AMENDMENT TO MANAGEMENT AGREEMENT
AMENDMENT to the Management Agreement, dated as of January 1, 1993,
between ASSET INVESTORS CORPORATION, a Maryland corporation (the "Company"), and
FINANCIAL ASSET MANAGEMENT CORPORATION, a Delaware corporation (the "Manager"),
dated as of October 12, 1993.
WHEREAS, the Company and the Manager entered into the Management
Agreement providing for the Manager to undertake the duties and responsibilities
set forth in the Management Agreement subject to the supervision of the
Company's Board of Directors; and
WHEREAS, the Company, effective October 12, 1993, distributed to its
stockholders approximately 70% of the outstanding shares of Commercial Assets,
Inc., another real estate investment trust managed by the Manager.
NOW, THEREFORE, in consideration for the mutual agreements herein set
forth, the parties hereto agree as follows:
1. The Management Agreement is, effective as of the date hereof,
hereby amended as follows:
(a) Section 1(d) is amended and restated as follows:
"(d) "Average Invested Assets" for any period means the average
of the aggregate book value of the consolidated assets of the Company, its
trusts and subsidiaries, computed in accordance with GAAP, invested, directly or
indirectly, in equity interests in and loans secured by real estate, including
assets that are pledged to secure Mortgage-Backed Obligations, after reserves
for depreciation or bad debts or other similar noncash reserves, less the book
value of minority interest (the portion of equity interest in Mortgage-Backed
Obligations not owned by the Company) and the liabilities associated with issued
and outstanding Mortgage-Backed Obligations of the Company, its trusts and
subsidiaries, computed for any period by adding the Average Invested Assets at
the end of each month during such period and dividing by the number of months in
the periods (provided that the Average Invested Assets shall not include (A)
investments in any other REIT for which the Manager or an Affiliate of the
Manager acts as a manager and (B) cash, certificates of deposit, treasury
instruments and other non-real estate related assets);"
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(b) Section l(e) is amend and restated as follows:
"(e) "Average Net Worth" means for any period, the difference
between (1) the gross proceeds of all offerings of equity securities of the
Company and (2) the $75,000,000 of capital contributed to CAI in 1993 times the
number of calendar days during such period that the proceeds of each such
offering or capital contribution were available for use by the Company divided
by the total number of calendar days in such period, together with (A) for the
first quarter of the current fiscal year, the Company's Tax Retained Earnings
(Losses) at the beginning of the first quarter or (B) for each subsequent year-
to-date cumulative quarterly period of the year for which a calculation is
required pursuant to Section 9(b) hereof, the average of the Company's Tax
Retained Earnings (Losses) computed by adding the Company's Tax Retained
Earnings (Losses) as of the beginning of each fiscal quarter during such year-
to-date period divided by the number of quarters in such period. A sample
calculation of the Average Net Worth is shown in Exhibit A;"
(c) Section l(f) is amended and restated as follows:
"(f) (A) "Board of Directors" means the Board of Directors of the
Company;
"(f) (B) "CAI" means Commercial Assets, Inc.;"
(d) Section i(i) is amended and restated as follows:
(A) "Commitment" means with respect to any Mortgage
Instrument, the agreement containing the terms pursuant to which the Company
agrees to acquire on a forward basis such Mortgage Instrument from any person;
"(i) (B) "Commercial Mortgage-Backed Obligations" means debt
obligations which are secured and funded as to the payment of interest and
principal by a specific group of mortgage loans on multi-family or other
commercial real estate, accounts and other collateral;"
(e) Section 1(gg) is amended and restated as follows:
"(gg) "Net Income" means the Company's taxable income including
capital gains and capital losses arising from the Company's operations in the
year they are
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generated before (i) the Manager's incentive compensation, (ii) net operating
loss deductions arising from losses in prior periods, (iii) dividends from CAI,
(iv) special deductions permitted by the Internal Revenue Code in calculating
taxable income for a REIT and (v) the deduction arising from the exercise of
stock options permitted under the Code Section 83 and the deduction for dividend
equivalent rights. In addition, taxable income, for this computation, will also
be adjusted for all mortgage derivative interests in which the Company's basis
is different from the current reportable tax basis in such mortgage derivative
interests. In such situations, GAAP income will be substituted for taxable
income. In addition, taxable income will also be reduced by 25% of the expense
otherwise deductible for tax purposes relating to the exercise of stock options
and the issuance of Common Stock relating to dividend equivalent rights;"
(f) Section 1(kk) is amended and restated as follows:
"(kk) (A) "REIT" means a real estate investment trust under the
Internal Revenue Code;
"(kk) (B) "Residential Mortgage-Backed Obligation" means debt
obligations which are secured and funded as to the payment of interest and
principal by a specific group of mortgage loans on single-family (one to four
units) real estate;"
(g) Section 1(qq) is amended by adding before the phrase "see
Exhibit A" the following:
"provided, however, that such calculation shall exclude the
effects, if any, of "excess inclusion" on Net Income, dividend distributions or
otherwise;"
(h) Section 2(i) is amended by adding the following before the
semi-colon at the end of such paragraph:
"(for purposes of this subsection, full-time shall mean full-time
obligation to the Company and CAI)"
(i) Section 2(o) is amended by adding the following after the
word "REIT" at the end of such paragraph:
"PROVIDED, HOWEVER, that the Company shall not invest in
Commercial Mortgage-Backed Obligations;"
(j) The first sentence of Section 3 is amended and restated as
follows:
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"Nothing herein shall prevent or restrict the Manager or any of its
officers, employees or Affiliates from engaging in any business rendering
services of any kind to any other Person, including investment in, or advisory
service to others investing in, any type of real estate assets, including assets
which meet the principal portfolio objectives of the Company, except that,
without the consent of the Board of Directors, which consent shall not be
unreasonably withheld, the Manager shall not provide general management services
to any REIT or similar entity other than the Company and its subsidiaries and
affiliates other than acting as Manager to CAI."
(k) The last paragraph of Section 11 is amended and restated as
follows:
"If any of the expenses set out above total $5,000 or more
individually, or $15,000 or more in the aggregate and are incurred by the
Manager in part for the purposes of the Company and in part for purposes
unrelated to the Company (including expenses incurred on behalf of CAI), the
Manager shall submit an accounting to the Company's Audit Committee of the Board
of Directors on a quarterly basis to show the allocation of such expenses."
(l) Section 12(t) is amended by deleting the word "5,000" and
inserting in its place the word "$10,000".
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
[Corporate ASSET INVESTORS CORPORATION
Seal]
Attest: /s/ Stephen L. Weiman By: /s/ Spencer I. Browne
---------------------- -------------------------
Name: Spencer I. Browne
Title: President and Chief
Executive Officer
FINANCIAL ASSET MANAGEMENT
CORPORATION
By: /s/ John C. Singer
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Name: John C. Singer
Title: Vice President