ASSUMPTION, WAIVER AND AMENDMENT AGREEMENT

 

                                                                  EXHIBIT 10.35

                   ASSUMPTION, WAIVER AND AMENDMENT AGREEMENT

         THIS ASSUMPTION, WAIVER AND AMENDMENT AGREEMENT (this "AGREEMENT") is
entered into as of February 27, 2004, by and among PMC CAPITAL, INC., a Florida
corporation ("PMC"), PMC COMMERCIAL TRUST, a Texas real estate investment trust
(the "COMPANY"), SECURITY LIFE OF DENVER INSURANCE COMPANY ("SLD") and ING USA
ANNUITY AND LIFE INSURANCE COMPANY ("ING USA") (collectively, the
"NOTEHOLDERS").

                                    RECITALS:

         A. PMC and SLD (in such capacity, the "1995 FLOATING RATE PURCHASER")
entered into that certain Note Agreement dated as of April 19, 1995, as amended
prior to the date hereof (as so amended, the "1995 FLOATING RATE NOTE
AGREEMENT"), pursuant to which PMC issued and sold to the 1995 Floating Rate
Purchaser $5,000,000 in aggregate principal amount of its Floating Rate Senior
Promissory Notes due April 19, 2004 (the "1995 FLOATING RATE NOTES"). The 1995
Floating Rate Purchaser is the holder, directly or through its nominees, of 100%
of the outstanding principal amount of the 1995 Floating Rate Notes.

         B. PMC and ING USA (or its predecessor) (in such capacity, the "7.44%
PURCHASER") entered into those certain Note Agreements each dated as of July 19,
1999, as amended prior to the date hereof (as so amended, the "7.44% NOTE
AGREEMENTS"), pursuant to which PMC issued and sold to the 7.44% Purchaser
$10,000,000 in aggregate principal amount of its 7.44% Senior Promissory Notes
due July 19, 2005 (the "7.44% NOTES"). The 7.44% Purchaser is the holder,
directly or through their respective nominees, of 100% of the outstanding
principal amount of the 7.44% Notes.

         C. PMC and SLD (in such capacity, the "2000 FLOATING RATE PURCHASER")
entered into that certain Note Agreement dated as of July 19, 2000, as amended
prior to the date hereof (as so amended, the "2000 FLOATING RATE NOTE
AGREEMENT"), pursuant to which the PMC issued and sold to the 2000 Floating Rate
Purchaser $10,000,000 in aggregate principal amount of its Floating Rate Senior
Promissory Notes due July 19, 2004 (the "2000 FLOATING RATE NOTES"). The 2000
Floating Rate Purchaser is the holder, directly or through its nominees, of 100%
of the outstanding principal amount of the 2000 Floating Rate Notes.

         D. PMC and SLD (in such capacity, the "2001 FLOATING RATE PURCHASER")
entered into that certain Note Agreement dated as of July 19, 2001, as amended
prior to the date hereof (as so amended, the "2001 FLOATING RATE NOTE
AGREEMENT"; together with the 1995 Floating Rate Note Agreement, the 7.44% Note
Agreements and the 2000 Floating Rate Note Agreement, collectively, the "NOTE
AGREEMENTS" and, each, a "NOTE AGREEMENT"), pursuant to which the PMC issued and
sold to the 2001 Floating Rate Purchaser $10,000,000 in aggregate principal
amount of its Floating Rate Senior Promissory Notes due July 19, 2006 (the "2001
FLOATING RATE NOTES"; together with the 1995 Floating Rate Notes, the 7.44%
Notes and the 2000 Floating Rate Notes, together with any promissory notes now
or hereafter issued in replacement or substitution thereof in accordance with
the Note Agreements, collectively, the "NOTES" and, each, a "NOTE" ). The 2001
Floating Rate Purchaser is the holder, directly or through its nominees, of 100%
of the outstanding principal amount of the 2001 Floating Rate Notes.

         E. PMC and the Company have authorized the merger of PMC with and into
the Company, with the Company being the surviving entity after giving effect to
such merger (the "MERGER"). Pursuant to the plan of merger adopted by both PMC
and the Company, and in accordance with applicable law, upon the effective date
of the Merger (i) PMC will cease to exist as a separate legal entity, (ii) all
of the rights, titles and interests of PMC in and to its licenses, assets,
properties and franchises will be deemed transferred and assigned to the Company
and the Company will be deemed to have acquired all such rights, titles and
interests in and to such licenses, assets, properties and franchises
automatically without any further action, and (iii) PMC will be deemed to have
assigned and delegated to the Company, and the Company will be deemed to have
assumed, all of the outstanding obligations of PMC, whether arising under
contract or under law.

         F. The parties hereto desire to enter into this agreement to, among
other things (i) provide for the express assumption by the Company of all of
PMC's obligations under each of the Note Agreements and the related Notes and
(ii) amend and/or waive certain provisions of the Note Agreements and the Notes,
only as expressly set forth herein.

         G. Capitalized terms used herein shall have the respective meanings
ascribed thereto in the Note Agreements unless herein defined or the context
shall otherwise require.

         NOW, THEREFORE, in order to induce the Purchasers to grant their
consent to the Merger, in consideration of the mutual premises herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:

SECTION 1. ASSUMPTION AGREEMENT. The Company has authorized its assumption of,
and (subject to the satisfaction in full of the conditions precedent set forth
in Section 5.1 hereof) hereby irrevocably assumes and agrees to be fully liable
for, all of the obligations and undertakings of PMC, whether now existing or
hereafter arising, provided for in the Note Agreements and the Notes, including,
without limitation, all the covenants in the Note Agreements and the Notes and
the obligation to duly and punctually pay the principal and interest,
Yield-Maintenance Premium, if any, on the Notes in accordance with the terms of
the Note Agreements and the Notes.

SECTION 2. CONSENT AND WAIVERS. Subject to the satisfaction in full of the
conditions precedent set forth in Section 5.1 hereof, the Noteholders hereby
grant the following consent and waivers:

         2.1. The Noteholders hereby (a) consent to the Merger and (b) waive the
provisions of paragraph 5E that would otherwise require PMC to maintain its
corporate existence and waive the provisions of paragraph 6C(4) that would
otherwise prohibit the Merger, in each case to the extent and only to the extent
to permit the Merger to be consummated, provided that (in the case of clause (a)
and (b) above of this Section 2.1) each of the following conditions are met: (i)
after giving effect to the Merger, the Company is the surviving entity, and the
Company has expressly assumed all of the obligations of PMC and agreed to be
bound by all of the covenants applicable to PMC under the Note Agreements and
the Notes; (ii) the merger is consummated no later than March 31, 2004; and
(iii) the Merger is consummated in accordance with the terms of the plan of

merger that has been furnished by PMC to the Noteholders, a copy of which is
attached hereto as Exhibit A.

2.2. The Noteholders hereby waive any violation of the financial covenant in
paragraph 6A(i) of the Note Agreements providing that the Company will not
permit Net Loans Receivable at any time to be less than 150% of Senior Funded
Debt of the Company and its Subsidiaries provided that (i) such waiver relates
solely to the fiscal month ended December 31, 2003, and (ii) on the date that
each of the conditions precedent in Section 5 have been satisfied (the
"EFFECTIVE DATE") and after giving effect to the Merger, the Company will be in
pro forma compliance with the financial covenant in paragraph 6A(i) of the Note
Agreements.

SECTION 3. AMENDMENTS. Subject to the satisfaction in full of the conditions
precedent set forth in Section 5.1 hereof, the parties hereto hereby agree that
the Note Agreements, the Schedules to the Note Agreements and the Notes are
hereby amended as follows:

         3.1. Each reference to the "Company" or to "PMC Capital, Inc."
appearing in the Note Agreements and the Notes shall be deemed to refer to "PMC
Commercial Trust, a Texas real estate investment trust".

         3.2. Schedule I (Outstanding Debt and Liens) to each of the Note
Agreements is hereby deleted in its entirety and a new Schedule I is substituted
in lieu thereof as set forth on Schedule I attached to this Agreement.

         3.3. Schedule II (Subsidiaries) to each of the Note Agreements is
hereby deleted in its entirety and a new Schedule II is substituted in lieu
thereof as set forth on Schedule II attached to this Agreement.

         3.4. Schedule III (Agreements Restricting Debt) to each of the Note
Agreements is hereby deleted in its entirety and a new Schedule III is
substituted in lieu thereof as set forth on Schedule III attached to this
Agreement.

         3.5. Schedule IV (Agreements with Shareholders) to each of the Note
Agreements is hereby deleted in its entirety and a new Schedule IV is
substituted in lieu thereof as set forth on Schedule IV attached to this
Agreement.

         3.6. Paragraph 5H of each of the Note Agreements is hereby deleted and
a new paragraph 5H is substituted in lieu thereof to read in its entirety as
follows:

                  "5H. BUSINESS OF THE COMPANY. The Company covenants that
                  neither it nor any Subsidiary will engage in any business if,
                  as a result, the general nature of the business which would
                  then be engaged in by the Company and its Subsidiaries taken
                  as a whole would be materially changed from the general nature
                  of the business engaged in by the Company and its Subsidiaries
                  on the date of this Agreement; provided, however that the
                  Company may engage in the business of a real estate investment
                  trust as conducted by the Company on the Amendment Effective
                  Date, including the origination of loans to small businesses
                  collateralized by first liens on the real estate of the
                  related business, the origination of loans for commercial real
                  estate collateralized by first liens on real

                  estate and the ownership of commercial properties
                  predominantly in the hospitality industry."

         3.7. Paragraph 6A of each of the Note Agreements is hereby amended by
adding the following sentence immediately after the end of the first paragraph
thereof to read in its entirety as follows:

                  "In addition to the foregoing covenants, the Company hereby
         covenants and agrees that it will not permit (a) the Company's
         consolidated Net Worth at any time to be less than the sum of (i)
         $145,000,000, plus (ii) 100% of the net proceeds from any Equity
         Issuances (defined below) by the Company after the Amendment Effective
         Date; (b) the Maximum Non-performing Loan Ratio (defined below) at any
         time to exceed 10%; and (c) the Maximum Charge-off Ratio (defined
         below) at any time to exceed 2%, to be determined for compliance
         reporting purposes as of the last day of each fiscal quarter.

                  As used herein, "EQUITY ISSUANCES" shall mean the issuance by
         the Company of any shares of any class of beneficial interests, stock,
         warrants, options or other equity interests, whether pursuant to a
         public offering or otherwise, but does not include (a) any present and
         future shares of beneficial interests, stock, options or warrants
         issued to employees or trust managers of the Company or (b) any present
         and future shares of beneficial interests, stock, options or warrants
         issued in respect of any dividend reinvestment plan established and
         maintained by the Company. As used herein, "MAXIMUM NON-PERFORMING LOAN
         RATIO" shall mean, as of any date of determination, the ratio expressed
         as a percentage equal to (a) the aggregate amount of all non-performing
         commercial mortgage loans (including delinquent loans) of the Company
         and its consolidated Subsidiaries as of such date, divided by (b) the
         Company's consolidated Net Worth as of such date. As used herein, the
         term "MAXIMUM CHARGE-OFF RATIO" shall mean, as of any date of
         determination, a fraction expressed as a percentage, the numerator of
         which is the sum of the total amounts charged off by the Company and
         its consolidated Subsidiaries (less any such amounts subsequently
         recovered) for the four fiscal quarters then ended, and the denominator
         of which is the aggregate average principal balance of commercial
         mortgage loans of the Company and its consolidated Subsidiaries for the
         four fiscal quarters of the Company then ended.

         3.8. Paragraph 6B(b) of each of the Note Agreements is hereby deleted
and a new paragraph 6B(b) is substituted in lieu thereof to read in its entirety
as follows:

                  "(b) the aggregate amount of all Restricted Payments declared,
                  paid or made on or after the Amendment Effective Date shall
                  not exceed the sum of (A) $3,000,000 plus (B) 100% (or minus
                  100% in the case of any deficit or loss) of Net Taxable Income
                  for the period (taken as one accounting period) commencing on
                  April 1, 2004 and terminating at the end of the last fiscal
                  quarter preceding the date of the Restricted Payment in
                  question."

         3.9. Paragraph 6C(2) of each of the Note Agreements is hereby amended
by deleting the proviso appearing immediately after clause (vi) in said
paragraph and substituting in lieu thereof the following proviso to read in its
entirety as follows:

                  provided always, however, that the Company shall not permit
                  (A) the aggregate amount of Secured Funded Debt of the Company
                  and its Subsidiaries at any time outstanding, determined on a
                  consolidated basis (except as otherwise provided in the
                  proviso to clause (iii) of paragraph 6C(1)), to exceed an
                  amount equal to (x) 25% of Consolidated Shareholders' Equity
                  at such time, or (y) if at any time the Minimum Asset Coverage
                  Ratio (defined below) equals or exceeds 1.50 to 1.00, 35% of
                  Consolidated Shareholders' Equity at such time; (B) the
                  aggregate amount of Senior Funded Debt of the Company and its
                  Subsidiaries at any time outstanding, determined on a
                  consolidated basis, to exceed 200% of Consolidated
                  Shareholders' Equity at such time; or (C) the aggregate amount
                  of Funded Debt of the Company and its Subsidiaries at any time
                  outstanding, determined on a consolidated basis, to exceed
                  300% of Consolidated Shareholders' Equity at such time; and
                  provided further, that, for purposes of clause (A) of this
                  proviso, Funded Debt (other than SBA Debentures) of a
                  Subsidiary that is not a Wholly-Owned Subsidiary shall, to the
                  extent such Funded Debt is attributable to minority interests,
                  be deemed to be Secured Funded Debt; and provided further
                  that, for purposes of clauses (B) and (C) of this proviso,
                  Funded Debt shall be deemed to include Base Current Debt for
                  the period of 365 consecutive days ending on the date of
                  determination of Funded Debt. As used herein, the term
                  "MINIMUM ASSET COVERAGE RATIO" means, as of any date of
                  determination, the ratio of unencumbered assets of the Company
                  and its consolidated subsidiaries to unsecured Senior Funded
                  Debt.

         3.10. Paragraph 6C(5) of each of the Note Agreements is hereby amended
by deleting clause (iv) thereof in its entirety and substituting in lieu thereof
the following new clause (iv) to read in its entirety as follows:

                  (iv) the aggregate book value (as valued on the books of the
                  Company or its Subsidiary, as applicable, immediately prior to
                  sale) of all such loans and accounts receivable sold by the
                  Company and its Subsidiaries shall not at any time exceed (x)
                  $370,000,000 prior to the repayment in full, satisfaction and
                  discharge by the Company of all of its obligations under the
                  2001 Floating Rate Note Agreement and the 2001 Floating Rate
                  Notes (as such terms are defined in the Assumption, Waiver and
                  Amendment Agreement), and (y) $500,000,000 after the repayment
                  in full, satisfaction and discharge by the Company of all of
                  its obligations under the 2001 Floating Rate Note Agreement
                  and the 2001 Floating Rate Notes (as such terms are defined in
                  the Assumption, Waiver and Amendment Agreement).

         3.11. Paragraph 8A of each of the Note Agreements is hereby deleted and
a new paragraph 8A is substituted in lieu thereof to read in its entirety as
follows:

                  "8A. ORGANIZATION; AUTHORIZATION. The Company is a real estate
                  investment trust duly organized and validly existing under the
                  laws of the State of Texas; each Subsidiary is duly organized,
                  validly existing and in good standing under the laws of the
                  jurisdiction in which it is organized and is identified on
                  Schedule II attached hereto; the Company is and each
                  Subsidiary is duly qualified as a foreign

                  corporation or organization and in good standing in each
                  jurisdiction where the ownership of property or the nature of
                  the business transacted by it makes such qualification
                  necessary; and the Company has and each Subsidiary has the
                  corporate, partnership, trust or limited liability company
                  power to own its respective property and to carry on its
                  respective business as now being conducted. The Company has
                  all requisite trust power and authority to execute and deliver
                  this Agreement and the Notes and to perform its obligations
                  hereunder and thereunder. This Agreement and the Notes will be
                  duly authorized by all requisite trust action and duly
                  executed and delivered by authorized officers of the Company,
                  and this Agreement constitutes and the Notes will each
                  constitute, a valid obligation of the Company, legally binding
                  upon and enforceable against the Company in accordance with
                  their respective terms. The Company has no Majority
                  Subsidiaries except its Subsidiaries.

         3.12 (a) Paragraph 8G of each of the Note Agreements is hereby amended
by deleting the first sentence thereof in its entirety and substituting in lieu
thereof the following to read in its entirety as follows:

                  "Neither the Company nor any of its Subsidiaries is a party to
                  any contract or agreement or subject to any organizational
                  document, charter or other corporate restriction which
                  materially and adversely affects its business, property or
                  assets, or financial condition."

                (b) Paragraph 8G of each of the Note Agreements is hereby
further amended by deleting the reference to "charter or by-laws" appearing in
the second sentence of Paragraph 8G and substituting in lieu thereof
"organizational documents".

         3.13. Paragraph 8M of each of the Note Agreements is hereby amended by
deleting the last sentence thereof in its entirety and substituting in lieu
thereof the following to read in its entirety as follows:

                  "The Company is not an "investment company" or an "affiliated
                  person" of, or "promoter" or "principal underwriter" for, a
                  company required to be registered as an "investment company",
                  as such terms are defined in the Investment Company Act of
                  1940, as amended."

         3.14 Paragraph 10 of each of the Note Agreements is hereby amended by
deleting the definition of "Net Investment Company Taxable Income." In addition,
the reference to "Net Investment Company Taxable Income" in paragraph 5A(v) of
the Agreement shall be deemed to refer to "Net Taxable Income."

         3.15 Paragraph 10 of each of the Note Agreements is hereby further
amended by adding the following new definitions in alphabetical order to read in
their entirety as follows:

                  "Amendment Effective Date" shall mean the Effective Date as
                  defined in the Assumption, Waiver and Amendment Agreement.

                  "Assumption, Waiver and Amendment Agreement" shall mean that
                  certain Assumption, Waiver and Amendment Agreement dated as of
                  February 27, 2004 by and among PMC Capital, Inc., a Florida
                  corporation, PMC Commercial Trust, a Texas real estate
                  investment trust, Security Life of Denver Insurance Company
                  and ING USA Annuity and Life Insurance Company.

                  "Net Taxable Income" for any period shall mean Consolidated
                  Net Earnings for such period, adjusted for differences in
                  timing of recognition of items of income or expense between
                  generally accepted accounting principles and tax accounting
                  principles, plus, to the extent deducted in computing the
                  foregoing, current and deferred taxes on income.

                  "Net Worth" means, for any Person, total beneficiaries' or
                  stockholders' equity, as applicable, as determined in
                  accordance with generally accepted accounting principles
                  consistently applied."

SECTION 4.        REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         4.1. To induce the Noteholders to execute and deliver this
Agreement (which representations shall survive the execution and delivery of
this Agreement), the Company represents and warrants to the Noteholders that
(and agrees that any material breach of any such representation or warranty
shall be deemed an Event of Default under the Note Agreements):

                  (a) this Agreement has been duly authorized, executed, and
delivered by it and this Agreement constitutes the legal, valid, and binding
obligation, contract, and agreement of the Company enforceable against it in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, or similar laws or equitable principles
relating to or limiting creditors' rights generally;

                  (b) the Note Agreements and the Notes, as heretofore amended
and as amended by this Agreement, constitute the legal, valid, and binding
obligations, contracts, and agreements of the Company enforceable against it in
accordance with their respective terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, or similar laws or equitable
principles relating to or limiting creditors' rights generally;

                  (c) the execution, delivery, and performance by the Company of
this Agreement (i) has been duly authorized by all requisite corporate action
and, if required, shareholder action, (ii) does not require the consent or
approval of any governmental or regulatory body or agency, and (iii) will not
(A) violate (1) any provision of law, statute, rule, or regulation or its
certificate of incorporation or bylaws, (2) any order of any court or any rule,
regulation, or order of any other agency or government binding upon it, or (3)
any provision of any material indenture, agreement, or other instrument to which
it is a party or by which its properties or assets are or may be bound, or (B)
result in a breach or constitute (alone or with due notice or lapse of time or
both) a default under any indenture, agreement, or other instrument referred to
in clause (iii)(A)(3) of this Section 4.1(c);

                  (d) as of the date hereof and after giving effect to this
Agreement and the consummation of the Merger, no Default or Event of Default has
occurred that is continuing;

                  (e) each of the representations and warranties made by the
Company in the Note Agreements is true and correct as of the date of this
Agreement and after giving effect to the Merger, except as such representations
and warranties may expressly refer to a prior date (and in such case, such
representations and warranties are true and correct as of such prior date).
After giving effect to the Merger, all of the Subsidiaries of PMC existing
immediately prior to the date of the Merger will become Subsidiaries of the
Company pursuant to the terms of the applicable merger documents and applicable
law;

                  (f) this Agreement and the documents, certificates, and other
writings delivered to the Noteholders by or on behalf of the Company in
connection with this Agreement and the transactions contemplated hereby, taken
as a whole, do not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements herein and therein not
misleading in light of the circumstances under which they were made; and

                  (g) on the Effective Date and after giving effect to the
Merger and the transactions contemplated by this Agreement including, without
limitation, the assumption of the Company's obligations as provided for in
Section 1 hereof, the Company will be solvent.

SECTION 5.        CONDITIONS TO EFFECTIVENESS OF THIS AGREEMENT.

         5.1. Upon satisfaction in full of each of the following conditions,
this Agreement (including, the consents, waivers and amendments contained
herein) shall become effective on and as of the Effective Date:

                  (a) executed counterparts of this Agreement, duly executed and
delivered by PMC, the Company and the Noteholders, and the Noteholders shall
have received original manually signed counterparts of this Agreement from all
parties hereto;

                  (b) the Merger shall have been consummated in accordance with
the terms of the articles of merger in the form attached as Exhibit A to this
Agreement, and the Noteholders shall have received certified copies of the
articles of merger relating to the Merger as filed with the Secretary of State
of Florida and the county clerk of Dallas County, Dallas, Texas;

                  (c) PMC and the Company shall have obtained all governmental
and third party consents and/or approvals to the Merger as required under
applicable law and under any existing contractual arrangements of PMC and the
Company, and the Merger shall have been approved by the requisite number of
shareholders of PMC and the Company;

                  (d) all corporate and other proceedings taken or to be taken
in connection with the transactions contemplated hereby and all documents
incident thereto shall be satisfactory to the Noteholders and their counsel, and
the Noteholders and their counsel shall have received all such counterpart
originals or certified or other copies of such documents, certificates or
instruments relating to the Merger or the transactions contemplated by this
Agreement as the Noteholders or their counsel may request;

                  (e) the Noteholders shall have received a certificate from the
Secretary of the Company, in form and substance satisfactory to the Noteholders
and their counsel, certifying as to matters relating to incumbency, due
authorization by the Board of Trust Managers and valid existence, and certifying
as to and attaching true, correct and complete copies of, the Company's
organizational documents, merger documents and Board of Trust Managers
resolutions approving the entering into of this Agreement and the transactions
contemplated hereby and by the Merger;

                  (f) the Noteholders shall have received a signed opinion from
counsel to the Company dated the Effective Date and addressed to the Noteholders
in the form attached hereto as Exhibit B; and

                  (g) the representations and warranties of the Company set
forth in Section 4 hereof shall be true and correct on and as of the date
hereof.

SECTION 6.        ADDITIONAL COVENANTS.

         6.1. The Company hereby covenants and agrees that it will not enter
into any amendment or modification to its existing Credit Agreement with Bank
One, N.A. and one or more other lenders (or any replacement credit agreement)
and any loan documents relating thereto, if the effect of such amendment or
modification would render any of the covenants (financial or otherwise) or
events of default more restrictive on the Company or any of its Subsidiaries
than the covenants and events of default in the Note Agreements (as amended
hereby and further amended from time to time), unless either (a) the Noteholders
consent to such amendment or modification or (b) the Company enters into an
amendment or modification, in form and substance satisfactory to the
Noteholders, which amends or modifies the applicable provisions of the Note
Agreements to render such covenants or events of default, as the case may be, in
the Note Agreements as restrictive on the Company and/or its Subsidiaries as the
applicable covenants or events of defaults under such Credit Agreement (or any
replacement credit agreement) and any loan documents relating thereto, as the
case may be.

6.2. Promptly upon (and in any event within 5 Business Days' after) request of
any Noteholder, the Company will duly execute and deliver to such Noteholder a
new promissory note in replacement of the existing Notes held by such
Noteholder, which note shall be executed and delivered by the Company as maker
and otherwise be in the same form as the Note being replaced.

SECTION 7.        PAYMENT OF COUNSEL FEES AND EXPENSES.

         7.1. The Company agrees to pay, upon demand, the reasonable fees and
expenses of Kilpatrick Stockton LLP in connection with the negotiation,
preparation, approval, execution, and delivery of this Agreement.

SECTION 8.        MISCELLANEOUS.

         8.1. This Agreement shall be construed in connection with and as part
of each of the Note Agreements and the Notes, and except as modified and
expressly amended or expressly waived by this Agreement, all terms, conditions,
and covenants contained in the Note

Agreements and the Notes, and all rights, powers, privileges, and remedies of
the Noteholders with respect thereto, are hereby ratified and shall be and
remain in full force and effect.

         8.2. Any and all notices, requests, certificates, and other instruments
executed and delivered after the execution and delivery of this Agreement may
refer to the Note Agreements and the Notes without making specific reference to
this Agreement, but nevertheless all such references shall include this
Agreement unless the context otherwise requires.

         8.3. The descriptive headings of the various Sections or parts of this
Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.

         8.4. All representations and warranties contained in this Agreement
shall survive the execution and delivery of this Agreement.

         8.5. This Agreement shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the State of
Georgia excluding choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than such State.

         8.6. The execution hereof by you shall constitute a contract between us
for the uses and purposes hereinabove set forth, and this Agreement may be
executed in any number of counterparts, each executed counterpart constituting
an original, but all together only one agreement.

                  [Remainder of Page Intentionally Left Blank]

         IN WITNESS WHEREOF, the parties have caused this Assumption, Waiver and
Amendment Agreement to be duly executed by their respective officers or
representatives thereunto duly authorized, as of the date first above written.

                                    PMC CAPITAL, INC.

                                    By: /s/ Barry N. Berlin
                                        ---------------------------------------
                                    Name: Barry N. Berlin
                                    Title: Chief Financial Officer

                                    PMC COMMERCIAL TRUST

                                    By: /s/ Lance B. Rosemore
                                        ---------------------------------------
                                    Name: Lance B. Rosemore
                                    Title: President

                                    SECURITY LIFE OF DENVER INSURANCE COMPANY
                                         AND ING USA ANNUITY AND LIFE INSURANCE
                                         COMPANY

                                    By: ING INVESTMENT MANAGEMENT LLC, ITS AGENT

                                    By: /s/ Christopher P. Lyons
                                        ---------------------------------------
                                    Name: Christopher P. Lyons
                                    Title: Senior Vice President 

Basic Info X:

Name: ASSUMPTION, WAIVER AND AMENDMENT AGREEMENT
Type: Waiver
Date: March 15, 2004
Company: CIM Commercial Trust Corp
State: Maryland

Other info: