the event that there shall not have been maintained on the related
Mortgaged Property or REO Property a policy otherwise complying with the
provisions of Section 3.05(a), and there shall have been one or more losses
which would have been covered by such a policy had it been maintained,
immediately deposit into the related Collection Account from its own funds the
amount not otherwise payable under the master force placed insurance policy
because of such deductible to the extent that such deductible exceeds the
deductible limitation required under the related Mortgage Loan Documents, or, in
the absence of such deductible limitation, the deductible limitation which is
consistent with Accepted Servicing Practices.
(c) The Servicer shall maintain at its own expense a fidelity bond in form
and amount that is consistent with Accepted Servicing Practices. In addition,
the Servicer shall keep in force, at its own expense during the term of this
Agreement, a policy or policies of insurance in form and amounts that are
consistent with Accepted Servicing Practices, covering loss occasioned by the
errors and omissions of the Servicer's officers and employees in connection with
its obligations hereunder.
Section 3.06 Delivery and Possession of Servicing Files.
------------------------------------------
On or before the related Servicing Transfer Date, the Owner shall deliver
or cause to be delivered to the Servicer (i) a Servicing File with respect to
each Mortgage Loan; and (ii) the amounts, if any, received by the Owner
representing Escrow Payments previously made by the Borrowers. The Servicer
shall promptly acknowledge receipt of the Servicing File and Escrow Payments for
the Mortgage Loans and shall promptly deposit such Escrow Payments in the Escrow
Accounts established pursuant to this Agreement. The contents of each Servicing
File delivered to the Servicer are and shall be held in trust by the Servicer
for the benefit of the Owner as the owner thereof; the Servicer's possession of
the contents of each Servicing File so delivered is for the sole purpose of
servicing the related Mortgage Loan; and such possession by the Servicer shall
be in a custodial capacity only. The Servicer shall release its custody of the
contents of any Servicing File only in accordance with written instructions from
the Owner, and upon request of the Owner, the Servicer shall deliver to the
Owner the Servicing File or a copy of any document contained therein; provided,
--------
however, that if the Servicer is unable to perform its Loan Servicing
-------
obligations with respect to the related Mortgage Loan after any such release or
delivery of the Servicing File, then the Servicer's responsibilities for Loan
Servicing with respect to such Mortgage Loan may be terminated immediately by
the Servicer upon written notice to the Owner.
Section 3.07 Inspections.
-----------
The Servicer shall perform a physical inspection of each Mortgaged Property
or REO Property at least annually for Mortgage Loans with outstanding principal
balance of more than $1,000,000 and every other year for Mortgage Loans with an
outstanding principal balance of less than or equal to $1,000,000 or if (a) the
related Mortgage Loan becomes a Specially Serviced Mortgage Loan, (b) the Owner
requests such an inspection, or (c) the Servicer, with the approval of the
Owner, determines that it is prudent to conduct such an inspection. The Servicer
shall prepare a written report of each such inspection and shall promptly
deliver a copy of such report to the Owner. The reasonable out-of-pocket
expenses incurred by the Servicer in connection with any such inspections
(including any out-of-pocket expenses related to travel and lodging and any
charges incurred through the use of a qualified third party to perform such
services) shall be paid as a Servicing Expense; provided, however, that with
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respect to the annual (or every other year) inspection of any Mortgaged Property
or the initial inspection of any Mortgaged property relating to any Specially
Serviced Mortgage Loan, such expenses shall be borne by the Servicer.
Section 3.08 "Due-on-Sale" Clauses; Assumption Agreements.
-------------------------------------------
When any Borrower proposes to convey or encumber all or any portion of its
interests in a Mortgaged Property, or if such conveyance or encumbrance has
actually occurred, to the extent that the Servicer has actual knowledge of such
conveyance or encumbrance, the Servicer shall immediately give notice thereof to
the Owner and take such related actions as the Owner reasonably directs,
including (i) waiving or enforcing any due-on-sale clause or due-on-encumbrance
clause contained in the related Mortgage Loan Documents, to the extent permitted
under the terms of the related Mortgage Loan Documents and applicable law, (ii)
taking or entering into an assumption or substitution agreement from or with the
Person to whom such Mortgaged Property has been or shall be conveyed, and (iii)
releasing the original Borrower from liability upon the related Mortgage Loan
and substituting the new Borrower as the obligor thereon.
To the extent the Servicer is engaged by the Owner to perform analysis,
processing and administrative functions in
connection with any request by a Borrower to waive any such due-on-sale clause
or due-on-encumbrance clause and/or to enter into any such assumption or
substitution agreement, the Servicer may, as a condition to granting any such
request require (to the extent permitted by applicable law) that such Borrower
pay to it, as Additional Servicing Compensation, a reasonable and customary fee
consistent with Accepted Servicing Practices in connection with such request,
together with any related costs and expenses incurred by the Servicer; provided,
--------
however, that in the event that the Borrower fails or is unable to pay any such
-------
costs and expenses, or the Owner directs the Servicer to waive any requirement
that the Borrower pay any such costs or expenses, the same shall be paid by the
Servicer as a Servicing Expense.
Section 3.09 Realization Upon Mortgaged Properties.
-------------------------------------
(a) Upon the failure of any Borrower to make any required payment of
principal, interest or other amounts due under a Mortgage Loan, or otherwise to
perform fully any material obligations under any of the related Mortgage Loan
Documents, in either case within any applicable grace period, the Servicer
shall, upon discovery of such failure, promptly notify the Owner in writing. As
directed in writing by the Owner in each instance, the Servicer shall issue
notices of default, declare events of default, declare due the entire
outstanding principal balance, and otherwise take all reasonable actions under
the related Mortgage Loan in preparation for the Owner to realize upon the
underlying collateral. With respect to any Specially Serviced Mortgage Loan, the
Servicer shall, as permitted under the provisions of the related Mortgage Loan
Documents, and subject to the Owner's prior written consent, foreclose upon or
otherwise comparably convert the ownership of the related Mortgaged Property. In
connection with such foreclosure or other conversion, the Servicer shall,
subject to the consent or direction of the Owner, follow such practices and
procedures as it shall deem necessary or advisable and as shall be consistent
with Accepted Servicing Practices. All costs and expenses incurred by the
Servicer in any such proceedings shall be paid by the Servicer as a Servicing
Expense.
(b) If title to any Mortgaged Property is acquired in foreclosure or by
deed in lieu of foreclosure, the deed or certificate of sale shall be taken in
the name of the Owner or its nominee, but in no event shall such deed or
certificate be taken in the name of the Servicer. Notwithstanding any such
acquisition of title and cancellation of the related Mortgage Loan, such
Mortgage Loan shall be considered to be an REO Mortgage Loan held by the Owner
until such time as the related REO Property shall be sold, transferred or
conveyed by the Owner. Consistent with the foregoing, for purposes of all
calculations hereunder, so long as such REO Mortgage Loan shall be considered to
be an outstanding Mortgage Loan, payments and collections with respect to the
related REO Property received in any month (net of related expenses) shall be
applied to amounts which would have been payable under the related Note in
accordance with the terms of such Note.
(c) Except as otherwise provided in written instructions delivered to the
Servicer by the Owner, the Servicer shall not obtain title to any Mortgaged
Property as a result or in lieu of foreclosure or otherwise, and shall not
otherwise acquire possession of, or take other action with respect to, any
Mortgaged Property, if, as a result of any such action, the Owner 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 of any
Environmental Law, or a "discharger" or "responsible party" thereunder, unless
the Servicer has also previously determined, based on a report prepared by a
Person who regularly conducts environmental site assessments, that:
(iii) such Mortgaged Property is in compliance with applicable
Environmental Laws or, if not, that taking such actions as are necessary to
bring such Mortgaged Property into compliance therewith is reasonably likely to
produce a greater recovery on a present value basis than not taking such
actions; and
(iv) there are no circumstances present on such Mortgaged Property
relating to the use, management or disposal of any Hazardous Materials for which
investigation, testing, monitoring, containment, clean-up or remediation could
be required under any applicable Environmental Law, or that, if any such
Hazardous Materials are present for which such action could be required, taking
such actions with respect to the affected Mortgaged Property is reasonably
likely to produce a greater recovery on a present value basis than not taking
such actions.
If the Servicer has so determined based on satisfaction of the criteria in
clauses (i) and (ii) above that it would be in the best economic interest of the
Owner to take any such actions, the Servicer shall notify the Owner of such
proposed action. The Servicer shall take such action only if authorized by the
Owner in writing. The costs of any such compliance, containment, clean-up or
remediation shall be paid by the Servicer as a Servicing Expense.
If the environmental assessment first obtained by the Servicer with
respect to a Mortgaged Property indicates that such Mortgaged Property may not
be in compliance with applicable Environmental Laws or that Hazardous Materials
may be present but does not definitively establish such fact, the Servicer,
subject to the Owner's prior written consent, shall cause such further
environmental assessments to be conducted.
(d) The environmental site assessments contemplated by Section 3.09(c)
shall be prepared by any Person who is recommended by the Servicer and approved
in writing by the Owner or such other Person as directed in writing by the
Owner. The cost of preparation of any environmental assessment shall be paid by
the Servicer as a Servicing Expense.
(e) If the Servicer determines, pursuant to Section 3.09(c), that taking
such actions as are necessary to bring any Mortgaged Property into compliance
with applicable Environmental Laws, or taking such actions with respect to the
containment, clean-up, removal or remediation of hazardous substances, hazardous
materials, hazardous wastes, or petroleum-based materials affecting any such
Mortgaged Property, is not reasonably likely to produce a greater recovery on a
present value basis than not taking such actions, then the Servicer shall take
such action as directed in writing by the Owner, including, without limitation,
releasing the lien of the related Mortgage with respect to the affected
Mortgaged Property.
Section 3.10 Sale of Specially Serviced Mortgage Loans and REO Properties.
------------------------------------------------------------
(a) With respect to any Specially Serviced Mortgage Loan or REO Property,
when and if directed in writing by the Owner, the Servicer shall use its Best
Efforts to sell to any Person (other than an Affiliate of the Servicer) such
Specially Serviced Mortgage Loan or REO Property on commercially reasonable
terms which are consistent with Accepted Servicing Practices; provided, however,
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that any such sale must be approved in writing by the Owner.
(b) Subject to Sections 3.10(a), the Servicer shall act on behalf of the
Owner in negotiating and taking any such action necessary or appropriate in
connection with the sale of any Specially Serviced Mortgage Loan or REO
Property, including the collection of all amounts payable in connection
therewith. Any sale of any Specially Serviced Mortgage Loan or REO Property
shall be without recourse to, or representation or warranty by, the Owner or the
Servicer, (except that any contract of sale and conveyance documents may contain
customary warranties of title and condition). The Net Liquidation Proceeds
(after deduction of the Disposition Fee) shall be promptly deposited by the
Servicer in the related Collection Account.
Section 3.11 Management of REO Property.
--------------------------
(a) Upon the acquisition by the Owner of any REO Property, the Servicer
shall have full power and authority, subject to the specific requirements and
prohibitions of this Agreement, to do or authorize to be done any and all things
in connection therewith as are consistent with Accepted Servicing Practices, all
on terms and for such period as the Servicer deems to be in the best economic
interest of the Owner. The Servicer shall segregate and hold all revenues
received by it with respect to any REO Property separate and apart from its own
funds and general assets and shall establish and maintain with respect to any
REO Property one or more Eligible Accounts (each, an "REO Account") for the
-----------
purposes set forth herein. REO Accounts shall be Eligible Accounts and shall be
denominated "Midland Loan Services, Inc. in Trust for IMPAC Commercial Capital
Corporation" or in such other manner as the Owner prescribes. The Servicer shall
be entitled to any interest or investment income earned on funds deposited in an
REO Account pursuant to Section 3.04. In connection therewith, the Servicer
shall deposit or cause to be deposited in the REO Account on a daily basis
within one (1) Business Day after receipt all revenues received by it with
respect to any REO Property (except for any Net Liquidation Proceeds), and shall
withdraw therefrom funds necessary for the proper maintenance, leasing,
operation, management and sale of any REO Property, including:
(i) all insurance premiums due and payable in respect of such REO
Property;
(ii) all taxes and assessments in respect of such REO Property that
could result or have resulted in the imposition of a lien thereon;
(iii) all ground rental payments, if applicable, with respect to such
REO Property; and
(iv) all costs and expenses necessary to maintain, lease, operate,
manage and sell such REO Property, including the management fee
payable to the property manager engaged by Servicer pursuant to
Section 3.11(b).
To the extent that amounts on deposit in any REO Account are insufficient
for the purposes set forth above, the Servicer shall pay the amount of such
shortfall as a Servicing Expense. The Servicer shall withdraw from each REO
Account and deposit into the related Collection Account on a monthly basis on or
prior to the related Remittance Date the income, net of expenses, received or
collected from each REO Property; provided, however, that the Servicer may
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retain in each REO Account funds sufficient for the payment of the items set
forth in clauses (i) through (iv) above, including, without limitation, the
creation of reasonable reserves for repairs, replacements, and necessary capital
improvements and other related expenses.
(b) The Servicer may contract with any Person as a property manager for
the operation and management of any REO Property; provided, however, that:
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(i) the terms and conditions of any such contract shall not be
inconsistent herewith and the Owner has provided its written consent
(which shall not be unreasonably withheld) with respect to such
property manager;
(ii) none of the provisions of this Section relating to any such
contract or to actions taken through any such Person shall be deemed
to relieve the Servicer of any of its duties and obligations to the
Owner with respect to the operation and management of such REO
Property; and
(iii) the Servicer shall be obligated with respect thereto to the same
extent as if it alone were performing all duties and obligations in
connection with the operation and management of such REO Property.
Section 3.12 Modifications, Waivers, Amendments and Consents.
-----------------------------------------------
(a) When any Borrower proposes any modification, waiver or amendment of
any term of any Mortgage Loan or requests any consents related thereto, the
Servicer shall immediately give notice thereof to the Owner and take such
related actions as the Owner reasonably directs, except with respect to any
Borrower proposal or request which involves any required payment from the
Borrower in the nature of Additional Servicing Compensation to which the
Servicer is properly entitled. All modifications, waivers or amendments of any
Mortgage Loan or consents related thereto shall be in writing.
(b) To the extent the Servicer is engaged by the Owner to perform
analysis, processing and administrative functions in connection with any request
by a Borrower for any consent, modification, waiver or amendment the Servicer
may, as a condition to granting any such request require (to the extent
permitted by applicable law) that such Borrower pay to it, as Additional
Servicing Compensation, a reasonable and customary fee consistent with Accepted
Servicing Practices in connection with such request, together with any related
costs and expenses incurred by the Servicer; provided, however, that in the
-------- -------
event that the Borrower fails or is unable to pay any such costs and expenses,
or the Owner directs the Servicer to waive any requirement that the Borrower pay
any such costs or expenses, the same shall be paid by the Servicer as a
Servicing Expense.
ARTICLE IV.
-----------
STATEMENTS AND REPORTS
Section 4.01 Reporting by the Servicer.
-------------------------
(a) On or before each Remittance Date, the Servicer shall render to the
Owner a report reflecting activity with respect to the Mortgage Loans as of the
close of business on the preceding Determination Date (or, in the case of the
first Remittance Date, the Servicing Transfer Date) in a format and containing
such information as the Owner shall reasonably require. Such report shall be
made available in both written and electronic format.
(b) Each year beginning in the calendar year which immediately succeeds
the year hereof, the Servicer shall prepare and file the reports of foreclosures
and abandonments of any Mortgaged Property and the annual information returns
with respect to each Borrower's debt service payments under the Mortgage Loans
as required by Sections 6050J and 6050H, respectively, of the Internal Revenue
Code and the rules and regulations promulgated thereunder, as amended.
(c) Not later than twenty days after each Remittance Date, the Servicer
shall forward to the Owner a statement, setting forth the status of the Accounts
as of the close of business on such Remittance Date showing, for the period from
the preceding Remittance Date (or, in the case of the first Remittance Date, the
Servicing Transfer Date) to such Remittance Date, the aggregate of deposits into
and withdrawals from the Accounts.
(d) The Servicer will provide the Owner with on-line telephone access to
all information with respect to the Mortgage Loans which is available through
the Servicer's Loan Inquiry Facility, Loans On-Line Administration System, or
Loan Portfolio Analysis System, or any successor facility or system, as
applicable, subject to such reasonable policies, procedures and limitations as
the parties may agree upon from time to time.
(e) The Servicer shall use its Best Efforts to promptly collect from each
Borrower (and forward on to the Owner) the property operating statements, rent
rolls, financial statements and other financial reports which are required to be
delivered by the Borrower pursuant to the related Mortgage Loan Documents. The
Servicer shall promptly (i) review and analyze such items as may be collected;
(ii) prepare written reports based on such analysis; and (iii) deliver copies of
such written reports to the Owner.
(f) The Servicer shall provide the Owner with any summary reports prepared
by any Rating Agency with respect to the Servicer's ranking by such Rating
Agency.
ARTICLE V.
----------
SERVICER'S COMPENSATION AND EXPENSES
Section 5.01 Servicing Compensation.
----------------------
As consideration for servicing the Mortgage Loans subject to this
Agreement, the Servicer shall be entitled to a Servicing Fee for each Mortgage
Loan remaining subject to this Agreement during any calendar month or part
thereof. Such Servicing Fee shall be payable monthly on the Remittance Date and
shall be computed on the basis of the same outstanding principal balance and for
the period with respect to which any related interest payment on the related
Mortgage Loan is computed. The Servicer may pay itself the Servicing Fee on each
Remittance Date from amounts on deposit in the related Collection Account.
As further compensation for its activities hereunder, the Servicer shall be
entitled to retain any payments or collections received by it which are in the
nature of Additional Servicing Compensation.
As compensation for its special servicing activities hereunder, the
Servicer shall be entitled to the Special Servicing Fee for each Specially
Serviced Mortgage Loan or REO Property remaining subject to this Agreement
during any calendar month or part thereof. Such Special Servicing Fee shall be
payable monthly on the Remittance Date and shall be computed on the basis of the
same outstanding principal balance and for the period with respect to which any
related interest payment on the related Mortgage Loan is computed. The Servicer
may pay itself the Special Servicing Fee on each Remittance Date from amounts on
deposit in the related Collection Account. The Servicer shall not be entitled to
the Servicing Fee for any Mortgage Loan in the event the Servicer is entitled to
receive the Special Servicing Fee for such Mortgage Loan.
In addition to the other servicing compensation provided for in this
Agreement, and not in lieu thereof, the Servicer shall be entitled to (i) the
Disposition Fee, which shall be payable out of Net Liquidation Proceeds prior to
the deposit of Net Liquidation Proceeds into the Collection Account; and (ii)
the Workout Fee, 50% of which shall be payable as an initial installment from
amounts on deposit in the related Collection Account on the date that the
related Specially Serviced Mortgage Loan becomes a Corrected Mortgage Loan, and
the remaining 50% of which shall be payable as a second installment in the same
manner after the expiration of any consecutive six month period during which the
related Mortgage
Loan has not become 30 days delinquent in the payment of any Monthly Payment or
has not otherwise become a Specially Serviced Mortgage Loan. The Servicer may
earn the Workout Fee only once with respect to any Mortgage Loan.
To the extent that amounts on deposit in the Collection Account are
insufficient for the payment of the Servicing Fee, Special Servicing Fee or
Workout Fee, the Owner shall pay any such shortfall to the Servicer within ten
(10) Business Days after the Owner's receipt of an itemized invoice therefor.
The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement thereof except as specifically provided for herein.
Section 5.02 Servicing Expenses.
------------------
Notwithstanding any other provision hereof, the Servicer shall obtain the
written approval of the Owner prior to incurring any Servicing Expense that is
over $5,000.00 per item, except for any Servicing Expense which is (i) incurred
by the Servicer pursuant to Sections 3.02(b) or 3.05 or (ii) made for any
purposes other than those described in item (i) above, and is not over
$25,000.00 and is made in an emergency situation to preserve and protect the
Mortgaged Property or the safety of the public in connection with such Mortgaged
Property.
The Servicer may cause any Servicing Expenses to be paid directly from the
related Collection Account. The Servicer shall have no obligation to advance its
own funds for the payment of any Servicing Expenses. The Servicer may, at its
option, make advances from its own funds with respect to the payment of such
expenses, in which event the Servicer shall be reimbursed for such advances from
the related Collection Account. In the event that there are insufficient funds
in the related Collection Account to permit the payment of Servicing Expenses or
to permit the Servicer to reimburse itself for such advances, the Owner shall
deposit the necessary funds in the related Collection Account or reimburse the
Servicer, as the case may be, for all incurred Servicing Expenses, with interest
thereon at the Advance Rate, within ten Business Days after the Owner's receipt
of an itemized invoice therefor. If the Servicer has provided such an invoice to
the Owner, and funds are subsequently deposited into the related Collection
Account from sources other than the Owner, the Servicer may pay such expenses or
reimburse itself for such advances from the related Collection Account, in which
event the Servicer shall promptly (i) notify the Owner of such payment or
reimbursement and (ii) amend or cancel, as the case may be, such invoice.
ARTICLE VI.
-----------
THE SERVICER AND THE OWNER
Section 6.01 Servicer Not to Assign; Merger or Consolidation of the Servicer.
---------------------------------------------------------------
(a) Except as otherwise provided for in this Section or in Section 2.02,
the Servicer may not assign this Agreement or any of its rights, powers, duties
or obligations hereunder without the written consent of the Owner; provided,
--------
however, that the Servicer may assign this Agreement to a Qualified Affiliate
-------
without the written consent of the Owner.
(b) The Servicer may be merged or consolidated with or into any Person, or
transfer all or substantially all of its assets to any Person, in which case any
Person resulting from any merger or consolidation to which it shall be a party,
or any Person succeeding to its business shall be the successor of the Servicer
hereunder, and shall be deemed to have assumed all of the liabilities of the
Servicer hereunder. The Servicer shall provide written notice to the Owner of
any such merger, consolidation, or transfer.
Section 6.02 Liability and Indemnification of the Servicer and the Owner.
-----------------------------------------------------------
Neither the Servicer nor its Affiliates nor any of the directors, officers,
employees or agents thereof shall be under any liability to the Owner or any
third party for taking or refraining from taking any action, in good faith
pursuant to or in connection with this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Servicer or any
-------- -------
such Person against any liability which would otherwise be imposed on the
Servicer or any such Person by reason of the Servicer's willful misfeasance, bad
faith or negligence in the performance of its duties hereunder. The Servicer
and any director, officer, employee or agent thereof may rely in good faith on
any document of any kind which, prima facie, is properly executed and submitted
by any appropriate Person respecting any matters arising hereunder. The Servicer
and any director, officer, employee or agent thereof shall be indemnified and
held harmless by the Owner against any loss, liability or expense incurred,
including reasonable attorneys' fees, in connection with any claim, legal
action, investigation or proceeding relating to this Agreement, the Servicer's
performance hereunder, or any specific action which the Owner authorized or
requested the Servicer to perform pursuant to this Agreement, as such are
incurred, except for any loss, liability or expense incurred by reason of the
Servicer's willful misfeasance, bad faith, negligence or breach of the
Servicer's representations and warranties set forth in Section 7.01.
Notwithstanding the exception set forth in the preceding sentence, in the event
that the Servicer sustains any loss, liability or expense by reason of such
exception and which results from any overcharges to Borrowers under the Mortgage
Loans, to the extent that such overcharges were collected by the Servicer and
remitted to the Owner, the Owner shall promptly remit such overcharge to the
related Borrower after the Owner's receipt of written notice from the Servicer
regarding such overcharge.
The Owner and any director, officer, employee or agent thereof shall be
indemnified and held harmless by the Servicer against any loss, liability or
expense incurred, including reasonable attorneys' fees, by reason of (i) the
Servicer's willful misfeasance, bad faith or negligence in the performance of
its duties hereunder or the failure of the Servicer to perform its duties
hereunder in accordance with this Agreement or (ii) a breach of the Servicer's
representations and warranties set forth in Section 7.01.
The provisions of this Section shall survive any termination of the
rights and obligations of the Servicer hereunder.
ARTICLE VII.
------------
REPRESENTATIONS AND WARRANTIES; DEFAULT
Section 7.01 Representations and Warranties.
------------------------------
(a) The Servicer hereby makes the following representations and warranties
to the Owner:
(i) Due Organization, Qualification and Authority. The Servicer is a
---------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and is duly qualified to transact business as a
foreign corporation, in good standing and licensed in each state to the extent
necessary to ensure the enforceability of each Mortgage Loan and to perform its
duties and obligations under this Agreement in accordance with the terms of this
Agreement; the Servicer has the full power, authority and legal right to execute
and deliver this Agreement and to perform in accordance herewith; the Servicer
has duly authorized the execution, delivery and performance of this Agreement
and has duly executed and delivered this Agreement; this Agreement constitutes
the valid, legal, binding obligation of the Servicer, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, receivership,
moratorium or other laws relating to or affecting the rights of creditors
generally and by general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(ii) No Conflicts. Neither the execution and delivery of this
------------
Agreement, nor the fulfillment of or compliance with the terms and conditions of
this Agreement by the Servicer, will (i) conflict with or result in a breach of
any of the terms, conditions or provisions of the Servicer's certificate of
incorporation, as amended, or bylaws, as amended, or any agreement or instrument
to which the Servicer is now a party or by which it (or any of its properties)
is bound, or constitute a default or result in an acceleration under any of the
foregoing; (ii) conflict with or result in a breach of any legal restriction if
compliance therewith is necessary (a) to ensure the enforceability of any
Mortgage Loan, or (b) for the Servicer to perform its obligations under this
Agreement in accordance with the terms hereof; (iii) result in the violation of
any law, rule, regulation, order, judgment or decree to which the Servicer or
its property is subject if compliance therewith is necessary (a) to ensure the
enforceability of any Mortgage Loan, or (b) for the Servicer to perform its
obligations under this Agreement in accordance with the terms hereof; or (iv)
result in the creation or imposition of any lien, charge or encumbrance that
would have a material adverse effect upon any of its properties pursuant to the
terms of any mortgage, contract, deed of trust or other instrument, or
materially impair the ability of the Owner to realize on the Mortgage Loans;
(iii) No Litigation Pending. There is no action, suit, or proceeding
---------------------
pending or to Servicer's knowledge threatened against the Servicer which, either
in any one instance or in the aggregate, would draw into question the validity
of this Agreement or the Mortgage Loans, or would be likely to impair materially
the ability of the Servicer to perform its duties and obligations under the
terms of this Agreement;
(iv) No Consent Required. No consent, approval, authorization or
-------------------
order of, or registration or filing with, or notice to, any court or
governmental agency or body having jurisdiction or regulatory authority over the
Servicer is required for (i) the Servicer's execution and delivery of, this
Agreement, or (ii) the consummation of the transactions contemplated by this
Agreement, or, to the extent required, such consent, approval, authorization,
order, registration, filing or notice has been obtained, made or given (as
applicable), except that the Servicer may not be duly qualified to transact
business as a foreign corporation or licensed in one or more states if such
qualification or licensing is not necessary (a) to ensure the enforceability of
any Mortgage Loan, or (b) for the Servicer to perform its obligations under this
Agreement in accordance with the terms hereof.
(b) The Owner hereby makes the following representations and warranties to
the Servicer:
Due Authority. The Owner has the full power, authority and legal right to
-------------
execute and deliver this Agreement and to perform in accordance herewith; the
Owner has duly authorized the execution, delivery and performance of this
Agreement and has duly executed and delivered this Agreement; the Owner is the
owner and the holder of the Mortgage Loans and has the right to authorize the
Servicer to perform the actions contemplated herein; this Agreement constitutes
the valid, legal, binding obligation of the Owner, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, receivership, moratorium
or other laws relating to or affecting the rights of creditors generally and by
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
Section 7.02 Events of Default.
-----------------
"Event of Default", wherever used herein, means any one of the following
events:
(a) any failure by the Servicer to remit to the Owner any payment required
to be so remitted by the Servicer under the terms of this Agreement when and as
due which continues unremedied by the Servicer for a period of two (2) Business
Days after the date on which such remittance was due; or
(b) any failure on the part of the Servicer duly to observe or perform in
any material respect any other of the covenants or agreements on the part of the
Servicer contained in this Agreement, or any representation or warranty set
forth by the Servicer in Section 7.01 shall be untrue or incorrect in any
material respect, and, in either case, such failure or breach materially and
adversely affects the value of any Mortgage Loan or Mortgaged Property or the
priority of the lien on any Mortgaged Property or the interest of the Owner
therein, which in either case continues unremedied for a period of thirty (30)
days after the date on which written notice of such failure or breach, requiring
the same to be remedied, shall have been given to the Servicer by the Owner (or
such extended period of time reasonably approved by the Owner provided that the
Servicer is diligently proceeding in good faith to cure such failure or breach);
or
(c) a decree or order of a court or agency or supervisory authority having
jurisdiction in respect of the Servicer for the commencement of an involuntary
case under any present or future federal or state bankruptcy, insolvency or
similar law, for the appointment of a conservator or receiver or liquidator in
any insolvency, 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 the Servicer, and such decree or order shall remain in
force undischarged or unstayed for a period of 60 days; or
(d) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Servicer or
of or relating to all or substantially all of its property; or
(e) the 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 federal or state bankruptcy, insolvency or similar law, make an
assignment for the benefit of its creditors or voluntarily suspend payment of
its obligations;
then, and in each and every case, so long as an Event of Default shall not have
been remedied, the Owner may, by notice in writing to the Servicer, in addition
to whatever rights the Owner may have at law or in equity, including injunctive
relief and specific performance, terminate all of the rights and obligations of
the Servicer under this Agreement and in and to the Mortgage Loans and the
proceeds thereof, without the Owner incurring any penalty or fee of any kind
whatsoever in connection therewith; provided, however, that such termination
-------- -------
shall be without prejudice to any rights of the Servicer relating to the payment
of its Servicing Fees, Special Servicing Fees, Disposition Fees, Workout Fees,
Additional Servicing Compensation and the reimbursement of any Servicing
Expenses which have been made by it under the terms of this Agreement through
and including the date of such termination. Except as otherwise expressly
provided in this Agreement, no remedy provided for by this Agreement shall be
exclusive of any other remedy, and each and every remedy shall be cumulative and
in addition to any other remedy, and no delay or omission to exercise any right
or remedy shall impair any such right or remedy or shall be deemed to be a
waiver of any Event of Default. On or after the receipt by the Servicer of such
written notice of termination from the Owner, all authority and power of the
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the Owner, and the Servicer agrees to
cooperate with the Owner in effecting the termination of the Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer of the Servicing Files and the funds held in the Accounts as set forth
in Section 8.01.
The Owner may waive any default by the Servicer in the performance of its
obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
ARTICLE VIII.
-------------
TERMINATION; TRANSFER OF MORTGAGE LOANS
Section 8.01 Termination of Agreement.
------------------------
(a) This Agreement may be terminated by the Owner (v) without cause, upon
sixty (60) days written notice to the Servicer, provided that the effective date
of such termination shall be at least 42 months after the date hereof, (w)
without cause, upon thirty (30) days written notice to the Servicer with respect
to any Loan Servicing duties relating to any Specially Serviced Mortgage Loan or
REO Property, (x) for cause with respect to any or all of the Mortgage Loans
pursuant to Section 7.02, (y) without cause with respect to any or all of the
Mortgage Loans, within 30 days after receipt of notice from the Servicer under
Section 6.01(b) if the Owner does not approve of the successor servicer, or (z)
without cause with respect to any or all of the Mortgage Loans, if the servicer
ranking of the Servicer by any Rating Agency shall be downgraded to
"Unacceptable" or less than "Above Average", as applicable. This Agreement may
be terminated by the Servicer with respect to the Mortgage Loans, without cause,
upon ninety (90) days written notice to the Owner.
(b) Termination pursuant to this Section or as otherwise provided herein
shall be without prejudice to any rights of the Owner or the Servicer which may
have accrued through the date of termination hereunder. Upon such termination,
the Servicer shall (i) remit all funds in the related Accounts to the Owner or
such other Person designated by the Owner, net of accrued Servicing Fees,
Special Servicing Fees, Disposition Fees, Workout Fees Additional Servicing
Compensation and Servicing Expenses through the termination date to which the
Servicer would be entitled to payment or reimbursement hereunder; (ii) deliver
all related Servicing Files to the Owner or to Persons designated by the Owner;
and (iii) fully cooperate with the Owner and any new servicer to effectuate an
orderly transition of Loan Servicing of the related Mortgage Loans. Upon such
termination, any Servicing Fees, Additional Servicing Compensation and Servicing
Expenses (with interest thereon at the Advance Rate) which remain unpaid or
unreimbursed after the Servicer has netted out such amounts pursuant to the
preceding sentence shall be remitted by the Owner to the Servicer within ten
(10) Business Days after the Owner's receipt of an itemized invoice therefor.
(c) With respect to a termination of this Agreement by the Owner without
cause as to any or all of the Mortgage Loans pursuant to clause (v) of Section
8.01(a), the Owner shall pay the Termination Fee to the Servicer within ten (10)
Business Days after the effective date of such termination.
Section 8.02 Transfer of Mortgage Loans; Securitization.
------------------------------------------
(a) The Servicer acknowledges that any or all of the Mortgage Loans may be
sold, transferred, assigned or otherwise conveyed by the Owner to any third
party without the consent or approval of the Servicer. Any such transfer shall
constitute a termination of this Agreement with respect to such Mortgage Loans,
subject to Section 8.02(c).
(b) Until the Servicer receives written notice from the Owner of the sale,
transfer, assignment or conveyance of one or more Mortgage Loans, the Owner
shall be presumed to be the owner and holder of such Mortgage Loans, the
Servicer shall continue to earn Servicing Fees and Additional Servicing
Compensation with respect to such Mortgage Loans and the Servicer shall continue
to remit payments and other collections in respect of such Mortgage Loans to the
Owner pursuant to the terms and provisions hereof.
(c) In the event any Mortgage Loan is sold, transferred, assigned or
otherwise conveyed by the Owner to any third party in connection with a
Securitization or other transaction, the Owner agrees to appoint or cause the
appointment of the Servicer as the master and primary servicer of the related
Mortgage Loans in accordance with a new servicing agreement to be negotiated in
good faith by the Servicer and the other parties thereto, which new servicing
agreement shall require the Servicer to perform substantially the same
performing loan duties and obligations with respect to the related Mortgage
Loans as the Servicer is required to perform hereunder; provided, however, that
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(i) the Servicer shall be entitled to receive servicing compensation under such
new servicing agreement that is not less than the performing loan servicing
compensation that the Servicer is entitled to receive hereunder; (ii) with
respect to any Securitization, the Servicer may be required under such new
servicing agreement to make advances for delinquent Monthly Payments (but not
for any balloon payments or default interest) and Servicing Expenses, provided
that (x) the Servicer shall be reimbursed for any such advances made with
interest thereon at the "Prime Rate" (as published from time to time in the
"Money Rates" section of The Wall Street Journal), such reimbursement being
-----------------------
consistent with customary servicing reimbursement mechanisms, and (y) the
Servicer shall not be required to make any such advances to the extent the
Servicer determines that such advances shall not be recoverable from the related
Mortgage Loan; (iii) with respect to any Securitization, the timing relating to
remittance of funds and reports by the Servicer shall be revised (x) to provide
at least five Business Days between the determination and distribution dates for
a customary reporting cycle, and (y) to ensure that the determination date shall
be subsequent to the expiration date of any grace periods under the related
Mortgage Loans; (iv) with respect to any Securitization, in the event the
Servicer is responsible for funding prepayment interest shortfalls to the extent
of its monthly servicing fee, the Servicer shall be entitled to retain all
excess prepayment interest as additional servicing compensation; and (v) such
new servicing agreement may be revised further as the Servicer and the parties
thereto agree to reflect any necessary and customary changes in connection with
the Securitization or other transaction.
ARTICLE IX.
-----------
MISCELLANEOUS PROVISIONS
Section 9.01 Amendment; Waiver.
-----------------
This Agreement contains the entire agreement between the parties relating
to the subject matter hereof, and no term or provision hereof may be amended or
waived unless such amendment or waiver is in writing and signed by the party
against whom such amendment or waiver is sought to be enforced.
Section 9.02 Governing Law.
-------------
This Agreement shall be construed in accordance with the laws of the State
of Missouri, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws, without giving effect to
principles of conflicts of laws.
Section 9.03 Notices.
-------
All demands, notices and communications hereunder shall be in writing and
addressed in each case as follows:
(i) if to the Owner, at:
The IMPAC Companies
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Servicer, at:
Midland Loan Services, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any of the above-referenced Persons may change its address for notices hereunder
by giving notice of such change to the other Persons. All notices and demands
shall be deemed to have been given at the time of the delivery at the address of
such Person for notices hereunder if personally delivered, mailed by certified
or registered mail, postage prepaid, return receipt requested, or sent by
overnight courier or telecopy; provided, however, that any notice delivered
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after normal business hours of the recipient or on a day which is not a Business
Day shall be deemed to have been given on the next succeeding Business Day.
To the extent that any demand, notice or communication hereunder is given
to the Servicer by a Responsible Officer of the Owner, such Responsible Officer
shall be deemed to have the requisite power and authority to bind the Owner with
respect to such communication, and the Servicer may conclusively rely upon and
shall be protected in acting or refraining from acting upon any such
communication. To the extent that any demand, notice or communication hereunder
is given to the Owner by a Responsible Officer of the Servicer, such Responsible
Officer shall be deemed to have the requisite power and authority to bind the
Servicer with respect to such communication, and the Owner may conclusively rely
upon and shall be protected in acting or refraining from acting upon any such
communication.
Section 9.04 Severability of Provisions.
--------------------------
If one or more of the provisions of this Agreement shall be for any reason
whatever held invalid or unenforceable, such provisions shall be deemed
severable from the remaining covenants, agreements and provisions of this
Agreement and such invalidity or unenforceability shall in no way affect the
validity or enforceability of such remaining provisions or the rights of any
parties thereunder. To the extent permitted by law, the parties hereto hereby
waive any provision of law that renders any provision of this Agreement invalid
or unenforceable in any respect.
Section 9.05 Inspection and Audit Rights.
---------------------------
The Servicer agrees that, on reasonable prior notice, it will permit any
agent or representative of the Owner, during the Servicer's normal business
hours, to examine all the books of account, records, reports and other papers of
the Servicer relating to the Mortgage Loans, to make copies and extracts
therefrom, to cause such books to be audited by accountants selected by the
Owner, and to discuss matters relating to the Mortgage Loans with the Servicer's
officers, employees and accountants (and by this provision the Servicer hereby
authorizes such accountants to discuss with such agents or
representatives such matters), all at such reasonable times and as often as may
be reasonably requested. Any expense incident to the exercise by the Owner of
any right under this Section shall be borne by the Owner.
Section 9.06 Binding Effect; No Partnership; Counterparts.
--------------------------------------------
The provisions of this Agreement shall be binding upon and inure to the
benefit of the respective successors and permitted assigns of the parties
hereto. Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto and the services of the
Servicer shall be rendered as an independent contractor for the Owner. For the
purpose of facilitating the execution of this Agreement as herein provided and
for other purposes, this Agreement may be executed simultaneously in any number
of counterparts, each of which counterparts shall be deemed to be an original,
and such counterparts shall constitute but one and the same instrument.
Section 9.07 Protection of Confidential Information; No Solicitation.
-------------------------------------------------------
The Servicer shall keep confidential and shall not divulge to any party,
without the Owner's prior written consent, any information pertaining to the
Mortgage Loans or the Borrowers except to the extent that (a) it is appropriate
for the Servicer to do so (i) in working with legal counsel, auditors, other
advisors, taxing authorities or other governmental agencies, (ii) in accordance
with Accepted Servicing Practices or (iii) when required by any law, regulation,
ordinance, court order or subpoena or (b) the Servicer is disseminating general
statistical information relating to the mortgage loans being serviced by the
Servicer (including the Mortgage Loans) so long as the Servicer does not
identify the Owner or the Borrowers.
In addition to the foregoing, neither the Servicer nor any of its
Affiliates shall (i) provide any employee of the Servicer or its Affiliates that
is directly involved in the solicitation of borrowers in connection with the
origination of mortgage loans by the Servicer and its Affiliates access to any
reports, documents or information in respect of any Borrower, Mortgaged Property
or Mortgage Loan which the Servicer has received pursuant to its Loan Servicing
obligations hereunder, or (ii) use any such reports, documents or information in
connection with such solicitation of borrowers. Failure of the Servicer to
comply with its obligations under this Section shall result in an Event of
Default hereunder.
Section 9.08 General Interpretive Principles.
-------------------------------
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular,
and the use of any gender herein shall be deemed to include the other
gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles;
(c) references herein to an "Article," "Section," or other
subdivision without reference to a document are to the designated
Article, Section or other applicable subdivision of this Agreement;
(d) reference to a Section, subsection, paragraph or other
subdivision without further reference to a specific Section is a
reference to such Section, subsection, paragraph or other subdivision,
as the case may be, as contained in the same Section in which the
reference appears;
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular provision;
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration; and
(g) the Article, Section and subsection headings herein are for
convenience of reference only, and shall not limit or otherwise affect
the meaning of the provisions contained therein.
Section 9.09 Further Agreements.
------------------
The Servicer and the Owner each agree to execute and deliver to the other
such additional documents, instruments or agreements as may be reasonably
requested by the other and as may be necessary or appropriate to effectuate the
purposes of this Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the Owner and the Servicer have caused this Agreement
to be duly executed by their respective officers thereunto duly authorized as of
the date first above written.
IMPAC COMMERCIAL HOLDINGS, INC.
By: ________________________________
Name: ______________________________
Title: _____________________________
IMPAC COMMERCIAL CAPITAL CORPORATION
By: ________________________________
Name: ______________________________
Title: _____________________________
("Owner")
MIDLAND LOAN SERVICES, INC.
By: ________________________________
Name: ______________________________
Title: _____________________________
("Servicer")
EXHIBIT "A"
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(Mortgage Loan Schedule)
EXHIBIT "B"
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Servicing File Listing
1) Copy of executed Note (including addendums, amendments, modifications,
etc., as they may apply), Loan Agreement and Guaranty Agreement (if
applicable).
2) Copy of executed and filed Deed of Trust/Mortgage (including addendums,
amendments, modifications, etc., as they may apply).
3) Copy of Assignment of Leases and Rents and Security Agreement, if separate
from the Deed of Trust/Mortgage.
4) Copy of any other legal document(s) referenced in the Note, Deed of
Trust/Mortgage, Security Agreement, Loan Agreement or Guaranty Agreement.
5) Copies of all filed UCC Financing Statements and Lien Searches.
6) Loan Closing Statement.
7) Borrower (and Guarantor, if applicable) financial and operating statements,
tax returns, tax identification number(s), mailing address(es), phone
number(s), and fax number(s). Also include property operating and financial
statements if prepared separately.
8) Special Reserve Agreement(s), if applicable.
9) Property Information -- paid tax receipts, insurance policy(ies),
appraisal(s), flood certificate(s), and environmental reports.
10) Underwriting File.
11) Checks/Wires for prepaid interest, tax and insurance impounds, and special
reserves.
12) Lockbox agreement(s), if applicable.
13) If special arrangements have been made with the borrower and/or guarantor
that are not noted in the legal documents, a memorandum detailing the
situation.