Exhibit 10.191

Execution Version

SERVICING AGREEMENT

Dated as of July 13, 2015

Between

PENNYMAC CORP.,

PENNYMAC HOLDINGS, LLC,

and

New Owner

collectively, as the “Owner,”

PENNYMAC LOAN SERVICES, LLC

in certain cases, a “Special Servicer”

and

MIDLAND LOAN SERVICES, A DIVISION OF PNC BANK, NATIONAL ASSOCIATION,

“Master Servicer” and in certain cases, a “Special Servicer”

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TABLE OF CONTENTS

 

         Page  

ARTICLE I. Definitions

     2  

Section 1.01.

 

Defined Terms

     2  

ARTICLE II. RETENTION AND AUTHORITY OF MASTER SERVICER & SPECIAL SERVICERS

     12  

Section 2.01.

 

Engagement; Servicing Standard

     12  

Section 2.02.

 

Subservicing

     13  

Section 2.03.

 

Authority of the Master Servicer

     13  

ARTICLE III. SERVICES TO BE PERFORMED

     14  

Section 3.01.

 

Services as Loan Servicer

     14  

Section 3.02.

 

Escrow Accounts; Collection of Taxes, Assessments and Similar Items

     17  

Section 3.03.

 

Collection Accounts

     17  

Section 3.04.

 

Permitted Investments

     18  

Section 3.05.

 

Maintenance of Insurance Policies

     19  

Section 3.06.

 

Delivery and Possession of Servicing Files

     20  

Section 3.07.

 

Inspections

     21  

Section 3.08.

 

“Due-on-Sale” Clauses; Assumption Agreements

     21  

Section 3.09.

 

Realization Upon Mortgaged Properties

     21  

Section 3.10.

 

Sale of Specially Serviced Mortgage Loans and REO Properties

     24  

Section 3.11.

 

Management of REO Property

     24  

Section 3.12.

 

Modifications, Waivers, Amendments and Consents

     25  

Section 3.13.

 

Transfers of Servicing Between Master Servicer and the Special Servicer

     25  

Section 3.14.

 

Preparation of Asset Status Reports

     26  

ARTICLE IV. STATEMENTS AND REPORTS

     27  

Section 4.01.

 

Reporting by the Master Servicer

     27  

ARTICLE V. SERVICER’S COMPENSATION AND EXPENSES

     28  

Section 5.01.

 

Servicing Compensation

     28  

Section 5.02.

 

Servicing Expenses

     29  

ARTICLE VI. THE MASTER SERVICER AND THE OWNER

     30  

Section 6.01.

 

Master Servicer Not to Assign; Merger or Consolidation of the Master Servicer

     30  

Section 6.02.

 

Liability and Indemnification of the Master Servicer and the Owner

     30  

 

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TABLE OF CONTENTS (continued)

 

         Page  

ARTICLE VII. REPRESENTATIONS AND WARRANTIES; DEFAULT

     32  

Section 7.01.

 

Representations and Warranties

     32  

Section 7.02.

 

Events of Default

     36  

Section 7.03.

 

Closing Conditions; Owner Covenants

     39  

Section 7.04.

 

Post Closing Performance Conditions

     41  

ARTICLE VIII. TERMINATION; TRANSFER OF MORTGAGE LOANS

     41  

Section 8.01.

 

Termination of Agreement

     41  

Section 8.02.

 

Transfer of Mortgage Loans

     42  

Section 8.03.

 

Cooperation of Master Servicer with a Reconstitution

     42  

ARTICLE IX. MISCELLANEOUS PROVISIONS

     44  

Section 9.01.

 

Amendment; Waiver

     44  

Section 9.02.

 

Governing Law

     44  

Section 9.03.

 

Notices

     45  

Section 9.04.

 

Severability of Provisions

     46  

Section 9.05.

 

Inspection and Audit Rights

     46  

Section 9.06.

 

Binding Effect; No Partnership; Counterparts

     47  

Section 9.07.

 

Protection of Confidential Information

     47  

Section 9.08.

 

WAIVER OF JURY TRIALS

     48  

Section 9.09.

 

General Interpretive Principles

     48  

Section 9.10.

 

Further Agreements

     48  

Section 9.11.

 

Addition or Removal of an Owner

     49  

EXHIBIT “A” (Initial Mortgage Loan Schedule)

EXHIBIT “B” (Statements, Reports and/or Information)

EXHIBIT “C” (Servicing Fee Schedule)

EXHIBIT “D” (Asset Management Fee Schedule)

EXHIBIT “E” (Loan Servicing Responsibilities Matrix)

EXHIBIT “F-1” Form of Notice to Servicer Adding New Owner

EXHIBIT “F-2” Form of Notice to Servicer Deleting Owner

 

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THIS SERVICING AGREEMENT dated as of July 13, 2015, is between PennyMac Corp., a
Delaware corporation, PennyMac Holdings, LLC, a Delaware limited liability
company, any other parties signing this Agreement as an owner of Mortgage Loans
as listed in Schedule I and any New Owners (collectively as the “Owner”),
PennyMac Loan Services, LLC, a Delaware limited liability company (“PennyMac
Loan Servicer” and in certain cases, a “Special Servicer”), and Midland Loan
Services, a Division of PNC Bank, National Association, a national banking
association (“Master Servicer” and in certain cases, a “Special Servicer”).

PRELIMINARY STATEMENT

The Owner desires to engage Midland as Master Servicer, and Midland desires to
accept the Owner’s engagement as Master Servicer, to service the Mortgage Loans
that the Owner acquires from time to time in accordance with the provisions of
this Agreement.

With respect to Freddie Mac multifamily Mortgage Loans (“Freddie Mortgage
Loans”), Owner desires to engage Midland as the Special Servicer, and Midland
desires to accept the Owner’s engagement as the Special Servicer, to service the
Freddie Mortgage Loans that the Owner acquires from time to time in accordance
with the provisions of this Agreement.

With respect to certain Mortgage Loans which are not Freddie Mortgage Loans as
identified by Owner (“PMSS Mortgage Loans”), Owner has appointed PennyMac Loan
Servicer, as the Special Servicer.

With respect to certain other Mortgage Loans which are not Freddie Mortgage
Loans as identified by Owner (“MSS Mortgage Loans”), Owner desires to engage
Midland as the Special Servicer, and Midland desires to accept the Owner’s
engagement as the Special Servicer, to service the MSS Mortgage Loans that the
Owner acquires from time to time in accordance with the provisions of this
Agreement.

In the future, Owner may elect to enter Public Securitization Transactions or
Private Securitization Transactions with respect to certain Mortgage Loans, for
which Master Servicer may act as the master servicer or primary servicer and
enter a separate pooling and servicing agreement with a trust and other parties
respecting such Mortgage Loans.

The Master Servicer is an independent contractor in the business of servicing
mortgage loans, and is not an Affiliate of the Owner.

This Agreement shall become effective with respect to each Mortgage Loan, or
appropriate group or portfolio of Mortgage Loans, upon the related Servicing
Transfer Date.

 

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NOW, THEREFORE, in consideration of the recitals in this Preliminary Statement
which are made a contractual part hereof, and of the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

ARTICLE I.

Definitions

Section 1.01. Defined Terms.

Whenever used in this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:

“Accepted Servicing Practices”: As defined in Section 2.01.

“Accounts”: The Escrow Accounts, REO Accounts, and the Collection Accounts.

“Additional Collateral”: Any non-real property collateral (including any letters
of credit or reserve funds) pledged and/or delivered by or on behalf of the
Borrower and held by the Mortgagee to secure payment on any Mortgage Loan.

“Additional Servicing Compensation”: (a) amounts collected for checks or other
items returned for insufficient funds, (b) late payment charges (but not default
interest) with respect to the Mortgage Loans, (c) reserve or escrow
administration fees with respect to the Mortgage Loans, (d) subject to
Section 3.04 of the Agreement, all income and gain realized from the investment
of funds deposited in the Accounts, (e) Asset Management Fee; (f) any
Deconversion Fee; (g) in exchange of processing Borrower’s draw request and
subject to Section 5.01, Reserve Administration Fee; (h) Program Set-Up Fee;
(i) Loan Set-Up Fee; and (j) Property Inspection Fee.

“Affiliate”: With respect to any specified Person, any other Person controlling
or controlled by or under common control with such specified Person; provided,
however, that in respect of Owner, the term “Affiliate” shall include only
PennyMac Mortgage Investment Trust and its wholly owned subsidiaries and, in
respect of PennyMac Loan Servicer, as Special Servicer, the term “Affiliate”
shall include only Private National Mortgage Acceptance Company, LLC and its
wholly owned subsidiaries. For the purposes of this definition, “control” when
used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise and the terms
“controlling” and “controlled” have meanings correlative to the foregoing.

“Agreement”: This Servicing Agreement, as the same may be modified, supplemented
or amended from time to time.

“Anti-Terrorism Laws”: shall mean any Laws relating to terrorism, trade
sanctions programs and embargoes, import/export licensing, money laundering or
bribery, and any regulation, order, or directive promulgated, issued or enforced
pursuant to such Laws, all as amended, supplemented or replaced from time to
time.

“Asset Management Fee”: shall mean defeasance fees, modification, waiver,
amendment, extension or forbearance fees, assumption fees, assumption
application fees, consent fees, loan process fees and other similar fees related
to Borrower requests or other transactions

 

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listed on the Asset Management Fee Schedule attached hereto as Exhibit “D”. Such
fees shall be paid by the relevant Borrower to the Master Servicer or the
Special Servicer, as applicable, at the inception of the related transaction. If
such fees are not paid by the Borrower, the Owner shall pay such mutually agreed
fees determined from time to time by the Master Servicer or the Special
Servicer, as applicable, and the Owner.

“Borrower”: The obligor on a Note.

“Business Day”: Any day other than (a) a Saturday or Sunday, or (b) a day in
which depository institutions or trust companies in the States of Kansas or
Pennsylvania or in any of the States in which the Accounts or any accounts used
by the Owner for remittance purposes are located, are authorized or obligated by
law, regulation or executive order to remain closed.

“Collection Account”: As defined in Section 3.03.

“Corrected Mortgage Loan”: Any Mortgage Loan which is no longer a Specially
Serviced Mortgage Loan pursuant to the second sentence of the definition of
“Specially Serviced Mortgage Loan”.

“Covered Entity”: shall mean (a) Owner and its subsidiaries and (b) each Person
that, directly or indirectly, is in control of a Person described in clause
(a) above. For purposes of this definition, control of a Person shall mean the
direct or indirect (x) ownership of, or power to vote, 25% or more of the issued
and outstanding equity interests having ordinary voting power for the election
of directors of such Person or other Persons performing similar functions for
such Person, or (y) power to direct or cause the direction of the management and
policies of such Person whether by ownership of equity interests, contract or
otherwise.

“Deconversion Fee”: Subject to Section 8.01(c), an amount equal to $250 per
Mortgage Loan if such Mortgage Loan is not serviced by the Master Servicer or
the Special Servicer, as applicable, for at least twelve (12) months.

“Deleted Owner”: As defined in Section 9.11(b).

“Determination Date”: The 5th day (or if such day is not a Business Day, the
Business Day immediately preceding such day) of the month, beginning in August,
2015.

“Disposition Fee”: The fee payable to the Special Servicer in connection with
the transfer, sale, foreclosure, deed in lieu of foreclosure or other
liquidation of a Specially Serviced Mortgage Loan or REO Property pursuant to
Section 3.10 of this Agreement (if such sale is effected by the Special
Servicer). The fee payable to the Special Servicer shall be in an amount equal
to the product of (x) the net sales price or proceeds received or collected (or
the appraised value of the Mortgage Property recovered by deed in lieu) and
(y) (i) 1.00% for any Mortgage Loan with an outstanding principal balance
greater than $5 million dollars as of the date such payment is received or
(ii) 2.00% for any Mortgage Loan with an outstanding principal balance equal to
or less than $5 million dollars as of the date such payment is received.

“Eligible Account”: An account maintained with PNC Bank, National Association.

 

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“Environmental Laws”: Any environmental law, ordinance, rule, regulation or
order of a federal, state or local governmental authority, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S.C. §§ 9601 et seq.), the Hazardous Material
Transportation Act, as amended (49 U.S.C. §§ 1801 et seq.), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. §§ 6901 et seq.), the
Federal Water Pollution Control Act, as amended (33 U.S.C. §§ 1251 et seq.), the
Clean Air Act, as amended (42 U.S.C. §§ 7401 et seq.) and the regulations,
whether currently in existence or hereafter enacted.

“Escrow Account”: As defined in Section 3.02.

“Escrow Payment”: Any amount received by the Master Servicer or the Special
Servicer for the account of the Borrowers for application toward the payment of
taxes, insurance premiums, assessments, ground rents, deferred maintenance,
environmental remediation, rehabilitation costs, capital expenditures, and
similar items in respect of the related Mortgaged Property.

“Freddie Mac”: The Federal Home Loan Mortgage Corporation or any successor
thereto.

“Freddie Mac Guide”: The Freddie Mac Multifamily Seller/Servicer Guide, as
amended or supplemented from time to time. To the extent the Freddie Mac
Multifamily Seller/Servicer Guide is no longer published by Freddie Mac, either
directly or indirectly, “Freddie Mac Guide” shall refer to any successor guide
as prescribed by Freddie Mac; provided, however, that in the event that no
successor guide is prescribed by Freddie Mac within 30 days of the date on which
the Freddie Mac Multifamily Seller/Servicer Guide is no longer published by
Freddie Mac, all references to the “Freddie Mac Guide” in this Agreement shall
be disregarded and the Freddie Mac Guide shall no longer be applicable.

“Freddie Mortgage Loans”: The Mortgage Loans identified as such on Exhibit A
hereto.

“Governmental Body”: shall mean any nation or government, any state or other
political subdivision thereof or any entity, authority, agency, division or
department exercising the executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to a government
(including any supra-national bodies such as the European Union or the European
Central Bank) and any group or body charged with setting financial accounting or
regulatory capital rules or standards (including, without limitation, the
Financial Accounting Standards Board, the Bank for International Settlements or
the Basel Committee on Banking Supervision or any successor or similar authority
to any of the foregoing).

“Law”: shall mean any law(s) (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling,
order, executive order, injunction, writ, decree, bond, judgment, authorization
or approval, lien or award of or any settlement arrangement, by agreement,
consent or otherwise, with any Governmental Body, foreign or domestic.

“Loan Servicing”: As defined in Section 3.01.

 

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“Loan Set-Up Fee”: shall mean a one-time, up-front payment of $250.00 per each
Mortgage Loan.

“Master Servicer”: Midland Loan Services, a Division of PNC Bank, National
Association, or any successor servicer as herein provided, including when it
also acts as a Special Servicer.

“Midland”: Midland Loan Services, a Division of PNC Bank, National Association,
or any successor Servicer as herein provided, including when it also acts as the
Special Servicer of the MSS Mortgage Loans and Freddie Mortgage Loans.

“Monthly Payment”: With respect to any Mortgage Loan, the scheduled monthly
payment of interest or the scheduled monthly payment of principal and interest,
as the case may be, on such Mortgage Loan which is payable by a Borrower on the
due date under the related Note.

“Mortgage”: With respect to each Mortgage Loan, the mortgage, deed of trust or
other instrument securing the related Note, which creates a lien on the real
property securing such Note.

“Mortgage Loan”: Each of the Freddie Mortgage Loans, MSS Mortgage Loans and PMSS
Mortgage Loans identified on the Mortgage Loan Schedule.

“Mortgage Loan Documents”: With respect to each Mortgage Loan, the related Note,
the related Mortgage and any and all other documents executed and delivered in
connection with the origination or subsequent modification of such Mortgage
Loan.

“Mortgage Loan Schedule”: A schedule of certain mortgage loans owned and held by
the Owner which sets forth information with respect to such mortgage loans, as
amended from time to time by the parties pursuant to Section 4.01(a). An initial
Mortgage Loan Schedule shall be attached hereto as Exhibit “A”.

“Mortgaged Property”: The real property and improvements thereon securing
repayment of the debt evidenced by the related Note. Such term shall also
include any REO Property.

“MSS Mortgage Loans”: The Mortgage Loans identified as such on Exhibit A hereto.

“Net Liquidation Proceeds”: The amount of proceeds received in connection with
the liquidation or sale of any Specially Serviced Mortgage Loan or REO Property
net of the amount of any liquidation expenses (including, without limitation,
legal fees and expenses, brokerage commissions and conveyance taxes) incurred
with respect to such liquidation or sale.

“New Owner”: As defined in Section 9.11(a).

“Non-Exempt Person”: shall mean any Person other than a Person who is either
(a) a U.S. Person or (b) has provided to Midland for the relevant year such
duly-executed form(s) or statement(s) which may, from time to time, be
prescribed by law and which, pursuant to applicable provisions of (1) any income
tax treaty between the United States and the country of

 

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residence of such Person, (2) the Internal Revenue Code of 1986, as amended from
time to time and any successor statute, or (3) any applicable rules or
regulations in effect under clauses (1) or (2) above, permit Midland to make
such payments free of any obligation or liability for withholding; provided,
that duly executed form(s) provided to the Master Servicer pursuant to
Section 7.01(b)(ii) hereof, shall be sufficient to qualify the Owner as not a
Non-Exempt Person.

“Note”: With respect to any Mortgage Loan, the promissory note or other evidence
of indebtedness or agreements evidencing the indebtedness of a Borrower under
such Mortgage Loan.

“Owner”: As defined in the first paragraph of this Agreement.

“Owner Event of Default”: As defined in Section 7.02(b).

“Permitted Investments”: Any one or more of the following obligations or
securities having at the time of purchase, or at such other time as may be
specified, the required ratings, if any, provided for in this definition:

(a) direct obligations of, or guaranteed as to timely payment of principal and
interest by, the United States of America or any agency or instrumentality
thereof provided that such obligations are backed by the full faith and credit
of the United States of America;

(b) direct obligations of, or guaranteed as to timely payment of principal and
interest by, the Federal Home Loan Mortgage Corporation, the Federal Home Loan
Bank, the Federal National Mortgage Association or the Federal Farm Credit
System, provided that any such obligation, at the time of purchase or
contractual commitment providing for the purchase thereof, is qualified by any
Rating Agency as an investment of funds backing securities rated “AAA” (or such
comparable rating);

(c) demand and time deposits in or certificates of deposit of, or bankers’
acceptances issued by, any bank or trust company, savings and loan association
or savings bank, provided that, in the case of obligations that are not fully
insured by the Federal Deposit Insurance Corporation, the commercial paper
and/or long- or short-term unsecured debt obligations of such depository
institution or trust company (or in the case of the principal depository
institution in a holding company system, the commercial paper or long- or
short-term unsecured debt obligations of such holding company) have the highest
rating available for such securities by any Rating Agency;

(d) general obligations of or obligations guaranteed by any state of the United
States or the District of Columbia receiving the highest long-term debt rating
available for such securities by any Rating Agency;

(e) commercial or finance company paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of acquisition thereof)
that is rated by any Rating Agency in its highest short-term unsecured debt
rating category at the time of such investment or contractual commitment
providing for such investment, and is issued by a corporation the outstanding
senior long-term debt obligations of which are then rated by any such Rating
Agency in its highest long-term unsecured debt rating category;

 

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(f) guaranteed reinvestment agreements issued by any bank, insurance company or
other corporation rated in one of the two highest long-term unsecured debt
rating levels available to such issuers by any Rating Agency at the time of such
investment, provided that any such agreement must by its terms provide that it
is terminable by the purchaser without penalty in the event any such rating is
at any time lower than such level;

(g) repurchase obligations with respect to any security described in clause
(a) or (b) above entered into with a depository institution or trust company
(acting as principal) described in clause (c) above;

(h) securities bearing interest or sold at a discount that are issued by any
corporation incorporated under the laws of the United States of America or any
state thereof and rated by any Rating Agency in its highest long-term unsecured
rating category at the time of such investment or contractual commitment
providing for such investment;

(i) units of taxable money market funds which funds are regulated investment
companies, seek to maintain a constant net asset value per share and invest
solely in obligations backed by the full faith and credit of the United States,
and have been approved in writing by the Owner as Permitted Investments with
respect to this definition; and

(j) such other obligations as are acceptable as Permitted Investments to the
Owner.

“PennyMac Loan Servicer”: means PennyMac Loan Services, LLC, a Delaware limited
liability company, the Special Servicer of the PMSS Mortgage Loans.

“Person”: Any individual, corporation, limited liability company, partnership,
joint venture, estate, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.

“PMSS Mortgage Loans”: The Mortgage Loans identified as such on Exhibit A
hereto.

“Private Securitization Transaction”: Any transaction involving either (1) a
sale of some or all of the Mortgage Loans directly or indirectly to an entity
that issues privately offered, rated mortgage-backed securities or (2) an
issuance of privately offered, rated securities, the payments of which are
determined primarily by reference to one or more portfolios of mortgage loans
consisting, in whole or in part, of some or all of the Mortgage Loans, in each
case, in a transaction exempt from registration under federal, state and local
securities laws.

“Program Set-Up Fee”: A one-time, up-front fee of $7,500.00 to be paid to the
Master Servicer prior to the date hereof which includes 15.00 hours of the
Master Servicer’s outside legal counsel time in negotiation and execution of
this Agreement; provided, however, that if legal negotiations exceed 15.00
hours, the Owner shall be responsible for any additional legal fees and expenses
in accordance with Section 6.03.

 

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“Property Inspection Fee”: To the extent the Master Servicer or the Special
Servicer, as applicable, is engaged by the Owner to perform site inspections
under Section 3.07 hereof, the Master Servicer or the Special Servicer, as
applicable, will bill all inspection costs back to the Owner under a separate
billing statement on a “cost plus 30% basis.”

“Public Securitization Transaction”: Any transaction subject to Regulation AB
involving either (1) a sale or other transfer of some or all of the Mortgage
Loans directly or indirectly to an issuing entity in connection with an issuance
of publicly offered, rated mortgage-backed securities or (2) an issuance of
publicly offered, rated securities, the payments on which are determined
primarily by reference to one or more portfolios of residential mortgage loans
consisting, in whole or in part, of some or all of the Mortgage Loans.

“Qualified Affiliate”: Any Person (a) that is organized and doing business under
the laws of any state of the United States or the District of Columbia, (b) that
is in the business of performing the duties of a servicer of mortgage loans, and
(c) as to which 50% or greater of its outstanding voting stock or equity
ownership interest are directly or indirectly owned by the Master Servicer or by
any Person or Persons who directly or indirectly own equity ownership interests
in the Master Servicer.

“Rating Agency”: Each of Standard & Poor’s Ratings Services, a division of
McGraw-Hill, Inc., Moody’s Investors Service, Inc., Fitch, Inc., Duff and Phelps
Credit Rating Co., or any other nationally recognized statistical rating agency.

“Reasonable Efforts”: As determined by the Owner, the Master Servicer or the
Special Servicer, as applicable, commercially reasonable efforts by the Owner or
the Master Servicer or the Special Servicer, as the case may be, in light of
Accepted Servicing Practices, which efforts do not require the Owner or the
Master Servicer or the Special Servicer, as the case may be, to enter into any
litigation, arbitration or other legal or quasi-legal proceeding.

“Remittance Date”: With respect to each Determination Date, the date which is
two (2) Business Days after such Determination Date.

“REO Account”: As defined in Section 3.11(a).

“REO Mortgage Loan”: A Mortgage Loan deemed for the purposes hereof to be
outstanding with respect to each REO Property, as more particularly described in
Section 3.09(b).

“REO Property”: A Mortgaged Property acquired by the Owner through acquisition
or the Special Servicer on behalf of the Owner through foreclosure or by deed in
lieu of foreclosure.

“Reportable Compliance Event”: shall mean that any Covered Entity becomes a
Sanctioned Person, or is charged by indictment, criminal complaint or similar
charging instrument, arraigned, or custodially detained in connection with any
Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or has
knowledge of facts or circumstances to the effect that it is reasonably likely
that any aspect of its operations is in actual or probable violation of any
Anti-Terrorism Law.

 

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“Responsible Officer”: Any officer or employee of the Owner or the Master
Servicer or the Special Servicer, as the case may be, involved in or responsible
for the administration, supervision or management of this Agreement and whose
name and specimen signature appear on a list prepared by each party and
delivered to the other party, as such list may be amended from time to time by
either party.

“Reserve Administration Fee”: shall mean $250.00 per draw paid by the relevant
Borrower to the Master Servicer or the Special Servicer, as applicable.

“Sanctioned Country”: shall mean a country subject to a sanctions program
maintained under any Anti-Terrorism Law.

“Sanctioned Person”: shall mean any individual person, group, regime, entity or
thing listed or otherwise recognized as a specially designated, prohibited,
sanctioned or debarred person, group, regime, entity or thing, or subject to any
limitations or prohibitions (including but not limited to the blocking of
property or rejection of transactions), under any Anti-Terrorism Law.

“Servicer Event of Default”: As defined in Section 7.02(a).

“Servicing Expenses”: All customary, reasonable and necessary out-of-pocket
costs and expenses paid or incurred in connection with the Master Servicer’s and
the Special Servicer’s obligations hereunder, including without limitation:

(a) real estate taxes, assessments and similar charges;

(b) insurance premiums;

(c) any expense necessary in order to prevent or cure any violation of
applicable laws, regulations, codes, ordinances, rules, orders, judgments,
decrees, injunctions or restrictive covenants;

(d) any cost or expense necessary in order to maintain or release the lien on
each Mortgaged Property and related collateral, including any mortgage
registration taxes, release fees, or recording or filing fees;

(e) customary expenses for the collection, enforcement or foreclosure of the
Mortgage Loans and the collection of deficiency judgments against Borrowers and
guarantors (including but not limited to the fees and expenses of any trustee
under a deed of trust, foreclosure title searches and other lien searches);

(f) subject to Section 3.07, costs and expenses of any appraisals, valuations,
inspections, environmental assessments (including but not limited to the fees
and expenses of environmental consultants), audits or consultations, engineers,
architects, accountants, on-site property managers, market studies, title and
survey work and financial investigating services;

 

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(g) customary expenses for liquidation, restructuring, modification or loan
workouts, such as sales brokerage expenses and other costs of conveyance;

(h) costs and expenses related to travel and lodging, subject to Section 3.07
with respect to property inspections; and

(i) any other reasonable costs and expenses, including without limitation, legal
fees and expenses, incurred by the Master Servicer or the Special Servicer, as
applicable, under this Agreement in connection with the enforcement, collection,
foreclosure, disposition, condemnation or destruction of the Mortgage Loans or
related Mortgaged Properties, the maintenance, leasing, operation, management
and sale of the REO Properties, and the performance of Loan Servicing by the
Master Servicer or the Special Servicer under this Agreement;

provided, however, any and all “Servicing Expenses” listed in this definition
shall be paid by the Master Servicer or the Special Servicer, as applicable, in
accordance with Sections 3.03 and 5.02.

“Servicing Fee”: With respect to each Mortgage Loan, an amount equal to the
applicable fees set forth on and calculated in accordance with the attached
Exhibit “C.”.

“Servicing File”: With respect to each Mortgage Loan or REO Mortgage Loan, all
documents, information and records relating to the Mortgage Loan and Additional
Collateral that are necessary to enable the Master Servicer or the Special
Servicer to perform its duties and service the Mortgage Loan in compliance with
the terms of this Agreement, and any additional documents or information related
thereto maintained or created by the Master Servicer or the Special Servicer.
Documents or information in the Servicing File may be maintained by the Master
Servicer or the Special Servicer in any commonly used electronic format in lieu
of paper. For the avoidance of doubt, Original Mortgage Loan Documents held by
Owner’s designated document custodian shall not be considered part of the
Servicing File but the copies of such originals shall be considered part of the
Servicing File.

“Servicing Transfer Date”: With respect to each Mortgage Loan or REO Mortgage
Loan, the first Business Day of the month following delivery by Owner to the
Master Servicer of a Mortgage Loan Schedule and the related Servicing File or
such other date as agreed in writing between the parties.

“Specially Serviced Mortgage Loan”: Any Mortgage Loan with respect to which:

(a) the related Borrower is at least two months delinquent in the payment of a
Monthly Payment;

(b) the related Borrower has expressed to the Master Servicer an inability to
pay or a hardship in paying the Mortgage Loan in accordance with its terms;

 

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(c) the Master Servicer has received notice that the related Borrower has become
the subject of any bankruptcy, insolvency or similar proceeding, or has admitted
in writing the inability to pay its debts as they come due or made an assignment
for the benefit of creditors;

(d) the Master Servicer has received notice of a foreclosure or threatened
foreclosure of any lien (other than the Mortgage Loan) on the related Mortgaged
Property;

(e) a default of which the Master Servicer has notice (other than a failure by
the related Borrower to pay principal or interest) and which materially and
adversely affects the interests of the Owner has occurred and remains unremedied
for the applicable grace period specified in the Mortgage Loan; or

(f) the related Borrower has failed to make a balloon payment as and when due
and such default has not been cured within 30 days after such due date and the
Borrower has not delivered to Master Servicer or the Special Servicer, on or
before the due date of such balloon payment, a written and fully executed
refinancing commitment from an acceptable lender (subject only to customary
final closing conditions) and reasonably satisfactory in form and substance to
Master Servicer or the Special Servicer, which provides that such refinancing
will occur within 120 days after the date on which such balloon payment is due;

provided, however, that with respect to the circumstances described in clauses
(b), (d) and (e), the Master Servicer has received written confirmation from the
Owner that such Mortgage Loan shall be a Specially Serviced Mortgage Loan, and
in the event such confirmation is not received, the Master Servicer shall not be
obligated or required to perform any foreclosure, workout, restructuring,
liquidation or disposition of such Mortgage Loan, or management or disposition
of the related Mortgaged Property, pursuant to Sections 3.09, 3.10, 3.11 or
3.12, notwithstanding anything herein to the contrary. To the extent no other
circumstances identified in clauses (a) through (f) above exist that would cause
the Mortgage Loan to continue to be characterized as a Specially Serviced
Mortgage Loan, a Mortgage Loan will cease to be a Specially Serviced Mortgage
Loan:

(g) with respect to the circumstances described in clauses (a) or (f) above,
when the related Borrower has brought the Mortgage Loan current (or, with
respect to the circumstances described in clause (f), pursuant to any work-out
of the Mortgage Loan) and thereafter made three consecutive full and timely
Monthly Payments (including pursuant to such workout); or

(h) with respect to the circumstances described in clauses (b), (c), (d) and
(e) above, when such circumstances cease to exist or such default is cured, as
applicable, in the good faith judgment of the Master Servicer (as confirmed in
writing by the Owner).

“Special Servicer”: With respect to Freddie Mortgage Loans and MSS Mortgage
Loans, Midland or any successor special servicer as herein provided. With
respect to PMSS Mortgage Loans, PennyMac Loan Servicer or any successor special
servicer as herein provided.

 

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“Special Servicing Fee”: With respect to each Specially Serviced Mortgage Loan
or REO Mortgage Loan, an amount equal to the greater of (a) $2,250 per month per
Specially Serviced Mortgage Loan or REO Mortgage Loan and (b) the product of
(i) the Special Servicing Fee Rate and (ii) the outstanding principal balance of
such Specially Serviced Mortgage Loan or REO Mortgage Loan, as calculated in
accordance with Section 5.01.

“Special Servicing Fee Rate”: A rate equal to 0.35% (35.0 basis points).

“Taxes” shall mean any income or other taxes (including withholding taxes),
levies, imposts, duties, fees, assessments or other charges of whatever nature,
now or hereafter imposed by any jurisdiction or by any department, agency, state
or other political subdivision thereof or therein.

“U.S. Person”: A citizen or resident of the United States, a corporation,
partnership (except to the extent provided in applicable Treasury Regulations),
or other entity created or organized in or under the laws of the United States,
any state thereof or the District of Columbia, including any entity treated as a
corporation or partnership for federal income tax purposes, an estate whose
income is subject to United States federal income tax regardless of its source,
or a trust if a court within the United States is able to exercise primary
supervision over the administration of such trust, and one or more such U.S.
Persons have the authority to control all substantial decisions of such trust
(or, to the extent provided in applicable Treasury Regulations, certain trusts
in existence on August 20, 1996 which have elected to be treated as U.S.
Persons).

“Whole Loan Transfer”: The sale or transfer by Owner of some or all of the
Mortgage Loans in a whole loan or participation format other than a Private
Securitization Transaction or a Public Securitization Transaction.

“Workout Fee”: In connection with the curing of any event of default under any
Specially Serviced Mortgage Loan through a modification, restructuring or
work-out of such Mortgage Loan effected by the Special Servicer and evidenced by
a writing executed by the related Borrower, the fee payable to the Special
Servicer in an amount equal to the product of (x) the amount of any payments
received by the Special Servicer on account of principal or interest on such
Mortgage Loan (including any prepayment premiums) and (y) (i) 1.00% for any
Mortgage Loan with an outstanding principal balance greater than $5 million
dollars as of the date such payment is received or (ii) 2.00% for any Mortgage
Loan with an outstanding principal balance equal to or less than $5 million
dollars as of the date such payment is received.

ARTICLE II.

RETENTION AND AUTHORITY OF MASTER SERVICER & SPECIAL SERVICERS

Section 2.01. Engagement; Servicing Standard.

The Owner hereby engages the Master Servicer and each of the Special Servicers
to perform, and the Master Servicer and each of the Special Servicers hereby
agree to perform, Loan Servicing with respect to each of the Mortgage Loans
throughout the term of this Agreement, upon and subject to the terms, covenants
and provisions hereof.

 

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The Master Servicer and each Special Servicer shall perform its services
hereunder (a) in accordance with (i) applicable federal, state, and local laws,
regulations, and ordinances, and investor requirements (ii) the terms and
provisions of the Mortgage Loan Documents, (iii) the express terms hereof, and
(iv) the customary and usual standards of practice of prudent institutional
commercial mortgage loan servicers, and (b) to the extent consistent with the
foregoing requirements, in the same manner in which the Master Servicer or each
Special Servicer services commercial mortgage loans for itself, its Affiliates,
or other third party portfolios of mortgage loans similar to the Mortgage Loans,
but without regard to any relationship which the Master Servicer or each Special
Servicer or any Affiliate of the Master Servicer or the Special Servicer may
have with the related Borrower or any Affiliate of such Borrower or to the
Master Servicer’s or each Special Servicer’s right to receive compensation for
its services hereunder. The servicing standards described in the preceding
sentence are herein referred to as “Accepted Servicing Practices”.

Section 2.02. Subservicing.

To the extent necessary for the Master Servicer to comply with any applicable
laws, regulations, codes or ordinances relating to the Master Servicer’s Loan
Servicing obligations hereunder, the Master Servicer may subservice to any
Person any of its Loan Servicing obligations hereunder; provided, however, that
the Master Servicer shall provide oversight and supervision with regard to the
performance of all subcontracted services and any subservicing agreement shall
be consistent with and subject to the provisions of this Agreement. Neither the
existence of any subservicing agreement nor any of the provisions of this
Agreement relating to subservicing shall relieve the Master Servicer of its
obligations to the Owner hereunder. Notwithstanding any such subservicing
agreement, the Master Servicer shall be obligated to the same extent and under
the same terms and conditions as if the Master Servicer alone was servicing the
related Mortgage Loans in accordance with the terms of this Agreement. The
Master Servicer shall be solely liable for all fees owed by it to any
subservicer, regardless of whether the Master Servicer’s compensation hereunder
is sufficient to pay such fees. Master Servicer shall each deliver to the Owner
copies of all subservicing agreements, and any amendments or modifications,
promptly upon execution and delivery of such documents.

Section 2.03. Authority of the Master Servicer.

(a) In performing its Loan Servicing obligations hereunder, the Master Servicer
shall, except as otherwise provided herein and subject to the terms of this
Agreement, have full power and authority, acting alone or through others, to
take any and all actions in connection with such Loan Servicing that it deems
necessary or appropriate. Without limiting the generality of the foregoing, the
Master Servicer is hereby authorized and empowered by the Owner when the Master
Servicer deems it appropriate in its reasonable judgment, to execute and
deliver, on behalf of the Owner, (i) any and all financing statements,
continuation statements and other documents or instruments necessary to maintain
the lien of each Mortgage on the related Mortgaged Property and any other
Additional Collateral; and (ii) any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge and all other
comparable instruments with respect to each of the Mortgage Loans; provided,
however, that the Master Servicer shall notify the Owner in writing in the event
that the Master Servicer intends to execute and deliver any such instrument
referred to in clause (i) above, and, except in connection with

 

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any payment in full of any Mortgage Loan, shall proceed with such course of
action only upon receipt of the Owner’s written approval thereof. The Owner
agrees to cooperate with the Master Servicer by either executing and delivering
to the Master Servicer from time to time (i) powers of attorney evidencing the
Master Servicer’s authority and power under this Section, or (ii) such documents
or instruments deemed necessary or appropriate by the Master Servicer to enable
the Master Servicer to carry out its Loan Servicing obligations hereunder.

(b) In the performance of its Loan Servicing obligations hereunder, the Master
Servicer shall take any action that is directed by the Owner which relates to
the Master Servicer’s or Special Servicer’s Loan Servicing obligations under
this Agreement; provided, however, that the Master Servicer shall not be
obligated to take, or to refrain from taking, any action which the Owner
requests that the Master Servicer take or refrain from taking to the extent that
the Master Servicer determines in its reasonable and good faith judgment that
such action or inaction (i) may cause a violation of applicable laws,
regulations, codes, ordinances, court orders or restrictive covenants with
respect to any Mortgage Loan, Borrower, Mortgaged Property or REO Property;
(ii) may cause a violation of any provision of a Mortgage Loan Document; or
(iii) may be a violation of the Accepted Servicing Practices.

ARTICLE III.

SERVICES TO BE PERFORMED

Section 3.01. Services as Loan Servicer.

The Master Servicer and each of the Special Servicers hereby agree to serve as
the loan servicers with respect to each of the Mortgage Loans and to perform
Loan Servicing as described below and as otherwise provided herein, upon and
subject to the terms of this Agreement. Subject to any limitation of authority
under Section 2.03, “Loan Servicing” shall mean those services pertaining to the
Mortgage Loans which, applying Accepted Servicing Practices, are required
hereunder to be performed by the Master Servicer or the Special Servicer, and
which shall include but not be limited to:

(i) as the Master Servicer, reviewing all available documents pertaining to the
Mortgage Loans, organizing, administering and maintaining the Servicing Files,
forwarding any originals of Mortgage Loan Documents received to the document
custodian of Owner, as designed by Owner from time to time, and inputting all
relevant information into the Master Servicer’s loan servicing computer system;

(ii) as the Master Servicer, preparing and filing or recording all financing
statements, continuation statements and other documents or instruments and
taking such other action necessary to maintain or, when appropriate, release the
lien of any Mortgage on the related Mortgaged Property and security interest in
the Additional Collateral;

(iii) as the Master Servicer, monitoring each Borrower’s maintenance of
insurance coverage on each Mortgaged Property as required by the related
Mortgage Loan Documents and causing to be maintained adequate insurance coverage
on each Mortgaged Property in accordance with Section 3.05;

 

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(iv) as the Master Servicer or a Special Servicer, as applicable, collecting,
analyzing, and spreading promptly from each Borrower quarterly and annual
operating statements, budgets and rent rolls (if applicable) and annual
financial statements of such Borrower as may be required under the Mortgage Loan
Documents;

(v) as the Master Servicer or a Special Servicer, as applicable, monitoring the
status of real estate taxes, assessments and other similar items and verifying
the payment of such items for each Mortgaged Property in accordance with
Section 3.02;

(vi) as the Master Servicer or a Special Servicer, as applicable, preparing and
delivering all reports and information required hereunder;

(vii) as the Master Servicer or a Special Servicer, as applicable, procuring and
supervising the services of third parties (other than subservicers pursuant to
Section 2.02) necessary or appropriate in connection with the servicing of the
Mortgage Loans;

(viii) as the Master Servicer, performing payment processing, record keeping,
administration of escrow and other accounts, interest rate adjustment, and other
routine customer service functions;

(ix) as the Master Servicer, monitoring any casualty losses or condemnation
proceedings and administering any proceeds related thereto in accordance with
the related Mortgage Loan Documents;

(x) as the Master Servicer, notifying all Borrowers of the appropriate place for
communications and payments, and collecting and monitoring all payments made
with respect to the Mortgage Loans;

(xi) as requested by Owner in writing from time to time, as the Master Servicer
or a Special Servicer, as applicable, performing a physical inspection of each
Mortgaged Property or REO Property in accordance with Section 3.07;

(xii) as the Master Servicer or a Special Servicer, as applicable, administering
any requests for assumptions of a Mortgage Loan or transfers of ownership of or
placement of subordinate financing on a Mortgaged Property in accordance with
Section 3.08;

(xiii) as a Special Servicer, commencing on behalf of the Owner any litigation
or proceeding relating to the restructuring, assumptions or substitutions,
foreclosure or other realization upon the collateral under any of the Mortgage
Loans, including seeking deficiency judgments if deemed advisable and permitted
by applicable law and the Mortgage Loan Documents, defending any action brought
against any party to this Agreement with respect to the servicing of any
Mortgage Loan while subject to this Agreement, and retaining legal counsel in
connection therewith, all in accordance with Section 3.09;

(xiv) as a Special Servicer, accepting deeds-in-lieu of foreclosure or
performing asset management, with respect to any Mortgage Loan or Mortgage
Property;

 

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(xv) as a Special Servicer, selling or disposing of each Specially Serviced
Mortgage Loan or REO Property in accordance with Section 3.10;

(xvi) as a Special Servicer, managing and operating each REO Property in
accordance with Section 3.11;

(xvii) as the Master Servicer or a Special Servicer, as applicable,
administering any proposals for modifications, waivers, amendments or consents
with respect to any term of a Mortgage Loan in accordance with Section 3.12;

(xviii) as the Master Servicer, to the extent required by the related Mortgage
Loan Documents, determining and notifying each Borrower of the amount of each
payment of principal and interest due under the terms of the related Mortgage
Loan, including determining and, if applicable, notifying the related Borrower
of the interest rate for any floating or adjustable rate Mortgage Loan;

(xix) as the Master Servicer or a Special Servicer, as applicable, with respect
to each Mortgage Loan requiring the Borrower to establish and maintain one or
more lockbox, cash management or similar accounts, establishing, maintaining and
applying the funds deposited in such accounts in accordance with terms of the
Mortgage Loan Documents, any lock-box, cash management or similar agreement, and
Accepted Servicing Practices;

(xx) as the Master Servicer or a Special Servicer, as applicable, maintaining
and drawing on any letter of credit, if any, provided as Additional Collateral
for the Mortgage Loan, and making Reasonable Efforts to recover any expenses
incurred to enable such draw from the Borrower to the extent Borrower is
required to pay such expenses under the terms of the Mortgage Loan;

(xxi) as the Master Servicer, at least ninety (90) days prior to the due date of
any balloon payment, sending a notice to the Borrower of such due date (with a
copy to Special Servicer) and requesting confirmation that the balloon payment
will be paid by such maturity date;

(xxii) as the Master Servicer or a Special Servicer, as applicable, establishing
and maintaining an effective OFAC compliance and anti-money laundering program
respecting the Borrowers and the Mortgage Loans and coordinating with Owner
regarding the filing of suspicious activity reports;

(xxiii) as a Special Servicer, preparing Asset Status Reports and timely
delivering such reports to Owner in accordance with Section 3.13; and

(xxiv) as the Master Servicer or a Special Servicer, as applicable, any services
that are set forth on Exhibit “E” attached to this Agreement (other than those
identified with an “x” as to be performed by Owner) and made a part hereof by
reference.

 

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Section 3.02. Escrow Accounts; Collection of Taxes, Assessments and Similar
Items.

(a) With respect to the Mortgage Loans described in the Mortgage Loan Schedule,
and subject to and as required by the terms of the related Mortgage Loan
Documents, the Master Servicer shall establish and maintain one or more Eligible
Accounts (each, an “Escrow Account”) into which any or all Escrow Payments shall
be deposited promptly after receipt and identification. Escrow Accounts shall be
denominated “Escrow Account, Midland Loan Services, a Division of PNC Bank,
National Association for the benefit of PennyMac Corp. and Various Borrowers” or
in such other manner as the Owner prescribes. The Master Servicer shall notify
the Owner in writing of the location and account number of each Escrow Account
it establishes and shall notify the Owner prior to any change thereof.
Withdrawals of amounts from an Escrow Account may be made, subject to any
express provisions to the contrary herein, applicable laws, and to the terms of
the related Mortgage Loan Documents governing the use of the Escrow Payments,
only: (i) to effect payment of taxes, assessments, insurance premiums, ground
rents and other items required or permitted to be paid from escrow; (ii) to
refund to the Borrowers any sums determined to be in excess of the amounts
required to be deposited therein; (iii) to pay interest, if required under the
Mortgage Loan Documents, to the Borrowers on balances in the Escrow Accounts;
(iv) to pay to the Master Servicer from time to time any interest or investment
income earned on funds deposited therein pursuant to Section 3.04; (v) to apply
funds to the indebtedness of the Mortgage Loan in accordance with the terms
thereof; (vi) to reimburse the Owner for any Servicing Expense for which Escrow
Payments should have been made by the Borrowers, but only from amounts received
on the Mortgage Loan which represent late collections of Escrow Payments
thereunder; (vii) to withdraw any amount deposited in the Escrow Accounts which
was not required to be deposited therein; or (viii) to clear and terminate the
Escrow Accounts at the termination of this Agreement.

(b) The Master Servicer shall maintain accurate records with respect to each
Mortgaged Property reflecting the status of taxes, assessments and other similar
items that are or may become a lien thereon and the status of insurance premiums
payable with respect thereto as well as the payment of ground rents with respect
to each ground lease (to the extent such information is reasonably available).
To the extent that the related Mortgage Loan Documents require Escrow Payments
to be made by a Borrower, the Master Servicer shall use Reasonable Efforts to
obtain, from time to time, all bills for the payment of such items, and shall
effect payment prior to the applicable penalty or termination date, employing
for such purpose Escrow Payments paid by the Borrower pursuant to the terms of
the Mortgage Loan and deposited in the related Escrow Account by the Master
Servicer. Subject to Section 3.05 with respect to the payment of insurance
premiums, if a Borrower fails to make any such payment on a timely basis or
collections from the Borrower are insufficient to pay any such item when due,
the amount of any shortfall shall be paid by the Master Servicer as a Servicing
Expense in accordance with Sections 3.03 and 5.02, provided that the Master
Servicer has consulted with the Owner regarding the timing for payment of taxes,
assessments and other similar items.

Section 3.03. Collection Accounts.

(a) With respect to the Mortgage Loans, the Master Servicer shall establish and
maintain one or more Eligible Accounts (each, a “Collection Account”) for the
benefit of the Owner for the purposes set forth herein. Collection Accounts
shall be denominated “Collection

 

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Account, Midland Loan Services, a Division of PNC Bank, National Association for
the benefit of PennyMac Corp.” or in such other manner as the Owner prescribes.
The Master Servicer shall deposit into the Collection Accounts within one
(1) Business Day after receipt all payments and collections received by it on or
after the date hereof with respect to the Mortgage Loans, other than payments
and collections with respect to any REO Property (which shall be deposited into
the REO Account from amounts withdrawn from the related REO Account pursuant to
Section 3.11(a)), Escrow Payments or payments in the nature of Additional
Servicing Compensation.

(b) The Master Servicer shall make withdrawals from the Collection Accounts only
as follows (the order set forth below not constituting an order of priority for
such withdrawals):

(i) to withdraw any amount deposited in the Collection Accounts which was not
required to be deposited therein;

(ii) pursuant to Section 5.01, to pay to the Master Servicer or the Special
Servicer the Servicing Fee, Special Servicing Fee, Additional Servicing
Compensation, Workout Fee and Disposition Fee on each Remittance Date;

(iii) pursuant to Section 5.02, to pay any Servicing Expenses;

(iv) to pay to the Master Servicer from time to time any interest or investment
income earned on funds deposited in the Collection Accounts pursuant to
Section 3.04;

(v) to remit to the Owner on each Remittance Date, pursuant to wiring
instructions from the Owner, all amounts on deposit in the Collection Accounts
(that represent good funds) as of the close of business on the Determination
Date, net of any withdrawals from the Collection Account pursuant to this
Section; and

(vi) to clear and terminate the Collection Accounts upon the termination of this
Agreement.

Section 3.04. Permitted Investments.

The Master Servicer may direct any depository institution or trust company in
which the Accounts are maintained to invest the funds held therein in one or
more Permitted Investments; provided, however, that such funds shall be either
(a) immediately available or (b) available in accordance with a schedule which
will permit the Master Servicer to meet its payment obligations hereunder. The
Master Servicer shall be entitled to all income and gain realized from the
investment of funds deposited in the Accounts. The Master Servicer shall deposit
from its own funds in the applicable Account the amount of any loss incurred in
respect of any such investment of funds immediately upon the realization of such
loss. Notwithstanding the foregoing, the Master Servicer shall not direct the
investment of funds held in any Escrow Account and retain the income and gain
realized therefrom if the related Mortgage Loan Documents or applicable law
permits the Borrower to be entitled to the income and gain realized from the
investment of funds deposited therein. In such event, the Master Servicer shall
direct the depository institution or trust company in which such Escrow Accounts
are maintained to invest the funds held therein (1) in accordance with the
Borrower’s written investment instructions, if the Mortgage Loan Documents or
applicable law require such funds to be

 

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invested in accordance with the Borrower’s direction; and (2) in accordance with
the Owner’s written investment instructions, if the Mortgage Loan Documents and
applicable law do not permit the Borrower to direct the investment of such
funds; provided, however, that in either event (i) such funds shall be either
(y) immediately available or (z) available in accordance with a schedule which
will permit the Master Servicer to meet the payment obligations for which the
Escrow Account was established; (ii) the Master Servicer shall have no liability
for any loss in investments of such funds that are invested pursuant to such
written instructions; and (iii) Master Servicer will not be responsible for
paying interest to any Borrower at a rate in excess of a reasonable and
customary rate earned on similar accounts. The Master Servicer may maintain the
funds in an interest-bearing Eligible Account.

Section 3.05. Maintenance of Insurance Policies.

(a) The Master Servicer shall use Reasonable Efforts to cause the Borrower of
each Mortgage Loan to maintain for each Mortgage Loan such insurance as is
required to be maintained pursuant to the related Mortgage Loan Documents. If
the Borrower fails to maintain such insurance, then the Master Servicer shall
notify the Owner of such breach and, to the extent available at commercially
reasonable rates and the Owner, as mortgagee, has an insurable interest, cause
to be maintained (i) fire and hazard insurance with extended coverage in an
amount which is at least equal to the lesser of the current principal balance of
such Mortgage Loan and the replacement cost of the improvements which are a part
of the related Mortgaged Property and (ii) to the extent that the Mortgaged
Property is located in a federally designated special flood hazard area, flood
insurance in respect thereof. Such flood insurance shall be in an amount equal
to the lesser of (y) the unpaid principal balance of the related Mortgage Loan
or (z) the maximum amount of such insurance as is available for the related
Mortgaged Property under the National Flood Insurance Act. After notifying the
Owner pursuant to the second preceding sentence, the Master Servicer shall take
such action as the Owner reasonably requests with respect to the maintenance of
any other forms of insurance which are required to be maintained pursuant to the
related Mortgage Loan Documents, except to the extent that such insurance is not
available at commercially reasonable rates or the Owner, as mortgagee, does not
have an insurable interest. The Master Servicer shall, to the extent available
at commercially reasonable rates and the Owner, as mortgagee, has an insurable
interest, maintain for each REO Property no less insurance coverage than was
previously required with respect to the related Mortgaged Property or as may be
required at any time by the Owner in writing. All such policies shall be
endorsed with standard mortgagee clauses with loss payable to the Owner, and
shall be in an amount sufficient to avoid the application of any co-insurance
clause. The costs of maintaining the insurance policies which the Master
Servicer is required to maintain pursuant to this Section shall be paid by the
Master Servicer as a Servicing Expense in accordance with Sections 3.03 and
5.02, provided, that the cost of maintaining insurance with respect to each REO
Property shall be paid pursuant to Section 3.11.

(b) The Master Servicer may fulfill its obligation to maintain insurance, as
provided in Section 3.05(a), through a master force placed insurance policy, the
cost of which shall be paid by the Master Servicer as a Servicing Expense in
accordance with Sections 3.03 and 5.02, provided that such cost is limited to
the incremental cost of such policy allocable to such Mortgaged Property or REO
Property (i.e., other than any minimum or standby premium payable for such
policy whether or not any Mortgaged Property is then covered thereby, which
shall be

 

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paid by the Master Servicer). Such master force placed insurance policy may
contain a deductible clause, in which case the Master Servicer shall, in the
event that there shall not have been maintained on the related Mortgaged
Property or REO Property a policy otherwise complying with the provisions of
Section 3.05(a), and there shall have been one or more losses which would have
been covered by such a policy had it been maintained, immediately deposit into
the related Collection Account from its own funds the amount not otherwise
payable under the master force placed insurance policy because of such
deductible to the extent that such deductible exceeds the deductible limitation
required under the related Mortgage Loan Documents, or, in the absence of such
deductible limitation, the deductible limitation which is consistent with
Accepted Servicing Practices.

(c) The Master Servicer shall maintain at its own expense a fidelity bond in
form and amount that is consistent with Accepted Servicing Practices. In
addition, the Master Servicer shall keep in force, at its own expense during the
term of this Agreement, a policy or policies of insurance in form and amounts
that are consistent with Accepted Servicing Practices, covering loss occasioned
by the errors and omissions of the Master Servicer’s officers and employees in
connection with its obligations hereunder.

(d) As long as Master Servicer has a corporate rating of “A-” (or such
comparable rating), Master Servicer may comply with this Section of the
Agreement by purchasing such bond or insurance, by self-insuring for these items
or a combination of the above.

Section 3.06. Delivery and Possession of Servicing Files.

On or before the related Servicing Transfer Date, the Owner shall deliver or
cause to be delivered to the Master Servicer (a) a Servicing File with respect
to each Mortgage Loan; and (b) the amounts, if any, received by the Owner
representing Escrow Payments previously made by the Borrowers. The Master
Servicer shall promptly acknowledge receipt of the Servicing File and Escrow
Payments for the Mortgage Loans and shall promptly deposit such Escrow Payments
in the Escrow Accounts established pursuant to this Agreement. The contents of
each Servicing File delivered to the Master Servicer shall be held by the Master
Servicer for the benefit of the Owner as the owner thereof; the Master
Servicer’s possession of the contents of each Servicing File so delivered is for
the sole purpose of servicing the related Mortgage Loan; and such possession by
the Master Servicer shall be in a custodial capacity only. The Master Servicer
shall release its custody of the contents of any Servicing File only in
accordance with written instructions from the Owner, and upon request of the
Owner, the Master Servicer shall deliver to the Owner the Servicing File or a
copy of any document contained therein; provided, however, that if the Master
Servicer is unable to perform its Loan Servicing obligations with respect to the
related Mortgage Loan after any such release or delivery of the Servicing File,
then the Master Servicer shall not be liable to the Owner or any third party
while the related Servicing File is not in the Master Servicer’s possession for
any inability of the Master Servicer to perform any such obligation hereunder
and Master Servicer may terminate this Agreement with respect to such Mortgage
Loan immediately upon written notice to the Owner.

 

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Section 3.07. Inspections.

For a Property Inspection Fee, the Master Servicer or the Special Servicer, as
applicable, shall perform a physical inspection in accordance with Accepted
Servicing Practices of each Mortgaged Property or REO Property if the Owner
requests such an inspection in writing. The Master Servicer shall prepare a
written report of each such inspection and shall promptly deliver a copy of such
report to the Owner. Property Inspection Fee shall be paid as a Servicing
Expense in accordance with Sections 3.03 and 5.02.

Section 3.08. “Due-on-Sale” Clauses; Assumption Agreements.

When any Borrower proposes to convey or encumber all or any portion of its
interests in a Mortgaged Property, or if such conveyance or encumbrance has
actually occurred, to the extent that the Master Servicer has actual knowledge
of such conveyance or encumbrance, the Master Servicer shall immediately give
notice thereof to the Owner and take such related actions as the Owner
reasonably directs, including (a) waiving or enforcing any due-on-sale clause or
due-on-encumbrance clause contained in the related Mortgage Loan Documents, to
the extent permitted under the terms of the related Mortgage Loan Documents,
Freddie Mac Guide, and applicable law, (b) taking or entering into an assumption
or substitution agreement from or with the Person to whom such Mortgaged
Property has been or shall be conveyed, and (c) releasing the original Borrower
from liability upon the related Mortgage Loan and substituting the new Borrower
as the obligor thereon.

To the extent the Master Servicer is engaged by the Owner to perform analysis,
processing and administrative functions in connection with any request by a
Borrower to waive any such due-on-sale clause or due-on-encumbrance clause
and/or to enter into any such assumption or substitution agreement, the Master
Servicer may, as a condition to granting any such request require (to the extent
permitted by applicable law) that such Borrower pay to it, as Additional
Servicing Compensation, a reasonable and customary fee consistent with Accepted
Servicing Practices in connection with such request, together with any related
costs and expenses incurred by the Master Servicer; provided, however, that in
the event that the Borrower fails or is unable to pay any such costs and
expenses, or the Owner directs the Master Servicer to waive any requirement that
the Borrower pay any such fees, costs or expenses, the same shall be paid by the
Master Servicer as a Servicing Expense in accordance with Sections 3.03 and
5.02.

Section 3.09. Realization Upon Mortgaged Properties.

(a) Upon the failure of any Borrower to make any required payment of principal,
interest or other amounts due under a Mortgage Loan, or otherwise to perform
fully any material obligations under any of the related Mortgage Loan Documents,
in either case within any applicable grace period, the Master Servicer shall,
upon discovery of such failure, promptly notify the Owner in writing. As
directed in writing by the Owner in each instance, the Master Servicer or the
Special Servicer shall issue notices of default, declare events of default,
declare due the entire outstanding principal balance, and otherwise take all
reasonable actions under the related Mortgage Loan in preparation for the Owner
to realize upon the underlying collateral, including the Mortgage Property and
the Additional Collateral. With respect to any Specially Serviced Mortgage Loan,
the Special Servicer shall, as permitted under the provisions of the

 

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related Mortgage Loan Documents, and subject to the Owner’s prior written
consent, foreclose upon or otherwise comparably convert the ownership of the
related Mortgaged Property. In connection with such foreclosure or other
conversion, the Special Servicer shall, subject to the consent or direction of
the Owner, follow such practices and procedures as it shall deem necessary or
advisable and as shall be consistent with Accepted Servicing Practices. All
costs and expenses incurred by the Special Servicer in any such proceedings
shall be paid by the Master Servicer as a Servicing Expense in accordance with
Sections 3.03 and 5.02. Master Servicer or the Special Servicer, as applicable,
shall consult with Owner regarding the selection and retention of legal counsel.

(b) If title to any Mortgaged Property is acquired in foreclosure or by deed in
lieu of foreclosure, the deed or certificate of sale shall be taken in the name
of the Owner or its nominee, but in no event shall such deed or certificate be
taken in the name of the Master Servicer or the Special Servicer.
Notwithstanding any such acquisition of title and cancellation of the related
Mortgage Loan, such Mortgage Loan shall be considered to be an REO Mortgage Loan
held by the Owner until such time as the related REO Property shall be sold,
transferred or conveyed by the Owner. Consistent with the foregoing, for
purposes of all calculations hereunder, so long as such REO Mortgage Loan shall
be considered to be an outstanding Mortgage Loan, payments and collections with
respect to the related REO Property received in any month (net of related
expenses) shall be applied to amounts which would have been payable under the
related Note in accordance with the terms of such Note.

(c) Except as otherwise provided in written instructions delivered to the Master
Servicer or the Special Servicer by the Owner, the Master Servicer or the
Special Servicer shall not obtain title to any Mortgaged Property as a result or
in lieu of foreclosure or otherwise, and shall not otherwise acquire possession
of, or take other action with respect to, any Mortgaged Property, if, as a
result of any such action, the Owner would be considered to hold title to, to be
a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such
Mortgaged Property within the meaning of any Environmental Law, or a
“discharger” or “responsible party” thereunder, unless the Master Servicer or
the Special Servicer has also previously determined, based on a report prepared
by a Person who regularly conducts environmental site assessments, that:

(i) such Mortgaged Property is in compliance with applicable Environmental Laws
or, if not, that taking such actions as are necessary to bring such Mortgaged
Property into compliance therewith is reasonably likely to produce a greater
recovery on a present value basis than not taking such actions; and

(ii) there are no circumstances present on such Mortgaged Property relating to
the use, management or disposal of any hazardous materials for which
investigation, testing, monitoring, containment, clean-up or remediation could
be required under any applicable Environmental Law, or that, if any such
hazardous materials are present for which such action could be required, taking
such actions with respect to the affected Mortgaged Property is reasonably
likely to produce a greater recovery on a present value basis than not taking
such actions.

 

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If the Master Servicer or the Special Servicer, as applicable, has so determined
based on satisfaction of the criteria in clauses (i) and (ii) above that it
would be in the best economic interest of the Owner to take any such actions,
the Master Servicer or the Special Servicer, as applicable, shall notify the
Owner of such proposed action. The Master Servicer or the Special Servicer, as
applicable, shall take such action only if authorized by the Owner in writing.
The costs of any such compliance, containment, clean-up or remediation shall be
paid by the Master Servicer as a Servicing Expense in accordance with Sections
3.03 and 5.02.

If the environmental assessment first obtained by the Master Servicer or the
Special Servicer with respect to a Mortgaged Property indicates that such
Mortgaged Property may not be in compliance with applicable Environmental Laws
but does not definitively establish such fact, the Master Servicer or the
Special Servicer, subject to the Owner’s prior written consent, shall cause such
further environmental assessments to be conducted.

(d) The environmental site assessments contemplated by Section 3.09(c) shall be
prepared by any Person who is recommended by the Master Servicer or the Special
Servicer and approved in writing by the Owner or such other Person as directed
in writing by the Owner, which Person shall be a qualified independent person
(the precise scope and timing to be mutually agreed upon by the Owner and the
Master Servicer or the Special Servicer). The report of the environmental
assessment shall be delivered to the Owner, with a copy to the Master Servicer
or the Special Servicer, and shall include an estimate of the cost to
investigate and remediate the Mortgage Property and environmental hazard, or to
otherwise address any noncompliance with applicable Environmental Laws or health
and safety law and regulations or environmental condition (such as the presence
of asbestos-containing materials). The Master Servicer, the Special Servicer or
its agent shall provide a separate recommendation to the Owner as to whether it
is advisable for the Owner or any REO Subsidiary to take title or otherwise
become in possession of, assume the operation of (including appointment of a
receiver) or take any other action with respect to the Mortgaged Property given
the conclusions and information set forth in such environmental assessment
report taking into account unique property features or characteristics. Such
recommendations should identify the factual and legal basis for the
recommendations and the applicable provisions of the Environmental Laws, the
health and safety laws and regulations and other authorities relevant thereto,
including a description of any reasonable steps required to avoid or minimize
the potential of environmental liability regarding the environmental conditions
on the Mortgaged Property in the event the Owner comes into possession,
ownership or operation of the Mortgaged Property. The cost of preparation of any
environmental assessment shall be paid by the Master Servicer as a Servicing
Expense in accordance with Sections 3.03 and 5.02. If the Master Servicer or the
Special Servicer determines, pursuant to Section 3.09(c), that taking such
actions as are necessary to bring any Mortgaged Property into compliance with
applicable Environmental Laws, or taking such actions with respect to the
containment, clean-up, removal or remediation of hazardous substances, hazardous
materials, hazardous wastes, or petroleum-based materials affecting any such
Mortgaged Property, is not reasonably likely to produce a greater recovery on a
present value basis than not taking such actions, then the Master Servicer or
the Special Servicer shall take such action as directed in writing by the Owner,
including, without limitation, releasing the lien of the related Mortgage with
respect to the affected Mortgaged Property.

 

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Section 3.10. Sale of Specially Serviced Mortgage Loans and REO Properties.

(a) With respect to any Specially Serviced Mortgage Loan or REO Property, when
and if directed in writing by the Owner, the Special Servicer shall use
Reasonable Efforts to sell to any Person such Specially Serviced Mortgage Loan,
REO Property or Additional Collateral on commercially reasonable terms which are
consistent with Accepted Servicing Practices; provided, however, that any such
sale must be approved in writing by the Owner.

(b) Subject to Sections 3.10(a), the Special Servicer shall act on behalf of the
Owner in negotiating and taking any such action necessary or appropriate in
connection with the sale of any Specially Serviced Mortgage Loan, REO Property
or Additional Collateral, including the collection of all amounts payable in
connection therewith. The Net Liquidation Proceeds (after deduction of the
Disposition Fee) shall be promptly remitted within one (1) Business Day after
receipt by the Special Servicer to the Master Servicer for deposit by the Master
Servicer in the related Collection Account.

Section 3.11. Management of REO Property.

(a) Upon the acquisition by the Owner of any REO Property, the Special Servicer
shall have full power and authority, subject to the specific requirements and
prohibitions of this Agreement, to do or authorize to be done any and all things
in connection therewith as are consistent with Accepted Servicing Practices, all
on terms and for such period as the Special Servicer deems to be in the best
economic interest of the Owner. The Special Servicer shall segregate and hold
all revenues received by it with respect to any REO Property separate and apart
from its own funds and general assets and shall establish and maintain with
respect to any REO Property one or more Eligible Accounts (each, an “REO
Account”) for the purposes set forth herein. REO Accounts shall be denominated
“REO Account, Midland Loan Services, a Division of PNC Bank, National
Association for the benefit of PennyMac Corp.” or in such other manner as the
Owner prescribes. Pursuant to Section 3.04, the Special Servicer may invest the
funds in the REO Account and shall be entitled to any interest or investment
income earned on such funds. In connection therewith, the Special Servicer shall
deposit or cause to be deposited in the REO Account on a daily basis within one
(1) Business Day after receipt all revenues received by it with respect to any
REO Property (except for any Net Liquidation Proceeds), and shall withdraw
therefrom funds necessary for the proper maintenance, leasing, operation,
management and sale of any REO Property, including:

(i) all insurance premiums due and payable in respect of such REO Property;

(ii) all taxes and assessments in respect of such REO Property that could result
or have resulted in the imposition of a lien thereon;

(iii) all ground rental payments, if applicable, with respect to such REO
Property; and

(iv) all costs and expenses necessary to maintain, lease, operate, manage and
sell such REO Property, including the management fee payable to the property
manager engaged by Master Servicer pursuant to Section 3.11(b).

 

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To the extent that amounts on deposit in any REO Account are insufficient for
the purposes set forth above, the Master Servicer shall pay the amount of such
shortfall as a Servicing Expense in accordance with Sections 3.03 and 5.02. The
Master Servicer shall withdraw from each REO Account and deposit into the
related Collection Account on a monthly basis on or prior to the related
Remittance Date the income, net of expenses, received or collected from each REO
Property; provided, however, that the Special Servicer may retain in each REO
Account funds sufficient for the payment of the items set forth in clauses
(i) through (iv) above, including, without limitation, the creation of
reasonable reserves for repairs, replacements, and necessary capital
improvements and other related expenses.

(b) The Special Servicer may contract with any Person as a property manager for
the operation and management of any REO Property; provided, however, that:

(i) the terms and conditions of any such contract shall not be inconsistent
herewith and the Owner has provided its written consent (which shall not be
unreasonably withheld) with respect to such property manager; and

(ii) none of the provisions of this Section relating to any such contract or to
actions taken through any such Person shall be deemed to relieve the Special
Servicer of any of its duties and obligations to the Owner with respect to the
operation and management of such REO Property.

Section 3.12. Modifications, Waivers, Amendments and Consents.

(a) When any Borrower proposes any modification, waiver or amendment of any term
of any Mortgage Loan or requests any consents related thereto, the Master
Servicer or the Special Servicer shall immediately give notice thereof to the
Owner and take such related actions as the Owner reasonably directs, except with
respect to any Borrower proposal or request which involves any required payment
from the Borrower in the nature of Additional Servicing Compensation to which
the Master Servicer is properly entitled. All modifications, waivers or
amendments of any Mortgage Loan or consents related thereto shall be in writing.

(b) To the extent the Master Servicer or the Special Servicer is engaged by the
Owner to perform analysis, processing and administrative functions in connection
with any request by a Borrower for any consent, modification, waiver or
amendment, the Master Servicer or the Special Servicer may, as a condition to
granting any such request require (to the extent permitted by applicable law)
that such Borrower pay to it, as Additional Servicing Compensation, a reasonable
and customary fee consistent with Accepted Servicing Practices in connection
with such request, together with any related costs and expenses incurred by the
Master Servicer or the Special Servicer; provided, however, that in the event
that the Borrower fails or is unable to pay any such costs and expenses, or the
Owner directs the Master Servicer or the Special Servicer to waive any
requirement that the Borrower pay any such fees, costs or expenses, the same
shall be paid by the Master Servicer as a Servicing Expense in accordance with
Sections 3.03 and 5.02.

Section 3.13. Transfers of Servicing Between Master Servicer and the Special
Servicer.

(a) Upon determining that a Mortgage Loan has become a Specially Serviced
Mortgage Loan, the Master Servicer shall promptly give notice thereof to the
Owner, and if the

 

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Master Servicer is not also the Special Servicer, the Master Servicer shall
(i) also promptly give notice to the Special Servicer; (ii) deliver the
Servicing File to the Special Servicer and use its Reasonable Efforts to provide
the Special Servicer with all information, documents (or copies thereof) and
records (including records stored electronically on computer tapes, magnetic
discs and the like) relating to such Mortgage Loan and reasonably requested by
the Special Servicer to enable the Special Servicer to assume its functions. The
Master Servicer shall use its best reasonable efforts to comply with this
Section 3.13(a) within five (5) Business Days of the Mortgage Loan becoming a
Specially Serviced Mortgage Loan.

(b) Upon determining that a Specially Serviced Mortgage Loan has become a
Corrected Mortgage Loan, and if the Master Servicer is not also the Special
Servicer, the Special Servicer shall immediately give notice thereof to the
Master Servicer and the Owner and shall return the Servicing File within five
(5) Business Days to the Master Servicer. Upon giving such notice and returning
such Servicing File to the Master Servicer, Special Servicer’s obligation to
service such Mortgage Loan and Special Servicer’s right to receive the Special
Servicing Fee with respect to such Mortgage Loan, shall terminate (provided,
however, that such termination shall be without prejudice to any rights to the
payment of Special Servicing Fees or other compensation due under the terms of
this Agreement through and including the date of such termination) and the
obligations of the Master Servicer to service and administer such Mortgage Loan
shall resume.

(c) In servicing any Specially Serviced Mortgage Loan, if the Special Servicer
is not also the Master Servicer, the Special Servicer shall provide to the
Master Servicer for inclusion in the Servicing File copies of any additional
Mortgage Loan Documents and Mortgage Loan information, including but not limited
to correspondence with the Borrower, complaints and responses, loss mitigation
applications, modification agreements, assumption applications and agreements,
appraisals, brokers’ opinions of value, and litigation files generated while the
Mortgage Loan is a Specially Serviced Mortgage Loan.

Section 3.14. Preparation of Asset Status Reports.

(a) No later than sixty (60) days after a Mortgage Loan becomes a Specially
Serviced Mortgage Loan or a borrower seeks approval of a material action
requiring Owner approval, the Special Servicer shall deliver in electronic
format a report (the “Asset Status Report”) with respect to such Mortgage Loan
and the related Mortgaged Property to the Owner with a copy to the Master
Servicer if the Special Servicer is not also the Master Servicer. Such Asset
Status Report shall set forth the following information to the extent reasonably
determinable based on the information in the Special Servicer’s possession:

(i) A summary of the borrower request with respect to a non-Specially Serviced
Loan and the Special Servicer’s recommendations with respect to such request;

(ii) A summary of the status of the applicable Specially Serviced Mortgage Loan
and any negotiations with the related Borrower, including:

(A) a discussion of the legal and environmental considerations reasonably known
to the Special Servicer that are applicable to the exercise of

 

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Owner’s remedies and to the enforcement of any related guaranties or other
collateral for the related Mortgage Loan and whether outside legal counsel needs
to be or has been retained;

(B) the most current rent roll and income or operating statement available for
the related Mortgaged Property;

(C) the Special Servicer’s recommendations on how such Specially Serviced
Mortgage Loan might be returned to performing status and returned to the Master
Servicer for regular servicing or otherwise realized upon;

(D) a copy of the last obtained appraisal of the Mortgaged Property and the most
recent brokers’ opinion of value; and

(E) such other information as the Special Servicer deems relevant in light of
Accepted Servicing Practices.

(b) Prior to taking any action with respect to a Specially Serviced Mortgage
Loan, Special Servicer shall obtain the Owner’s approval of the related Asset
Status Report. No direction or disapproval of the Owner hereunder or failure of
the Owner to consent to or approve (including any deemed consents or approvals)
any request of the Special Servicer, shall (i) require or cause the Special
Servicer to violate the terms of a Specially Serviced Mortgage Loan, applicable
law or any provision of this Agreement, including the Special Servicer’s
obligation to act in accordance with the Accepted Servicing Practices, or
(ii) expose the Special Servicer or their respective officers, directors,
members, employees or agents to any claim, suit or liability or (iii) materially
expand the scope of the Special Servicer’s responsibilities under this
Agreement. Notwithstanding the foregoing, if Special Servicer has made
commercially reasonable efforts to contact the Owner for such approval and
determines in accordance with Accepted Servicing Practices that emergency action
is necessary to protect the Mortgaged Property or the interests of the Owner, or
that a failure to take any such action at such time would be inconsistent with
Accepted Servicing Practices, Special Servicer shall take the recommended
actions with respect to the Mortgaged Property before Owner provides such
approval; provided; however, that the Master Servicer or the Special Servicer
shall not be obligated to make any advance.

ARTICLE IV.

STATEMENTS AND REPORTS

Section 4.01. Reporting by the Master Servicer.

(a) Master Servicer shall prepare and/or provide the statements, reports and/or
information listed on Exhibit “B” hereto to Owner or such other Person
designated by Owner and on such date as indicated thereon. On the Remittance
Date, the Master Servicer shall also prepare and/or provide a remittance report
in a form reasonably agreed upon by the parties hereto. The delivery by the
Master Servicer to the Owner of such remittance report shall be deemed to be an
acknowledgment by the parties hereto that, as of the related Determination Date,
the Mortgage Loans listed on such report are the Mortgage Loans being serviced
by the Master Servicer pursuant to this Agreement.

 

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(b) Midland will provide the Owner with immediate online Internet website access
to Portfolio Investor Insight®, subject to such reasonable policies, procedures
and limitations as the parties may agree upon from time to time.

(c) Unless otherwise specifically stated herein, if the Master Servicer is
required to deliver any statement, report or information under any provisions of
this Agreement, the Master Servicer may satisfy such obligation by
(x) physically delivering a paper copy of such statement, report or information,
(y) delivering such statement, report or information in a commonly used
electronic format, or (z) making such statement, report or information available
on the Master Servicer’s Internet website, unless this Agreement expressly
specifies a particular method of delivery.

ARTICLE V.

SERVICER’S COMPENSATION AND EXPENSES

Section 5.01. Servicing Compensation.

As consideration for servicing the Mortgage Loans subject to this Agreement, the
Master Servicer shall be entitled to a Servicing Fee for each Mortgage Loan
remaining subject to this Agreement during any calendar month or part thereof.
Such Servicing Fee shall be payable monthly on the Remittance Date and shall be
computed on the basis of the number of Mortgage Loans serviced during the
calendar month as more specifically set forth in Exhibit “C.” The Master
Servicer may pay itself the Servicing Fee on each Remittance Date from amounts
on deposit in the related Collection Account.

As further compensation for its activities hereunder, the Master Servicer, or
the Special Servicer, as applicable, shall be entitled to retain any interest or
investment income earned on funds deposited in the Accounts to the extent
permitted hereunder and by the Mortgage Documents, subject to any loss payable
by the Master Servicer or the Special Servicer, as applicable, pursuant to
Section 3.04 and to any other amount or collections received by it which are in
the nature of Additional Servicing Compensation. For Reserve Administration Fee,
the relevant Borrower shall pay such fees to the Master Servicer or Special
Servicer, as applicable, at the time of the draw. If the relevant Borrower fails
to pay such fees, Owner shall pay such fees to the Master Servicer or the
Special Servicer, as applicable.

As compensation for its special servicing activities hereunder, the Special
Servicer shall be entitled to the Special Servicing Fee for each Specially
Serviced Mortgage Loan or REO Property remaining subject to this Agreement
during any calendar month or part thereof. Such Special Servicing Fee shall be
payable monthly on the Remittance Date and shall be computed on the basis of the
same outstanding principal balance and for the period with respect to which any
related interest payment on the related Mortgage Loan is computed. The Master
Servicer may pay itself or such other Special Servicer the Special Servicing Fee
on each Remittance Date from amounts on deposit in the related Collection
Account.

 

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In addition to the other servicing compensation provided for in this Agreement,
and not in lieu thereof, the Special Servicer shall be entitled to (a) the
Disposition Fee, which shall be payable out of Net Proceeds prior to the deposit
of Net Proceeds into the Collection Account in the event of a transfer, sale,
foreclosure, a deed in lieu of foreclosure or other liquidation of a Specially
Serviced Mortgage Loan or REO Property and (b) the Workout Fee, which shall be
payable from amounts on deposit in the related Collection Account in the event
of the curing of any monetary event of default under any Mortgage Loan through
modification, assumption, restructure or work-out of such Mortgage Loan (if such
modification, assumption, restructure or work-out is effected by the Special
Servicer). If the Master Servicer is terminated, it shall retain the right to
receive any and all Disposition Fees otherwise payable to it with respect to any
Mortgage Loan or REO Property, as applicable, that (A) became a Corrected
Mortgage Loan during the period that Master Servicer acted as such and that was
a Corrected Mortgage Loan at the time of such termination, (B) becomes a
Corrected Mortgage Loan subsequent to the time of such termination if Master
Servicer resolved the circumstances and/or conditions (including by way of a
modification of such Mortgage Loan) which caused such Mortgage Loan to become a
Specially Serviced Mortgage Loan but such Mortgage Loan had not, when the Master
Servicer was terminated, become a Corrected Mortgage Loan because the related
Borrower had not then made three (3) consecutive monthly debt service payments
(but the related Borrower then makes those three (3) monthly debt service
payments, and such Mortgage Loan subsequently becomes a Corrected Mortgage Loan
as a result of the Borrower making those three (3) monthly debt service
payments); (C) the Master Servicer has identified a buyer or transferee of a
Mortgage Loan or REO Property and a sale of such Mortgage Loan or REO Property
to such buyer or transferee, an Affiliate or related party is closed within six
(6) months of termination or resignation of the Master Servicer; or (D) notice
of a judicial or non-judicial sale has been provided to the Borrower and the
Mortgaged Property is sold to a third-party purchaser at a judicial or
non-judicial sale.

To the extent that amounts on deposit in the Collection Account are insufficient
for the payment of the Servicing Fee, Special Servicing Fee or Workout Fee, the
Owner shall pay any such shortfall to the Master Servicer or the Special
Servicer, as applicable, within ten (10) Business Days after the Owner’s receipt
of an itemized invoice therefor.

The Master Servicer or the Special Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder,
such as costs for office space, office equipment, supplies and related expenses,
employee salaries and related expenses and similar internal costs, overhead and
expenses, and shall not be entitled to reimbursement thereof except as
specifically provided for herein. Owner shall not be obligated to pay any
Servicing Fee, Additional Servicing Compensation, or Special Servicing Fee,
unless the amount of such fee or basis for calculation of such fee is
specifically set forth in this Agreement as amended from time to time.

Section 5.02. Servicing Expenses.

Notwithstanding any other provision hereof, the Master Servicer or the Special
Servicer shall obtain the written approval of the Owner prior to incurring any
Servicing Expense that is over $5,000.00 per item, except for any Servicing
Expense which is (a) incurred by the Master Servicer or the Special Servicer
pursuant to Sections 3.02(b) or 3.05 or (b) made for any

 

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purposes other than those described in item (a) above, and is not over
$25,000.00 and is made in an emergency situation to preserve and protect the
Mortgaged Property or the safety of the public in connection with such Mortgaged
Property.

The Master Servicer or the Special Servicer shall not advance its own funds for
the payment of any Servicing Expenses. The Master Servicer may cause any
Servicing Expenses to be paid directly from the related Collection Account. In
the event that there are insufficient funds in the related Collection Account to
permit the payment of Servicing Expenses, the Owner shall deposit the necessary
funds in the related Collection Account or promptly and directly pay for all
such Servicing Expenses. If the Master Servicer has provided written notice of
such Servicing Expenses to the Owner, and funds are subsequently deposited into
the related Collection Account from sources other than the Owner, the Master
Servicer may pay such expenses from the related Collection Account, in which
event the Master Servicer shall promptly notify the Owner of such payment. If
there are insufficient funds on deposit in the related Collection Account and
Owner does not deposit the necessary funds into the related Collection Account
or promptly and directly pay for such Servicing Expense, Master Servicer shall
have no obligation to pay such Servicing Expense.

ARTICLE VI.

THE MASTER SERVICER AND THE OWNER

Section 6.01. Master Servicer Not to Assign; Merger or Consolidation of the
Master Servicer.

(a) Except as otherwise provided for in this Section or in Section 2.02, the
Master Servicer may not assign this Agreement or any of its rights, powers,
duties or obligations hereunder without the written consent of the Owner;
provided, however, that the Master Servicer may assign this Agreement to a
Qualified Affiliate without the written consent of the Owner.

(b) The Master Servicer may be merged or consolidated with or into any Person,
or transfer all or substantially all of its assets to any Person, in which case
any Person resulting from any merger or consolidation to which it shall be a
party, or any Person succeeding to its business, shall be the successor of the
Master Servicer hereunder, and shall be deemed to have assumed all of the
liabilities of the Master Servicer hereunder. Following notice of such merger or
consolidation, Owner may terminate this Agreement without cause upon thirty
(30) days’ written notice to the Master Servicer and without the payment of any
Deconversion Fee if such notice is given within sixty (60) days of receiving
such notice of merger or consolidation; provided, however, that Master Servicer
shall be entitled to the pro rata share of minimum annual Servicing Fee set
forth on Exhibit “C” for the period during which it services the Mortgage Loans
under this Agreement. For the avoidance of doubt, to the extent the Owner has
paid a portion of minimum annual Servicing Fee before such termination, the
Owner would only owe the remaining amount to reach the pro rata share of the
minimum annual Servicing Fee.

Section 6.02. Liability and Indemnification of the Master Servicer and the
Owner.

(a) Neither the Master Servicer nor its Affiliates nor any of the directors,
officers, employees or agents thereof shall be under any liability to the Owner
or any third party for

 

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taking or refraining from taking any action, using its reasonable judgment
pursuant to or in connection with this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Master Servicer or
any such Person against any liability which would otherwise be imposed on the
Master Servicer or any such Person by reason of the Master Servicer’s willful
misfeasance, bad faith or negligence (except to the extent such liability is
related to the Master Servicer’s performance of Special Services, in which event
a gross negligence standard shall apply) in the performance of its duties
hereunder. The Master Servicer and any director, officer, employee or agent
thereof may rely in good faith on any document of any kind which, prima facie,
is properly executed and submitted by any appropriate Person respecting any
matters arising hereunder.

(b) The Master Servicer and any director, officer, employee or agent thereof
shall be indemnified and held harmless by the Owner against any loss, liability
or expense incurred, including reasonable attorneys’ fees, in connection with
any claim, legal action, investigation or proceeding relating to this Agreement,
the Master Servicer’s performance hereunder, or any specific action which the
Owner authorized or requested the Master Servicer to perform pursuant to this
Agreement, as such are incurred, except for any loss, liability or expense
incurred by reason of the Master Servicer’s willful misfeasance, bad faith,
negligence (except to the extent such loss, liability or expense is related to
the Master Servicer’s performance of Special Services, in which event a gross
negligence standard shall apply) or breach of the Master Servicer’s
representations and warranties set forth in Section 7.01. Notwithstanding the
exception set forth in the preceding sentence, in the event that the Master
Servicer sustains any loss, liability or expense by reason of such exception and
which results from any overcharges to Borrowers under the Mortgage Loans, to the
extent that such overcharges were collected by the Master Servicer and remitted
to the Owner, the Owner shall promptly remit such overcharge to the related
Borrower after the Owner’s receipt of written notice from the Master Servicer
regarding such overcharge.

(c) The Owner and any director, officer, employee or agent thereof shall be
indemnified and held harmless by the Master Servicer or the Special Servicer, as
applicable, against any loss, liability or expense incurred, including
reasonable attorneys’ fees, by reason of (i) the Master Servicer’s or Special
Servicer’s willful misfeasance, bad faith or negligence (except to the extent
such loss, liability or expense is related to the Master Servicer’s or Special
Servicer’s performance of Special Services, in which event a gross negligence
standard shall apply) in the performance of its duties hereunder or (ii) a
breach of the Master Servicer’s representations and warranties set forth in
Section 7.01.

(d) IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR INDIRECT, EXEMPLARY,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES TO THE OTHER PARTY ARISING FROM
THIS AGREEMENT, INCLUDING DAMAGES OR COSTS INCURRED AS A RESULT OF LOSSES OF
DATA, TIME, SAVINGS, PROPERTY, PROFITS OR GOODWILL, EVEN IF IT HAS BEEN ADVISED
OF THE POSSIBILITY OR LIKELIHOOD OF SUCH DAMAGES, REGARDLESS OF WHETHER SUCH
CLAIMS ARE BASED OR REMEDIES ARE SOUGHT IN CONTRACT, NEGLIGENCE, EQUITY, STRICT
LIABILITY, TORT, PRODUCTS LIABILITY OR OTHERWISE. NOTWITHSTANDING ANY OTHER
PROVISION HEREIN TO THE CONTRARY, THE LIABILITY OF MIDLAND UNDER THIS AGREEMENT
SHALL BE LIMITED TO THE AGGREGATE AMOUNT OF THE SERVICING FEES RECEIVED BY
MIDLAND HEREUNDER DURING THE TWELVE (12) MONTH PERIOD PRECEDING THE ACTION
GIVING RISE TO ANY CLAIM.

 

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The provisions of this Section shall survive any termination of the rights and
obligations of the Master Servicer hereunder.

ARTICLE VII.

REPRESENTATIONS AND WARRANTIES; DEFAULT

Section 7.01. Representations and Warranties.

(a) Midland, as the Master Servicer and a Special Servicer, hereby makes the
following representations and warranties to the Owner:

(i) Due Organization, Qualification and Authority. Midland is a division of a
national bank association duly organized, validly existing and in good standing
under the laws of the United States of America, and has and shall maintain all
requisite licenses to the extent necessary to ensure the enforceability of each
Mortgage Loan and to perform its duties and obligations under this Agreement in
accordance with the terms of this Agreement; Midland has the full power,
authority and legal right to execute and deliver this Agreement and to perform
in accordance herewith; Midland has duly authorized the execution, delivery and
performance of this Agreement and has duly executed and delivered this
Agreement; this Agreement constitutes the valid, legal, binding obligation of
Midland, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws relating to or affecting
the rights of creditors generally and by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law);

(ii) No Conflicts. Neither the execution and delivery of this Agreement, nor the
fulfillment of or compliance with the terms and conditions of this Agreement by
Midland (1) conflicts with or results in a breach of any of the terms,
conditions or provisions of Midland’s organizational documents; (2) conflicts
with or results in a breach of any agreement or instrument to which Midland is
now a party or by which it (or any of its properties) is bound, or constitutes a
default or results in an acceleration under any of the foregoing if compliance
therewith is necessary (A) to ensure the enforceability of any Mortgage Loan, or
(B) for Midland to perform its obligations under this Agreement in accordance
with the terms hereof; (3) conflicts with or results in a breach of any legal
restriction if compliance therewith is necessary (A) to ensure the
enforceability of any Mortgage Loan, or (B) for Midland to perform its
obligations under this Agreement in accordance with the terms hereof;
(4) results in the violation of any law, rule, regulation, order, judgment or
decree to which Midland is subject if compliance therewith is necessary (A) to
ensure the enforceability of any Mortgage Loan, or (B) for Midland to perform
its obligations under this Agreement in accordance with the terms hereof; or
(5) results in the creation or imposition of any lien, charge or encumbrance
that would have a material adverse effect upon any of its properties pursuant to
the terms of any mortgage, contract, deed of trust or other instrument, or
materially impairs the ability of (A) the Owner to realize on the Mortgage
Loans, or (B) Midland to perform its obligations hereunder;

 

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(iii) No Litigation Pending. There is no action, suit, or proceeding pending or
to Midland’s knowledge threatened against Midland, which, either in any one
instance or in the aggregate, would draw into question the validity of this
Agreement or the Mortgage Loans, or would be likely to impair materially the
ability of Midland to perform its duties and obligations under the terms of this
Agreement;

(iv) No Consent Required. No consent, approval, authorization or order of, or
registration or filing with, or notice to, any court or governmental agency or
body having jurisdiction or regulatory authority over Midland is required for
(A) Midland’s execution and delivery of, this Agreement, or (B) the consummation
of the transactions contemplated by this Agreement, or, to the extent required,
such consent, approval, authorization, order, registration, filing or notice has
been obtained, made or given (as applicable), except that Midland may not be
duly qualified to transact business or licensed in one or more states if such
qualification or licensing is not necessary (1) to ensure the enforceability of
any Mortgage Loan, or (2) for Midland to perform its obligations under this
Agreement in accordance with the terms hereof.

(b) PennyMac Loan Servicer, as a Special Servicer, hereby makes the following
representations and warranties to the Owner:

(i) Due Organization, Qualification and Authority. PennyMac Loan Servicer is a
Delaware limited liability company duly organized, validly existing and in good
standing under the laws of the United States of America, and has and shall
maintain all requisite licenses to the extent necessary to ensure the
enforceability of each Mortgage Loan and to perform its duties and obligations
under this Agreement in accordance with the terms of this Agreement; PennyMac
Loan Servicer has the full power, authority and legal right to execute and
deliver this Agreement and to perform in accordance herewith; PennyMac Loan
Servicer has duly authorized the execution, delivery and performance of this
Agreement and has duly executed and delivered this Agreement; this Agreement
constitutes the valid, legal, binding obligation of PennyMac Loan Servicer,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws relating to or affecting
the rights of creditors generally and by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law);

(ii) No Conflicts. Neither the execution and delivery of this Agreement, nor the
fulfillment of or compliance with the terms and conditions of this Agreement by
PennyMac Loan Servicer (1) conflicts with or results in a breach of any of the
terms, conditions or provisions of PennyMac Loan Servicer’s organizational
documents; (2) conflicts with or results in a breach of any agreement or
instrument to which PennyMac Loan Servicer is now a party or by which it (or any
of its properties) is bound, or constitutes a default or results in an
acceleration under any of the foregoing if compliance therewith is necessary
(A) to ensure the enforceability of any Mortgage Loan, or (B) for PennyMac Loan
Servicer to perform its obligations under this Agreement in accordance

 

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with the terms hereof; (3) conflicts with or results in a breach of any legal
restriction if compliance therewith is necessary (A) to ensure the
enforceability of any Mortgage Loan, or (B) for PennyMac Loan Servicer to
perform its obligations under this Agreement in accordance with the terms
hereof; (4) results in the violation of any law, rule, regulation, order,
judgment or decree to which PennyMac Loan Servicer is subject if compliance
therewith is necessary (A) to ensure the enforceability of any Mortgage Loan, or
(B) for PennyMac Loan Servicer to perform its obligations under this Agreement
in accordance with the terms hereof; or (5) results in the creation or
imposition of any lien, charge or encumbrance that would have a material adverse
effect upon any of its properties pursuant to the terms of any mortgage,
contract, deed of trust or other instrument, or materially impairs the ability
of (A) the Owner to realize on the Mortgage Loans, or (B) PennyMac Loan Servicer
to perform its obligations hereunder;

(iii) No Litigation Pending. There is no action, suit, or proceeding pending or
to PennyMac Loan Servicer’s knowledge threatened against PennyMac Loan Servicer,
which, either in any one instance or in the aggregate, would draw into question
the validity of this Agreement or the Mortgage Loans, or would be likely to
impair materially the ability of Midland to perform its duties and obligations
under the terms of this Agreement;

(iv) No Consent Required. No consent, approval, authorization or order of, or
registration or filing with, or notice to, any court or governmental agency or
body having jurisdiction or regulatory authority over PennyMac Loan Servicer is
required for (A) PennyMac Loan Servicer’s execution and delivery of, this
Agreement, or (B) the consummation of the transactions contemplated by this
Agreement, or, to the extent required, such consent, approval, authorization,
order, registration, filing or notice has been obtained, made or given (as
applicable), except that PennyMac Loan Servicer may not be duly qualified to
transact business or licensed in one or more states if such qualification or
licensing is not necessary (1) to ensure the enforceability of any Mortgage
Loan, or (2) for PennyMac Loan Servicer to perform its obligations under this
Agreement in accordance with the terms hereof.

(v) Non-Exempt Person. PennyMac Loan Servicer is not a Non-Exempt Person.

(vi) Anti-Money Laundering/International Trade Law Compliance. As of the date of
this Agreement, each Remittance Date or payment date under Section 3.02 or
Section 3.03, and at all times until the Agreement has been terminated and all
amounts hereunder have been paid in full, that: (A) no Covered Entity (1) is a
Sanctioned Person; (2) has any of its assets in a Sanctioned Country or in the
possession, custody or control of a Sanctioned Person in violation of any
Anti-Terrorism Law; (3) does business in or with, or derives any of its income
from investments in or transactions with, any Sanctioned Country or Sanctioned
Person in violation of any Anti-Terrorism Law; or (4) engages in any dealings or
transactions prohibited by any Anti-Terrorism Law; (B) the proceeds of this
Agreement will not be used to fund any operations in, finance any investments or
activities in, or, make any payments to, a Sanctioned Country or Sanctioned
Person in violation of any Law; (C) the funds used to pay the Master Servicer

 

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are not derived from any unlawful activity; and (D) each Covered Entity is in
compliance with, and no Covered Entity engages in any dealings or transactions
prohibited by, any Laws, including but not limited to any Anti-Terrorism Laws.
PennyMac Loan Servicer covenants and agrees that it shall immediately notify the
Master Servicer in writing upon the occurrence of a Reportable Compliance Event.

(c) The Owner hereby makes the following representations and warranties to the
Master Servicer and each of the Special Servicers:

(i) Due Authority. The Owner has the full power, authority and legal right to
execute and deliver this Agreement and to perform in accordance herewith; the
Owner has duly authorized the execution, delivery and performance of this
Agreement and has duly executed and delivered this Agreement; the Owner is the
owner and the holder of the Mortgage Loans and has the right to authorize the
Master Servicer to perform the actions contemplated herein; this Agreement
constitutes the valid, legal, binding obligation of the Owner, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws relating to or affecting the rights of
creditors generally and by general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law).

(ii) Non-Exempt Person. The Owner is not a Non-Exempt Person.

(iii) Anti-Money Laundering/International Trade Law Compliance. As of the date
of this Agreement, each Remittance Date or payment date under Section 3.02 or
Section 3.03, and at all times until the Agreement has been terminated and all
amounts hereunder have been paid in full, that: (A) no Covered Entity (1) is a
Sanctioned Person; (2) has any of its assets in a Sanctioned Country or in the
possession, custody or control of a Sanctioned Person in violation of any
Anti-Terrorism Law; (3) does business in or with, or derives any of its income
from investments in or transactions with, any Sanctioned Country or Sanctioned
Person in violation of any Anti-Terrorism Law; or (4) engages in any dealings or
transactions prohibited by any Anti-Terrorism Law; (B) the proceeds of this
Agreement will not be used to fund any operations in, finance any investments or
activities in, or, make any payments to, a Sanctioned Country or Sanctioned
Person in violation of any Law; (C) the funds used to pay the Master Servicer
are not derived from any unlawful activity; and (D) each Covered Entity is in
compliance with, and no Covered Entity engages in any dealings or transactions
prohibited by, any Laws, including but not limited to any Anti-Terrorism Laws.
Owner covenants and agrees that it shall immediately notify the Master Servicer
in writing upon the occurrence of a Reportable Compliance Event.

 

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Section 7.02. Events of Default.

(a) “Master Servicer Event of Default”, wherever used herein, means any one of
the following events:

(i) any failure by the Master Servicer to remit to the Owner any payment
required to be so remitted by the Master Servicer under the terms of this
Agreement when and as due which continues unremedied by the Master Servicer for
a period of one (1) Business Day after the date on which Master Servicer
receives written notice of such failure; or

(ii) any failure by the Master Servicer to timely pay Servicing Expenses from
the related Collection Account when sufficient funds are on deposit and Owner
has approved such payments in writing, which Servicing Expenses remain unpaid
for a period of five (5) Business Days following the date on which written
notice of such failure is given to the Master Servicer; or

(iii) any failure on the part of the Master Servicer duly to observe or perform
in any material respect any other of the covenants or agreements on the part of
the Master Servicer contained in this Agreement, or any representation or
warranty set forth by the Master Servicer in Section 7.01 shall be untrue or
incorrect in any material respect, and, in either case, such failure or breach
materially and adversely affects the value of any Mortgage Loan or Mortgaged
Property or the priority of the lien on any Mortgaged Property or the interest
of the Owner therein, which in either case continues unremedied for a period of
thirty (30) days after the date on which written notice of such failure or
breach, requiring the same to be remedied, shall have been given to the Master
Servicer by the Owner (or such extended period of time reasonably approved by
the Owner provided that the Master Servicer is diligently proceeding in good
faith to cure such failure or breach); or

(iv) a decree or order of a court or agency or supervisory authority having
jurisdiction in respect of the Master Servicer for the commencement of an
involuntary case under any present or future federal or state bankruptcy,
insolvency or similar law, for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs shall have been entered against the Master Servicer, and such decree or
order shall remain in force undischarged or unstayed for a period of 90 days; or

(v) the Master Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Master
Servicer or of or relating to all or substantially all of its property; or

(vi) the Master Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable federal or state bankruptcy, insolvency or similar law, make an
assignment for the benefit of its creditors or voluntarily suspend payment of
its obligations;

then, and in each and every case, so long as a Master Servicer Event of Default
shall not have been remedied, the Owner may, by notice in writing to the Master
Servicer, in addition to whatever rights the Owner may have at law or in equity,
including injunctive relief and specific

 

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performance, terminate all of the rights and obligations of the Master Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds thereof,
without the Owner incurring any penalty or fee of any kind whatsoever in
connection therewith; provided, however, that such termination shall be without
prejudice to any rights of the Master Servicer relating to the payment of any
earned and unpaid Servicing Fees along with the pro rata share of minimum annual
Servicing Fee set forth on Exhibit “C” (for the avoidance of doubt, to the
extent the Owner has paid a portion of minimum annual Servicing Fee before such
termination, the Owner would only owe the remaining amount to reach the pro rata
share of the minimum annual Servicing Fee), any earned and unpaid Special
Servicing Fees, any earned and unpaid Disposition Fees, Workout Fees and any
earned and unpaid Additional Servicing Compensation under the terms of this
Agreement through and including the date of such termination. Except as
otherwise expressly provided in this Agreement, no remedy provided for by this
Agreement shall be exclusive of any other remedy, and each and every remedy
shall be cumulative and in addition to any other remedy, and no delay or
omission to exercise any right or remedy shall impair any such right or remedy
or shall be deemed to be a waiver of any Master Servicer Event of Default. On or
after the receipt by the Master Servicer of such written notice of termination
from the Owner, all authority and power of the Master Servicer under this
Agreement, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in the Owner, and the Master Servicer agrees to cooperate with
the Owner in effecting the termination of the Master Servicer’s responsibilities
and rights hereunder, including, without limitation, the transfer of the
Servicing Files and the funds held in the Accounts as set forth in Section 8.01.

The Owner may waive, which waiver shall be in writing, any default by the Master
Servicer in the performance of its obligations hereunder and its consequences.
Upon any such waiver of a past default, such default shall cease to exist, and
any Master Servicer Event of Default arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other default or impair any right consequent thereon except
to the extent expressly so waived.

(b) “Special Servicer Event of Default”, wherever used herein with respect to
each Special Servicer, means any one of the following events:

(i) any failure by the Special Servicer to remit to the Master Servicer any
payment required to be so remitted by the Special Servicer under the terms of
this Agreement when and as due which continues unremedied by the Special
Servicer for a period of one (1) Business Day after the date on which Special
Servicer receives written notice of such failure; or

(ii) any failure by the Special Servicer to timely pay Servicing Expenses from
the related Collection Account when sufficient funds are on deposit and Owner
approved such payments in writing, which Servicing Expenses remain unpaid for a
period of five (5) Business Days following the date on which written notice of
such failure is given to the Special Servicer; or

(iii) any failure on the part of the Special Servicer duly to observe or perform
in any material respect any other of the covenants or agreements on the part of
the Special Servicer contained in this Agreement, or any representation or
warranty set forth by the Special Servicer in Section 7.01 shall be untrue or
incorrect in any material

 

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respect, and, in either case, such failure or breach materially and adversely
affects the value of any Mortgage Loan or Mortgaged Property or the priority of
the lien on any Mortgaged Property or the interest of the Owner therein, which
in either case continues unremedied for a period of thirty (30) days after the
date on which written notice of such failure or breach, requiring the same to be
remedied, shall have been given to the Special Servicer by the Owner (or such
extended period of time reasonably approved by the Owner provided that the
Special Servicer is diligently proceeding in good faith to cure such failure or
breach); or

(iv) a decree or order of a court or agency or supervisory authority having
jurisdiction in respect of the Special Servicer for the commencement of an
involuntary case under any present or future federal or state bankruptcy,
insolvency or similar law, for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding up or liquidation of its
affairs shall have been entered against the Special Servicer, and such decree or
order shall remain in force undischarged or unstayed for a period of 90 days; or

(v) the Special Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Special
Servicer or of or relating to all or substantially all of its property; or

(vi) the Special Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable federal or state bankruptcy, insolvency or similar law, make an
assignment for the benefit of its creditors or voluntarily suspend payment of
its obligations;

then, and in each and every case, so long as a Special Servicer Event of Default
shall not have been remedied, the Owner may, by notice in writing to the Special
Servicer, in addition to whatever rights the Owner may have at law or in equity,
including injunctive relief and specific performance, terminate all of the
rights and obligations of the Special Servicer under this Agreement and in and
to the Mortgage Loans and the proceeds thereof, without the Owner incurring any
penalty or fee of any kind whatsoever in connection therewith; provided,
however, that such termination shall be without prejudice to any rights of the
Special Servicer relating to the payment of any earned and unpaid Special
Servicing Fees, Disposition Fees, Workout Fees and Additional Servicing
Compensation through and including the date of such termination. Except as
otherwise expressly provided in this Agreement, no remedy provided for by this
Agreement shall be exclusive of any other remedy, and each and every remedy
shall be cumulative and in addition to any other remedy, and no delay or
omission to exercise any right or remedy shall impair any such right or remedy
or shall be deemed to be a waiver of any Special Servicer Event of Default. On
or after the receipt by the Special Servicer of such written notice of
termination from the Owner, all authority and power of the Special Servicer
under this Agreement, whether with respect to the Mortgage Loans or otherwise,
shall pass to and be vested in the Owner, and the Special Servicer agrees to
cooperate with the Owner in effecting the termination of the Special Servicer’s
responsibilities and rights hereunder, including, without limitation, the
transfer of the Servicing Files and the funds held in the Accounts as set forth
in Section 8.01.

 

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The Owner may waive, which waiver shall be in writing, any default by the
Special Servicer in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Special Servicer Event of Default arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement. No such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon except to the extent expressly so waived.

(c) “Owner Event of Default”, wherever used herein with respect to the Owner,
means any one of the following events:

(i) Breach of AML Representations – Any representation or warranty contained in
Section 7.01(b)(ii) or (iii) is or becomes false or misleading at any time; or

(ii) Breach of AML Covenants – Owner fails to comply with the covenant contained
in Section 7.03(b) at any time;

then, and in each and every case of an Owner Event of Default, the Master
Servicer may, by notice in writing to the Owner, in addition to whatever rights
the Master Servicer may have at law or in equity, including injunctive relief
and specific performance, terminate this Agreement, without the Master Servicer
incurring any penalty or fee of any kind whatsoever in connection therewith.
Except as otherwise expressly provided in this Agreement, no remedy provided for
by this Agreement shall be exclusive of any other remedy, and each and every
remedy shall be cumulative and in addition to any other remedy, and no delay or
omission to exercise any right or remedy shall impair any such right or remedy
or shall be deemed to be a waiver of any Owner Event of Default. On or after the
receipt by the Owner of such written notice of termination from the Master
Servicer, the Master Servicer’s obligations under this Agreement, whether with
respect to the Mortgage Loans or otherwise, shall terminate and immediately pass
to and be vested in the Owner. Notwithstanding the foregoing, upon any such
termination, the Master Servicer will be entitled to receive all accrued and
unpaid Servicing Fees and Additional Servicing Compensation through the date of
termination.

Upon discovery by the Owner of any Owner Event of Default (but regardless of
whether any notice has been given as provided in this Agreement or any cure
period provided herein has expired), the Owner shall give prompt written notice
thereof to the Master Servicer.

Section 7.03. Closing Conditions; Owner Covenants.

(a) The obligations of the Owner and Master Servicer to effect the transactions
contemplated hereby shall be subject to the following conditions:

(i) (A) Master Servicer shall have completed its due diligence with respect to
the Owner in order to satisfy compliance with laws and regulations applicable to
financial institutions in connection with this transaction (e.g., the USA
PATRIOT Act, OFAC and related regulations), and (B) the Master Servicer shall
have been satisfied with the results of such due diligence in its sole
discretion;

 

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(ii) Contemporaneously with the execution of this Agreement and from time to
time as necessary during the term of the Agreement, the Owner shall deliver to
the Master Servicer evidence satisfactory to the Master Servicer substantiating
that it is not a Non-Exempt Person and that the Master Servicer is not obligated
under applicable law to withhold Taxes on sums paid to it with respect to the
Mortgage Loans or otherwise under this Agreement. Without limiting the effect of
the foregoing, (A) if the Owner is created or organized under the laws of the
United States, any state thereof or the District of Columbia, it shall satisfy
the requirements of the preceding sentence by furnishing to the Master Servicer
an Internal Revenue Service Form W-9 and (B) if the Owner is not created or
organized under the laws of the United States, any state thereof or the District
of Columbia, and if the payment of interest or other amounts by the Mortgage
Loan Borrowers is treated for United States income tax purposes as derived in
whole or part from sources within the United States, the Owner shall satisfy the
requirements of the preceding sentence by furnishing to the Master Servicer an
Internal Revenue Service Form W-8ECI, Form W-8EXP, Form W-8IMY (with appropriate
attachments) or Form W-8BEN, or successor forms, as may be required from time to
time, duly executed by the Owner, as evidence of such Owner ‘s exemption from
the withholding of United States tax with respect thereto. The Master Servicer
shall not be obligated to make any payment hereunder to the Owner until the
Owner shall have furnished to the Master Servicer the requested forms,
certificates, statements or documents. For the purposes of this
Section 7.03(a)(ii), “Owner” shall include any loan participants and/or other
recipients of payments on the Mortgage Loans as directed by the Owner to the
Master Servicer; and

(b) AML Covenants. The obligations of Master Servicer to effect any transaction
contemplated hereby shall be subject to Owner’s compliance with all Laws,
including Anti- Terrorism Laws, and the continued truthfulness and completeness
of Owner’s representations and warranties found in Section 7.01(b)(ii) and
(iii).

(c) The obligations of the Master Servicer to effect the transactions
contemplated hereby shall be subject to the following conditions:

(i) Unless Owner has notified Master Servicer in writing prior to the Servicing
Transfer Date that any tax is due within 30 days of the Servicing Transfer Date
in connection with a Mortgage Loan (“30-Day Taxes”) and has provided the Master
Servicer with specific information as to the amount of the 30-Day Taxes, to whom
the payment is to be made, when the payment is due and any other reasonably
requested information regarding such 30-Day Taxes, the Owner shall pay all
30-Day Taxes prior to the Servicing Transfer Date and shall be responsible for
any penalty or interest due as a result of such 30-Day Taxes not being timely
paid to the appropriate Person.

(ii) Owner has paid Master Servicer a Set-up Fee per each Mortgage Loan.

 

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(iii) Owner shall pay all of Master Servicer’s legal fees (in excess of 15.00
hours of legal fees) and expenses related to negotiation and execution of this
Agreement within ten (10) days of receipt of invoice from Master Servicer or its
legal counsel.

Section 7.04. Post Closing Performance Conditions.

The Master Servicer and Owner agree to cooperate with reasonable requests made
by the Master Servicer or Owner, as applicable, after signing this Agreement to
the extent reasonably necessary for the other to comply with laws and
regulations applicable to financial institutions in connection with this
transaction (e.g., the USA PATRIOT Act, OFAC and related regulations).

ARTICLE VIII.

TERMINATION; TRANSFER OF MORTGAGE LOANS

Section 8.01. Termination of Agreement.

(a) The initial term of this Agreement shall be three (3) years. This Agreement
may be terminated by the Owner with respect to any Mortgage Loan without cause
upon thirty (30) days’ written notice to the Master Servicer. This Agreement may
be terminated by the Master Servicer with respect to the Mortgage Loans without
cause upon ninety (90) days written notice to the Owner; provided, however, that
if the minimum annual Servicing Fee set forth on Exhibit “C” is not reached at
the end of the second year, the Master Servicer can terminate this Agreement
immediately upon written notice to the Owner.

(b) Termination pursuant to this Section or as otherwise provided herein shall
be without prejudice to any rights of the Owner or the Master Servicer which may
have accrued through the date of termination hereunder. Upon such termination,
the Master Servicer shall (i) remit all funds in the related Accounts to the
Owner or such other Person designated by the Owner, net of accrued Servicing
Fees, Special Servicing Fees, Disposition Fees, Workout Fees and Additional
Servicing Compensation through the termination date to which the Master Servicer
would be entitled to payment hereunder (but excluding the minimum annual
Servicing Fee set forth on Exhibit “C”); (ii) deliver all related Servicing
Files to the Owner or to Persons designated by the Owner; and (iii) fully
cooperate with the Owner and any new servicer to effectuate an orderly
transition of Loan Servicing of the related Mortgage Loans. Upon such
termination, any Servicing Fees and Additional Servicing Compensation which
remain unpaid after the Master Servicer has netted out such amounts pursuant to
the preceding sentence shall be remitted by the Owner to the Master Servicer
within ten (10) Business Days after the Owner’s receipt of an itemized invoice
therefor.

(c) With respect to a termination of this Agreement by the Owner without cause
as to any or all of the Mortgage Loans, the Owner shall pay the Deconversion Fee
to the Master Servicer within ten (10) Business Days after the effective date of
such termination. If Owner enters into a contract with Master Servicer or its
Affiliate for the license of its commercially available software system for use
in servicing commercial mortgage loans for a minimum term of one (1) year or
more, then no Deconversion Fee shall apply.

 

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Section 8.02. Transfer of Mortgage Loans.

(a) The Master Servicer acknowledges that any or all of the Mortgage Loans may
be sold, transferred, assigned or otherwise conveyed by the Owner to any third
party without the consent or approval of the Master Servicer or the Special
Servicer. Except as provided in Section 8.03, any such transfer shall constitute
a termination of this Agreement with respect to such Mortgage Loans, subject to
the Owner’s notice requirements under Section 8.01(a). The Owner acknowledges
that the Master Servicer shall not be obligated to perform Loan Servicing with
respect to such transferred Mortgage Loans for any third party unless and until
the Master Servicer and such third party execute a servicing agreement having
terms which are mutually agreeable to the Master Servicer and such third party.

(b) Until the Master Servicer or the Special Servicer, as applicable, receives
written notice from the Owner of the sale, transfer, assignment or conveyance of
one or more Mortgage Loans, the Owner shall be presumed to be the owner and
holder of such Mortgage Loans, the Master Servicer or the Special Servicer, as
applicable, shall continue to earn Servicing Fees, Special Servicing Fees and
Additional Servicing Compensation with respect to such Mortgage Loans and the
Master Servicer or the Special Servicer, as applicable, shall continue to remit
payments and other collections in respect of such Mortgage Loans to the Owner
pursuant to the terms and provisions hereof.

Section 8.03. Cooperation of Master Servicer with a Reconstitution.

(a) The Master Servicer and the Owner agree that with respect to some or all of
the Mortgage Loans, on one or more dates (each a “Reconstitution Date”), at the
Owner’s sole option, the Owner may effect a sale (each, a “Reconstitution”) of
some or all of the Mortgage Loans then subject to this Servicing Agreement,
without recourse, to:

(i) Freddie Mac in one or more Whole Loan Transfers with respect to multifamily
Mortgage Loans;

(ii) one or more other third-party purchasers in one or more Whole Loan
Transfers;

(iii) one or more trusts or other entities to be formed as part of one or more
Private Securitization Transactions; or

(iv) one or more trusts or other entities to be formed as part of one or more
Public Securitization Transactions.

(b) With respect to each Whole Loan Transfer, Private Securitization Transaction
or Public Securitization Transaction, as the case may be, entered into by the
Owner, the Master Servicer shall:

(i) upon a mutual agreement between the Owner and the Master Servicer, which
agreement shall not be unreasonably withheld, service the Mortgage Loans
included in such Reconstitution pursuant to the relevant pooling and servicing
agreement or other agreement with substantially similar or higher compensation
and similar scope of services;

 

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(ii) if the Master Servicer or the Special Servicer will continue servicing the
Mortgage Loans included in the Reconstitution, provide as applicable:

(A) information pertaining to the Master Servicer or the Special Servicer of the
type and scope customarily included in offering documents for commercial
mortgage-backed securities transactions involving single or multiple loan
originators including information regarding financial condition and mortgage
loan delinquency, foreclosure and loss experience or other information as is
otherwise reasonably requested by the Owner, and to deliver to the Owner any
non-public, unaudited financial information, in which case the Owner shall bear
the cost of having such information audited by certified public accountants if
the Owner desires such an audit, or as is otherwise reasonably requested by the
Owner and which the Master Servicer or the Special Servicer is capable of
providing without unreasonable effort or expense (collectively “Servicer
Information”), and to indemnify the Owner and its affiliates for material
misstatements or omissions contained in the Servicer Information in any offering
document; provided, however, Owner shall indemnify and hold harmless the Master
Servicer or the Special Servicer and its Affiliates for material misstatements
or omissions contained in all other information in any offering document, other
than Servicer Information; and

(B) such opinions of counsel, letters from auditors, and certificates of public
officials or officers of the Master Servicer or the Special Servicer as are
reasonably necessary by the depositor, the issuer, the trustee or any Rating
Agency rating the securities or the Owner, as the case may be, in connection
with such Private Securitization Transaction or Public Securitization
Transaction. The Owner shall pay all third party costs associated with the
preparation of the information described in clause (ii)(A) above and the
delivery of any opinions (other than opinions by in-house counsel), letters or
certificates described in this clause (ii)(B).

(c) if the Master Servicer or the Special Servicer will continue servicing the
Mortgage Loans included in the Reconstitution, the Master Servicer or the
Special Servicer shall (i) cooperate fully with the Owner, any prospective
purchaser, any Rating Agency rating the securities or any party to any agreement
to be executed in connection with such Whole Loan Transfer, Private
Securitization Transaction or Public Securitization Transaction, with respect to
all reasonable requests and due diligence procedures, including participating in
meetings with the relevant Rating Agencies, bond insurers and such other parties
as the Owner shall designate and participating in meetings with prospective
purchasers of the Mortgage Loans or interests therein and providing information
reasonably requested by such purchasers; (ii) to execute, deliver and perform
all reconstitution agreements required by the Owner, and to use its Reasonable
Efforts to facilitate such Whole Loan Transfer, Private Securitization
Transaction or Public Securitization Transaction, as the case may be;
(iii) (A) to restate the representations and warranties set forth in

 

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this Agreement as of the Reconstitution Date which shall not be materially more
onerous than those required under this Agreement or (B) make the representations
and warranties with respect to the servicing of the Mortgage Loans stating that
while servicing the Mortgage Loans, the Mortgage Loans were serviced in
accordance with this Agreement. The Master Servicer or the Special Servicer
shall use its Reasonable Efforts to provide to such master servicer or issuer,
as the case may be, and any other participants in such Reconstitution: (x) any
and all information and appropriate verification of information which may be
reasonably available to the Master Servicer or the Special Servicer or its
affiliates, whether through letters of its auditors and counsel or otherwise, as
the Owner or any such other participant shall reasonably request and (y) subject
to the provisions of this Section 8.03, to execute, deliver and satisfy all
conditions set forth in any indemnity agreement reasonably required by the Owner
or any such participant related to information about the Master Servicer or the
Special Servicer, as applicable, in the related offering documents; provided
that Master Servicer or the Special Servicer is given an opportunity to review
and reasonably negotiate in good faith provisions of such indemnity.

(d) Any execution of a pooling and servicing agreement or reconstitution
agreement by the Master Servicer or the Special Servicer shall be conditioned on
the Master Servicer or the Special Servicer receiving the Master Servicing Fee,
Additional Servicing Compensation, and the Special Servicing Fee, as applicable,
or such other servicing fee acceptable to the Master Servicer or the Special
Servicer. All Mortgage Loans not sold or transferred pursuant to a Whole Loan
Transfer, Private Securitization Transaction or Public Securitization
Transaction shall be subject to this Agreement and shall continue to be serviced
in accordance with the terms of this Agreement, which shall remain in full force
and effect. Notwithstanding any provision to the contrary in this Agreement, if
the Master Servicer or the Special Servicer is the servicer with respect to a
Reconstitution, the Owner agrees that in such Reconstitution any servicing
performance termination triggers, servicing compensation and scope of services
shall be substantially similar to those contained in this Agreement or otherwise
subject to approval by the Master Servicer or the Special Servicer in its
reasonable discretion.

ARTICLE IX.

MISCELLANEOUS PROVISIONS

Section 9.01. Amendment; Waiver.

This Agreement contains the entire agreement between the parties relating to the
subject matter hereof, and no term or provision hereof may be amended or waived
unless such amendment or waiver is in writing and signed by the party against
whom such amendment or waiver is sought to be enforced.

Section 9.02. Governing Law.

This Agreement shall be construed in accordance with the laws of the State of
Kansas, and the obligations, rights and remedies of the parties hereunder shall
be determined in accordance with such laws, without giving effect to principles
of conflicts of laws.

 

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Section 9.03. Notices.

All demands, notices and communications hereunder shall be in writing and
addressed in each case as follows:

 

  (i) if to the Owner, at:

PennyMac Corp.

6101 Condor Drive

Moorpark, CA 93021

Attention: Chief Legal Officer

Facsimile No.: (818) 224-7393

 

  (ii) if to the Master Servicer, by U.S. Mail at:

Midland Loan Services,

a Division of PNC Bank, National Association

P.O. Box 25965

Shawnee Mission, KS 66225-5965

Attention: Executive Vice President - Division Head

Facsimile No.: (913) 253-9001

or by delivery to:

Midland Loan Services,

a Division of PNC Bank, National Association

10851 Mastin, Suite 300

Overland Park, KS 66210

Attention: Executive Vice President - Division Head

with a copy to:

Stinson Leonard Street LLP

1201 Walnut Street

Kansas City, Missouri 64106

Attention: Kenda K. Tomes

Facsimile No.: (816) 691-3495

Any of the above-referenced Persons may change its address for notices hereunder
by giving notice of such change to the other Persons. All notices and demands
shall be deemed to have been given at the time of the delivery at the address of
such Person for notices hereunder if personally delivered, mailed by certified
or registered mail, postage prepaid, return receipt requested, or sent by
overnight courier or telecopy; provided, however, that any notice delivered
after normal business hours of the recipient or on a day which is not a Business
Day shall be deemed to have been given on the next succeeding Business Day.

To the extent that any demand, notice or communication hereunder is given to the
Master Servicer by a Responsible Officer of the Owner, such Responsible Officer
shall be deemed to

 

45

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have the requisite power and authority to bind the Owner with respect to such
communication, and the Master Servicer may conclusively rely upon and shall be
protected in acting or refraining from acting upon any such communication. To
the extent that any demand, notice or communication hereunder is given to the
Owner by a Responsible Officer of the Master Servicer, such Responsible Officer
shall be deemed to have the requisite power and authority to bind the Master
Servicer with respect to such communication, and the Owner may conclusively rely
upon and shall be protected in acting or refraining from acting upon any such
communication.

Section 9.04. Severability of Provisions.

If one or more of the provisions of this Agreement shall be for any reason
whatever held invalid or unenforceable, such provisions shall be deemed
severable from the remaining covenants, agreements and provisions of this
Agreement and such invalidity or unenforceability shall in no way affect the
validity or enforceability of such remaining provisions or the rights of any
parties thereunder. To the extent permitted by law, the parties hereto hereby
waive any provision of law that renders any provision of this Agreement invalid
or unenforceable in any respect.

Section 9.05. Inspection and Audit Rights.

(a) The Master Servicer shall at its expense deliver, or otherwise make
available, to the Owner annually during the term of this Agreement a report, by
an independent third party audit firm registered with the Public Company
Accounting Oversight Board and of good repute in the financial services
industry, that describes the Master Servicer’s security and control policies and
procedures and is in the form as described in the then-current Statement on
Standards for Attestation Engagements 16 Report (the “SSAE 16 Report”), which
report shall be no more than one (1) year old. The Master Servicer shall also
provide to the Owner, upon request, a “roll forward” certification of Master
Servicer’s management assertion (unattested by the Master Servicer’s auditor),
relative to the SSAE 16 Report, for the recent reporting period covered by the
SSAE 16 Report through and including December 31 of the most recent previous
calendar year.

(b) The Master Servicer agrees that, on reasonable prior notice, it will permit
any agent or representative of the Owner, during the Master Servicer’s normal
business hours, to audit and examine all the books of account, records, reports
and other documents of the Master Servicer specifically relating to the Mortgage
Loans, to make copies and extracts therefrom, to cause such books to be audited
by an audit firm selected by the Owner, and to discuss matters relating to the
Mortgage Loans with the Master Servicer’s officers and employees. All audits
carried out in accordance with this paragraph shall be at the expense of the
Owner, and any support from the Master Servicer required by the Owner relative
to any such audit (including the completion of any required forms) shall be
compensated by the Owner at the standard time and materials rates customarily
charged by the Master Servicer; provided, however, that any remediation, or
support required to demonstrate issue remediation, shall not be charged to the
Owner, and shall be at the Master Servicer’s sole cost and expense. The Owner
understands and agrees that in conducting such audits, its agents and/or
representatives shall be subject to all reasonable security policies and
procedures relative to any facility of the Master Servicer.

 

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Section 9.06. Binding Effect; No Partnership; Counterparts.

The provisions of this Agreement shall be binding upon and inure to the benefit
of the respective successors and permitted assigns of the parties hereto.
Nothing herein contained shall be deemed or construed to create a partnership or
joint venture between the parties hereto and the services of the Master Servicer
and Special Servicer shall be rendered as an independent contractor for the
Owner. For the purpose of facilitating the execution of this Agreement as herein
provided and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute but one and the same
instrument.

Section 9.07. Protection of Confidential Information.

(a) The Master Servicer or the Special Servicer, as applicable, shall keep
confidential and shall not divulge to any party, without the Owner’s prior
written consent, any information pertaining to the Mortgage Loans, the Mortgaged
Properties, the Additional Collateral, or the Borrowers except to the extent
that (i) it is appropriate for the Master Servicer or the Special Servicer, as
applicable, to do so (1) in working with legal counsel, auditors, other
advisors, investors, taxing authorities or other governmental agencies, (2) in
accordance with Accepted Servicing Practices or (3) when required by any law,
regulation, ordinance, court order or subpoena or (ii) the Master Servicer or
the Special Servicer, as applicable, is disseminating general statistical
information relating to the mortgage loans being serviced by the Master Servicer
or the Special Servicer, as applicable (including the Mortgage Loans), so long
as the Master Servicer does not identify the Owner or the Borrowers.

(b) Subject to Section 9.07(a) above, each party hereto agrees that during the
term of this Agreement and at all times thereafter it shall not disclose any
information pertaining to the terms and provisions of this Agreement
(“Confidential Information”), to any person or entity, except (i) to such
party’s own employees, contractors, officers, directors, affiliates, agents and
representatives (collectively, the “Representatives”) having a “need to know”,
(ii) as it is appropriate for the Master Servicer or the Special Servicer, as
applicable, to do so (A) in working with legal counsel, auditors, other
advisors, taxing authorities or other governmental agencies, (B) in accordance
with Accepted Servicing Practices or (C) when required by any law, regulation,
ordinance, court order or subpoena. Each party agrees that it will not use or
permit its Representatives to use any Confidential Information for purposes
other than in connection with performance of its duties under this Agreement.
Each party shall use at least the same degree of care in safeguarding
Confidential Information as it uses in safeguarding the confidential information
it has, but in no event shall such party use less than reasonable diligence and
care. Notwithstanding the foregoing, such party may disclose Confidential
Information pursuant to a requirement or request of a governmental agency or
pursuant to a court or administrative subpoena, order or other such legal
process or requirement of law, or in defense of any claims or causes of action
asserted against it. Nothing herein shall require such party to fail to honor a
subpoena, court or administrative order or requirement on a timely basis,
provided, however, that such party shall promptly notify the other party of any
such requirement to the extent such notification is not prohibited by law or
court or administrative order.

 

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Section 9.08. WAIVER OF JURY TRIALS.

THE PARTIES HERETO HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN
CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT
OF THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 9.09. General Interpretive Principles.

For purposes of this Agreement, except as otherwise expressly provided or unless
the context otherwise requires:

(a) the terms defined in this Agreement have the meanings assigned to them in
this Agreement and include the plural as well as the singular, and the use of
any gender herein shall be deemed to include the other gender;

(b) accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with generally accepted accounting principles in the United
States;

(c) references herein to an “Article,” “Section,” or other subdivision without
reference to a document are to the designated Article, Section or other
applicable subdivision of this Agreement;

(d) reference to a Section, subsection, paragraph or other subdivision without
further reference to a specific Section is a reference to such Section,
subsection, paragraph or other subdivision, as the case may be, as contained in
the same Section in which the reference appears;

(e) the words “herein,” “hereof,” “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular provision;

(f) the term “include” or “including” shall mean without limitation by reason of
enumeration; and

(g) the Article, Section and subsection headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning of the
provisions contained therein.

Section 9.10. Further Agreements.

The Master Servicer, Special Servicer and the Owner each agree to execute and
deliver to each other such additional documents, instruments or agreements as
may be reasonably requested by the others and as may be necessary or appropriate
to effectuate the purposes of this Agreement.

 

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Section 9.11. Addition or Removal of an Owner.

(a) The parties hereto further acknowledge and agree that from time to time this
Agreement may be amended to add as a new Owner hereunder certain affiliates of
the Owner (“New Owner”) by prior written notice to the Master Servicer from such
New Owner in the form of the attached Exhibit F-1. Whereupon, without further
action by any party hereto, upon receipt of such notice by the Master Servicer
and the occurrence of the first Servicing Transfer Date after receipt of such
notice: (i) this Agreement shall be deemed to be amended to add such New Owner
to this Agreement as a party hereto, (ii) such New Owner shall have all rights
and obligations of an “Owner” hereunder, and (iii) the Master Servicer shall be
bound to such New Owner under the terms of the Agreement, as if such New Owner
executed this Agreement.

(b) The parties hereto acknowledge and agree that from time to time this
Agreement may be amended by the deletion of any Owner or Owners listed thereon
by prior written notice to the Master Servicer from each such deleted Owner on
behalf of each such deleted Owner in the form of the attached Exhibit F-2 (each
a “Deleted Owner”). Whereupon, without further action by any party hereto, upon
thirty (30) days after receipt of such notice by the Master Servicer if the
Master Servicer at that time is providing Loan Servicing in connection with
Mortgage Loans owned by such Deleted Owner, and immediately upon receipt of such
notice by the Master Servicer if the Master Servicer is not then providing any
Loan Servicing in connection with any Mortgage Loans owned by such Deleted
Owner: (i) this Agreement shall be deemed to be amended to delete such Deleted
Owner or Deleted Owners from this Agreement as a party hereto, and (ii) such
Deleted Owner(s) shall have no further rights or obligations hereunder except
for those that survive termination or accrued prior thereto.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Owner and the Master Servicer have caused this Agreement
to be duly executed by their respective officers thereunto duly authorized as of
the date first above written.

 

PENNYMAC CORP., A DELAWARE CORPORATION By:  

/s/ Steven Skolnik

Name:   Steven Skolnik Title:   Chief Commercial Lending Officer   (“Owner”)
PENNYMAC HOLDINGS, LLC By:  

/s/ Steven Skolnik

Name:   Steven Skolnik Title:   Chief Commercial Lending Officer   (“Owner”)
PENNYMAC LOAN SERVICES, LLC, A DELAWARE LIMITED LIABILITY COMPANY By:  

/s/ Steven Skolnik

Name:   Steven Skolnik Title:   Chief Commercial Lending Officer   (A “Special
Servicer”) MIDLAND LOAN SERVICES, A DIVISION OF PNC BANK, NATIONAL ASSOCIATION
By:  

/s/ Cynthia A. Bicknell

Name:   Cynthia A. Bicknell Title:   Senior Vice President   (“Master Servicer”
and a “Special Servicer”)

 

50

[PennyMac – Midland Servicing Agreement – Signature Page]

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EXHIBIT “A”

(Initial Mortgage Loan Schedule)

 

Loan Number

 

Mortgaged

Property

 

Borrower

 

Outstanding Principal
Balance

 

Names of

Special

Servicer

Freddie Mortgage Loans

        Midland                                                        

PMSS Mortgage Loans

       

PennyMac Loan

Servicer

                                                                       

MSS Mortgage Loans

        Midland                                                                
       

 

A-1

--------------------------------------------------------------------------------

EXHIBIT “B”

(Statements, Reports and/or Information)

 

LOGO [g215086g13j09.jpg]

 

B-1

--------------------------------------------------------------------------------

EXHIBIT “C”

(Servicing Fee Schedule)

 

Monthly Servicing Fee:

   Loans 1 to 250:    $250 per loan    Loans 251 to 500:    $225 per loan   
Loans over 500:    $200 per loan

Minimum Annual Servicing Fee:

   $150,000 (waived during 1st year of Agreement)

 

C-1

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EXHIBIT “D”

(Asset Management Fee Schedule)

ASSET MANAGEMENT FEES

The following represents a schedule of asset management fees customarily
charged. The fees are guidelines and are assessed relative to each request, the
relevant loan documents, and the negotiated Servicing Agreement. Approximately
50% of any processing fee related to substantive borrower requests is collected
at the inception of the borrower’s request to cover direct and indirect costs in
the event the transaction does not consummate. All requested actions are
individually subject to appropriate delegated authority and if applicable,
Midland’s Legal Department concurrence.

Transfer/Assumption fee:

1% of the principal balance or the fee specified by the relevant loan documents.
The 1% fee is negotiable for loans with a principal balance exceeding
$10,000,000 but should not be less than .25%. The minimum assumption fee
regardless of principal balance is $2,500. A $2,500-$5,000 non-refundable
application fee should be collected at the time of receiving the assumption
package.

Transfer of title or interest without change of beneficial ownership:

 

Loan balances under $500,000:

   $ 1,500-$2,500   

Loan balances between $500,000 and $1,000,000:

   $ 2,500-$5,000   

Loan balances between $1,000,000 and $10,000,000:

   $ 5,000-$10,000   

Loan balances of $10,000,000 or greater:

   $ 10,000-$25,000   

Secondary Financing:

 

Loan balances under $500,000:

   $ 2,000-$2,500   

Loan balances between $500,000 and $1,000,000:

   $ 2,500-$5,000   

Loan balances between $1,000,000 and $10,000,000:

   $ 5,000-$10,000   

Loan balances of $10,000,000 or greater:

   $ 10,000-$25,000   

Collateral Release without Substitution

 

(not identified in the loan documents):

  

Loan balances under $500,000:

   $ 1,500-$2,500   

Loan balances under $1,000,000:

   $ 2,500-$5,000   

Loan balances between $1,000,000 and $10,000,000:

   $ 5,000-$7,500   

Loan balances of $10,000,000 or greater:

   $ 7,500-$20,000   

Collateral Release with Substitution

 

(provided for in the loan documents):

   $ 7,500-$15,000/Property   

 

D-1

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Conditional Collateral Release

 

(provided for in the loan document):

   $ 1,500-$5,000/Property   

Defeasance:

 

Loan $2,000,000 or less

   -    $ 7,500 + $15,000 legal retainer

$ 2,000,001 - $10,000,000

   -    $10,000 + $15,000 legal retainer

$10,000,001 - $20,000,000

   -    $15,000 + $15,000 legal retainer

$20,000,001 - $30,000,000

   -    $20,000 + $15,000 legal retainer

$30,000,001 - $40,000,000

   -    $25,000 + $15,000 legal retainer

$40,000,001 - $50,000,000

   -    $30,000 + $15,000 legal retainer

Loan $50,000,001 and up

   -    Negotiable, but not less than 30,000 +       $15,000 legal retainer

Property Management/Facility Operator Change:

 

Loan balances under $1,000,000:

   $ 500 - $1,500   

Loan balances between $1,000,000 and $10,000,000:

   $ 1,500-$3,500   

Loan balances of $10,000,000 or greater:

   $ 3,500-$5,000   

Subordination of Mortgage:

 

Routine, under 4 hours work:

   $ 750   

Complex:

   $ 1,500   

Very Complex, over 8 hours:

   $ 3,000   

Easement or Condemnation:

 

Routine, under 4 hours work:

   $ 500   

Complex:

   $ 1,500   

Very Complex, over 8 hours:

   $ 3,000   

Lease approval/ratification

 

Routine, under 4 hours work:

   $ 250   

Complex:

   $ 500   

Very Complex, over 8 hours:

   $ 1,000   

Subordination, non-disturbance, attornment, or quiet enjoyment provisions,
(SNDA) related to a commercial lease:

 

Routine, under 4 hours work:

   $ 350   

Complex:

   $ 600   

Very Complex, over 8 hours:

   $ 1,000   

Release of Liability:

   $ 3,000-$7,500   

Loan Extension provided for in the loan documents:

   $ 750-$1,500   

 

D-2

--------------------------------------------------------------------------------

Credit Report/Lexis Nexis:

   $100-Individual    $150-Corporate

Architectural and/or Engineering Reports:

   Actual Costs Incurred

Environmental Site Assessments:

   Actual Costs Incurred

Appraisal Reports:

   Actual Costs Incurred

Property Inspection Reports:

   Actual Costs Incurred

Travel Costs:

   Actual Costs Incurred

Legal Fees:

   Actual Costs Incurred

Title and Recording Charges:

   Actual Costs Incurred

 

D-3

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EXHIBIT “E”

(Loan Servicing Responsibilities Matrix)

See attached

 

E-1-1

--------------------------------------------------------------------------------

EXHIBIT “F-1”

FORM OF NOTICE TO SERVICER ADDING NEW OWNER

Midland Loan Services

P.O. Box 25965

Shawnee Mission, KS 66225-5695

Attention: Executive Vice President - Division Head

 

  Re: Addition of New Owner to the Servicing Agreement and as a Party to the
Servicing Agreement

Please refer to that certain Servicing Agreement for Mortgage Loans, dated as of
July 13, 2015 (the “Agreement”), between PennyMac Corp., a Delaware corporation,
PennyMac Holdings, LLC, a Delaware limited liability company, any other parties
signing this Agreement as an owner of Mortgage Loans as listed in Schedule I
(collectively as the “Owner”), PennyMac Loan Services, LLC, a Delaware limited
liability company (“PennyMac Loan Servicer” and in certain cases, a “Special
Servicer”), and Midland Loan Services, a Division of PNC Bank, National
Association, a national banking association (“Master Servicer” and in certain
cases, a “Special Servicer”) and any New Owners. Capitalized terms used but not
defined herein shall have the meanings ascribed to them under the Agreement.

Pursuant to Section 9.11(a) of the Agreement, the following entity is hereby
added as an Owner to the Agreement and as a party to the Agreement:

[INSERT NAME OF NEW OWNER] (“New Owner”)

New Owner hereby agrees to be bound by the terms of the Agreement and makes the
representations contained in Section 7.01(b) therein with respect to the
Agreement, as well as with respect to execution and delivery of this notice, as
if fully set forth herein.

The parties to the Agreement have agreed that pursuant to Section 9.11(a) of the
Agreement, upon the Effective Date (as herein defined), (i) the Agreement is
hereby deemed to be amended to add New Owner as a party to the Agreement,
(ii) New Owner hereby has all rights and obligations of an “Owner” under
the Agreement, and (iii) Servicer is hereby bound to such New Owner under the
terms of the Agreement, as if such New Owner executed the Agreement.

The “Effective Date” shall be the latter of the date of this Exhibit or the date
upon which Servicer completed its due diligence with respect to each New Owner
in order to satisfy compliance with laws and regulations applicable to financial
institutions in connection with this transaction (e.g., the USA PATRIOT Act and
related regulations) and satisfaction of any other closing conditions in the
Agreement.

 

F-1-1

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[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

[INSERT NAME OF NEW OWNER] By:  

 

Name:   Title:   Date:  

 

F-1-2

--------------------------------------------------------------------------------

EXHIBIT “F-2”

FORM OF NOTICE TO SERVICER DELETING OWNER

Midland Loan Services

P.O. Box 25965

Shawnee Mission, KS 66225-5695

Attention: Executive Vice President - Division Head

 

  Re: Deletion of Owner from Servicing Agreement

Please refer to that certain Servicing Agreement for Mortgage Loans, dated as of
July 13, 2015 (the “Agreement”), between PennyMac Corp., a Delaware corporation,
PennyMac Holdings, LLC, a Delaware limited liability company, any other parties
signing this Agreement as an owner of Mortgage Loans as listed in Schedule I and
any New Owners (collectively as the “Owner”), PennyMac Loan Services, LLC, a
Delaware limited liability company (“PennyMac Loan Servicer” and in certain
cases, a “Special Servicer”), and Midland Loan Services, a Division of PNC Bank,
National Association, a national banking association (“Master Servicer” and in
certain cases, a “Special Servicer”). Capitalized terms used but not defined
herein shall have the meanings ascribed to them under the Agreement.

Pursuant to Section 9.11(b) of the Agreement, the following entity is hereby
deleted as an Owner to the Agreement and as a party to the Agreement:

[INSERT NAME OF DELETED OWNER] (“Deleted Owner”)

The parties to the Agreement have agreed that pursuant to Section 9.11(b) of the
Agreement, upon thirty (30) days after receipt of this notice if Master Servicer
is at that time providing Loan Servicing in connection with Mortgage Loans owned
by such Deleted Owner and immediately upon receipt of such notice by Master
Servicer if Master Servicer is not then providing any Loan Servicing in
connection with any Mortgage Loans owned by such Deleted Owner, with no further
action on the part of Deleted Owner or any other party to the Agreement, (i) the
Agreement is hereby deemed to be amended to delete Deleted Owner, and
(ii) Deleted Owner hereby has no further rights or obligations of an “Owner”
under the Agreement except for those that survive termination or accrued prior
thereto.

 

[INSERT NAME OF DELETED OWNER] By:  

 

Name:   Title:   Date:  

 

F-2-1