Amended and Restated Loan Servicing Agreement
THIS AMENDED AND RESTATED LOAN SERVICING AGREEMENT ("the Agreement") is made as
of December 23, 1998, between Wilshire Servicing Company UK Limited a company
incorporated in England under Company Registration Number 3277447 whose
registered office is at 4 St Paul's Churchyard, London EC4M 8AY ("the Servicer")
and Wilshire Real Estate Investment Trust Inc., a Maryland corporation ("the
Company").
RECITALS
The Company and certain of its affiliates intend to acquire and/or originate
mortgage loans, real estate mortgage backed securities and other real estate
related assets in the United Kingdom ("the Real Estate Assets") during the term
of this Agreement. The Company desires that the Servicer service such loans and
the Servicer desires to do the same. The Company and Servicer previously entered
into a Loan Servicing Agreement dated April 6, 1998 ("Original Agreement") and
the parties wish to amend and restate the Original Agreement.
The parties hereby agree as follows:
1. Exclusive Servicing of Real Estate Assets. The Servicer shall provide
portfolio management services including billing, portfolio administration and
collection services ("Services") for all Real Estate Assets unless the Servicer
and the Company agree that specific Real Estate Assets shall not be so serviced
("Excluded Real Estate Assets"). The Company agrees that the Servicer shall not
be required to service Real Estate Assets for which the Servicer may not have
applicable licences. The Company agrees that the Servicer shall service all of
its Real Estate Assets and any affiliate's Real Estate Assets, except for
Excluded Real Estate Assets under this Agreement.
2. Manner and performance of Services. Except as otherwise specifically
provided herein the Servicer shall be entitled to exercise its sole discretion
in servicing the Real Estate Assets. The Servicer shall devote such time and
attention as shall be necessary to provide the Company with the Services
described herein. The Servicer may service its own loans, real estate and
financial assets and render services to any current or future clients, provided
that such activities do not interfere with the Servicer's performance of the
Services. The Services to be provided by the
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Servicer include the following:
2.1 The Servicer's Duties in General. The Servicer shall administer the
Real Estate Assets with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to comparable Real Estate
Assets that it services for its own account or as a fiduciary for others. The
Servicer shall take all necessary actions which the Servicer in good faith
determines are commercially reasonable in regard to each Real Estate Asset,
which in the case of a loan shall continue until it is collected or the
Servicer, in its good faith judgement, determines that is no longer commercially
reasonable to continue to try to collect the outstanding indebtedness on the
loan.
2.2 Compliance. The Servicer shall use its best efforts to comply
throughout the term of the Agreement with all requirements of applicable laws
and regulations including to the extent applicable, any consumer and debt
collection protection laws and any other consumer credit and disclosure laws.
2.3 Collection. The Servicer shall use its reasonable efforts, but not
less than the same efforts it uses with respect to comparable Real Estate Assets
that it services for others, to collect all payments due and to become due under
each of the Real Estate Assets from the party or parties liable thereunder (a
"Borrower").
2.4 Subcontractors. The Servicer may subcontract services but no such
subcontract shall relieve or reduce the Servicer's obligation to perform
services as provided in this Agreement. The Servicer shall notify the Company
and/or WRSC of each subcontract entered into by it within twenty (20) business
days after such subcontract is entered into, and shall attach a copy of such
subcontract. The Servicer shall also notify the Company and/or WRSC as soon as
any subcontract is no longer necessary with respect to any Real Estate Assets
and shall immediately terminate such subcontract is no longer necessary with
respect to any Real Estate Assets and shall immediately terminate such
subcontract as to such Real Estate Assets. Each subcontract shall provide that
it is terminable at will without payment of a termination fee or penalty. Each
subcontract will be upon such terms and conditions as are not inconsistent with
this Agreement. As part of its servicing activities hereunder, the Servicer
shall enforce the obligations of each subcontractor under the related
subcontract. Any subcontract and any other transactions or services relating to
the Real Estate Assets involving a subcontractor shall be deemed to be between
such subcontractor and
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Servicer alone, and the Company shall have no obligation, duty or liability with
respect to such subcontractor, including, without limitation, any obligation,
duty or liability to pay such subcontractor fees and expenses. For purposes of
remittances by the Servicer pursuant to this Agreement, the Servicer shall be
deemed to have received a payment on a Mortgage Loan when the applicable
subcontractor has received such payment.
2.5 Indemnity. The Servicer shall reimburse and indemnify the Company and
its successors and assigns for and against, and hold the Company and its
successors and assigns harmless from and against, any and all liabilities,
obligations, losses, damages, penalties, actions, judgements, suits, costs,
expenses and disbursements, including without limitation reasonable legal fees
and disbursements, which may be imposed upon, or incurred by the Company in any
way relating to or arising out of the Servicer's gross negligence in its
performance of its duties hereunder. The Company shall reimburse and indemnify
the Servicer and its successors and assigns and hold the Servicer and its
successors and assigns harmless from and against, any all liabilities,
obligations, losses, damages, penalties, actions, judgements, suits, costs,
expenses and disbursements, including without limitation reasonable legal fees
and disbursements, which may be imposed upon, or incurred by the Servicer in any
way relating to or arising out of the Real Estate Assets or the servicing,
thereof prior to the servicing thereof by the Servicer other than arising out of
the Servicer's gross negligence.
2.6 Amendments, Variable Rate and Redemptions. In connection with its
collection efforts the Servicer may modify or change the interest rate of any
loan, and quote to, and accept from a Borrower a full or partial redemption
amount on any loan as full settlement.
2.7 Monthly Accounting Reports. For each month during the term of this
Agreement, the Servicer will furnish the Company with a monthly report regarding
the Real Estate Assets by the twenty-fifth (25th) day of the following month.
The Servicer shall furnish at the Servicer's cost such other information
regarding the Servicer, the Real Estate Assets and this Agreement as the Company
may from time to time reasonably request, provided, that if the information or
data requested by the Company is something the Servicer cannot produce
internally from its then existing reporting systems without manual compilation
or production, or reprogramming its computer system, the Company shall reimburse
the Servicer for its cost for furnishing such information.
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3. Term. This Agreement shall commence on April 6, 1998 and shall continue
in force for two (2) years and thereafter will automatically renew for
successive one year periods unless either party delivers a notice of termination
at least 120 days prior to the end of the them current term. Notwithstanding any
other provision to the contrary, this Agreement shall be terminated if the
Management Agreement dated 6 April 1998 between the Company and Wilshire Realty
Services Corp. a Delaware corporation ("WRSC") is terminated by either the
Company or WRSC.
4. Insurance
4.1 Insurance Coverage Requirements. The Servicer shall use its best
endeavours to cause the Borrower to maintain for each Real Estate Asset which is
a loan all buildings insurance required by the terms of the relevant facility
letter or loan agreement of the amount set forth therein. If the Borrower fails
to maintain such insurance the Servicer shall notify the Company as promptly as
possible and in accordance with usual servicing practice shall put in place and
maintain a buildings insurance policy covering all the usual risks in an amount
by reference to the current valuation. To the extent that the Servicer has
expended its own funds to pay insurance premiums under this clause the cost of
such premiums shall be deemed a servicing advance. The Servicer shall promptly
notify the Company as soon as it is notified of a change of insurance carrier or
increase in deductible or a decrease in the scope or amount of coverage with
regard to any insurance policy maintained by a Borrower.
4.2 Servicer Insurance Requirement. In the event that the Servicer shall
obtain and maintain a block buildings insurance policy in respect of the Real
Estate Assets with a reputable insurer to the extent that such policy provides
no less coverage in scope than the insurance required to be maintained by the
Servicer under clause 4.1 above the Servicer shall conclusively be deemed to
have satisfied its obligations as set forth in clause 4.1. If the amount of the
deductible under that policy is greater than it would have been under a policy
effected under clause 4.1 the Servicer shall pay the difference into a custodial
account prior to the date on which the fund due to the Company under the policy
are required to be distributed to the Company. In accordance with its
obligations under this Agreement the Servicer agrees to make any claim under any
such block buildings insurance policy on behalf of itself and the Company.
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4.3 Servicer Insurance Requirement. The Servicer shall obtain and maintain
at its own expense, and keep in full force and effect throughout the term of
this Agreement, a blanket fidelity bond and errors and omissions insurance
policy covering the Servicer's officers and employees acting on behalf of the
Servicer in connection with its activities under this Agreement. The amount of
such coverage shall meet the servicing requirements of prudential institutional
commercial or residential mortgage loan servicers for the relevant market. In
the event that such bond or policy ceases to be in effect, the Servicer shall
obtain a comparable replacement bond or policy. Coverage of the Servicer under a
policy or bond obtained by an affiliate of the Servicer and providing the
coverage required by this section shall satisfy the requirements of this clause.
5. Annual Statement as to Compliance. The Servicer will deliver to the
Company on or before 31 December in each year beginning 31 December 1998 an
officer's certificate stating as to each signatory thereof that (a) a review of
the activities of the Servicer during the preceding calendar year (or during the
period from the date of execution of this Agreement until the end of the
calendar year in the case of the first certificate) and of performance of under
this Agreement has been made under such officer's supervision; and (b) to the
best of such officer's knowledge based on such review the Servicer has fulfilled
in all material respects all its obligations under this Agreement throughout
such period or if there has been a material default in the fulfilment of any
such obligation specifying each such default known to such officer and the
nature and status thereof.
6. Access. Upon reasonable advance notice, the Servicer will provide
reasonable access, during its normal business hours at its offices, to the
Company to the Servicer's books and records regarding the Real Estate Assets.
7. Fees and Costs. The Company shall pay the Servicer and the Servicer may
retain or disburse from any Real Estate Asset proceeds the following amounts:
7.1 Reimbursement of Costs. All bona fide amounts paid by the Servicer to
third parties in connection with this Agreement, including without limitation,
stationery suppliers, related printing costs, estate agents fees, legal fees,
travel, insurance costs and payments arising out of acts and omissions of third
parties (including persons from whom the Real Estate Assets are acquired) and
the Servicer's standard photocopying charges.
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7.2 Service Fee. The Servicer shall be entitled to a fee ("the Service
Fee") for servicing the Real Estate Assets equal to (a) all interest and other
earnings paid or accrued on amounts from time to time on deposit in any accounts
in which proceeds of Real Estate Assets are deposited plus (b) a monthly fee
together with VAT at the current rate equal to an amount negotiated by the
parties for each particular Real Estate Assets portfolio which monthly fee shall
be comparable to fees charged by other industry participants for servicing
comparable Real Estate portfolios.
7.3 Payment. The Servicer may withdraw on a monthly basis from all Real
Estate Assets proceeds all escrow payments, costs and the Service Fee. Within
twenty-five (25) days after the last day of each calendar month the Servicer
shall pay to the Company or the affiliate owning the Real Estate Assets the net
proceeds received in that calendar month. The Company or the applicable
affiliate shall pay the Servicer within fifteen (15) days after billing for any
excess fees and costs. The Servicer shall receive any ancillary income, other
than float revenue.
8. Independent Contractor. The Servicer shall provide the Services in the
capacity of an independent contractor. Nothing in this Agreement shall be
construed as establishing an employment partnership or joint venture between the
Company and the Servicer.
9. Representations of the Company
9.1 The Company has been duly organised and is validly existing and of
good standing under the laws of the jurisdiction of its organisation with power
and authority to own its own properties and to conduct its business as such
properties are currently owned and such business is currently conducted.
9.2 The Company has the power and authority to execute and deliver this
Agreement and to carry out its terms and the execution, delivery and performance
of this Agreement have been duly authorised by the Company by all necessary
action on the part of the Company.
9.3 This Agreement constitutes a legal valid and binding obligation of the
Company enforceable in accordance with its terms.
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9.4 In those instances in which the Real Estate Assets are owned by an
affiliate of the Company, the Company will cause the affiliate to comply with
the Company's obligations hereunder with regard to such asset.
10. Representations of the Servicer. The Servicer represents to the
Company that it is duly incorporated under the Companies Act 1985 and that it
has power under its Memorandum and Articles of Association and all necessary
corporate authority has been obtained and action taken to carry on its business
as it is now being conducted and to sign and deliver and perform the
transactions contemplated in this Agreement.
11. Audits and Examination.
11.1 The Servicer shall use reasonable efforts to maintain in good order
and condition throughout the term of this Agreement all Real Estate Assets files
and relevant materials that the Servicer has received regarding the Real Estate
Assets.
11.2 The Servicer shall maintain a copy of each Real Estate Asset file at
its office or elsewhere within its control provided that at the Company's
request the Servicer will deliver copies of such Real Estate Asset files to the
Company or a designee of the Company. The Servicer shall make available to the
Company or its duly authorised representatives lawyers or auditors the Real
Estate Assets files and the related accounts records and computer systems
maintained by the Servicer at such times as the Company shall reasonably
request.
11.3 The Servicer shall permit the Company and its agents to audit the
books and records of the Servicer applicable to the Real Estate assets at the
Servicer's business premises during the Servicer's normal business hours upon
reasonable prior notice to the Servicer. The Company shall have direct access to
the Servicer's management information system for the Real Estate Assets or if
applicable to any service bureau used by the Servicer for the Real Estate
Assets.
12. Substitute Servicer: Limited Arbitration
12.1 If at any time during the term of this Agreement the Servicer shall
breach or default in the performance of a material obligation of the Servicer
undertaken in this Agreement, the
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Company and the Servicer shall consult for such period of time as the Company
may determine is reasonable under the circumstances to determine a mutually
acceptable resolution. In the event that the Company and the Servicer fail to
agree thereon within such a period as the Company may specify, the Company may
by written notice to the Servicer and without limitation of any other right or
remedy of the Company, require that the Servicer transfer the Real Estate
Assets, and all of the Servicer's servicing and related rights and obligations
in and with respect to the Real Estate Assets, to a substitute servicer to be
designated by the Company. Such substitute servicer shall thereupon perform
pursuant to a servicing contract acceptable to the Company, all of the
Servicer's duties and obligations under this Agreement. Upon the Company's
designation of such a substitute servicer the Servicer shall within a reasonable
time and to the extent that it holds possession thereof deliver to such
substitute servicer all written evidence and documentation of the Real Estate
Assets and the Servicer shall thereafter cooperate and follow all instructions
of the Company in all reasonable respects to facilitate such substitute
servicer's performance of the Servicer's duties and obligations under this
Agreement. The fees and expenses of the substitute servicer shall be paid by the
Company. The Servicer, however shall continue to be entitled to the Servicer's
Service Fee with regard to any Real Estate Assets being serviced under this
section, net of all servicing fees paid by the Company to the substitute
servicer for such Real Estate Assets.
12.2 If the Servicer wishes to contest or dispute the Company's
appointment of a substitute servicer, the Servicer shall so notify the Company
in writing within thirty (30) days after such appointment specifying in the
notice the Servicer's reasons for doing so. Such dispute regarding the Company's
appointment of a substitute servicer shall be settled by arbitration by one
arbitrator in England appointed jointly by the parties or in default of
agreement by the president of the Law Society. The arbitrator shall be impartial
and neutral and shall have experience in the management of operations of an
institution which performs services similar to those to be performed by the
Servicer under this Agreement. The decision of the arbitrator shall be final,
binding and conclusive on the parties. The arbitrator shall comply with the
privacy restrictions provided in clause 12.6 regarding publication of any award.
12.3 In no event shall the arbitrator have power or authority to add to or
to detract from the agreements of the parties nor to award punitive or
consequential damages. The arbitrator shall be authorised only to render an
award regarding a dispute or controversy concerning the Company's appointment of
a substitute servicer pursuant to clause 12.1 hereof, including an award of
costs and
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expenses as herein provided and the arbitrator shall not purport to determine or
issue an award regarding any other legal or equitable rights or remedies of the
parties.
12.4 The arbitration hearing will conclude and the arbitrator's award
shall be rendered in writing within 30 days after it commences. The arbitrator
will make every effort to enforce this requirement strictly but may extend the
time for the hearing upon a showing that exceptional circumstances require
extension to prevent manifest injustice.
12.5 The arbitrator shall award to the prevailing party as determined by
the arbitrator all costs fees and expenses related to the arbitration including
reasonable legal fees and fees of experts and other professional incurred by the
prevailing party.
12.6 The Servicer and the Company acknowledge that the existence, progress
and results of any arbitration held under this Agreement and any arbitral award
are to remain private. Each party agrees not to publish or disclose any
information regarding the arbitration or any such award by any means except as
may be required for enforcement of any arbitral award and further agrees to take
reasonable care but in any event no less care than it takes to protect its own
confidential business information generally, to prevent disclose and
dissemination of such information.
12.7 The award rendered in any arbitration may be enforced in any court of
competent jurisdiction.
13. General Provisions
13.1 Written Notices. Notices under this Agreement must be in writing and
sent by first class postage prepaid to the appropriate addresses shown above
unless that address has been changed by notice given as provided herein at least
three (3) business days in advance of the effective date of such change. Notice
will be effective three (3) business days after postage.
Wilshire Real Estate Investment Trust Inc.
1776 SW Madison Street
Portland, OR 97207 U.S.A.
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With a copy to
James M Waddington
Proskauer Rose LLP
1585 Broadway
New York, NY 10036-8299 U.S.A.
Wilshire Servicing Company UK Ltd
4 St Paul's Churchyard
London EC4M 8AY
With a copy to
Bo Aberg
Wilshire Servicing Company UK Ltd
Wilshire House
19/21 Woolmead
Farnham
Surrey GU9 7TT
13.2 Events beyond the Control of the Parties. Performance by either party
hereunder will not be deemed to be in default where the delay or default is due
to events beyond its reasonable control including without limitation war,
insurrection, strike, lock out, riots, floods, earthquakes, fires, casualties,
acts of God, epidemics, quarantine restrictions, governmental restrictions,
inability to secure necessary labour or materials, acts of the other party, or
failure to act of any public to governmental agency or entity.
13.3 Further Assurances. Following the execution of this Agreement the
Servicer and the Company, respectively, shall, from time to time at the request
of the other, execute and deliver such other, documents and instruments and
shall take such other actions as may be reasonable necessary or appropriate to
carry out and perform more effectively the terms and purposes of this Agreement.
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13.4 Counterparts. This Agreement may be executed in one or more
counterparts. Each signed counterpart shall be deemed an original, but all of
them together constitute one and the same instrument.
13.5 Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all proposals oral or written, including
without limitation, the Original Agreement, and all negotiations conversations
or discussions heretofore had between the parties relating to the subject matter
of this Agreement. Any amendment to this Agreement must be in writing signed by
the party to be charged.
13.6 Governing Law This Agreement is to be governed by and construed in
accordance with English Law and each party agrees to submit to arbitration in
England and the exclusive jurisdiction of the English courts as regards any
claim or matter arising under it.
13.7 Severability. If any provision herein is deemed unenforceable in
whole or in part such provision shall be deemed severable solely to the extent
of such enforceability without impacting on the remainder of this Agreement.
SIGNED FOR AND ON BEHALF OF
WILSHIRE SERVICING COMPANY /s/ Bo Aberg
UK LIMITED ----------------------------------------
(Authorised Signatory) Bo Aberg
Print Name
SIGNED FOR AND ON BEHALF OF
WILSHIRE REAL ESTATE /s/ Andrew Wiederhorn
INVESTMENT TRUST Inc. ----------------------------------------
(Authorised Signatory) Andrew Wiederhorn
Print Name
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AMENDED AND RESTATED LOAN SERVICING AGREEMENT
SERVICING FEE SCHEDULE
Pursuant to the Amended and Restated Loan Servicing Agreement made as of
December 23, 1998 between Wilshire Servicing Company UK Limited and Wilshire
Real Estate Investment Trust Inc., the parties agree that the Service Fees shall
be as follows for the following assets.
Asset Service Fees
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WREP Islands (Warners)
Management Fees per annum 1% of invested amount
Service Fees 5% of cash receipts
Savoy
Management Fees per annum 1% of invested amount (i.e. UPB)
Service Fees 20 basis points of UPB
Albany Loans
Management Fees per annum 1% of average invested amount
Service Fees 50 basis points on invested amount of
performing loans or 5% of cash
receipts on non-performing
Dated as of December 23, 1998
Wilshire Servicing Company UK Limited Wilshire Real Estate Investment
Trust Inc.
By:/s/ Bo Aberg By: /s/ Andrew Wiederhorn
---------------------------------- ----------------------------------
Name: Bo Aberg Name: Andrew Wiederhorn
Title:_______________________________ Title:________________________________
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AMENDED AND RESTATED LOAN SERVICING AGREEMENT
SERVICING FEE SCHEDULE
Pursuant to the Amended and Restated Loan Servicing Agreement made as of
December 23, 1998 between Wilshire Servicing Company UK Limited ("UK") and
Wilshire Real Estate Investment Trust Inc., ("WREIT") the parties agree that the
Service Fees shall be as follows for the following assets. These Service Fees
are in addition to any management fees to be paid by WREIT under its Management
Agreement with Wilshire Realty Services Corporation.
Asset Service Fees
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WREP Islands (Warners) 5% of cash receipts (gross rent)
collected (UK shall be responsible
for all other third party servicing
fees and costs, including without
limitation, Cardelles).
Savoy 0
Albany Loans 50 basis points per annum on unpaid
principal balance of performing
loans and 5% of cash receipts on
non-performing loans
A loan is non-performing if payments are more than 90 days delinquent. Servicer
shall inform the Company as soon as practicable of any change in status of
performing loans and non-performing loans.
Dated as of December 23, 1998
Wilshire Servicing Company UK Limited Wilshire Real Estate Investment
Trust Inc.
By:/s/ Bo Aberg By: /s/ Andrew Wiederhorn
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Name: Bo Abert Name: Andrew Wiederhorn
Title:_______________________________ Title:________________________________