AMENDMENT NO. 1 TO MANAGEMENT AGREEMENT
THIS AMENDMENT NO. 1 TO MANAGEMENT AGREEMENT, dated as of April 6, 1998 by
and between WILSHIRE REAL ESTATE INVESTMENT TRUST INC., a Maryland corporation
("WREIT" and, together with its subsidiaries and partnerships, and as the
general partner of Wilshire Real Estate Partnership, L.P., a Delaware limited
partnership (the "Company")), and WILSHIRE REALTY SERVICES CORPORATION, a
Delaware corporation (the "Manager");
WITNESSETH:
WHEREAS, the Management Agreement dated as of April 6, 1998 (the
"Management Agreement") between WREIT and the Manager defined Primary
Investments by reference to WREIT's preliminary prospectus dated March 13, 1998
and various parties have suggested that such definition is ambiguous; and
WHEREAS, the formula set forth in Section 9(b) of the Management Agreement
contains a typographical error; and
WHEREAS, the parties to the Management Agreement wish to eliminate any
ambiguity and correct any errors;
NOW THEREFORE, in consideration of the mutual agreements herein set forth,
the undersigned agree to amend and restate the Management Agreement as follows:
SECTION 1. Amendments.
(a) Section 1 of the Management Agreement is hereby amended to insert
therein the following definition of Primary Investments as new subsection (h):
"(h) "Primary Investments" means (i) commercial and
multi-family mortgage loans that are delinquent in payments and
commercial and multi-family real properties in the United States;
(ii) subordinated interests in mortgage-backed securities (other
than mortgage-backed securities backed by mortgage loans and/or real
properties previously owned by Wilshire Financial Services Group
Inc. or its affiliates); and (iii) international mortgage loans and
real properties."
(b) Section 9(b) of the Management Agreement is hereby deleted in its
entirety and replaced with the following new subsection (b):
"(b) The Company shall pay to the Manager incentive
compensation for each calendar quarter, commencing in the calendar
quarter ending June 30, 1998, in an amount equal to the product of
(A) 25% of the dollar amount by which (1)(a) Funds from Operations
(before the incentive fee) of the Company per share of Common Stock
(based on the weighted average number of shares outstanding) (b)
plus gains (or minus losses) from debt restructuring and sales of
property per share of Common Stock (based on the weighted average
number of shares outstanding), exceed (2) an amount equal to (a) the
weighted average of the price per share at the initial public
offering and the prices per share at any secondary offerings by the
Company multiplied by (b)(i) the sum of the Ten-Year U.S. Treasury
Rate and five percent per annum (ii) divided by 4, multiplied by (B)
the weighted average number of shares of Common Stock outstanding
during such period. "Funds from Operations" as defined by the
National Association of Real Estate Investment Trusts ("NAREIT"), on
the date hereof means net income (computed in accordance with GAAP)
excluding gains (or losses) from debt restructuring and sales of
property, plus depreciation and amortization on real estate assets,
and after adjustments for unconsolidated partnerships and joint
ventures. As used in calculating the Manager's compensation, the
term "Ten Year U.S. Treasury Rate" means the arithmetic average of
the weekly average yield to maturity for actively traded current
coupon U.S. Treasury fixed interest rate securities (adjusted to
constant maturities of ten years) published by the Federal Reserve
Board during a quarter, or, if such rate is not published by the
Federal Reserve Board, any Federal Reserve Bank or agency or
department of the federal government selected by the Company. If the
Company determines in good faith that the Ten Year U.S. Treasury
Rate cannot be calculated as provided above, then the rate shall be
the arithmetic average of the per annum average yields to
maturities, based upon closing asked prices on each business day
during a quarter, for each actively traded marketable U.S. Treasury
fixed interest rate security with a final maturity date not less
than eight nor more than twelve years from the date of the closing
asked prices as chosen and quoted for each business day in each such
quarter in New York City by at least three recognized dealers in
U.S. government securities selected by the Company."
SECTION 2. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.1
to Management Agreement as of the date first written above.
WILSHIRE REAL ESTATE INVESTMENT TRUST INC.,
a Maryland corporation and the general partner of
Wilshire Real Estate Partnership L.P.
By /s/ Andrew A. Wiederhorn
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Andrew A. Wiederhorn
Chairman of the Board, Chief Executive Officer,
Treasurer and Secretary
WILSHIRE REALTY SERVICES CORPORATION,
a Delaware corporation
By /s/ Andrew A. Wiederhorn
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Andrew A. Wiederhorn
Chairman of the Board, Chief Executive Officer,
Treasurer and Secretary