Exhibit 10.1

CAUSE NO. CC-13-05823-E

 

REIT REDUX, L.P., HOAK & CO.,and   §                                  
IN THE COUNTY COURT    HOAK PUBLIC EQUITIES, L.P.,   §      On behalf of
themselves and others   §      similarly situated, and Derivatively on   §     
Behalf of PMC COMMERCIAL TRUST et al.   §        §     

Plaintiffs,

  §        §      v.   §   AT LAW NO. 5      §      PMC COMMERCIAL TRUST,   §  
   JAN F. SALIT, BARRY N. BERLIN,   §      NATHAN COHEN, DR. MARTHA   §     
ROSEMORE MORROW, BARRY IMBER,   §      SOUTHFORK MERGER SUB,   §      and CIM
URBAN REIT, LLC,   §        §     

Defendants.

  §   DALLAS COUNTY, TEXAS   

MEMORANDUM AND AGREEMENT OF SETTLEMENT

EXECUTION COPY

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WHEREAS, pending before the County Court at Law No. 5, in Dallas County, State
of Texas (the “Court”), is an action captioned REIT Redux, L.P., Hoak & Co., and
Hoak Public Equities, L.P., on behalf of themselves and all others similarly
situated, and derivatively on behalf of PMC Commercial Trust v. PMC Commercial
Trust, Jan F. Salit, Barry N. Berlin, Nathan Cohen, Dr. Martha Rosemore Morrow,
Barry Imber, Southfork Merger Sub, LLC, and CIM Urban REIT, LLC, Cause No.:
CC-13-05823-E (the “Action”);

WHEREAS, plaintiffs Hoak & Co., and Hoak Public Equities L.P., (together, the
“Plaintiffs”) have asserted their claims in the Action on their own behalf,
derivatively on behalf of PMC Commercial Trust, and on behalf of a putative
class of all persons or entities who, from July 8, 2013, and through and
including the shareholder vote on the Proposed Transaction (as defined below)
who were or are holders of PMC’s common shares, either of record or
beneficially, other than Defendants, their employees, affiliates, relatives or
control persons, any consultants or advisors of Defendants (the “Putative
Class”);

WHEREAS, the Parties (as defined below) in the Action by their respective
counsel, have reached this agreement providing for the settlement of the Action
on the terms and subject to the conditions set forth below (the “Settlement
Agreement”);

WHEREAS, on July 8, 2013, PMC Commercial Trust (“PMC”), a publicly traded (NYSE:
PCC) Real Estate Investment Trust organized under the laws of the State of
Texas, announced that it and its subsidiary, Southfork Merger Sub, LLC
(“Southfork”) a Delaware limited liability company, entered into an Agreement
and Plan of Merger (the “Merger Agreement”) with CIM Urban REIT, LLC (“CIM”) and
its subsidiary, CIM Merger Sub, LLC (“CIM Merger Sub”), pursuant to which (among
other things), if approved by a vote of at least a majority of the shareholders
of PMC present or represented by proxy at a special meeting of

 

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PMC’s shareholders currently scheduled for February 11, 2014 (the “PMC
Shareholder Vote”): (1) PMC would pay a special dividend to its shareholders as
of the dividend record date in the amount of $5.50 per share; (2) PMC would
issue approximately 22 million additional common and approximately 65 million
preferred shares to a subsidiary of CIM as set forth in the Merger Agreement;
and (3) following the issuance of such shares, CIM Merger Sub would merge into
Southfork, all as more fully described in the Merger Agreement (the “Proposed
Transaction”);

WHEREAS, on July 8, 2013, PMC filed with the Securities and Exchange Commission
(“SEC”) a Form 8-K (the “Form 8-K”) which announced the Proposed Transaction and
attached a copy of the Merger Agreement;

WHEREAS, on August 30, 2013, PMC filed a Registration Statement on Form S-4
(File No. 333-190934) (the “Form S-4”) with the SEC in connection with the
Proposed Transaction, and on December 30, 2013, PMC filed its definitive Proxy
Statement/Prospectus pursuant to Rule 424(b)(3) of the Securities Act of 1933,
as amended, which was mailed to shareholders of PMC on or about January 6, 2014
seeking their approval of certain aspects of the Proposed Transaction, and among
other things, provided certain information about the Proposed Transaction, its
background, and the reasons PMC’s Board of Trust Managers was recommending
certain aspects of the Proposed Transaction for shareholder approval;

WHEREAS, Plaintiffs claim that, on a combined basis, they constitute the largest
public shareholder of PMC Commercial Trust, holding at least 769,000 shares of
PMC (the “Represented Shares”);

WHEREAS on July 8, 2013 and again on December 23, 2013, Plaintiffs sent letters
to PMC opposing the Proposed Transaction because, among other things, Plaintiffs
contended that their shares’ value post-Merger, and therefore, the total merger
compensation, would be insufficient;

 

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WHEREAS, Defendants dispute the assertions set forth in Plaintiffs’ July 8, 2013
and December 23, 2013 letters;

WHEREAS, on October 9, 2013, Plaintiffs filed the Action seeking, among other
things, to enjoin the Proposed Transaction as contemplated in the Form S-4,
based on Plaintiffs’ direct, derivative, and putative class allegations in
connection with the Proposed Transaction claiming (among other things):
(a) breach of PMC’s Declaration of Trust, breach of fiduciary duty and
shareholder oppression against Jan F. Salit, Barry N. Berlin, Nathan Cohen,
Dr. Martha Rosemore Morrow and Barry Imber (the “Individual Defendants”),
(b) vicarious liability against PMC, and (c) aiding, abetting and inducing such
breaches and tortious interference against CIM;

WHEREAS Defendants have denied, and continue to deny, that they have:
(i) breached the PMC Declaration of Trust, (ii) committed, attempted to commit,
or aided and abetted in the commission of any breach of fiduciary duty owed to
PMC, Southfork or their shareholders or otherwise, (iii) committed any tortious
act or (iv) engaged in any of the wrongful acts alleged in the Action;

WHEREAS, on November 4, 2013, Plaintiffs filed an Application for Temporary
Injunction, seeking to enjoin the Proposed Transaction, which is currently set
for hearing on January 29, 2014, and February 6, 2014;

WHEREAS on November 12, 2013, Plaintiffs amended their Petition to add
derivative allegations on behalf of Southfork;

 

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WHEREAS, on December 13, 2013, PMC, the Individual Defendants and Southfork
filed their Amended Plea to the Jurisdiction and Special Exceptions, which is
pending before the Court and could result in dismissal of the derivative claims;

WHEREAS, Steckler LLP is counsel for the Plaintiffs;

WHEREAS, beginning in November 2013, the parties to the Action and their counsel
engaged in arms’ length discussions regarding a potential resolution of the
claims asserted in the Action, and on January 21, 2014, the parties mediated
such claims before Chris Nolland, the mediator appointed by the Court to mediate
the claims in the Action;

WHEREAS, after multiple adversarial negotiations including two days of in-person
meetings, one day of which involved mediation before the Court-appointed
mediator, Plaintiffs, on the one hand, and PMC, Southfork, the Individual
Defendants and CIM (collectively, the “Defendants,” and together with
Plaintiffs, the “Parties”), on the other hand, reached an agreement concerning
the settlement of the claims in the Action, which they set forth herein (the
“Settlement”);

WHEREAS, as part of the Settlement, CIM has represented and warranted that CIM
Service Provider, LLC (“Manager”), a subsidiary of CIM Group and the entity
appointed to act as manager pursuant to the Master Services Agreement (as
defined in the Form S-4), has or will enter into a Rule 10b-5(1) Plan, pursuant
to which Manager will agree to purchase shares of PMC at a market price of up to
$5.00 per share during a period ending approximately six months following the
closing of the Proposed Transaction (the “Share Purchases”), with a limit of
2,750,000 shares, pursuant and subject to the terms set forth in the Rule
10b-5(1) Plan attached hereto as Exhibit A to this Settlement Agreement (which
is incorporated herein by reference);

 

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WHEREAS, as part of the Settlement, CIM and PMC have agreed to issue a press
release substantially in a form attached as Exhibit B to this Settlement
Agreement (which is incorporated herein by reference).

WHEREAS, Plaintiffs and their counsel have, after conducting discovery and
investigating the legal and factual issues, determined that in light of the
risks of litigation, this settlement is ultimately in the best interests of PMC
and the shareholders, and is fair, reasonable and adequate under the
circumstances because, among other things, the settlement provides greater
assurance that there will be a market for the post-merger shares of PMC at a
price of $5.00;

WHEREAS, in consideration for the foregoing and the mutual promises made herein,
Plaintiffs and the Putative Class will release the Defendants, their affiliates,
and all persons acting on behalf of or in concert with them, of and from all
claims that Plaintiffs or any member of the Putative Class have or might have
relating to the Proposed Transaction and the events leading up to the Proposed
Transaction, including all claims that were or could have been asserted in the
Action;

WHEREAS, as part of the Settlement, Plaintiffs have agreed to withdraw their
Application for Temporary Injunction and to vote their shares in favor of the
Proposed Transaction;

WHEREAS, Defendants have agreed to settle the claims on the terms set forth in
this Settlement Agreement solely to avoid the costs, disruption and distraction
of further litigation, and without admitting the validity of any allegations
made in the Action or any liability with respect thereto and expressly denying
same;

 

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NOW THEREFORE, as a result of the foregoing and the arm’s length negotiations
among counsel, in consideration of the promises and covenants set forth herein,
the Parties have agreed as follows:

1. MANAGER’S SHARE PURCHASES. CIM represents and warrants that Manager has or
will enter into a Rule 10b-5(1) Plan (the “Plan”) substantially in the form as
attached hereto as Exhibit A to this Settlement Agreement as soon as reasonably
practicable. Pursuant to the Plan, Manager will agree to purchase shares of PMC
through open market purchases and/or through allowed block trades at a market
price of up to $5.00 per share during the period ending on August 10, 2014, with
a limit of 2,750,000 shares, pursuant and subject to the terms as set forth in
the Rule 10b-5(1) Plan attached hereto as Exhibit A to this Settlement Agreement
(which is incorporated herein by reference). CIM agrees not to take any action
that would cause the withdrawal, modification or termination of Plan prior to
the expiration of the Plan pursuant to its terms, except as required by law or
in accordance with the terms of this Settlement Agreement.

2. PRESS RELEASE. Upon approval by the Court of the Derivative Action
Settlement, CIM and PMC will issue a press release substantially in the form as
attached hereto as Exhibit B (which is incorporated by reference).

3. VOTING. Plaintiffs represent that they and all other “reporting persons” on
Plaintiffs’ Schedule 13D filings with respect to PMC filed with the SEC
(collectively, the “13D Group”), will vote all PMC shares beneficially owned by
Plaintiffs and the other members of the 13D Group as of the record date for the
PMC Shareholder Vote (which number of shares so voted shall not be less than the
number of Represented Shares), in favor of all proposals presented to PMC’s
shareholders at the PMC Shareholder Vote, including any adjournment or

 

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postponement thereof. In furtherance of the foregoing, Plaintiffs (a) shall vote
or validly submit proxies with respect to their PMC shares owned as of the
record date and (b) represent that the other members of the 13D Group shall vote
or validly submit proxies with respect to their PMC shares owned as of the
record date, in each case by February 9, 2014 in accordance with the
instructions set forth in the Form S-4 voting in favor of all proposals
presented to PMC’s shareholders at the PMC Shareholder Vote (it being understood
that “street name” shares may be voted through directing a broker intermediary
to vote or submit a proxy in accordance with the foregoing). Following the
foregoing affirmative vote by Plaintiffs and the 13D Group, they shall not
change or withdraw their vote. In the event that Plaintiffs and the other
members of the 13D Group fail to so vote all such PMC shares, then this
Agreement shall be null and void (if and only if the PMC Shareholder Vote is
held pursuant to proper notice provided in accordance with PMC’s governing
documents and applicable law). If Plaintiffs and the other members of the 13D
Group comply with their voting obligations herein but the Proposed Transaction
nevertheless fails to close, this Agreement shall be null and void. For purposes
of the foregoing, “fails to close” means (1) the Proposed Transaction with CIM
and its affiliates does not close within six (6) months of the date hereof and
(2) the Merger Agreement is terminated. Notwithstanding the foregoing, if a de
minimis number of PMC shares (totaling no greater than 5,000 shares) owned by
members of the 13D Group are not voted at all (or proxies with respect thereto
have been not provided to PMC), Plaintiffs and the other members of the 13D
Group shall not be out of compliance with the foregoing voting obligations so
long as such de minimis PMC shares are not voted against the proposals presented
to PMC shareholders at the PMC Shareholder Vote.

 

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4. WITHDRAWAL OF OPPOSITION. Plaintiffs will withdraw their Application for a
Temporary Injunction in the Action and agree not to mount, encourage or
cooperate in any opposition to the Proposed Transaction.

5. SETTLEMENT FAIR, ADEQUATE AND REASONABLE. Plaintiffs and their counsel have
diligently conducted discovery and investigated the merits of the derivative and
class claims in the Action, and based thereupon believe that this Settlement
Agreement is fair, reasonable, adequate, and in the best interests of
Plaintiffs, PMC, and the Settlement Class (defined below);

6. RELEASE PROVISION. Plaintiffs and the Settlement Class will agree to a Court
Order dismissing all claims, and releasing all claims in the following form:

(a) Plaintiffs on behalf of themselves individually, derivatively, and the
Settlement Class (collectively, the “Releasing Persons”) RELEASE, ACQUIT AND
FOREVER DISCHARGE Defendants and their respective spouses, parent entities,
affiliates, divisions, subsidiaries and members, and each and all of their
respective past, present or future officers, directors, trustees, managers,
principals, agents, representatives, employees, general or limited partners,
attorneys, financial or investment advisors (including without limitation
Sandler O’Neill), appraisers, and any other advisors, consultants, accountants,
investment bankers, commercial bankers, trustees, engineers, insurers, members,
heirs, executors, personal or legal representatives, estates, administrators,
successors and assigns, whether or not any such Released Persons were named in
the Action (collectively, the “Released Persons”), of all claims, demands,
rights, actions or causes of action, liabilities, damages, losses, obligations,
judgments, suits, fees, expenses, costs, matters and issues of any kind or
nature whatsoever, whether legal, equitable or any other type, known or unknown,
contingent or absolute, suspected or unsuspected, disclosed

 

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or undisclosed, hidden or concealed, matured or unmatured, that have been, could
have been, or in the future can or might be asserted in the Action or in any
court, tribunal or proceeding relating to the Proposed Transaction, including
but not limited to any claims arising under federal securities laws or under
federal, state statutory or common law, or any other law, rule or regulation,
including the law of any other jurisdiction outside of the United States,
regarding the allegations, facts, events, acquisitions, matters, acts,
occurrences, decisions, conduct, statements, representations, omissions, that
was or could have been raised in the Action, or that are otherwise related in
any way to: (i) the claims or allegations asserted in the Action or in any other
proceeding concerning the Proposed Transaction, (ii) the Proposed Transaction
and the Merger Agreement and any related agreements (the “Related Agreements”);
(iii) any filing with the SEC relating to the Proposed Transaction; (iv) the
negotiations in connection with the Proposed Transaction and Related Agreements;
(v) the public statements or disclosures or disclosure obligations of any of the
Defendants or Released Persons in connection with the Proposed Transaction and
the Related Agreements; (vi) the fiduciary obligations of any of the Defendants
or Released Persons in connection with the Proposed Transaction, the Related
Agreements, any SEC filings or any other matter in connection with the Proposed
Transaction; (vii) any alleged breach of the PMC Declaration of Trust related to
the PMC Shareholder Vote or the Proposed Transaction; and/or (viii) the entry by
Defendants into this Settlement Agreement, the Settlement Documents and the
Settlement (collectively, “Settled Claims”); provided, however, that
notwithstanding the foregoing, the above release shall not extend to Plaintiffs’
right to enforce the terms of this Settlement Agreement or to any non-Settled
Claims that accrued after execution of this Settlement Agreement;

 

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(b) Releasing Persons waive their rights under applicable state law, federal law
and common law to the extent such laws may have the effect of limiting the
releases set forth above, including a specific waiver by the Releasing Persons
of all claims which the Releasing Persons do not know or expect to exist at the
time of the release, and any rights pursuant to California Civil Code
Section 1542, or any similar, comparable or equivalent provision of the law of
any other jurisdiction, which provides:

A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor;

(c) Defendants will RELEASE, ACQUIT AND FOREVER DISCHARGE Plaintiffs (and their
affiliates, members, control persons, partners, heirs, and assigns) and
Plaintiffs’ counsel from all claims arising out of the commencement,
prosecution, settlement or resolution of the Settled Claims; provided, however,
that the foregoing release shall not extend to the Released Persons’ right to
enforce the terms of this Settlement Agreement;

(d) In the event the Settlement does not become final for any reason, including
if the Court approves the Settlement Agreement but such approval is reversed on
appeal, Defendants reserve the right to oppose certification of any class as
well as defend on the merits in the Action or any future proceedings, and
Plaintiffs reserve their right to amend their petition and prosecute their
claims as if no release had been effectuated or entered into; and

(e) Subject to the Order of the Court, pending final determination of whether
the Settlement should be approved, Plaintiffs and all members of the Settlement
Class, and any of them, are barred and enjoined from commencing, prosecuting,
instigating or in any way participating in the commencement or prosecution of
any action asserting any Settled Claims, either directly, representatively,
derivatively or in any other capacity, against any Released Person.

 

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7. APPROVAL OF DERIVATIVE ACTION SETTLEMENT.

(a) The Parties agree to present the derivative settlement as contained in this
Settlement Agreement to the Court for hearing and approval on January 29, 2014;

(b) The Parties shall on an expedited basis seek Court approval of (i) the
Manager share purchases as set forth in Section 1 of this Settlement Agreement;
(ii) Plaintiffs’ agreement to withdraw their motion for temporary injunction and
otherwise seeking to enjoin or stop the Proposed Transaction or the PMC
Shareholder Vote; (iii) Plaintiffs’ agreement to dismiss their derivative claims
on behalf of PMC and Southfork with prejudice in consideration of the Settlement
Agreement; and (iv) Plaintiffs’ application for attorneys’ fees as set forth
below in Section 15 (altogether, the “Derivative Action Settlement”);

(c) Plaintiffs may petition for attorneys’ fees and costs as provided for and
which shall be payable only as set forth in Section 15, which Defendants have
agreed not to oppose under the terms and conditions of Section 15, the award
and/or approval of which shall not be a condition of approval of the overall
Derivative Action Settlement; and

(d) The Parties agree that under applicable law, the release of the derivative
claims shall have preclusive effect on all future asserted derivative claims,
whether asserted by Plaintiffs or any other party on behalf of PMC, Southfork or
any other PMC subsidiary, to the extent such claims relate to or arise out of
the events set forth in the Third Amended Petition.

 

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8. APPROVAL OF CLASS ACTION SETTLEMENT.

(a) Stay of Class Action. Other than the approval of the Derivative Action
Settlement, the Action shall be stayed pending final Court approval of the class
action settlement described herein (the “Class Action Settlement”), and the
Parties’ counsel shall take all reasonable steps required to effectuate such
stay. The Parties agree that all outstanding notices of deposition and
outstanding discovery requests are withdrawn. Except as otherwise provided
herein, Plaintiffs agree that they will not take or encourage any action or make
any filing in the Action or in any other forum (whether in the United States or
any other jurisdiction), including, but not limited to, filing any motion or
pleading seeking expedited discovery, or any motion or pleading of any kind that
seeks to enjoin, either temporarily or permanently, the Proposed Transaction or
the shareholder vote related to the Proposed Transaction or assert any other
challenge or objection to the Proposed Transaction. The Parties further agree
that they shall cooperate in opposing any subsequently-filed similar action,
whether in the Court or in any other forum, and to take all reasonable steps to
defend the settlement as contained in this Settlement Agreement (the
“Settlement”). This stay is not intended to limit the right of any party to
enforce the terms of this Settlement Agreement and/or to effectuate the proposed
Settlement.

(b) Class Action Approval Process. The Parties will use their best efforts to
agree upon, execute and present to the Court any and all documents (altogether,
the “Settlement Documents”) as may be necessary and appropriate to obtain the
prompt approval by the Court of the Class Action Settlement and the dismissal
with prejudice of the Class Action, including (among other things) the following
provisions:

(i) On January 29, 2014, the Parties will jointly move for preliminary
certification of the Class Action, approval of the Class Action Settlement and
of class notice pursuant to Texas Rule of Civil Procedure 42, for the following
non-opt out settlement class: “All persons or entities who, from July 8, 2013,
through and including January 29, 2014, were or are holders of PMC’s common
shares, either of record or beneficially, other than Defendants, their
affiliates and other PMC shareholders who previously settled or released their
claims against Defendants related to the Proposed Transaction” (the “Settlement
Class”);

 

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(ii) PMC shall be responsible for providing and administering notice of the
Settlement to the members of the Settlement Class. PMC shall pay all reasonable
costs and expenses incurred in providing notice of the Settlement to the members
of the Settlement Class as directed by the Court;

(iii) PMC shall have fifteen (15) days from the date of the Court’s preliminary
approval to send the court-approved notice to class members;

(iv) the Parties will request that the Court allow thirty (30) days from the
date notice is sent for objectors to file objections;

(v) The Parties will seek final approval approximately sixty (60) days following
the Court’s preliminary approval of the Settlement Class and agree to use their
best efforts to obtain Final Court Approval of the Settlement and the dismissal
of the Action with prejudice as to all Settled Class Action Claims and without
costs to any party (other than as provided herein); and

(vi) The Class Action will be dismissed with prejudice upon final Court approval
of the Class Action Settlement, and the Parties agree that, except as expressly
provided herein, the Action shall be stayed pending final Court approval, and
the Plaintiffs and the Settlement Class will release all claims in accordance
with the Release Provision contained herein.

9. .PLAINTIFF STAND-STILL Subject to the Order of the Court, pending final
determination of whether the Settlement should be approved, Plaintiffs and all
members of the Settlement Class, and any of them, are barred and enjoined from
commencing, prosecuting, instigating or in any way participating in the
commencement or prosecution of any action asserting any Settled Claims, either
directly, representatively, derivatively or in any other capacity, against any
Released Person.

 

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10. EXECUTION. This Settlement Agreement shall be executed by or on behalf of
each of the Parties and by counsel for the Parties, each of whom represents and
warrants that he/she has the authority to enter into this Settlement Agreement
and bind the Party on whose behalf he/she signs below.

11. WARRANTIES

(a) Plaintiffs represent and warrant that Plaintiffs are the only holder and
owner of their claims and causes of action asserted in the Action, and that none
of Plaintiffs’ claims or causes of action referred to in the Action or this
Settlement Agreement have been assigned, encumbered or in any manner transferred
in whole or in part. By signing this Settlement Agreement, Plaintiffs and their
counsel further warrant and represent that the named Plaintiffs are shareholders
of PMC. Plaintiffs and their counsel further represent that they are not aware
of any pending or planned lawsuits or legal challenges to PMC alleging breaches
of fiduciary duty, whether same was alleged in the Action or not.

(b) CIM represents and warrants that Manager has the authority and wherewithal
to effectuate and complete the Manager Share Purchases as outlined in this
Settlement Agreement, and that CIM knows of no reasons, contingencies, legal or
regulatory restrictions or events that would interfere with Manager’s ability to
perform said promises.

 

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(c) EACH PARTY FURTHER REPRESENTS AND WARRANTS THAT HE/IT HAS BEEN FULLY
INFORMED AND HAS FULL KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS
SETTLEMENT AGREEMENT, THAT HE/IT (EITHER THROUGH HIS/ITS PARTNERS, TRUSTEES,
OFFICERS, AGENTS OR INDEPENDENTLY RETAINED ATTORNEYS) HAS FULLY INVESTIGATED TO
HIS/ITS SATISFACTION ALL FACTS SURROUNDING THE VARIOUS CLAIMS, CONTROVERSIES AND
DISPUTES AND IS FULLY SATISFIED WITH THE TERMS AND EFFECTS OF THIS SETTLEMENT
AGREEMENT, THAT NO PROMISE OR INDUCEMENT HAS BEEN OFFERED OR MADE TO HIM/IT BY
ANY OTHER PARTY EXCEPT AS PROVIDED IN THIS SETTLEMENT AGREEMENT, AND THAT THIS
SETTLEMENT AGREEMENT IS EXECUTED WITHOUT RELIANCE ON ANY STATEMENT OR
REPRESENTATION BY ANY OTHER PARTY THAT IS NOT EXPRESSLY REFERRED TO IN THIS
SETTLEMENT AGREEMENT.

12. GOVERNING LAW. This Settlement Agreement and the Settlement shall be
governed by and construed in accordance with the laws of the State of Texas,
without regard to any principles governing choice of law. The Parties agree that
any dispute arising out of or relating in any way to this Settlement Agreement,
the Settlement Documents or the Settlement shall not be litigated or otherwise
pursued in any forum or venue other than the Court. 16. This Settlement
Agreement may be modified or amended only by a writing, signed by all of the
signatories hereto, that refers specifically to this Settlement Agreement.

13. SETTLEMENT AGREEMENT NOT ADMISSIBLE FOR ANY PURPOSE. The existence of, and
the provisions contained in this Settlement Agreement shall not be deemed a
presumption, concession or admission by any Party as to the merits of the
claims, or as to the fault, liability or wrongdoing of any Party, or as to any
facts or claims that have been or might be alleged or asserted in the Action, or
any other action or proceeding that has been, will be, or could be brought.
Neither the fact nor substance of this Settlement Agreement may be used by or

 

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against any Party, and shall not be interpreted, construed, deemed, invoked,
offered, or received in evidence or otherwise used by any person in the Action,
or in any other action or proceeding, whether civil, criminal or administrative,
for any purpose other than as provided expressly herein.

14. THIRD PARTY BENEFICIARIES. This Settlement Agreement shall be binding upon
and inure to the benefit of the Parties and their respective agents, executors,
heirs, successors and assigns, said obligations may not be assigned to third
parties without Plaintiffs’ prior approval.

15. ATTORNEYS’ FEES. Counsel for the Parties negotiated at arms’-length and in
good faith and agreed, subject to and following the Court’s approval of this
Settlement (including both the Derivative Action Settlement and the Class Action
Settlement), to payment by PMC of reasonable attorneys’ fees and expenses to
Plaintiffs’ Counsel, as may be awarded by the Court, of up to $772,000.
Defendants agree they will not oppose an application by Plaintiffs’ counsel for
an award of fees and expenses of up to $772,000 predicated either on the value
conferred on PMC or on Plaintiffs’ lodestar, or both. Plaintiffs’ counsel agrees
it will not petition the Court for more than the above specified amount (the
“Attorneys’ Fee Application”). The Attorneys’ Fee Application shall be
conditioned upon: (1) the Court’s approval of this Settlement (the Derivative
Action Settlement and the Class Action Settlement); and (2) the successful
completion of the Proposed Transaction (collectively, (1) and (2) shall be the
“Payment Conditions”). Defendants (excluding the Individual Defendants) will pay
and/or will cause their insurers to pay the awarded attorneys’ fees, costs and
expenses, up to $772,000, to Plaintiffs’ Counsel within ten (10) business days
after the later to occur of the Payment Conditions, subject to Plaintiffs and
Plaintiffs’ Counsel’s joint and several obligations to refund

 

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any amount advanced pursuant to this Section plus all interest accrued or
accumulated thereon within ten (10) business days after entry of an order or
judgment as a result of any appeal and/or further proceeding or remand, or
successful collateral attack, that reduces the fee or expense award described in
this Section. It is expressly agreed by the Parties that this provision shall
survive the closing of the Proposed Transaction. Plaintiffs and their counsel
agree the Court’s approval of the Derivative Action Settlement and the Class
Action Settlement set forth herein shall not be conditioned upon the Court’s
approval of Plaintiffs’ Attorney Fee Application. Except as provided in this
Section, and for PMC’s obligation to pay for the costs of notice as provided in
Section 8(b)(ii), Defendants and the Released Persons shall bear no other
expenses, costs, damages, or fees alleged or incurred by the Plaintiffs, any
member of the Settlement Class, or any of their attorneys, experts, advisors,
agents or representatives.

16. MUTUAL NON-DISPARAGEMENT The Parties agree that they will not disparage,
denigrate or discredit or seek to harm the reputation of any other Party in
relation to this dispute or Settlement to any third parties. Nothing in this
paragraph shall be construed as prohibiting the Parties from providing truthful
testimony, responding to a subpoena, or cooperating with any government official
or agency, or from truthfully communicating with any government official or
agency.

17. PUBLICITY The Parties agree that the only discussion with any news media,
and the only publicity in connection with this settlement, will be the terms of
the agreed upon press release attached hereto as Exhibit B. Other than the
attached press release, the Parties are allowed to disclose the terms of this
Settlement and the implications thereof to the extent any of their respective
their counsel reasonably believes is required to comply with such party’s
disclosure obligations under federal or state law. The Parties may respond to
any inquiries from

 

   PAGE 18

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PMC shareholders or CIM investors or the news media that the case settled on
mutually beneficial terms and that Plaintiff now supports the Proposed
Transaction and all proposals presented to PMC’s shareholders at the PMC
Shareholder Vote. The Parties acknowledge and agree that the terms of the Agreed
Protective Order entered in the Action remain effective and are not amended in
this Settlement Agreement.

18. CONDITIONS TO THIS SETTLEMENT AGREEMENT. This Settlement Agreement is
expressly conditioned upon (i) the successful completion of the Proposed
Transaction, (ii) there being no challenge to or attack made or advanced against
or with respect to the Proposed Transaction in the Court or any other forum or
venue that has the effect of disrupting or delaying the closing of the Proposed
Transaction as contemplated in the S-4, (iii) the Court’s certification of the
Settlement Class; (iv) CIM fulfilling its duties under Sections 1 and 2, and
Defendants fulfilling their duties under Section 15 hereof; and (v) entry of an
order and judgment by the Court approving this Settlement Agreement and the
Settlement Documents, ordering the releases contained in this Settlement
Agreement, and dismissing the Action with prejudice, and such order is finally
affirmed on appeal or is no longer subject to appeal and the time for any
petition for re-argument, appeal or review, by certiorari or otherwise, has
expired (“Final Court Approval”). Should any of the foregoing conditions not be
met for any reason, the proposed Settlement and this Settlement Agreement shall
be null and void and of no force and effect, and shall not be deemed to
prejudice in any way the position of any Party with respect to the Action or
their claims or defenses thereto.

19. EXECUTION IN PARTS. This Settlement Agreement may be executed in any number
of actual or electronic copies of counterparts and by each of the different
Parties on several counterparts, each of which when so executed and delivered
will be an original. The executed signature page(s) from each actual or
electronic copy of a counterpart may be joined together and attached and will
constitute one and the same instrument.

 

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20. CONTINUING OBLIGATIONS. The Parties hereto agree to cooperate and take all
reasonable and necessary steps towards effectuating the intent and purpose of
this Settlement Agreement and to defend the terms hereof in any proceeding.

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the Parties have executed this Settlement Agreement
effective as of January 28, 2014.

AGREED TO:

 

/s/ Mazin A. Sbaiti

    

January 29, 2014

Mazin A. Sbaiti

Bruce W. Steckler

STECKLER LLP

12720 Hillcrest Road, Suite 1045

Dallas, TX 75230

     Date

COUNSEL FOR PLAINTIFFS

    

/s/ Karl G. Dial

    

January 29, 2014

Karl G. Dial

     Date

Casey L. Moore

FULBRIGHT & JAWORSKI LLP

2200 Ross Avenue, Suite 2800

Dallas, Texas 75201

COUNSEL FOR PMC DEFENDANTS and

INDIVIDUAL DEFENDANTS

    

/s/ Richard A. Sayles

    

Richard A. Sayles

SAYLES | WERBNER

4400 Renaissance Tower

1201 Elm Street

Dallas, Texas 75270

    

    - and -

Robert A. Sacks

SULLIVAN & CROMWELL LLP

1888 Century Park East

Los Angeles, California 90067-1725

COUNSEL FOR DEFENDANT

CIM URBAN REIT, LLC

    

 

   PAGE 21

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AGREED TO:    

HOAK & CO.

   

BY:

 

/s/ J. Hale Hoak

   

January 29, 2014

  J. HALE HOAK as its President     Date HOAK PUBLIC EQUITIES, L.P.    

BY:

 

/s/ J. Hale Hoak

   

January 29, 2014

  J. HALE HOAK, as its President     Date PMC COMMERCIAL TRUST    

By:

 

*

   

January 29, 2014

      Date CIM URBAN REIT, LLC    

By:

 

/s/ David Thompson

   

January 29, 2014

  Name: David Thompson     Date   Title: Vice President and Chief Financial
Officer     SOUTHFORK MERGER SUB, LLC    

By:

 

*

   

January 29, 2014

      Date

*

   

January 29, 2014

JAN SALIT, Individually

    Date

 

   PAGE 22

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*

   

January 29, 2014

BARRY BERLIN, Individually     Date

*

   

January 29, 2014

DR. MARTHA ROSEMORE MORROW, Individually     Date

*

   

January 29, 2014

NAT COHEN, Individually     Date

*

   

January 29, 2014

BARRY IMBER, Individually     Date

*By:   /s/ Karl G. Dial   Executed by Karl G. Dial with authorization

 

   PAGE 23

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Exhibit A

Rule 10b-5(1) Plan

See Exhibit 10.2 to this

Current Report on Form 8-K

 

   PAGE 24

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Exhibit B

Press Release

See Exhibit 99.1 to this

Current Report on Form 8-K

 

   PAGE 25