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EXHIBIT 10.1
INVESTMENT MANAGEMENT AGREEMENT
This Investment Management Agreement (the "Agreement") dated this 1st
day of July, 1996 by and among PMC Commercial Trust, a Texas real estate
investment trust (the "Company"), PMC Advisers, Inc., a Texas corporation ("PMC
Advisers" or the "Investment Manager"), a wholly-owned subsidiary of PMC
Capital, Inc. ("PMC Capital"), and PMC Capital.
1. CERTAIN DEFINITIONS
As used in this Agreement, the following terms have the meanings set
forth below:
"Affiliate" shall mean a Person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned Person.
"Average Annual Value of All Invested Assets" shall mean the book
value of the Invested Assets determined in accordance with GAAP on the first
day of the year and on the last day of each quarter of such year divided by
five.
"Average Annual Value of All Invested Assets at Date of Termination"
shall mean the book value of the Invested Assets at Date of Termination
determined in accordance with GAAP on the first day of the year and on the last
day of each quarter of such year divided by five.
"Average Common Equity Capital" shall mean the Common Equity Capital
on the first day of the year and on the last day of each quarter of such year,
divided by five.
"Average Quarterly Value of All Assets" shall mean the book value of
total assets of the Company or any Person wholly-owned (directly or indirectly)
by the Company determined in accordance with GAAP on the first day of the
quarter and on the last day of the quarter, divided by two.
"Average Quarterly Value of All Invested Assets" shall mean the book
value of Invested Assets determined in accordance with GAAP on the first day of
the quarter and on the last day of the quarter, divided by two.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Equity Capital" shall mean the sum of the stated capital plus
the additional paid-in capital for the Common Shares.
"Common Shares" shall mean the Company's common shares of beneficial
interest, par value $.01 per share.
"GAAP" shall mean generally accepted accounting principles.
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"Independent Trust Managers" shall mean the trust managers of the
Company who are not affiliated with PMC Capital or its subsidiaries.
"Invested Assets" shall have the meaning set forth in Section 2 of this
Agreement.
"Invested Assets at Date of Termination" shall mean Primary
Investments and Other Investments and any Primary Investments or Other
Investments that arise from loan commitments, letters of intent or other
agreements, in any case, as in existence on the Termination Date, as set forth
on a schedule to be prepared by the Company and delivered to PMC Capital not
later than 45 days from such date of termination, which schedule shall be
annually updated by the Company and delivered to PMC Capital not later than 90
days following the end of each of the Company's fiscal years during which the
Non-Compete Agreement (as defined in Section 10 of this Agreement) is in
effect.
"Other Investments" shall have the meaning set forth in Section 2 of this
Agreement.
"Person" shall mean an individual, corporation, partnership,
association, trust or any unincorporated organization or other entity.
"Primary Investments" shall have the meaning set forth in Section 2 of
this Agreement.
"Return on Average Common Equity Capital" means the net income of the
Company determined in accordance with GAAP, less preferred dividends, if any,
divided by the Average Common Equity Capital.
"Termination Date" shall mean the date on which this Agreement no
longer has any force and effect, whether as a result of being terminated in
accordance with the provisions of Section 10 hereof (following the expiration
of the 60-day notice period provided for therein) or as a result of non-renewal
(at the expiration of the term hereof) for whatever reason.
2. PURPOSE OF THE COMPANY
The Company intends primarily to originate business loans (a) to small
business enterprises that exceed the net worth, asset, income, number of
employees or other limitations applicable to the Small Business Administration
("SBA") programs utilized by PMC Capital, (b) in excess of $1,100,000 to small
business enterprises without regard to SBA eligibility requirements, (c) for
which PMC Capital does not have available funds to make such loans or (d) that
cannot be originated by PMC Capital or its subsidiaries as a result of industry
concentration limitations. All such loans (collectively, the "Primary
Investments") will be secured by first liens on real estate and subject to the
Company's underwriting criteria. In addition, the Company may (i) purchase
from the Resolution Trust Company, the Federal Deposit Insurance Corporation
and other sellers loans on which payments are current at the time of the
Company's commitment to purchase and which meet the Company's underwriting
criteria, (ii) invest in other commercial loans secured by real estate and
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(iii) invest in real estate (collectively, the "Other Investments"). At least
75% of the assets of the Company will be invested in the Primary Investments
and up to 25% of the assets of the Company may be invested by the Company in
Other Investments provided that such Other Investments do not affect the
ability of the Company to maintain its qualification as a real estate
investment trust under the Code.
Concurrently with the execution of this Agreement, the Company, PMC
Advisers, and PMC Capital shall enter into a Loan Origination Agreement in the
form of Exhibit A hereto (the "Loan Origination Agreement") pursuant to which
PMC Advisers shall determine the allocation of the loan origination
opportunities to either the Company or PMC Capital.
The Company's primary investment objective is to obtain current income
from interest payments and other related fee income from Primary Investments
originated by it and Other Investments acquired by it and, in each case, owned
by the Company or by any Person wholly-owned (directly or indirectly) by the
Company (collectively, the "Invested Assets") for distribution to its
shareholders. The Company will invest in Invested Assets selected by the
Investment Manager in accordance with underwriting criteria established by the
trust managers with the intention of creating a portfolio of investments
intended to preserve the capital base of the Company and generate income for
distribution to the Company's shareholders. The Company's investments are
anticipated to be held primarily to maturity.
3. THE INVESTMENT MANAGER
PMC Advisers shall act as the investment adviser to the Company,
registered under the Investment Advisers Act of 1940, as amended. The Company
hereto engages the services of PMC Advisers as the Company's Investment
Manager.
4. OBLIGATIONS OF THE INVESTMENT MANAGER
As the Investment Manager, PMC Advisers will:
(a) advise the Company as to the acquisition and
disposition of Invested Assets and temporary investments
(collectively, "Investments") in accordance with the Company's
underwriting criteria and investment policies;
(b) provide the Company with office space and services to
the extent required by the Company's trust managers, officers and
employees;
(c) maintain the Company's books of account and other
records and files;
(d) report to the Company's trust managers, or to any
committee or officer of the Company acting pursuant to the authority
of the trust managers, at such times and in such
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detail as the trust managers deem appropriate in order to enable the
Company to determine that its investment policies are being observed
and implemented;
(e) undertake its obligations pursuant hereto and any
other activities undertaken by PMC Advisers on the Company's behalf
subject to any directives of the Company's trust managers or any duly
constituted committee or officer of the Company acting pursuant to
authority of the Company's trust managers;
(f) subject to the Company's investment policies and any
specific directives from the Company's trust managers, to effect
acquisitions and dispositions for the Company's account in the
Investment Manager's discretion and to arrange for the documents
representing acquired Investments to be delivered to the Company's
custodian;
(g) on a continuing basis, monitor, manage and service
the Company's Investments; and
(h) arrange debt and equity financing for the Company,
subject to policies adopted by the Company's trust managers.
5. EXPENSES TO BE PAID BY THE INVESTMENT MANAGER
The Investment Manager will pay for its own account all expenses
incurred by it in rendering the services hereunder without regard to the
compensation received by the Investment Manager from the Company hereunder.
Without limiting the generality of the foregoing, the Investment Manager shall
bear the following expenses incurred in connection with the performance of its
duties under this Agreement:
(a) employment expenses of the personnel employed by the
Investment Manager (other than fees paid and reimbursement of expenses
made to independent managers, independent contractors, mortgage
services, consultants, managers, local property managers or agents
employed by or on behalf of the Company including such persons or
entities which may be Affiliates of the Investment Manager when acting
in any such capacity, all of which shall be the responsibility of the
Company), including but not limited to, salaries, wages, payroll taxes
and the costs of employee benefit plans;
(b) rent, telephone, utilities, office furniture,
equipment and machinery (including computers, to the extent utilized)
and other office expenses of the Investment Manager, except to the
extent such expenses relate solely to an office maintained by the
Company separate from the office of the Investment Manager; and
(c) miscellaneous administrative expenses incurred in
supervising, monitoring and inspecting real property and such other
investments of the Company or relating to the performance by the
Investment Manager of its obligations hereunder.
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Notwithstanding the foregoing, any share options granted by the
Company to directors, officers and key employees of the Investment Manager
shall not be an expense to be borne by the Investment Manager pursuant to this
Section 5.
6. EXPENSES TO BE PAID BY THE COMPANY
Except as expressly otherwise provided in this Agreement, the Company
will pay any expenses incurred by the Company and will reimburse the Investment
Manager promptly, against the Investment Manager's voucher, for any such
expenses paid by the Investment Manager for the Company's account. Without
limiting the generality of the foregoing, such expenses shall include:
(a) all expenses of the Company's organization and of any
offering and sale by the Company of its shares;
(b) expenses of the Company operations, except as
otherwise provided in Section 5 above;
(c) financing costs and debt service with respect to
indebtedness of the Company;
(d) taxes on income and taxes and assessments on real
property, if any, and all other taxes applicable to the Company;
(e) legal, auditing, accounting, underwriting, brokerage,
listing, reporting, registration and other fees, and printing,
engraving and other expenses and taxes incurred in connection with the
issuance, distribution, transfer, trading, registration and stock
exchange listing of the Company's securities, whether such expenses
are directly incurred by the Company or are allocated to the Company
by the Investment Manager either pursuant to this Agreement or as
otherwise agreed to by the Board of Trust Managers of the Company from
time to time;
(f) expenses of organizing, revising, amending,
converting, modifying or terminating the Company;
(g) fees and expenses paid to trust managers and officers
who are not employees or Affiliates of the Investment Manager,
independent advisors, independent contractors, mortgage services,
consultants, managers, local property managers or management firms,
accountants, attorneys and other agents employed by or on behalf of
the Company and out-of-pocket expenses of trust managers of the
Company;
(h) expenses directly connected with the acquisition,
disposition and ownership of Invested Assets, including real estate
interests or other property (including the costs of foreclosure,
insurance premiums, legal services, brokerage and sales commissions,
maintenance, repair, improvement and local management of property),
other than expenses
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with respect thereto of employees of the Investment Manager to the
extent that such expenses are to be borne by the Investment Manager
pursuant to Section 5 above, and any expenses allocated to the Company
by the Investment Manager as agreed to by the Board of Trust Managers
of the Company from time to time;
(i) all insurance costs incurred in connection with the
Company (including officer and trust manager liability insurance, if
any);
(j) expenses connected with payments of dividends or
interest or contributions in cash or any other form made or caused to
be made by the trust managers to holders of securities of the Company;
(k) all expenses connected with communications to holders
of securities of the Company and other bookkeeping and clerical work
necessary to maintaining relations with holders of securities,
including the cost of printing and mailing certificates for securities
and proxy solicitation materials and reports to holders of the Company
securities;
(l) transfer agent's, registrar's and indenture trustee's
fees and charges;
(m) legal, accounting and auditing fees and expenses; and
(n) expenses relating to any office or office facilities
maintained by the Company separate from the office of the Investment
Manager.
If the Company uses the services of attorneys or paraprofessionals on the staff
of the Investment Manager in lieu of outside counsel for purposes other than
the performance of the services to be performed by the Investment Manager
hereunder, the Company will reimburse the Investment Manager for such services
at hourly rates calculated to cover the cost of such services, as well as for
incidental disbursements.
7. RECEIPT OF FEES
All fees that may be paid to the Investment Manager by any person in
connection with any investment transaction in which the Company participates or
proposes to participate shall be paid over or credited to the Company at the
time such investment transaction is consummated. The Investment Manager may,
on the other hand, retain for its own account any fees paid to it by any such
person for any services rendered to such person which is not related to any
such investment transaction. For this purpose, any fees paid for services
rendered by attorneys on the staff of the Investment Manager in connection with
any such investment transaction shall be treated as transaction costs and shall
not be deemed to be fees paid to the Investment Manager in connection with any
investment transaction. The Investment Manager will report to the Company's
trust managers not less often than quarterly all fees received by the
Investment Manager from any source whatever and whether, in its opinion, any
such fee is one that the Investment Manager is entitled to
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retain under the provisions of this Section 7. In the event that any trust
manager should disagree, the matter shall be conclusively resolved by a
majority of the trust managers of the Company, including a majority of the
Independent Trust Managers.
8. COMPENSATION OF THE INVESTMENT MANAGER
As the Investment Manager's sole and exclusive compensation for its
services to be rendered pursuant to the terms set out above, the Company will,
during the term of this Agreement, pay to the Investment Manager the following
fees, beginning as of the date of this Agreement:
I. Quarterly in arrears, a fee ("Base Fee") consisting
of a quarterly servicing and advisory fee equal to the sum of
(a) the product of 0.4167% (1.67% on an annual basis)
multiplied by the lesser of (i) the Average Quarterly Value of
Common Equity Capital or (ii) the Average Quarterly Value of
All Invested Assets and (b) the product of 0.21875% (0.875% on
an annual basis) and the difference between the Average
Quarterly Value of All Invested Assets and the Average
Quarterly Value of Common Equity Capital. Notwithstanding the
foregoing or any other provision contained herein, the Base
Fee payable to the Investment Manager hereunder shall be
reduced for each quarter during the term of this Agreement by
an amount equal to the amount of servicing or supervisory
servicing fees, if any, required to be paid for such quarter
by the Company to any third party which is unaffiliated with
the Company or the Investment Manager for the servicing of any
Invested Assets. For purposes of calculating the Base Fee,
the Average Quarterly Value of Common Equity Capital shall not
be increased by the proceeds received from any public offering
of Common Shares by the Company (other than pursuant to the
Company's dividend reinvestment plan or any employee/trust
manager benefit plan) during the 180 calendar day period
immediately following such public offering.
II. Quarterly in arrears, a consulting fee equal to the
sum of (a) the product of 50% multiplied by the amount of fees
contractually due to any third party assisting in the
placement of any of the Company's debt securities or preferred
shares of beneficial interest and (b) the product of 12.5%
multiplied by the amount of any fees contractually due any
third party assisting in the placement or underwriting of any
private or public offering of Common Shares (the "Offering
Fee"). If the Offering Fee is less than 5.5%, the consulting
fee shall be increased by an amount equal to the product of
(i) 50% of the difference between 5.5% and the actual Offering
Fee multiplied by (ii) the gross proceeds of the offering.
In no event, however, shall the aggregate amount of the fees payable
to the Investment Manager pursuant to this Section 8 exceed, on an annual
basis, the fees that would have been payable to the Investment Manager pursuant
to the terms of Section 8 of the prior Investment Management Agreement between
the Company and the Investment Manager, which terms are attached hereto as
Exhibit B.
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9. INDEMNIFICATION OF THE INVESTMENT MANAGER
The Company confirms that in performing services hereunder the
Investment Manager (including its directors, officers and employees) will be an
agent of the Company for the purpose of the indemnification provisions of the
Company's Declaration of Trust, as amended, and Bylaws, subject, however, to
the same limitations as though the Investment Manager were a director or
officer of the Company. The Investment Manager shall not be liable to the
Company, its shareholders or its creditors except for violations of law or for
conduct which would preclude the Investment Manager from being indemnified
under such provisions.
10. TERM OF THE AGREEMENT; TERMINATION
The term of this Agreement shall commence as of the first day of July
1996 and shall remain in effect and is renewable annually thereafter by the
Company, if (a) a majority of the Independent Trust Managers determines that
(i) the Investment Manager's performance has been satisfactory and (ii) the
terms of this Agreement are appropriate with respect to the Company's
performance and then existing economic conditions and (b) a majority of the
independent directors of the Investment Manager approve the renewal of this
Agreement.
Notwithstanding any other provision of this Agreement to the contrary,
this Agreement, or any extension thereof, may be terminated by either party
thereto upon at least sixty (60) days' notice to the other party specifying the
effective date of such termination, pursuant to a majority vote of the
Independent Trust Managers or upon the vote of the holders of more than
two-thirds of the outstanding shares of the Company, or, in the case of a
termination by the Investment Manager, by a majority vote of the independent
directors of the Investment Manager.
In the event this Agreement is terminated or not renewed by (i) the
Company, other than as a result of a material breach of the terms of this
Agreement by the Investment Manager, or (ii) the Investment Manager as a result
of a material breach of the terms of this Agreement by the Company, PMC Capital
shall enter into a non-compete agreement, substantially in the form attached
hereto as Exhibit C, which shall have a term of seven (7) years following the
Termination Date (the "Non-Compete Agreement"). The payment to be made by the
Company to PMC Capital as consideration for the Non-Compete Agreement entered
into as a result of in the occurrence of any event set forth in clause (i) or
(ii) in the preceding sentence shall be an amount equal to the product of the
Non-Compete Percentage (as hereinafter defined) multiplied by the Average
Annual Value of All Invested Assets at Date of Termination, calculated and
payable on an annual basis and prorated on the basis of a 360-day year for any
portion of a calendar year during which the Non-Compete Agreement is in effect.
In the event this Agreement is terminated or not renewed by (x) the Company as
a result of a material breach of the terms of this Agreement by the Investment
Manager or (y) the Investment Manager, other than as a result of a material
breach of the terms of this Agreement by the Company, PMC Capital shall enter
into the Non-Compete Agreement either on the terms and conditions provided
herein and in Exhibit C hereto or, at the Company's option, such other terms as
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may be mutually agreeable to PMC Capital and the Company. The "Non-Compete
Percentage" shall be equal to 1% less the amount of the percentage, determined
by dividing the dollar amount of loan losses on the Invested Assets at Date of
Termination in any year (or portion thereof) during which the Non-Compete
Agreement is in effect (as determined based on the audited financial statements
of the Company for that year), by the Average Annual Value of All Invested
Assets at Date of Termination for such year, in excess of 1%. In no event will
the annual fee payable pursuant to the Non-Compete Agreement be reduced below
zero. Notwithstanding anything contained in this Section 10 to the contrary,
in the event that, following the Termination Date, the Company has foreclosed
on an outstanding loan and has liquidated the collateral relating thereto and
otherwise exhausted all remedies available to it to collect any remaining
deficiency on such obligation, the Company shall, upon written request of the
Investment Manager, transfer to the Investment Manager all files related to
such loan. If the Investment Manager is successful in collecting any
additional amount of the deficiency it may retain 1% of such additional amount
and shall return the remainder to the Company.
11. ASSIGNMENT, AMENDMENTS AND WAIVERS
The Company may terminate this Agreement at any time in the event of
its assignment by the Investment Manager except an assignment to a corporation,
association, trust or other successor organization which may take over the
property and carry on the affairs of the Investment Manager, provided that
following such assignment the Persons who controlled the operations of the
Investment Manager on the date such Investment Manager became an advisor to the
Company shall control the operation of the successor organization, including
the performance of its duties under this Agreement, and they shall be bound by
the same restrictions by which they were bound prior to such assignment;
however, if at any time subsequent to such an assignment such Persons shall
cease to control the operations of the successor organization, the Company may
thereupon terminate this Agreement. Such an assignment or any other assignment
of this Agreement by the Investment Manager shall bind the assignee hereunder
in the same manner as the Investment Manager is bound hereunder. This
Agreement shall not be assignable by the Company without the prior written
consent of the Investment Manager, except in the case of any assignment by the
Company to a Person which is the successor to the Company, in which case such
successor shall be bound hereby and by the terms of said assignment in the same
manner and to the same extent as the Company is bound hereby. Any successor
organization that is a permitted assignee under this Section 11, whether a
successor to the Investment Manager or to the Company, shall be obligated to
execute such agreements, certificates or other documents as the nonassigning
party shall reasonably request to evidence that such successor organization is
bound hereby.
This Agreement may not be amended, supplemented or discharged, and
none of its provisions may be modified, except expressly by an instrument in
writing signed by the party to be charged, provided that, in the case of the
Company, such amendment, supplement, discharge or modification must be approved
by a majority vote of the Independent Trust Managers or by a vote of the
holders of more than two-thirds of the outstanding shares of the Company and,
in the case of the Investment Manager, such amendment, supplement, discharge or
modification must be approved by a majority
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vote of the independent directors of the Investment Manager. Any term or
provision of this Agreement may be waived, but only in writing by the party
which is entitled to the benefit of that provision. No waiver by any party of
any default with respect to any provision, condition or requirement hereof
shall be deemed to be a continuing waiver in the future thereof or a waiver of
any other provision, condition or requirement hereof; nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right accruing to it thereafter.
12. OTHER ACTIVITIES OF INVESTMENT MANAGER
Nothing herein shall prevent the Investment Manager or its Affiliates
from engaging in other activities or businesses or from acting as advisor to
any other Person (including other real estate investment trusts) or from
managing other investments including those of investors or investments advised,
sponsored or organized by the Investment Manager even though such Person has
investment policies and objectives similar to those of the Company; provided,
however, that the Investment Manager shall notify the Company in writing in the
event that it does so act (or intends to so act) as an advisor to another real
estate investment trust. The Investment Manager may also render such services
to joint ventures and partnerships in which the Company is a co-venturer or
partner and to the other entities in such joint ventures and partnerships.
Except with respect to loan origination opportunities allocated pursuant to the
Loan Origination Agreement, the Investment Manager shall be free from any
obligation to present to the Company any particular investment opportunity
which comes to the Investment Manager. In addition, nothing herein shall
prevent any shareholder or Affiliate of the Investment Manager from engaging in
any other business or from rendering services of any kind to any other
corporation, partnership or other entity (including competitive business
activities).
Directors, officers, employees and agents of the Investment Manager or
of its Affiliates may serve as trust managers, officers, employees, agents,
nominees or signatories of the Company. When executing documents or otherwise
acting in such capacities for the Company, such persons shall use their
respective titles in the Company. Such persons shall receive from the Company
no compensation for their services to the Company in such capacities.
13. BANK ACCOUNTS
The Investment Manager shall establish and maintain one or more bank
accounts in its own name or, at the direction of the trust managers, in the
name of the Company, and shall collect and deposit into such account or
accounts and disburse therefrom any monies on behalf of the Company, provided
that no funds in any such account shall be commingled with any funds of the
Investment Manager or any other Person. The Investment Manager shall from time
to time render an appropriate accounting of such collections and payments to
the trust managers and to the auditors of the Company.
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14. PROTECTION OF INVESTMENTS
The Investment Manager shall use its efforts, in cooperation with the
legal counsel to the Company, as deemed appropriate in the Investment Manager's
reasonable discretion, (a) to verify title to or procure title insurance in
respect of any property in which the Company makes or proposes to make any
investment; (b) to verify that any mortgage securing any Investment of the
Company shall be a valid lien upon the mortgaged property according to its
terms; that any insurance or guaranty issued by the Federal Housing Authority,
the Veterans Administration or any similar agency of the United States or
Canada, or any subdivision thereof, or any private mortgage insurance company,
upon which the trust managers rely, is valid and in full force and effect and
enforceable according to its terms; and that any commitments to provide
permanent financing on property with respect to which the Company is furnishing
interim loans are satisfactory; and (c) to carry on the policies from time to
time specified by the trust managers with regard to the protection of the
Company's Investments.
15. RECORDS
The Investment Manager shall maintain appropriate books of account and
records relating to services performed pursuant hereto, which books of account
and records shall be available for inspection by representatives of the Company
upon reasonable notice during normal business hours.
16. REIT QUALIFICATION
Anything else in this Agreement to the contrary notwithstanding, the
Investment Manager shall not take any action (including, without limitation,
furnishing or rendering services to tenants of property or managing real
property), which action, in its judgment made in good faith, or in the judgment
of the trust managers as transmitted to the Investment Manager in writing,
would (a) adversely affect the status of the Company as a real estate
investment trust as defined and limited in the Code or which would make the
Company subject to the Investment Company Act of 1940, as amended, if not in
the best interest of the Company's shareholders or (b) violate any law, rule,
regulation or statement of policy of any government body or agency having
jurisdiction over the Company or over its securities, or (c) otherwise not be
permitted by the Declaration of Trust, as amended, or Bylaws of the Company,
except if such action shall be ordered by the trust managers, in which event
the Investment Manager shall promptly notify the trust managers of the
Investment Manager's judgment that such action or omission to act would
adversely affect such status or violate any such law, rule or regulation or the
Declaration of Trust, as amended, or Bylaws of the Company and shall refrain
from taking such action pending further clarification or instructions from the
trust managers. In addition, the Investment Manager shall take such
affirmative steps which, in its good faith judgment, or in the judgment of the
trust managers as transmitted to the Investment Manager in writing, would
prevent or cure any action described in (a), (b) or (c) above.
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17. SELF-DEALING
Neither the Investment Manager nor any Affiliate of the Investment
Manager shall sell any property or assets to the Company or purchase any
property or assets from the Company, directly or indirectly, except as approved
by a majority of the Independent Trust Managers, provided that any Person
wholly-owned (directly or indirectly) by the Company may sell property or
assets to the Company or purchase assets from the Company without such
approval. In addition, except as approved by a majority of the Independent
Trust Managers, neither the Investment Manager nor any Affiliate of the
Investment Manager shall receive any commission or other remuneration, directly
or indirectly, in connection with the activities of the Company (except as
expressly provided herein) or any joint venture or partnership in which the
Company is a party, unless such joint venture or partnership is wholly-owned
(directly or indirectly) by the Company. Except for compensation received by
the Investment Manager pursuant to Section 8 hereof, all commissions or other
remuneration received by the Investment Manager or an Affiliate of the
Investment Manager and not approved by the Independent Trust Managers under
this Section 17 shall be reported to the Company annually within ninety (90)
days following the end of the Company's fiscal year.
18. NO PARTNERSHIP OR JOINT VENTURE
The Company and the Investment Manager are not partners or joint
venturers with each other and neither the terms of this Agreement nor the fact
that the Company and the Investment Manager have joint interest in any one or
more investments shall be construed so as to make them such partners or joint
venturers or impose any liability as such on either of them.
19. FIDELITY BOND
The Investment Manager shall not be required to obtain or maintain a
fidelity bond in connection with the performance of its services hereunder.
20. JURISDICTION
This Agreement shall be governed by the laws of Texas.
21. LIMITATION OF LIABILITY
The Declaration of Trust establishing the Company (the "Declaration"),
a copy of which is duly filed with the County Clerk for Dallas County, Texas,
provides that the name "PMC Commercial Trust" refers to the trust managers
under the Declaration collectively as trust managers, but not individually or
personally; and that no trust manager, officer, shareholder, employee or agent
of the Company or its subsidiaries shall be held to any personal liability,
jointly or severally, for any obligation of, or claim against, the Company or
its subsidiaries. All persons dealing with the Company, in any way, shall look
only to the assets of the Company for the payment of any sum or the performance
of any obligations. Notwithstanding the foregoing, the Investment Manager
hereby
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acknowledges and agrees that it shall look only to the assets of the Company
for the payment of any sum or performance of any obligations due by or from the
Company pursuant to the terms and provisions hereof. Furthermore, except as
otherwise expressly provided herein, in no event shall the Company (original or
successor) ever be liable to the Investment Manager for any indirect or
consequential damages suffered by the Investment Manager from whatever cause.
22. SURVIVAL OF OBLIGATIONS
The obligations of the Company, PMC Capital and the Investment Manager
set forth in Section 10 hereof shall survive any termination or non-renewal of
this Agreement for a period of seven (7) years following the Termination Date.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first above written.
PMC COMMERCIAL TRUST
By: \s\
-------------------------------------------
Xxxxxx X. Xxxxxxxx
Chairman of the Board and
Executive Vice President
PMC ADVISERS, INC.
By: \s\
-------------------------------------------
Xxxxx X. Xxxxxxxx
President
PMC CAPITAL, INC.
By: \s\
-------------------------------------------
Xxxxx X. Xxxxxxxx
President
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