EXHIBIT 10.2
EXECUTION COPY
SERVICING AGREEMENT
by and among
PMC CONDUIT L.P.,
as Borrower,
PMC COMMERCIAL TRUST,
as Servicer
and
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
as Agent
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Dated as of February 7, 2005
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS
ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.1. Representations and Warranties of Servicer................................................ 3
Section 2.2. Covenants of Servicer..................................................................... 4
Section 2.3. Closing Certificate and Opinion........................................................... 4
Section 2.4. Fidelity Bond and Insurance............................................................... 4
Section 2.5. Access to Certain Documentation and Information Regarding the Loans....................... 4
Section 2.6. Merger or Consolidation................................................................... 5
ARTICLE III GENERAL ADMINISTRATION AND SERVICING OF THE LOANS
Section 3.1. General Duties of the Servicer............................................................ 5
Section 3.2. No Assignment or Delegation of Duties by Servicer......................................... 6
Section 3.3. Establishment of Lockbox Account; Notices to Obligors; Deposits in Lockbox
Account........................................................................................ 7
Section 3.4. Permitted Withdrawals from the Lockbox Account............................................ 8
Section 3.5. Payment of Taxes and Other Charges........................................................ 8
Section 3.6. Collection of Certain Loan Payments....................................................... 9
Section 3.7. Limitation of Liability of Servicer' Officers and Others.................................. 9
Section 3.8. Servicing Compensation; Advances and Expenses............................................. 9
Section 3.9. Maintenance and Release of Loan Documentation; Satisfaction of Mortgages.................. 10
Section 3.10. Notice of Liens and Other Actions........................................................ 11
Section 3.11. Waivers, Releases, Condemnations, Easements and Alterations.............................. 11
Section 3.12. Limitation on Liability of Servicer and Others........................................... 12
Section 3.13. Property Address Change.................................................................. 12
ARTICLE IV SPECIFIC SERVICING PROCEDURES
Section 4.1. Assumption Agreements..................................................................... 12
Section 4.2. Servicing Delinquent Accounts; Liquidation of Loans....................................... 13
Section 4.3. Foreclosure Expenses...................................................................... 15
Section 4.4. Title, Management and Disposition of REO Property......................................... 16
ARTICLE V REPORTS TO BE PROVIDED BY SERVICER
Section 5.1. Monthly Reports........................................................................... 17
Section 5.2. Reports of Foreclosure and Abandonment of Mortgaged Property.............................. 18
Section 5.3. Quarterly Statement as to Compliance...................................................... 18
Section 5.4. Annual Independent Public Accountants' Servicing Report................................... 18
ARTICLE VI AMORTIZATION EVENTS; REMEDIES
Section 6.1. Remedies.................................................................................. 19
Section 6.2. Additional Remedies of Agent Upon Amortization Events..................................... 19
Section 6.3. Agent To Act; Appointment of Successor.................................................... 19
Section 6.4. Waiver of Defaults........................................................................ 20
TABLE OF CONTENTS
ARTICLE VII TERMINATION
Section 7.1. Servicer Not To Resign.................................................................... 20
Section 7.2. Term of Agreement......................................................................... 20
ARTICLE VIII MISCELLANEOUS PROVISIONS
Section 8.1. Amendment................................................................................. 21
Section 8.2. Governing Law............................................................................. 21
Section 8.3. Notices................................................................................... 21
Section 8.4. Severability of Provisions................................................................ 21
Section 8.5. No Partnership............................................................................ 21
Section 8.6. Counterparts.............................................................................. 21
Section 8.7. Successors and Assigns; Beneficiaries; Assignment......................................... 21
Section 8.8. Indulgences; No Waivers................................................................... 22
Section 8.9. Titles Not To Affect Interpretation....................................................... 22
Section 8.10. Entire Agreement......................................................................... 22
Section 8.11. Recordation of Agreement................................................................. 22
Section 8.12. No Setoff................................................................................ 22
EXHIBIT A Form of Lockbox Agreement
EXHIBIT B Form of Lockbox Notice Letter
EXHIBIT C Form of Monthly Report
EXHIBIT D Form of Quarterly Officer's Certificate
EXHIBIT E Form of Obligor Letter
SERVICING AGREEMENT
This Servicing Agreement (this "Agreement"), dated as of February 7, 2005
is made and entered into by and among PMC CONDUIT, L.P., a Delaware limited
partnership, as Borrower (the "Borrower"), PMC COMMERCIAL TRUST, a Texas real
estate investment trust, as servicer ( the "Servicer"), and JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION as agent (the "Agent").
PRELIMINARY STATEMENTS
The Borrower is the owner of the Loans and the other property being
pledged, assigned and conveyed by it to the Agent for the benefit of the Lenders
(as defined below) pursuant to that certain Credit and Security Agreement, dated
as of the date hereof (the "Credit Agreement"), by and among the Borrower, PMC
Conduit, LLC, the Servicer, the other lenders party thereto (the "Lenders") and
the Agent. The Servicer is in the business, among other things, of servicing
Loans. The Borrower hereby appoints the Servicer to service the Loans that were
transferred by the Servicer to the Borrower and are included in the Collateral,
and the Servicer hereby accepts such appointment.
All covenants and agreements made by the Borrower and the Servicer herein
are for the benefit of the Agent and the Secured Parties. The Borrower, the
Servicer and the Agent are entering into this Agreement for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.
In consideration of the mutual agreements herein contained, the Borrower,
the Servicer and the Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
All capitalized terms used herein and not otherwise defined herein shall
have the meanings set forth in Exhibit I to the Credit Agreement.
"Collection" means all payments received by the Servicer in respect of the
Mortgage Loans, including, without limitation, Monthly Payments, Principal
Payments, Liquidation Proceeds and insurance proceeds.
"Determination Date" means, with respect to a Settlement Date, the close
of business on the last day of the related Due Period.
"Environmental Law" means any and all federal, state and local statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges, releases
or threatened releases of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes into the environment including, without
limitation, ambient air, surface water, ground processing, distribution, use,
treatment, storage,
disposal, transport, or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes.
"Law" means all statutes, rules, regulations, ordinances, orders or
decrees of any federal or state government or political subdivision, agency or
public official thereof that apply to or affect a Loan or Mortgaged Property or
the Servicer under this Agreement.
"Liquidated Loan" means any Defaulted Loan as to which the Servicer has
certified to the Agent that all amounts which it expects to recover from or on
account of such Loan and related Mortgaged Property (including REO Property)
have been recovered and that no further Liquidation Proceeds will be received in
connection therewith.
"Liquidation Expenses" means, with respect to Loans being liquidated and
REO Properties, expenses paid or incurred by or for the account of the Servicer
with respect to such Loans for (i) property protection expenses; (ii) property
sales expenses; (iii) foreclosure costs, including court costs and reasonable
attorneys' fees; and (iv) similar expenses reasonably paid or incurred in
connection with liquidation.
"Liquidation Proceeds" means amounts received by the Servicer with respect
to such a Loan in connection with the liquidation of such Loan, whether from (i)
proceeds from a trustee's sale or judicial or nonjudicial foreclosure or
otherwise; (ii) payments received from guarantors; (iii) condemnation proceeds
received from any taking of the property by condemnation or otherwise; or (iv)
any final disposition of REO Property, in each case, net of related Liquidation
Expenses and any amounts required to be returned to the applicable Obligors
pursuant to applicable law.
"Lockbox Account" means the bank account into which Obligors are directed
by the Servicer to make payments in respect of the Loans, which account is
maintained at JPMorgan Chase Bank, N.A. or another financial institution
approved by the Agent.
"Lockbox Agreement" means an agreement in the form attached hereto a
Exhibit A or otherwise satisfactory to the Agent.
"Monthly Payments" means, with respect to any Loans, each scheduled
monthly payment of principal and interest on such Loan, which is payable by an
Obligor from time to time under the related Underlying Note.
"Monthly Report" shall have the meaning set forth in Section 5.1 hereof.
"Principal Prepayments" means any payment of principal or other recovery
of principal (whether in the form of Liquidation Proceeds or otherwise) on a
Loan which is received in advance of its scheduled due date and which is not
accompanied by an amount of interest representing the full amount of scheduled
interest due on any date or dates in any month or months subsequent to the month
of prepayment.
"Realized Loss" means, with respect to each Liquidated Loan, an amount
(not less than zero or greater than the related Principal Balance as of the date
of the final liquidation) equal to the Principal Balance of the Loan as of the
date of liquidation, minus the Liquidation Proceeds
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relating to such Liquidated Loan applied to principal (such Liquidation Proceeds
to be applied first to unpaid interest due on the Liquidated Loan and then to
the principal balance of the Liquidated Loan).
"REO Property" means a Mortgaged Property acquired by the Servicer on
behalf of the Borrower through foreclosure or deed in lieu of foreclosure,
pursuant to Section 4.4 hereof.
"Reporting Date" means the third (3rd) Business Day preceding each
Settlement Date.
"Servicing Expenses" shall have the meaning set forth in Section 3.8
hereof.
"Servicing Fee" means an amount payable monthly in arrears on each
Settlement Date, equal, for each month during the term of the Credit Agreement,
to one-twelfth of 0.30% per annum times the aggregate outstanding Pool Principal
Balance on the immediately preceding Determination Date.
"Servicing Officer" means an officer or other authorized employee of the
Servicer involved in, or responsible for, the administration and servicing of
the Loans whose name appears on an incumbency certificate of servicing officers
and employees furnished to the Agent by the Servicer, as such certificate may
from time to time be amended.
"Servicing Standard" means to service and administer the Loans with the
same care, skill and diligence with which the Servicer services and administers
mortgage loans held for its own account, and with which prudent institutional
commercial mortgage lenders and loan servicers service comparable Loans, and
with a view to the timely collection of all scheduled payments of principal and
interest under the Loans or, if a default under a Loan occurs and continues and
no satisfactory arrangements can be made for the collection of the delinquent
payments, the maximization of the recovery of such Loan to the Agent and Lenders
(as a collective whole) on a present value basis.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.1. Representations and Warranties of Servicer. The
Servicer hereby reaffirms those representations and warranties it has made
pursuant to Section 5.1 of the Credit Agreement. In addition, the Servicer
hereby represents and warrants on behalf of itself to the Agent for the benefit
of the Agent, the Lenders and the Borrower as of the Closing Date, and at all
times during the term of this Agreement shall be deemed to represent and warrant
on behalf of itself, that:
(a) it does not believe, nor does it have any reason or cause to
believe, that it cannot perform each of its covenants contained in this
Agreement; and
(b) it is not in default with respect to any order or decree of any
court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default might have consequences that would materially
and adversely affect the condition
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(financial or other) or operations of the Servicer or its properties or might
have consequences that would materially and adversely affect its performance
hereunder.
Section 2.2. Covenants of Servicer. The Servicer hereby reaffirms
those covenants specified in Article VII of the Credit Agreement. The Servicer
hereby agrees with respect to itself that during the term of this Agreement, it
shall maintain all licenses, permits, charters and registrations which are
material to the performance by the Servicer of its obligations under this
Agreement.
Section 2.3. Closing Certificate and Opinion. On the Closing Date,
the Servicer will deliver to the Borrower and the Agent an Opinion of Counsel,
dated the Closing Date, in form and substance satisfactory to the Agent, as to
the due authorization, execution and delivery of this Agreement by the Servicer
and the enforceability thereof and such other matters as reasonably requested by
the Agent. On the Closing Date, the Servicer shall also deliver an Officer's
Certificate, dated the Closing Date, signed by two Authorized Officers of the
Servicer, to the effect that:
(a) the representations and warranties contained in Section 5.1 of
the Credit Agreement are true and correct in all material respects as of the
Closing Date;
(b) no Amortization Event or Unmatured Amortization Event exists;
and
(c) the Servicer maintains such errors and omissions insurance and
fidelity bond coverage as is required by this Agreement.
Section 2.4. Fidelity Bond and Insurance. The Servicer shall
maintain with a responsible company, at its own expense, a blanket fidelity bond
in a minimum amount of $1,000,000 (the "Fidelity Bond") and an errors and
omissions insurance policy with coverage in an amount deemed reasonable by the
Servicer (but in no event less than $1,000,000) with coverage on all officers,
employees or other persons acting in any capacity requiring such persons to
handle funds, money, documents or papers relating to the Loans ("Servicer
Employees"). Any such fidelity bond and errors and omissions insurance shall
protect and insure the Collateral and the Agent, as Agent for the Lenders, its
officers, employees and agents against losses, including losses resulting from
forgery, theft, embezzlement, fraud, errors and omissions and negligent acts of
the Servicer's employees. Such fidelity bond shall name the Agent, for the
benefit of the Secured Parties, as a loss payee and shall provide that such bond
cannot be cancelled without 30 days' prior notice to the Agent. No provision of
this Section 2.4 requiring such fidelity bond and errors and omissions insurance
shall diminish or relieve the Servicer from its duties and obligations as set
forth in this Agreement. Upon the request of the Agent, the Servicer shall cause
to be delivered to the Agent a certified true copy of such fidelity bond and
insurance policy. Coverage of the Servicer under a policy or bond obtained by an
Affiliate of the Servicer and providing the coverage required by this Section
shall satisfy the requirements of this Section.
Section 2.5. Access to Certain Documentation and Information
Regarding the Loans. The Servicer shall provide to the Agent and the Borrower,
the Lenders and their representatives or designees, access to the documentation
regarding the Loans, such access being
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afforded without charge but only upon reasonable request and during normal
business hours at the offices of the Servicer provided that such access shall
not be requested more frequently than is reasonable or justifiable; provided,
further, however, following the occurrence and during the continuance of an
Amortization Event, Borrower and the Agent shall have unfettered access to the
documentation relating to the Loans. The Servicer shall at all times maintain
accurate records and books of account and an adequate system of audit and
internal controls. All accounting and loan servicing records pertaining to each
Loan shall be maintained in such manner as will permit the Agent and the Lenders
or their duly authorized representatives and designees to examine and audit and
make legible reproductions of records upon reasonable prior notice and during
reasonable business hours. All such records shall be maintained until no Loans
remain outstanding or such longer period as is required by Law, including but
not limited to, all transaction registers and loan ledger histories.
Section 2.6. Merger or Consolidation. The Servicer will keep in full
effect its existence, rights and franchises, and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement or any of the Loans it services and to perform its duties under this
Agreement. The Servicer shall not merge with, consolidate with or otherwise sell
substantially all of its assets to, another Person except in accordance with the
Purchase Agreement and in accordance with this Section 2.6. Any Person into
which the Servicer may be merged or consolidated, or any Person resulting from
any merger, conversion or consolidation to which the Servicer shall be a party,
or any Person succeeding to the business of the Servicer, shall be an
established Loan servicing institution that has a net worth of at least
$50,000,000 (unless such Person is then the Servicer hereunder or is otherwise
consented to in writing by the Agent and the Required Alternate Lenders) and
shall be the successor of the Servicer hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding, provided such successor accepts
the terms and conditions of this Agreement. The Servicer shall, upon making a
determination that it will enter into any such merger or consolidation, send
written notice thereof to the Agent which shall in no event be less than thirty
(30) days prior written notice.
ARTICLE III
GENERAL ADMINISTRATION AND SERVICING OF THE LOANS
Section 3.1. General Duties of the Servicer.
(a) For and on behalf of the Borrower, the Agent and the Secured
Parties, the Servicer shall service and administer the Loans in accordance with
the provisions of this Agreement and the instructions of the Agent hereunder.
Unless otherwise specified herein with respect to specific obligations of the
Servicer, the Servicer shall service and administer the Loans in the best
interests of, and for the benefit of, the Lenders, in accordance with the Credit
and Collection Policy and the Servicing Standard.
(b) Consistent with the terms of this Agreement, the Servicer may
waive, modify or vary any term of any Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Obligor if, in the Servicer's reasonable
5
determination, such waiver, modification, postponement or indulgence is not
materially adverse to the interests of the Secured Parties, is consistent with
the Credit and Collection Policy and the Servicing Standard; provided, however,
that the Servicer may not permit any modification (except in connection with a
plan of liquidation or reorganization of the related Obligor) with respect to
any Loan that would decrease the Loan Rate or the default rate, forgive the
payment of any principal or interest (unless in connection with the liquidation
of the related Loan or in connection with a plan of liquidation or
reorganization of the related Obligor), release any primary collateral (the
first lien Mortgage) securing the Loan or defer or extend the final maturity
date of such Loan without the written consent of the Agent. Notwithstanding the
foregoing, in the event that any Loan is a Defaulted Loan, the Servicer,
consistent with the Servicing Standard and upon written notice to the Agent,
may, so long as no Amortization Event exists and it deems such action reasonably
prudent in order to maximize Collections on such Loan, also waive, modify or
vary any term of such Loan (including modifications that would change the Loan
Rate or the default rate, forgive the payment of any principal or interest,
waive any prepayment fee or penalty, release any primary collateral securing the
Loan or defer or extend the final maturity date of such Loan. No such waiver or
modification described above shall change the status of an otherwise ineligible
Loan to an Eligible Loan). Without limiting the generality of the foregoing, and
subject to the consent of the Agent and in accordance with the Servicing
Standard, the Servicer shall continue, and is hereby authorized and empowered,
to execute and deliver on behalf of the Agent, all instruments of satisfaction
or cancellation, or of partial or full release, discharge and all other
comparable instruments, with respect to the Loans it services and with respect
to the Mortgaged Properties. If reasonably required by the Servicer, the
Borrower shall furnish the Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
Section 3.2. No Assignment or Delegation of Duties by Servicer.
(a) The Servicer, as an independent contractor, shall service and
administer the Loans and shall have full power and authority, acting alone, to
do any and all things in connection with such servicing and administration which
the Servicer may deem necessary or desirable and consistent with the terms of
this Agreement. The Servicer may not enter into subservicing agreements (except
with an Affiliate) for any servicing and administration of Loans without the
prior written consent of the Agent. Except as expressly provided herein, the
Servicer shall not assign or transfer (except to an Affiliate) any of its
rights, benefits or privileges hereunder to any other Person, or delegate to or
subcontract with, or authorize or appoint any other Person to perform any of the
duties, covenants or obligations to be performed by the Servicer hereunder,
without notice to the Agent and without the prior written consent of the Agent
and absent such written consent any agreement, instrument or act purporting to
effect any such assignment, transfer, delegation or appointment shall be void.
(b) Notwithstanding any subservicing agreement or any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer and a sub-servicer or reference to actions taken through a sub-servicer
or otherwise, the Servicer shall remain obligated and primarily liable for the
servicing and administering of the Loans in accordance with the provisions of
this Agreement and the other Transaction Documents without diminution of such
obligation or liability by virtue of such subservicing agreements or
arrangements or by
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virtue of indemnification from the sub-servicer and to the same extent and under
the same terms and conditions as if the Servicer alone were servicing and
administering the Loans. For purposes of this Agreement, the Servicer shall be
deemed to have received payments on a Loan when a sub-servicer has received such
payments. The Servicer shall be entitled to enter into any agreement with a
sub-servicer for indemnification of the Servicer by such sub-servicer, and
nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
(c) Any subservicing agreement that may be entered into and any
transactions or services relating to the Loans involving a sub-servicer shall be
deemed to be between the sub-servicer and the Servicer alone, and the Agent and
Lenders shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the sub-servicer except as
set forth in Section 3.2(d). The Servicer shall be solely liable for all fees
owed by it to any sub-servicer irrespective of whether the Servicer's
compensation pursuant to this Agreement is sufficient to pay such fees. Each
sub-servicing agreement shall provide that it is assignable in accordance with
Section 3.2(d) and may be terminated in accordance with such subsection.
(d) In the event a successor Servicer is appointed hereunder
(including by reason of an Amortization Event), the Agent or its designee may in
its sole discretion assume all of the rights and obligations of the predecessor
Servicer under each subservicing agreement that the predecessor Servicer may
have entered into, unless the Agent or designee elects to terminate any such
subservicing agreement. Any fee payable in connection with such a termination
will be payable by the predecessor Servicer. If the Agent, its designee or the
successor Servicer for the Agent elects to assume all of the Servicer's rights
and obligations under a subservicing agreement, then the Agent, such designee or
such successor Servicer shall be deemed to have replaced the predecessor
Servicer as a party to such subservicing agreement to the same extent as if the
subservicing agreements had been assigned to the assuming party, except that the
predecessor Servicer shall not thereby be relieved of any liability or
obligations under the subservicing agreements with regard to events that
occurred prior to the date the predecessor Servicer ceased to be the Servicer
hereunder. The predecessor Servicer, at its expense and without right of
reimbursement therefor, shall, upon the request of the Agent, deliver to the
assuming party all documents and records and afford the assuming party
reasonable access (to the extent practicable) to the computer systems,
electronic files and personnel as they relate to each subservicing agreement and
the Loans then being serviced and an accounting of amounts collected and held by
it and otherwise use its best efforts to effect the orderly and efficient
transfer of the subservicing agreements to the assuming party.
(e) The Servicer shall be liable for all acts and omissions of any
sub-servicer, delegate, subcontractor or other agent appointed pursuant to this
Agreement. Nothing contained in this Section 3.2 shall prohibit or be deemed to
prohibit the Servicer from contracting with third parties to perform duties that
are not duties of the Servicer hereunder that the Servicer deems reasonably
necessary in connection with the servicing of the Loans for which it is
responsible for servicing including, without limitation, title work, surveying,
environmental consulting, property management and maintenance, construction,
engineering and architectural consulting.
Section 3.3. Establishment of Lockbox Account; Notices to Obligors;
Deposits in Lockbox Account.
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(a) On or prior to the Closing Date, the Servicer shall cause to be
established and maintained, at the Servicer's expense, the Lockbox Account with
JPMorgan Chase Bank, N.A. or another financial institution approved by the Agent
and which has entered into a Lockbox Agreement.
(b) Within three (3) Business Days after the Closing Date, the
Servicer will prepare and deliver to each of the Obligors with respect to the
Loans, with a copy of such correspondence to the Agent, notices in the form
attached hereto as Exhibit B, directing each such Obligor to send all future
Monthly Payments or Principal Prepayments directly to the Lockbox Account. Prior
to the time the Obligations are satisfied in full, the Servicer will not direct
the Obligors to send Monthly Payments or Principal Prepayments to any other
address without the prior written consent of the Agent.
(c) Notwithstanding the foregoing notices, if the Servicer receives
any Collections, including, without limitation, any Monthly Payments, late
payment charges or other payments relating to any Loan, the Servicer will
receive such funds in trust for the Agent and the Secured Parties and will
forward such funds to the Lockbox Account no later than the Business Day
immediately following the date the Servicer obtains knowledge of such receipt.
In addition, any Liquidation Proceeds received by the Servicer will be deposited
into the Lockbox Account no later than the Business Day immediately following
the day the Servicer obtains knowledge of such receipt.
(d) Upon receipt of notice that the institution holding the Lockbox
Account no longer wishes to hold the Lockbox Account or upon such institution
failing to meet with Agent approval, the Agent will provide notice thereof to
the Servicer and the Servicer will, within five (5) Business Days, cause to be
executed a new Lockbox Agreement and to be established and maintained, at its
expense a new Lockbox Account at a financial institution approved by the Agent.
Within five (5) Business Days of establishing the new Lockbox Account, the
Servicer will prepare and deliver to each of the Obligors with respect to the
Loans for which it is responsible for servicing, with copies of such
correspondence to the Agent, notices, in the form of Exhibit B attached hereto,
directing each such Obligor to send all future Monthly Payments directly to the
Lockbox Account. The Servicer will not add, terminate or replace a Lockbox Bank
unless it has obtained a new Lockbox Agreement and shall cause the Lockbox
Account to be subject to a Lockbox Agreement at all times.
Section 3.4. Permitted Withdrawals from the Lockbox Account. On a
daily basis, all deposits to the Lockbox Account shall be withdrawn
automatically and transferred to the Collection Account established under the
Credit Agreement. The Agent shall cause the entity holding the Lockbox Account
to forward funds held therein as provided herein.
Section 3.5. Payment of Taxes and Other Charges. If the Servicer
receives notice that any taxes, assessments or other charges which are or may
become a lien upon the Mortgaged Property are overdue, the Servicer will give a
written demand to the Obligor to pay such amounts and will verify whether such
payment has been made within sixty (60) days after mailing such notice (but in
any event prior to the time that any taxing authority commences to exercise its
available remedies), subject to any right, pursuant to the Mortgage, of an
Obligor who is contesting the validity of such charges and has paid to the
Servicer a deposit or security in
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the amount of the contested charge plus possible costs, interest and penalties
or who has otherwise established adequate reserves against such liability in
accordance with generally accepted accounting principles; provided, further,
however, that this provision shall not have the effect of permitting the
Servicer to take, or fail to take, any action in respect of the payments
described herein that would adversely affect the interest of the Agent in any
Mortgaged Property. If such amounts have not been paid by the Obligor or the
Obligor has not deposited or reserved funds therefor as described in the
immediately preceding sentence, the Servicer will promptly make such payment as
a Servicing Expense and request reimbursement from the Obligor, and from the
Agent in accordance with Section 3.8 hereof.
Section 3.6. Collection of Certain Loan Payments. The Servicer shall
make reasonable efforts to collect all payments called for under the terms and
provisions of the Loans. Consistent with the foregoing, the Servicer shall not,
unless the charging or collection of any such late payment charge, prepayment
fee, assumption fee or any penalty or interest would result in the violation or
contravention of applicable Law, waive or permit to be waived, except pursuant
to the Servicer's customary servicing procedures, any late payment charge or
assumption fee. If an Amortization Event or Unmatured Amortization Event shall
have occurred and be continuing, the Servicer shall not, unless the charging or
collection of any such prepayment fee or penalty would result in the violation
or contravention of applicable Law, waive or permit to be waived any prepayment
fee or any penalty or interest in connection with the prepayment of a Loan.
Notwithstanding any other provisions hereof, the Servicer shall not charge or
impose on any Obligor, nor seek to charge or impose on any Obligor, nor assert a
right to receive, any fee, charge, premium or penalty that if charged or
collected would violate or contravene any Law, including usury laws or the terms
of the related Loan.
Section 3.7. Limitation of Liability of Servicer' Officers and
Others. No director, officer, employee or agent of the Servicer shall be under
any liability to the Agent, the Borrower, the Lenders or any other persons for
any action taken by them or for their refraining to take any action in good
faith pursuant to this Agreement or for errors in judgment; except that such
provision shall not protect any of them from liability which would be imposed by
reason of willful misfeasance, willful misconduct, bad faith or negligence.
Section 3.8. Servicing Compensation; Advances and Expenses.
(a) As compensation for its services hereunder, the Servicer shall
be paid the Servicing Fee with respect to the Loans being serviced under this
Agreement. The Servicer shall be required to pay all Servicing Expenses incurred
by it in connection with its servicing activities hereunder and shall be
entitled to reimbursement therefor as described in Section 3.8(b). The Servicing
Fee shall be paid to the Servicer monthly on each Settlement Date in accordance
with Section 2.2(c) of the Credit Agreement.
(b) All reasonable and customary "out-of-pocket" costs and expenses
incurred in the performance by the Servicer of its servicing obligations
hereunder ("Servicing Expenses") shall constitute routine servicing
responsibilities of the Servicer, which shall include, but are not limited to,
expenditures for the following, subject to the provisions of this Agreement: (i)
attorneys' fees, trustee fees under any deed of trust, recording, filing and
publication fees, title report and title search costs, costs associated with
environmental audits, court costs, witness fees
9
and all other costs incurred in respect of any enforcement of a Loan, any
judicial foreclosure, or any foreclosure sale, trustee's sale or acquisition in
lieu of foreclosure, or in respect of the insurance, sale or other disposition
of any Mortgaged Property or REO Property; (ii) repair, restoration, maintenance
or other protection of any Mortgaged Property (whether incurred before or after
such property became an REO Property) in accordance with and subject to the
provisions of this Agreement, as applicable and (iii) compliance with the
Servicer's obligations under Section 3.5 hereof; provided, that the Servicer
shall not be obligated to incur such Servicing Expenses if it has determined in
good faith that such Servicing Expenses will not ultimately be recoverable from
the related Obligor, from the related Liquidation Proceeds or otherwise from
proceeds or collections on the related Loan. Servicing Expenses shall not
include any portion of the Servicer's overhead or normal salary and operating
expenses. The Servicer shall be entitled to be reimbursed for Servicing Expenses
(i) incurred in connection with foreclosure pursuant to Section 4.3; (ii) out of
the Collections paid by any Obligor which, under the terms of the related Loan,
are specifically allocable to such expenses; and (iii) otherwise out of any
available funds otherwise released to the Borrower under Section 2.2(c)(viii) of
the Credit Agreement.
Section 3.9. Maintenance and Release of Loan Documentation;
Satisfaction of Mortgages.
(a) The Servicer shall retain, with respect to each Loan, the
originals (or copies if originals are not available) of all Loan Files. Each
Loan File shall remain the property of the Borrower pledged to the Agent for the
benefit of the Lenders and shall be held by the Servicer in trust for the
benefit of the Agent on behalf of the Lenders. Upon written request of the
Agent, the Servicer shall immediately deliver all or any of such instruments,
records and documents in its possession or custody to the Agent, together with a
list identifying each loan to which such records pertain. The Servicer, at its
option, may microfilm, microfiche or otherwise condense any records or documents
constituting a part of, or relating to, any Loan or any Loan File for which it
is responsible, provided that the Servicer, upon written request by the Agent,
promptly reproduces in their entirety any or all such records or documents at no
cost to the Agent.
(b) The Servicer shall maintain each Loan File for a period of four
(4) years after the related Loan has been paid in full, is foreclosed upon or is
otherwise liquidated, or such longer period as may be required by Law. The
Servicer shall maintain an appropriate account record for each Loan which shall
include the permanent loan number for each Loan serviced by the Servicer as
shown on the Loan Schedule. Any system utilized for the Loan account records
shall be capable of producing, for any Loan, an account transcript itemizing in
chronological order the date, amount and application of each Monthly Payment by
due date and other information affecting the amounts paid by the Obligor,
including the latest outstanding Principal Balance.
(c) The Servicer shall not grant a satisfaction or release of a
Mortgage without having obtained payment in full of the indebtedness secured by
the Mortgage, nor shall the Servicer otherwise prejudice any right the Agent may
have under the mortgage instruments, subject to Section 4.1 hereof. Upon the
prepayment in full or other liquidation of a Loan, the Servicer shall
immediately deposit the prepayment or Liquidation Proceeds in the Lockbox
Account or the Collection Account and prepare and deliver to the Agent a request
for the
10
appropriate instrument releasing the Mortgaged Property from the lien of the
Mortgage, together with an Officer's Certificate (i) certifying that (A) all
amounts that the Obligor is obligated to pay under the Underlying Note, the
Mortgage and any other document pertaining to the Loan, including, but not
limited to, all required payments of principal and interest, have been paid in
full and deposited in the Lockbox Account or the Collection Account; or (B) all
Liquidation Proceeds that the Servicer reasonably believes will be collected
with respect to a Liquidated Loan have been collected and deposited in the
Lockbox Account or the Collection Account; and (ii) requesting that the Agent
execute and deliver to the Servicer the appropriate instrument prepared by the
Servicer if necessary to release the lien of the Mortgage, including release to
the Servicer of the Underlying Note, if in Agent's possession, bearing written
evidence of cancellation or assignment thereof, as appropriate. The Agent shall,
upon receipt of a written request from a Servicing Officer, execute any document
provided to the Agent by the Servicer or take any other action requested in such
request, that is, in the opinion of the Servicer as evidenced by such request,
required by any state or other jurisdiction to discharge the lien of a Mortgage
upon the satisfaction thereof and the Agent will sign and post, but will not
guarantee receipt of, any such documents to the Servicer, or such other party as
the Servicer may direct in writing, within five (5) Business Days of the Agent's
receipt of such certificate or documents. Such certificate or documents shall
establish to the Agent's satisfaction that the related Loan has been paid in
full by or on behalf of the Obligor and that such payment has been deposited in
the Lockbox Account or the Collection Account, as the case may be. Any
applications for partial release of any part of a Mortgaged Property must be
approved in the manner set forth in Section 3.11 hereof. If the Servicer at any
time seeks to initiate a foreclosure proceeding with respect to any Mortgaged
Property, then the Servicer shall deliver to the Agent, for signature by the
Agent, if necessary under applicable Law, any court pleadings, requests for
Agent's sale or other documents necessary to the foreclosure or to any legal
action brought to obtain judgment against the Obligor on the Underlying Note or
the Mortgage, or to obtain a deficiency judgment, or to enforce any other
remedies or rights provided by the Underlying Note or the Mortgage or otherwise
available at law or in equity, provided that the Servicer shall be entitled to
make the Agent a party to any litigation without the prior consent of the Agent.
The Servicer shall also deliver to the Agent an Officer's Certificate requesting
that such pleadings or documents be executed by the Agent and certifying as to
the reason such documents or pleadings are required and that the execution and
delivery thereof by the Agent will not invalidate the Mortgage except for the
termination of such lien upon completion of the proposed foreclosure.
(d) The Servicer shall, at its expense, prepare and deliver to the
Agent any instruments required in connection with substitution of a Loan
pursuant to Section 8.5 of the Credit Agreement and will pay any recording or
filing costs associated therewith.
Section 3.10. Notice of Liens and Other Actions. The Servicer shall,
at all times, exercise reasonable efforts to prevent any Lien or judicial levy
upon or writ of attachment against a Mortgaged Property of which the Servicer is
notified or otherwise has knowledge, which is, or may be, superior to the lien
of the Mortgage.
Section 3.11. Waivers, Releases, Condemnations, Easements and
Alterations. Any applications for partial releases of real property and releases
of personal property which are part of a Mortgaged Property, the creation or
release of easements, waivers of rights under any Mortgage, consent to
alteration, removal or demolition of improvements and other matters
11
affecting the Mortgage or the Mortgaged Property, other than those which are
contractually provided for in the Underlying Note or related loan documents,
shall be subject to the prior written approval of the Agent which consent shall
not be unreasonably withheld and which shall be provided only upon written
certification by the Servicer that such action is consistent with the Servicing
Standard and the relevant Mortgage and the ability to collect under the
Underlying Note will not be adversely affected by such release.
Section 3.12. Limitation on Liability of Servicer and Others. The
Servicer and any director, officer, employee or agent of the Servicer may rely
on any document of any kind which it in good faith reasonably believes to be
genuine and to have been adopted or signed by the proper authorities respecting
any matters arising hereunder. Subject to the terms of Section 10.2 of the
Credit Agreement, the Servicer shall have no obligation to appear with respect
to, prosecute or defend any legal action which is not incidental to the
Servicer's duty to service the Loans in accordance with this Agreement. The
Borrower agrees to indemnify and hold the Servicer harmless from any loss,
claim, demand, liability or expense (including, without limitation, past acts of
predecessor Servicer and fees and expenses of legal counsel) arising from or
relating to the performance of its duties under this Agreement which do not
result from the Servicer's negligence, bad faith or willful misconduct; provided
that such indemnities shall be only payable out of Collections to the extent
such Collections are not required to be distributed to the Agent or any Lender
under Section 2.2(c) of the Credit Agreement.
Section 3.13. Property Address Change. The Servicer shall note in its
records and notify the Agent of all changes of address of an Obligor or of a
Mortgaged Property of which the Servicer is notified or of which the Servicer
has knowledge.
ARTICLE IV
SPECIFIC SERVICING PROCEDURES
Section 4.1. Assumption Agreements. When a Mortgaged Property has
been or is about to be conveyed by the Obligor, the Servicer shall, at its
option, to the extent it has knowledge of such conveyance or prospective
conveyance, either (i) exercise its rights to accelerate the maturity of the
related Loan under any "due-on-sale" clause contained in the related Mortgage or
Underlying Note; provided, however, that the Servicer shall not exercise any
such right if the "due-on-sale" clause, in the reasonable belief of the
Servicer, is not enforceable under applicable law or if such enforcement would
materially increase the risk of default or delinquency on, or materially
decrease the security for, such Loan, or (ii) enter into an assumption and
modification agreement with the person to whom such property has been or is
about to be conveyed, pursuant to which such person becomes liable under the
Underlying Note and, unless prohibited by applicable law or the Mortgage, the
Obligor shall remain liable thereon. The Servicer may enter into an assumption
agreement with the transferee only if (a) the transferee qualifies for credit
under the customary credit policies of the Servicer, (b) an officer of the
Servicer has examined and approved all instruments as are necessary to carry out
the assumption transaction and approved such instruments as to form and
substance, (c) the execution and delivery of such instruments by all necessary
parties will not cause the unpaid principal balance and any accrued interest
thereon for the Loan to be uncollectible in whole or in part, (d) such
assumption will not cause the related Mortgage Loan to cease to be an Eligible
12
Mortgage Loan; or cause the Aggregate Principal to exceed the Borrowing Base due
to additional Excess Concentration Amounts or otherwise, and (e) upon closing
the assumption transaction (i) the Mortgage will continue to be a first lien
upon the Mortgaged Property, and (ii) the Loan Rate and Monthly Payment for the
related Loan will not be changed nor will the term of the Note be extended or
shortened. For each proposed assumption transaction, the Servicer shall deliver
an Officer's Certificate to the Agent certifying that each of the applicable
requirements specified in the immediately preceding sentence have been satisfied
together with the assumption instruments requiring execution by the Agent. Such
certificate shall also indicate whether the seller/transferor of the Mortgaged
Property will be released from liability on the Loan and that the Servicer has
made a good faith determination that any such release will not adversely affect
the collectibility of the Loan. The Servicer shall perform substantially the
same level of due diligence with respect to the transferee as was performed on
the seller/transferor in connection with the origination of the Loan and shall
release the seller/transferor from liability only if any applicable Law requires
that the seller/transferor be released from liability on the Loan or the
Servicer has made a good faith determination that the applicable requirements
set forth above have been satisfied. The Servicer is also authorized with the
prior approval of the Agent to enter into a substitution of liability agreement
with such transferee, pursuant to which the original Obligor is released from
liability and such person is substituted as Obligor and becomes liable under the
Underlying Note. The Servicer shall notify the Agent that any such substitution
or assumption agreement has been completed and the original of such substitution
or assumption agreement, shall be added by the Servicer to the appropriate Loan
File and shall, for all purposes, be considered a part of such Loan File to the
same extent as all other documents and instruments constituting a part thereof.
Any fee collected by the Servicer for consenting to any such conveyance or
entering into an assumption or substitution agreement shall be retained by or
paid to the Servicer as additional servicing compensation. Notwithstanding the
foregoing paragraph or any other provision of this Agreement, the Servicer shall
not be deemed to be in default, breach or any other violation of its obligations
hereunder by reason of any assumption of a Loan by operation of law or any
assumption which the Servicer may be restricted by law from preventing, for any
reason whatsoever.
Section 4.2. Servicing Delinquent Accounts; Liquidation of Loans.
(a) The Servicer shall exercise diligence in obtaining payment of
Monthly Payments when due under the terms of each Loan and shall use reasonable
efforts to contact any delinquent Obligor. If any delinquent Obligor shall be or
become a bankrupt or otherwise become the subject of any insolvency or similar
proceeding, the Servicer shall notify the Agent of such event and, thereafter,
shall carry out all reasonable actions necessary for the benefit and protection
of the interests of the Agent and the Secured Parties, including, but not
limited to, retention of counsel to represent the Borrower in any bankruptcy or
other court proceedings relating to such Obligor or the Mortgaged Property. If
any Loan previously reported on a Monthly Report as ninety one (91) or more days
delinquent is subsequently reported as being brought current, the Servicer will
verify with the relevant Obligor that the Obligor paid the delinquent payments,
by sending the Obligor the letter in the form attached hereto as Exhibit E.
(b) In the event that any payment due under any Loan and not
postponed pursuant to Section 3.1 is not paid when the same becomes due and
payable, or in the event the Obligor fails to perform any other covenant or
obligation under such Loan and such failure
13
continues beyond any applicable grace period, the Servicer shall take such other
action as it shall deem to be in the best interests of the Agent and the
Lenders. The Servicer shall foreclose upon or otherwise effect the ownership in
the name of the Agent of Mortgaged Properties relating to Defaulted Loans as to
which no satisfactory arrangements can be made for collection of delinquent
payments in accordance with the customary collection policies of the Servicer
and the provisions of Section 3.1. In connection with such foreclosure or other
conversion, the Servicer shall exercise collection and foreclosure procedures
with the same degree of care and skill in its exercise or use as it would
exercise or use under the circumstances in the conduct of its own affairs and
shall in any event comply with the Servicing Standard. The Servicer shall use
its reasonable efforts to realize upon such Defaulted Loans in accordance with
the Servicing Standard. The Servicer shall be responsible for all other costs
and expenses incurred by it in any foreclosure proceedings; provided, however,
that it shall be entitled to reimbursement thereof as contemplated in Sections
3.8 and 4.3 hereof. No modification, recast or extension of a Loan other than as
provided above and in Section 3.1 is permitted without the prior written consent
of the Agent. Notwithstanding the foregoing provisions of this Section 4.2, the
Servicer shall not, without the prior written consent of the Agent, obtain title
to a Mortgaged Property by deed in lieu of foreclosure or otherwise, or take any
other action with respect to any Mortgaged Property, if, as a result of any such
action, the Agent or the Secured Parties, could, in the reasonable judgment of
the Servicer, made in accordance with the Servicing Standard, 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 CERCLA or any
comparable law. The Servicer shall also not obtain title to any Mortgaged
Property on behalf of the Borrower unless the Servicer has previously determined
in accordance with the Servicing Standard, based on a Phase I Environmental
Assessment (and any additional environmental testing that the Servicer deems
necessary and prudent) of such Mortgaged Property conducted by an Independent
Person who regularly conducts Phase I Environmental Assessments and performed
during the twelve-month period preceding any such acquisition of title or other
action, that the Mortgaged Property is in material compliance with applicable
environmental laws and regulations or, if not, that it would maximize the
recovery to the Secured Parties on a present value basis to acquire title to or
possession of the Mortgaged Property and to effect such compliance.
(c) If the environmental testing contemplated by Section 4.2(b)
above establishes that any of the conditions set forth therein have not been
satisfied in all material respects with respect to any Mortgaged Property
securing a defaulted Loan, the Servicer shall, in accordance with the Servicing
Standard, prepare a written report to the Agent and the Lenders summarizing the
environmental condition of the Mortgaged Property and proposing a course of
action to pursue with respect to such Mortgaged Property. The Servicer shall not
pursue any such proposed course of action without the prior written consent of
the Agent.
(d) The Servicer shall report to the Agent monthly in writing as to
any actions taken by the Servicer with respect to any Mortgaged Property as to
which the environmental testing contemplated in Section 4.2(b) above has
revealed that any of the conditions set forth thereon have not been satisfied,
in each case until the earliest to occur of satisfaction of all such conditions
and the release of the Lien of the related Mortgage on such Mortgaged Property.
(e) If foreclosure has been approved as provided above, the Servicer
shall initiate or cause to be initiated the foreclosure action according to such
procedures as are
14
authorized by Law and the practices in the locality where the Mortgaged Property
is located. In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be taken in a manner which preserves on such property the lien of the
Agent for the benefit of the Lenders. The Servicer shall not take title to any
such property in its own name.
(f) The Servicer shall have the right to determine, in accordance
with the Servicing Standard, the advisability of seeking to obtain a deficiency
judgment if the state in which the Mortgaged Property is located and the terms
of the Loan permit such an action and shall, in accordance with the Servicing
Standard, seek such deficiency judgment if it deems advisable.
(g) After a Loan has become a Liquidated Loan, the Servicer shall
promptly prepare and forward to the Agent a liquidation report detailing the
Liquidation Proceeds received from the Liquidated Loan, expenses incurred with
respect thereto and any Realized Loss incurred in connection therewith.
(h) If the requirements of Sections 4.2(b) and (c) hereof have been
satisfied, the Servicer may accept a deed in lieu of foreclosure, provided that
(i) marketable title as evidenced by a policy of title insurance can be conveyed
to and acquired by the Borrower or its designee; (ii) a valid first priority
Lien thereon is created in favor of the Agent as evidenced by a policy of title
insurance; and (iii) no cash consideration is to be paid to the Obligor by the
Agent; and (iv) the Servicer has obtained from the Obligor a written
acknowledgment that the deed is being accepted as an accommodation to the
Obligor and on the condition that the Mortgaged Property will be transferred to
the Borrower or its designee free and clear of all claims, liens, encumbrances,
attachments, reservations or restrictions except for those to which the
Mortgaged Property was subject at the time the Mortgaged Property became subject
to the Mortgage. Title shall be conveyed directly from the Obligor to such
designee as the Agent may direct who will hold such title for the Borrower
subject to the lien of the Agent for the benefit of the Secured Parties.
(i) The Servicer will indemnify and hold harmless the Agent, the
Lenders and the Secured Parties and their respective directors, officers, agents
and employees from and against any and all claims, demands, losses, penalties,
liabilities, costs, damages, injuries and expenses, including, without
limitation, reasonable attorneys' fees and expenses, suffered or sustained by
such parties, either directly or indirectly, relating to or arising out of the
violation of an Environmental Law with respect to a Mortgaged Property resulting
from the Servicer's failure to perform its obligations hereunder, including
without limitation any expenses and other costs incurred in connection with the
defense of any such action, proceeding or claim. This obligation shall survive
the termination of this Agreement, the Credit Agreement or the earlier
resignation or removal of the Agent, as the case may be.
Section 4.3. Foreclosure Expenses. The Servicer shall prepare a
written estimate of the amount of attorneys' fees, trustee's fees and other
costs in respect of any foreclosure or acquisition in lieu of foreclosure and
shall send copies of such estimate to the Agent. The Servicer shall arrange
payment of attorneys' fees, trustees' fees and other foreclosure costs at the
commencement of foreclosure proceedings. The Servicer may reimburse itself for
15
any Servicing Expenses paid by the Servicer, made in connection with a Loan or
such foreclosure or other action, out of amounts received by the Servicer in
connection with liquidation of such Loan, prior to remittance of any such
amounts to the Lockbox Account.
Section 4.4. Title, Management and Disposition of REO Property.
(a) Upon the acquisition of REO Property by a Servicer by
foreclosure or conveyance in lieu of foreclosure, the Servicer shall notify the
Agent promptly that the REO Property has been acquired and shall thereafter: (i)
deliver the deed or certificate of sale to the Agent, or its nominee and deliver
to the Agent the related mortgage or deed of trust in favor of the Agent; (ii)
manage, conserve and protect the REO Property in the same manner and to such
extent as is customary in the locality where such REO Property is located
including the rental of the same, or any part thereof, as the Servicer deems to
be in the best interest of the Agent for the benefit of the Secured Parties;
(iii) pay all costs such as taxes and assessments relating to the REO Property;
(iv) process any claims for redemption and otherwise comply with any redemption
procedures required by Law; (v) sell or otherwise dispose of the REO Property
and remit the proceeds to the Agent; and (vi) timely file any and all federal,
state and local tax or information returns or reports as are required as a
result of the acquisition or disposition of REO Property and perform any
withholding required in connection therewith. The Servicer shall not acquire any
REO Property relating to a Defaulted Loan that is required to be released from
the lien of the Credit Agreement and disposed of by the Borrower on the next
Payment Date. If any REO Property is expected to be acquired, the Servicer shall
inform the Borrower and the Agent and the Borrower shall acquire and maintain
liability and casualty insurance in accordance with subsection 4.4(c). The
Servicer shall manage, conserve, protect and operate each REO Property for the
Agent solely for the purpose of its prudent and prompt disposition and sale. The
Servicer shall, either itself or through an agent selected by the Servicer,
manage, conserve, protect and operate the REO Property in the same manner that
it manages, conserves, protects and operates other foreclosed property for its
own account and in the same manner that similar property in the same locality as
the REO Property is managed. The Servicer shall attempt to sell the same (and
may temporarily rent the same) on such terms and conditions as the Servicer
deems to be in the best interest of the Agent and the Lenders.
(b) Until the REO Property is disposed of, the Servicer shall (i)
take appropriate action to secure the REO Property and maintain proper
surveillance over it; (ii) advance all costs such as taxes and assessments;
(iii) maintain the REO Property so as to preserve its value and prevent any
additional deferred maintenance; and (iv) submit monthly statements for services
to the Agent, together with additional documentation including statements of
income and expenses (accompanied by copies of paid invoices for every expense
item).
(c) Until the REO Property is disposed of, the Servicer shall
maintain for such REO Property, a standard hazard insurance policy providing
fire and extended coverage in an amount equal to the full replacement cost of
all improvements on the Mortgaged Property, which requirement may be satisfied
by a master force placed or blanket insurance policy insuring against hazard
losses. If the Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards (and such flood insurance has been made available) the Servicer shall
maintain a flood hazard insurance policy
16
meeting the requirements of the current guidelines of the Federal Insurance
Administration with an insurance carrier generally acceptable to commercial
mortgage lending institutions for properties, similar to the REO Property in an
amount representing coverage not less than the lesser of (i) the full insurable
value of such REO Property, or (ii) the maximum amount of insurance which is
available under the Flood Disaster Protection Act of 1973, as amended from time
to time. The Servicer will also maintain comprehensive general liability
insurance, casualty insurance, and business interruption insurance (to the
extent applicable) in such amounts as are then customary for similarly situated
properties and businesses.
(d) The Servicer shall advance all funds necessary for the proper
operation, management, insurance and maintenance of the REO Property. On each
Monthly Report, the Servicer shall schedule its reasonable expenses with respect
to any REO Property for the related Due Period.
(e) The Servicer shall deposit all funds collected and received in
connection with the operation or disposition of any REO Property in the Lockbox
Account no later than the Business Day immediately following notice of receipt
of such funds, net of funds necessary for the proper operation, management,
insurance and maintenance of the REO Property.
(f) If as of the date of disposition of any REO Property there
remain unpaid Servicing Fees with respect to the related Loan, the Servicer
shall be entitled to payment for the unpaid Servicing Fees and reimbursement for
the unreimbursed related Servicing Expenses from proceeds received in connection
with the disposition prior to remittance of any proceeds to the Agent.
(g) Disposition of REO Property shall be carried out by the Servicer
at such price and upon such terms and conditions as the Servicer, in its
judgment, believes to be in the best interests of the Lenders, subject to and in
accordance with Section 4.2. Upon the sale of any Mortgaged Property, the
Servicer shall remit the net cash proceeds remaining after payment of expenses
of the sale to the Collection Account.
(h) If any Defaulted Loan is expected to be released from the Lien
of the Credit Agreement on the next Payment Date, the Servicer shall not
commence a foreclosure proceeding or accept a deed in lieu of foreclosure. Any
determination by the Servicer that a Loan is a Defaulted Loan shall be made in
good faith.
ARTICLE V
REPORTS TO BE PROVIDED BY SERVICER
Section 5.1. Monthly Reports.
(a) Each month, not later than 12:00 noon Dallas, Texas time on each
Reporting Date, the Servicer shall deliver to the Agent, in electronic format,
the receipt and legibility of which shall be confirmed telephonically, with hard
copy thereof to be delivered on the next Business Day, with copies to the Agent,
a monthly report in the form attached hereto as Exhibit C (each a "Monthly
Report") signed by a Servicing Officer stating the date (day, month
17
and year), referring to this Agreement by name and date and containing
information, as of the close of business on the immediately preceding
Determination Date.
(b) The Servicer shall furnish to the Agent, during the term of this
Agreement, such periodic, special or other reports, Officer's Certificates, data
relating to the Loans or information, whether or not provided for herein, as
shall be reasonably requested, all such reports or information to be provided by
and in accordance with such applicable instructions and directions as the Agent
may reasonably require.
Section 5.2. Reports of Foreclosure and Abandonment of Mortgaged
Property. Each year the Servicer shall make any reports of foreclosures and
abandonments of any Mortgaged Property required by the Tax Code.
Section 5.3. Quarterly Statement as to Compliance. The Servicer will
deliver to the Agent, quarterly, no later than each April 15, July 15, October
15 and January 15, for each quarterly period ending on each March 31, June 30,
September 30 and December 31, commencing on April 15, 2005, an Officer's
Certificate in the form attached hereto as Exhibit D stating that (a) the
Servicer has fully complied with the provisions of this Agreement, (b) a review
of the activities of the Servicer during the preceding quarter and of the
Servicer's performance under this Agreement has been made under such officer's
supervision and (c) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all of its obligations, duties and
responsibilities under this Agreement throughout such quarterly period (or, with
respect to the first such report, since the Closing Date) and no Amortization
Event or Unmatured Amortization Event exists, or, if there has been a default or
failure in the fulfillment of any such obligation, specifying each such default
or failure known to such officer and the nature and status thereof and the
action being taken by the Servicer to cure such default.
Section 5.4. Annual Independent Public Accountants' Servicing
Report. The Servicer at its expense shall cause a nationally recognized firm of
independent certified public accountants to furnish a statement to the Agent on
or before May 1 of each year, commencing on May 1, 2006, to the effect that,
with respect to the most recently ended fiscal year, such firm has examined
certain records and documents relating to the Servicer's performance of its
servicing obligations and that, on the basis of such examination, conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers, such firm is of the opinion that such servicing has been
conducted substantially in compliance in all material respects with the
requirements of the standard servicing procedures outlined in the Uniform Single
Attestation Program for Mortgage Bankers, except for such exceptions noted
therein. In the event such firm requires the Agent to agree to the procedures
performed by such firm, the Servicer shall direct the Agent in writing to so
agree; it being understood and agreed that the Agent will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and each of
the Agent makes no independent inquiry or investigation as to, and shall have no
obligation or liability in respect of, the sufficiency, validity or correctness
of such procedures.
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ARTICLE VI
AMORTIZATION EVENTS; REMEDIES
Section 6.1. Remedies. Upon the occurrence and during the
continuance of an Amortization Event, the Agent may, and at the written
direction of the Required Alternate Lenders shall, by notice in writing
specifying the termination date to the Servicer, terminate all of the rights and
obligations of the Servicer under this Agreement and in and to the Loans and the
proceeds thereof. On or after the receipt by the Servicer of such written
notice, all authority and power shall pass to and be vested in such Person as
the Agent may designate (such Person, the "Successor Servicer") pursuant to and
under this Section; and, without limitation, the Agent is hereby authorized and
empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the purposes of such
notice of termination, whether to complete the transfer and assignment of the
Loans and related documents or otherwise. All reasonable costs and expenses
(including, without limitation, attorneys' fees) of the Agent, the Successor
Servicer or the Servicer incurred in connection with such termination and
transfer will be at the expense of the Servicer. The Servicer agrees to
cooperate with the Successor Servicer and the Agent in effecting the termination
of the Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Successor Servicer for administration by it of
any cash amounts held by the Servicer or thereafter received relating to the
Loans and all Loan Files. In addition to any other amounts which are then, or,
notwithstanding the termination of its activities as Servicer, may become
payable to the Servicer under this Agreement, the Servicer shall be entitled to
receive out of any delinquent payment on account of interest on a Loan due
during a Due Period prior to the notice of termination received pursuant to this
Section 6.3 and received after such notice, that portion of such payment which
it would have received pursuant to Section 3.8 hereof if such notice had not
been given.
Section 6.2. Additional Remedies of Agent Upon Amortization Events.
Upon any Amortization Event, the Agent, in addition to the rights specified in
Section 6.1 hereof, shall have the right, in its own name and as Agent, to take
all actions now or hereafter existing at law, in equity or by statute to enforce
its rights and remedies and to protect the interests, and enforce the rights and
remedies, of the Secured Parties (including the institution and prosecution of
all judicial, administrative and other proceedings and the filings of proofs of
claim and debt in connection therewith). 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 Amortization Event.
Section 6.3. Agent To Act; Appointment of Successor. On the
effective date of any resignation of the Servicer pursuant to Section 7.1 hereof
or on the date the Servicer is removed as servicer pursuant to this Article VI,
the Successor Servicer hereof shall be the successor in all respects to the
Servicer under this Agreement and the transactions set forth or provided for
herein and shall, except as otherwise agreed to in writing by the Agent, be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof; provided, however,
that the Successor Servicer shall not be liable for any
19
acts or omissions of the Servicer occurring prior to such succession nor for any
breach by the Servicer of any of its representations or warranties contained
herein or in any related document or agreement. The Servicer shall, upon request
of the Agent but at the expense of the Servicer, deliver to the Successor
Servicer), all Loan Files, documents and records (including computer tapes and
diskettes) relating to the Loans and an accounting of any amounts collected and
held by the Servicer and otherwise use their reasonable efforts to effect the
orderly and efficient transfer of servicing rights and obligations to the
assuming party. The Servicer agrees to cooperate with the Agent and any
Successor Servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Successor
Servicer all documents and records reasonably requested by it to enable it to
assume the Servicer's functions hereunder and shall promptly also transfer to
the Successor Servicer, as applicable, all amounts which then have been or
should have been deposited in the Lockbox Account by the Servicer or which are
thereafter received with respect to the Loans. Neither the Agent nor any
Successor Servicer shall be held liable by reason of any failure to make, or any
delay in making, any distribution hereunder or any portion thereof caused by (i)
the failure of the Servicer to deliver, or any delay in delivering, cash,
documents or records to it, or (ii) restrictions imposed by any regulatory
authority having jurisdiction over the Servicer hereunder. The Agent shall
provide written notice of each appointment of a successor to the Servicer
hereunder to the Secured Parties.
Section 6.4. Waiver of Defaults. The Agent (with the written consent
of the Required Lenders) may, on behalf of all Lenders, waive any events
permitting removal of the Servicer pursuant to this Article VI. No such waiver
shall extend to any subsequent or other default or impair any right consequent
thereto except to the extent expressly so waived.
ARTICLE VII
TERMINATION
Section 7.1. Servicer Not To Resign. The Servicer shall not assign
this Agreement or resign from the obligations and duties hereby imposed on them
except by mutual consent of the Servicer and the Agent (with the Required
Alternate Lenders' consent), or upon the determination that the Servicer's
duties hereunder are no longer permissible under applicable law and such
incapacity cannot be cured by the Servicer. Any such determination permitting
the resignation of the Servicer shall be evidenced by a Certificate of an
Authorized Officer of the Servicer to such effect delivered to the Agent. No
such resignation shall become effective until a successor has assumed the
Servicer's responsibilities and obligations hereunder in accordance with Section
6.3.
Section 7.2. Term of Agreement. This Agreement shall continue in
existence and effect until the earlier of (a) the later of the final payment or
other liquidation of the last Loan or the disposition of all property acquired
upon foreclosure or deed in lieu of foreclosure of any Loan and the remittance
of all funds due thereunder, (b) the payment in full of Obligations in
accordance with the Credit Agreement or (c) mutual consent of the Servicer, the
Agent and the Required Alternate Lenders in writing.
20
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1. Amendment. This Agreement may not be amended except by
a written instrument executed by the Servicer, the Borrower and the Agent.
Section 8.2. Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF OTHER THAN SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW (EXCEPT IN THE CASE OF THE OTHER TRANSACTION DOCUMENTS,
TO THE EXTENT OTHERWISE EXPRESSLY STATED THEREIN).
Section 8.3. Notices. All demands, notices and communications
hereunder shall be in writing and shall be duly given if addressed to the
appropriate Notice Address and delivered by hand or sent by nationally
recognized express courier, or mailed by registered mail, postage prepaid, or
transmitted by telecopy, and shall be effective upon receipt, except when
telecopied, in which case, any such communication shall be effective upon
telecopy against receipt of answer back or written confirmation thereof.
Section 8.4. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement. The parties hereto further agree that the holding by any court of
competent jurisdiction that any remedy pursued by the Agent hereunder is
unavailable or unenforceable shall not affect in any way the ability of the
Agent to pursue any other remedy available to it.
Section 8.5. No Partnership. 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 and not as an agent for the Agent.
Section 8.6. Counterparts. This Agreement may be executed in one or
more counterparts and by the different parties hereto on separate counter-parts,
each of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same agreement.
Section 8.7. Successors and Assigns; Beneficiaries; Assignment. This
Agreement shall (i) inure to the benefit of the Servicer, the Borrower, the
Agent, the Lenders and their respective successors and assigns, and (ii) shall
be binding upon the Servicer, the Borrower and the Agent and their respective
successors and assigns. The Servicer acknowledges and consents to the assignment
to the Agent for the benefit of the Lenders of all of the Borrower's rights and
the delegation of any the Borrower's obligations hereunder pursuant to the
Credit Agreement.
21
Section 8.8. Indulgences; No Waivers. Neither the failure nor any
delay on the part of a party to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such
waiver.
Section 8.9. Titles Not To Affect Interpretation. The titles of
paragraphs and subparagraphs contained in this Agreement are for convenience
only, and they neither form a part of this Agreement nor are they to be used in
the construction or interpretation hereof.
Section 8.10. Entire Agreement. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof.
Section 8.11. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement is subject to recordation in all appropriate
public offices for real property records in all the counties or the comparable
jurisdictions in which any Mortgaged Property is situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Servicer and at its expense upon the written request of the
Agent.
Section 8.12. No Setoff. The Servicer shall remit Collections as
contemplated under this Agreement and under the Credit Agreement, except as
expressly contemplated in Sections 3.8 and 4.3 hereof, without deduction,
set-off or counterclaim, and, unless and until the Credit Agreement has been
terminated and all amounts owing by the Borrower thereunder shall have been
indefeasibly paid in full, hereby waives any right it may now or at any time
hereafter have to set-off, such Collection against any obligations owed to it by
the Borrower, or by the Agent or any Lenders.
[The immediately following page contains the signatures.]
22
IN WITNESS WHEREOF, the Borrower, the Servicer and the Agent have caused
their names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
PMC CONDUIT, L.P.,
as Borrower
By: PMC Conduit, LLC
Its General Partner
By: /s/ βββ β. βββββ
-----------------------------
βββ β. βββββ
Executive Vice President
PMC COMMERCIAL TRUST,
as Servicer
By: /s/ βββ β. βββββ
-----------------------------
βββ β. βββββ
Executive Vice President
JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION, as Agent
By: /s/ βββββββ β. ββββββ
-----------------------------
Name: βββββββ β. ββββββ
Title: Vice President
Signature Page to Servicing Agreement
EXHIBIT A
TO
SERVICING AGREEMENT
FORM OF LOCKBOX AGREEMENT
EXECUTION COPY
LOCK-BOX AGREEMENT
February 7, 2005
JPMorgan Chase Bank, N.A.
Asset Backed Finance
Suite IL1-0612
1 Bank βββ βββββ
βββββββ, ββββββββ βββββ-ββββ
Fax: (βββ) βββ-ββββ
Re: PMC Conduit, L.P.
Ladies and Gentlemen:
You have exclusive control of β.β. βββ ββββββ, ββββββ, ββ
βββββ-ββββ (the "Lock-Box") for the purpose of receiving mail and processing
payments therefrom pursuant to that certain lock-box services agreement (the
"Agreement") dated February 7, 2005 between you and PMC Conduit, L.P. (the
"Customer") for the purposes of (1) that certain Purchase and Contribution
Agreement (the "Purchase Agreement") dated as of February 7, 2005 among PMC
Commercial Trust and PMC Conduit, L.P. and (2) that certain Credit and Security
Agreement dated as of February 7, 2005 (the "Credit Agreement"), among the PMC
Commercial Trust, as servicer (the "Servicer"), PMC Conduit, LLC, as general
partner of the Customer, the Customer, JPMorgan Chase Bank, National
Association, as agent (the "Agent") and the "Conduit Lender" and the "Alternate
Lenders" from time to time parties thereto. You hereby confirm your agreement to
perform the services described therein. Among the services you have agreed to
perform therein is to endorse all checks and other evidences of payment, and
credit such payments to checking account no. 675512990 maintained with you in
the name of the Customer (the "Lock-Box Account").
We understand that JPMorgan Chase Bank, N.A. (as the "Collection Bank")
and Bank One National Processing Corporation ("BONPC") work together to provide
services with respect to the Lock-Box. All references herein to "you" and "your"
shall mean the Collection Bank and BONPC, as applicable.
Customer hereby irrevocably instructs you, and you hereby agree, that
from the date hereof, you shall comply with instructions originated by the
Agent, directing disposition of the funds in the Lock-Box Account without
further consent of the Customer. The Agent hereby authorizes you to take
instructions from the Servicer, on behalf of the Agent, with respect to the
funds delivered to the
1
Lock-Box and/or on deposit in the Lock-Box Account until such time as you
receive notice from the Agent in the form attached hereto as Annex A.
Customer hereby irrevocably instructs you, and you hereby agree, that
upon receiving notice from the Agent in the form attached hereto as Annex A: (i)
the name of the Lock-Box Account will be changed to "JPMorgan Chase Bank, N.A.,
for itself and as agent" (or any designee of JPMorgan Chase Bank) and the Agent
will have exclusive ownership of and access to such Lock-Box Account, and none
of Customer, Servicer or any of their respective affiliates will have any
control of such Lock-Box Account or any access thereto, (ii) you will either
continue to send the funds from the Lock-Box to the Lock-Box Account, or will
redirect the funds as the Agent may otherwise request, (iii) you will transfer
monies on deposit in the Lock-Box Account, at any time, as directed by the
Agent, (iv) all services to be performed by you under the Agreement will be
performed on behalf of the Agent, and (v) all correspondence or other mail which
you have agreed to send us will be sent to the Agent at the following address:
JPMorgan Chase Bank, N.A., as Agent
Asset Backed Finance
Suite IL1-0612
1 Bank βββ βββββ
βββββββ, ββββββββ βββββ-ββββ
Fax: (βββ) βββ-ββββ
Moreover, upon such notice, the Agent will have all rights and remedies
given to Customer under the Agreement. The Customer agrees, however, to continue
to pay all fees and other assessments due thereunder at any time.
You hereby acknowledge that monies deposited in the Lock-Box Account or
any other account established with you by the Agent for the purpose of receiving
funds from the Lock-Box are subject to the liens of the Agent for itself and as
agent under the Purchase Agreement, and will not be subject to deduction,
set-off, banker's lien or any other right you or any other party may have
against Customer or the Servicer, except that you may debit the Lock-Box Account
for any items deposited therein that are returned or otherwise not collected and
for all charges, fees, commissions and expenses incurred by you in providing
services hereunder, all in accordance with your customary practices for the
charge back of returned items and expenses.
You hereby agree that (i) you are a "bank" within the meaning of
Section 9-102 of the Uniform Commercial Code as is in effect in the State of New
York (the "UCC"), (ii) the Lock-Box Account constitutes a "deposit account"
within the meaning of Section 9-102 of the UCC and (iii) this letter agreement
shall constitute an "authenticated record" for purposes of Section 9-104 of the
UCC. The Customer hereby grants to and confers upon the Agent "control" of the
Lock-Box and Lock-Box Account as contemplated in Section 9-104 (and similar and
related provisions) of the UCC.
You will be liable only for direct damages in the event you fail to
exercise ordinary care. You shall be deemed to have exercised ordinary care if
your action or failure to act is in conformity with general banking usages or is
otherwise a commercially reasonable practice of the banking industry. You shall
not be liable for any special, indirect or consequential damages,
2
even if you have been advised of the possibility of these damages. You will not
be liable for any failure to perform your obligations when the failure arises
out of causes beyond your control, including, without limitation, an act of a
governmental regulatory/authority, an act of God, accident, equipment failure,
labor disputes or system failure, provided you have exercised such diligence as
the circumstances require.
Nothing in this agreement, unless otherwise agreed in writing, or any
course of dealing between you, the Customer, the Servicer or the Agent, commits
or obligates you to extend any overdraft or other credit to the Customer, the
Servicer or the Agent.
You or the Agent, upon thirty (30) days notice to the other parties,
may terminate this agreement. Any claim or cause of action of any party against
any other relating to this agreement which existed at the time such termination
becomes effective shall survive the termination. All mail received after the
date specified in such notice of termination (the "Termination Date") shall be
returned by you to the Agent by first class mail or such other means mutually
agreeable to you and the Agent, and all funds received in the Lock-Box Account
after the Termination Date shall be sent by you to an account specified by the
Agent. Notwithstanding the foregoing, you acknowledge that monies deposited in
the Lock-Box Account after the Termination Date shall continue to be subject to
the liens of the Agent for itself and as agent under the Credit Agreement, and
will not be subject to deduction, set-off, banker's lien or any other right you
or any other party may have against Customer or the Servicer, except as
otherwise provided in this letter agreement.
The Customer and the Servicer agree to indemnify you for, and hold you
harmless from, all claims, damages, losses, liabilities and expenses, including
legal fees and expenses, resulting from or with respect to this agreement and
the administration and maintenance of the Lock-Box Account and the services
provided hereunder, including, without limitation: (a) any action taken, or not
taken, by you in regard thereto in accordance with the terms of this agreement,
(b) the breach of any representation or warranty made by the Customer pursuant
to this agreement, (c) any item, including, without limitation, any automated
clearinghouse transaction, which is returned for any reason, and (d) any failure
of the Customer to pay any invoice or charge to you for services in respect to
this agreement and the Lock-Box Account or any amount owing to you from the
Servicer with respect thereto or to the service provided hereunder.
The parties acknowledge that you may assign or transfer your
rights and obligations hereunder to a wholly-owned subsidiary of JPMorgan Chase
Bank, N.A.
This letter agreement and the rights and obligations of the
parties hereunder will be governed by and construed and interpreted in
accordance with the laws of the State of New York. This letter agreement may be
executed in any number of counterparts and all of such counterparts taken
together will be deemed to constitute one and the same instrument.
This letter agreement contains the entire agreement between
the parties, and may not be altered, modified, terminated or amended in any
respect, nor may any right, power or privilege of any party hereunder be waived
or released or discharged, except upon execution by all parties hereto of a
written instrument so providing. In the event that any provision in this letter
agreement is in conflict with, or inconsistent with, any provision of the
Agreement, this
3
letter agreement will exclusively govern and control. Each party agrees to take
all actions reasonably requested by any other party to carry out the purposes of
this letter agreement or to preserve and protect the rights of each party
hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
4
Please indicate your agreement to the terms of this letter
agreement by signing in the space provided below. This letter agreement will
become effective immediately upon execution of a counterpart of this letter
agreement by all parties hereto.
Very truly yours,
PMC CONDUIT, L.P.
By: PMC Conduit, LLC, its General Partner
By:
-------------------------------------
Name:
Title:
PMC COMMERCIAL TRUST, as Servicer
By:
-------------------------------------
Name:
Title:
Acknowledged and agreed to
this 7th day of February, 2005:
JPMORGAN CHASE BANK, N.A.,
in its capacity as Collection Bank.
By:
---------------------------
Name:
Title:
JPMORGAN CHASE BANK, N.A.,
in its capacity as Agent under the Credit Agreement.
By:
---------------------------
Name:
Title:
Signature Page to the Lock-Box Agreement
ANNEX A
FORM OF COLLECTION NOTICE
[ON LETTERHEAD OF THE AGENT]
[DATE]
JPMorgan Chase Bank, N.A.
Asset Backed Finance
Suite IL1-0612
1 Bank βββ βββββ
βββββββ, ββββββββ βββββ-ββββ
Fax: (βββ) βββ-ββββ
Re: PMC Conduit, L.P.
Ladies and Gentlemen:
We hereby notify you that we are exercising our rights
pursuant to that certain letter agreement among PMC Conduit, L.P., you and us,
to have the name of, and to have exclusive ownership and control of, account
number ________________ (the "Lock-Box Account") maintained with you,
transferred to "JPMorgan Chase Bank, N.A., as Agent." [The Lock-Box Account will
henceforth be a zero-balance account, and funds deposited in the Lock-Box
Account should be sent at the end of each day to _________________]. You have
further agreed to perform all other services you are performing under that
certain agreement dated ____________ between you and PMC Conduit, L.P. on our
behalf.
We appreciate your cooperation in this matter.
Very truly yours,
JPMORGAN CHASE BANK, N.A., as Agent
By:
-------------------------------------
Name:
Title:
Annex A
EXHIBIT B
TO
SERVICING AGREEMENT
FORM OF LOCKBOX NOTICE LETTER
[PMC Commercial Trust Letterhead]
[Date]
[Name of Obligor]
[Address]
Re: PMC Commercial Trust ("PMC")
Loan Number
Dear [Obligor]:
Unless and until you are otherwise directed by JPMorgan Chase Bank,
National Association, as Agent or any successor thereto to send your payments to
a different address, please send all future payments on your loan including, all
monthly payments of principal and interest and any and all prepayments to the
following address:
PMC Commercial Trust
P. O. Box ______
Dallas, Texas ______
You should, however, continue to direct any and all inquiries or other
correspondence relating to your loan to the following address:
PMC Commercial Trust
βββββ βββββββ ββββ, βββββ βββ
ββββββ, βββββ βββββ
If you have any questions, please contact the undersigned at (XXX)
XXX-XXXX.
Sincerely,
[Officer]
[Title]
EXHIBIT D
TO
SERVICING AGREEMENT
QUARTERLY OFFICER'S CERTIFICATE
[Date]
The undersigned, pursuant to the provisions of Section 5.3 of the
Servicing Agreement dated as of February 7, 2005 (the "Agreement"), by and among
JPMorgan Chase Bank, National Association in its capacity as Agent, PMC Conduit,
L.P. and the Servicer, do hereby certify on behalf of each the Servicer, as
follows:
(i) the Servicer has fully complied with the provisions of the
Agreement;
(ii) a review of the activities of the Servicer during the preceding
quarter and of the Servicer's performance under the Agreement has
been made under my supervision; and
(iii) to the best of my knowledge, based on the review referred to in (ii)
above, the Servicer has fulfilled all of its obligations, duties and
responsibilities under the Agreement throughout the preceding
quarterly period and no Unmatured Amortization Event or Amortization
Event exists.
Capitalized terms used but not otherwise defined herein shall have the
same meanings ascribed to such terms in the Agreement.
IN WITNESS WHEREOF, I have executed this certificate this ____ day of
_________, 20____.
PMC COMMERCIAL TRUST, Servicer
By:
Name:
Title:
EXHIBIT E
TO
SERVICING AGREEMENT
FORM OF OBLIGOR LETTER
[Date]
VIA CERTIFIED MAIL
[Obligor]
[Address]
Re: PMC Commercial Trust ("PMC")
Loan Number
Dear [Obligor]:
Your loan serviced by PMC is part of a pool of loans for which JPMorgan
Chase Bank, National Association serves as Agent. As part of our servicing
responsibility we are required to verify certain information with respect to
your loan.
Our records indicate your loan was previously delinquent by more than 90
days and has recently been brought current. We are required to demonstrate that
you did in fact make the delinquent payments.
If these facts are correct, please indicate your acknowledgment by signing
and returning a copy of this letter to our attention, in the envelope provided.
If these facts are not correct, please indicate your disagreement by signing
this letter and indicating your disagreement beneath your signature and
returning a copy of this letter to our attention, in the envelope provided.
If we do not hear from you within 30 days of the date of this letter we
will assume that these facts are true.
If you have any questions, please contact the undersigned at (XXX)
XXX-XXXX.
Sincerely,
[Officer]
[Title]
Acknowledged by:
Obligor Name Date