printer-friendly

Sample Business Contracts

Management Agreement - Primecore Mortgage Trust Inc. and Primecore Funding Group Inc.

Sponsored Links

                    Amended and Restated Management Agreement

         This Amended and Restated Management Agreement ("Agreement") is entered
into effective as of October 17, 2002 (the "Effective Date") between Primecore
Mortgage Trust, Inc., a Maryland corporation (the "Company" or the "REIT"), and
Primecore Funding Group, Inc., a California corporation (the "Manager"). This
Agreement is intended to amend and restate, in one full and complete document,
the entire agreement of the parties with respect to the matters set forth
herein, and restates and amends the Management Agreement dated March 30, 1999,
as previously amended on October 1, 2000 and January 2, 2002.

         The Company wishes to continue its retention of the Manager to manage
the investments of the Company and to perform administrative services for the
Company on the following terms.

        Section 1.         Definitions.

     (a)  "affiliate"  means,  with respect to any person,  another  person that
directly,  or  indirectly  through  one or more  intermediaries,  controls or is
controlled by, or is under common control with such person.

     (b) "Affiliate  Agreement"  means the Agreement  Regarding  Affiliate Loans
that the Manager and the Company are entering into concurrently herewith, and as
to which this Agreement constitutes additional consideration.

     (c) "Code" means the Internal Revenue Code of 1986, as amended.

     (d)  "governing   instruments,"   means  the  articles  or  certificate  of
incorporation  or other  charter,  as the case may be, and bylaws of the Company
and its subsidiaries.

     (e) "mortgage  loans" means  construction,  mixed use, land acquisition and
development  loans  primarily  secured  by  mortgages  or deeds of trust on real
estate properties.

     (f) "REIT' means Real Estate  Investment Trust as defined under Section 856
of the Code.

     (g) "REIT Provisions of the Code" refers to Sections 856 through 860 of the
Code.

     (h) "REO  Property"  and  "REO  Properties"  means  each  property  and all
properties  as to which  the  Company  had a deed of trust  and as to which  the
Company  has  assumed  ownership  either  through  foreclosure,  deed in lieu of
foreclosure or other means.

     (i)  "unaffiliated  directors"  refers  to those  members  of the  Board of
Directors  of the  Company,  if any,  who are not  officers or  employees of the
Company nor officers, directors or affiliates of the Manager.

         Section 2.        General Duties of the Manager.

     (a)  Administrative  Services Provided by the Manager.  The Manager will be
responsible for the day-to-day operations of the Company subject to oversight by
the  Company's  Board of Directors and shall  perform  services  relating to the
assets and operations of the Company as may be appropriate, including:

     1. Representing the Company in connection with the origination and purchase
of mortgage loans;


                                       1
<PAGE>

     2. In accordance  with the directions of the Company's  Board of Directors,
investing or reinvesting any money of the Company;

     3. Furnishing  reports and statistical and economic research to the Company
regarding the Company's real estate investment activities and the performance of
its portfolio of mortgage loans;

     4.  Administering  the day-to-day  operations of the Company and performing
administrative  functions necessary in the management of the Company,  including
the  collection of revenues,  the payment of the Company's  expenses,  debts and
obligations and the maintenance of appropriate computer services to perform such
administrative functions;

     5. Counseling the Company in connection with policy decisions to be made by
the Board of Directors;

     6. Overseeing the servicing of the Company's mortgage loans;

     7. Establishing underwriting,  appraisal and quality control procedures for
the mortgage loans made or acquired by the Company;

     8.  Conducting a legal  document  review of each  mortgage loan acquired to
verify  the  accuracy  and  completeness  of the  information  contained  in the
security instruments and other pertinent documents in the mortgage loan file;

     9.  Providing the Company with data  processing,  legal and  administrative
services  to the extent  required  to  implement  the  business  strategy of the
Company;

     10.  Providing  services  necessary for  compliance by the Company with all
federal,  state and local regulatory  requirements  applicable to the Company in
respect of its business activities,  including maintaining books and records and
preparing  or causing to be prepared all  financial  statements  required  under
applicable regulations and contractual undertakings;

     11.  Providing  services  necessary to enable the Company to make  required
federal,  state and local tax  filings  and  reports  and  generally  enable the
Company  to  maintain  its  status as a REIT,  including,  but not  limited  to,
soliciting  stockholders for required  information to the extent required by the
REIT provisions of the Code;

     12.  Communicating  on behalf of the Company with the  stockholders  of the
Company as  required  to satisfy  any  reporting  requirements  and to  maintain
effective relations with such stockholders; and

     13. Performing such other services as may be required from time to time for
management and other activities relating to the assets and growth of the Company
as the Board of Directors  shall  reasonably  request or the Manager  shall deem
appropriate under the particular circumstances.

     (b)  Administrative  Services Provided by  Subcontractors.  The Manager may
enter into  subcontracts  with other parties to provide any such services to the
Company,  so long as it  exercises  reasonable  care  in the  selection  of such
subcontractors.

     (c)  Cooperation  of the  Company.  The Company  agrees to take all actions
reasonably  required  to  permit  the  Manager  to  carry  out  its  duties  and
obligations.  The  Company  further  agrees  to  make  available  all  materials
reasonably  required to enable the Manager to satisfy its obligations to deliver
financial  statements  and any other  information or reports with respect to the
Company.

         Section 3. Additional Activities of the Manager. Nothing in this
agreement shall prevent the Manager or any of its officers, directors, employees
or affiliates from engaging in other businesses or from rendering services of
any kind to any other person or entity, including the purchase of, or advisory
service to others investing in, any type of real estate investment, including

                                       2
<PAGE>

investments which meet the principal investment objectives of the Company,
except that the Manager and its officers, directors and employees shall not
provide any such services to any mortgage REIT other than the Company or another
REIT sponsored by the Manager or its affiliates which has operating policies and
strategies different in one or more material respects from those of the Company.
Directors, officers, employees and agents of the Manager or affiliates of the
Manager may serve as trustees, directors, officers, employees, agents, nominees
or signatories for the Company or any subsidiary of the Company, to the extent
permitted by their governing instruments, as from time to time amended, or by
any resolutions duly adopted by the Board of Directors pursuant to the Company's
governing instruments.

         Section 4. Bank Accounts. At the direction of the Board of Directors,
the Manager may establish and maintain one or more bank accounts in the name of
the Company or any subsidiary of the Company, and may collect and deposit into
any such account or accounts, and disburse funds from any such account or
accounts, under such terms and conditions as the Board of Directors may approve;
and the Manager shall from time to time render appropriate accountings of such
collections and payments to the Board of Directors and, upon request, to the
auditors of the Company or any subsidiary of the Company.

         Section 5. Records. The Manager shall maintain appropriate books of
account and records relating to services performed, and such books of account
and records shall be accessible for inspection by representatives of the Company
or any subsidiary of the Company at any time during normal business hours.

         Section 6.        Compensation of the Manager.

(a) For Period Through December 31, 2002. Through December 31, 2002, the Manager
shall receive a monthly management fee equal to the sum of (1) .25% per month,
or 3% per annum, of the total amount of the Company's interest in the face
amount of the notes which evidence the outstanding mortgage loan portfolio
balance, and (2) the face amount of any note that was previously secured by any
REO Property that is held by the Company, all as calculated by the Manager and
payable on the last day of each month.

     (b) For Period Beginning  January 1, 2003.  Beginning  January 1, 2003, the
Manager shall receive compensation  consisting of a base fee, and, to the extent
provided below, certain bonuses (the "Performance Bonuses") as follows:

     1. Base Fee. The Manager  shall be entitled to receive a base fee,  payable
on the last day of each month, equal to 3.125 % per annum or 0.26% per month, of
the total  carrying  amount of all the  Company's  loans,  ADC contracts and REO
Properties on the last day of each month, as determined under Generally Accepted
Accounting Principles.

     2. Cash Flow Bonus.  The Manager  shall be entitled to receive a bonus (the
"Cash  Flow  Bonus"),  payable  on a  quarterly  basis  on the  last day of each
calendar  quarter.  The Cash Flow Bonus will be calculated by first  determining
the cash flow  percentage  (the "Cash Flow  Percentage")  which is  obtained  by
dividing  the  total  amount  of  repayments  of loans,  ADC  contracts  and REO
properties ("Repayments") collected during the previous four quarters (including
the calculation  quarter) by the balance of loan  commitments at that date which
is one year prior to the calculation date. If the resultant Cash Flow Percentage
is less than 25%, then the Cash Flow Bonus shall be 0.0% of  Repayments.  If the
Cash Flow  Percentage  is between 25% and 34%, then the Cash Flow Bonus shall be
0.05 % of Repayments;  if the Cash Flow  Percentage is between 35% and 44%, then
the  Cash  Flow  Bonus  shall  be 0.1% of  Repayments;  and ; if the  Cash  Flow
Percentage  is 45% or  higher,  then  the  Cash  Flow  Bonus  shall  be  0.2% of
Repayments.

     3.  Return  Bonus.  The  Manager  shall be entitled to receive a bonus (the
"Return  Bonus"),  if  applicable,  calculated  and due on the  last day of each
calendar  quarter.  The Return Bonus shall be  calculated  according to the form
attached as Schedule A to this Agreement.

         Section 7.        Expenses.

     (a)  Expenses  Borne by the  Manager.  Without  regard to the  compensation
received by the Manager, the Manager shall bear the following expenses:


                                       3
<PAGE>

     1. Employment expenses of the personnel employed by the Manager, including,
but not limited to,  salaries,  wages,  payroll taxes,  and the cost of employee
benefit plans;

     2. Rent, telephone,  utilities,  office furniture,  equipment and machinery
(including computers, to the extent utilized) and other office expenses (such as
asset/liability software,  modeling software and other software and hardware) of
the Manager needed in order to perform its duties as set forth herein;

     3. Bookkeeping fees and expenses  including any costs of computer services,
other than in connection with communications to security holders of the Company;

     4.  Miscellaneous  administrative  expenses  incurred  in  supervising  and
monitoring the Company's investments or any subsidiary's investments or relating
to performance by the Manager of its functions;

     5. Fees and expenses paid to advisors under agreements with the Manager;

     6. Expenses  connected  with the  acquisition  of the Company's  assets and
mortgage loans;

     7. Expenses related to the servicing of the Company's mortgage loans; and

     8. Travel and related  expenses of personnel of the Manager when  attending
meetings or performing other business  activities which relate to the Company or
any subsidiary of the Company.

     (b) Expenses  Borne by the Company.  The Company or any  subsidiary  of the
Company  shall pay all of its  expenses  except  those  which  are the  specific
responsibility of the Manager pursuant to this agreement;  and, without limiting
the generality of the foregoing,  it is  specifically  agreed that the following
expenses of the Company or any  subsidiary  of the Company  shall not be paid by
the Manager:

     1. The cost of borrowed money;

     2. All taxes  applicable  to the Company or any  subsidiary  of the Company
including interest and penalties;

     3.  Legal,  accounting  and  auditing  fees and  expenses  relating  to the
Company's or any subsidiary's operations;

     4. Expenses relating to any office or office  facilities  maintained by the
Company or any subsidiary of the Company exclusive of the office of the Manager;

     5. Expenses  connected with the ownership and  disposition of the Company's
or any subsidiary's assets,  including, but not limited to, costs of completion,
foreclosure,  maintenance,  repair and  improvement of property and premiums for
insurance on property owned by the Company or any subsidiary of the Company;

     6. Legal,  audit,  accounting,  underwriting,  brokerage,  listing,  rating
agency, registration and other fees, printing,  engraving and other expenses and
taxes  incurred  in  connection  with  the  issuance,  distribution,   transfer,
registration  and stock  exchange  listing of the Company's or any  subsidiary's
equity securities or debt securities;

     7. The expenses of  organizing,  modifying or dissolving the Company or any
subsidiary of the Company;

     8. All  insurance  costs  incurred  in  connection  with the Company or any
subsidiary of the Company;


                                       4
<PAGE>

     9.   Expenses   connected   with  payments  of  dividends  or  interest  or
distributions  in any  other  form  made or  caused  to be made by the  Board of
Directors to holders of the  securities of the Company or any  subsidiary of the
Company;

     10.  Expenses  connected  with the  structuring  and  issuance  of mortgage
securities by the Company or any  subsidiary  of the Company,  including but not
limited to trustee's  fees,  insurance  premiums,  and costs of required  credit
enhancements;

     11.  Travel and related  expenses  of the  directors  of the  Company  when
attending  meetings or performing other business  activities which relate to the
Company;

     12. All expenses of third parties connected with  communications to holders
of equity  securities or debt securities of the Company or any subsidiary of the
Company and the other  bookkeeping  and clerical work  necessary in  maintaining
relations  with holders of such  securities and in complying with the continuous
reporting and other requirements of governmental  bodies or agencies,  including
any costs of computer  services in connection  with this  function,  the cost of
printing and mailing  certificates  for such  securities and proxy  solicitation
materials and reports to holders of the Company's or any subsidiary's securities
and reports to third parties  required  under any indenture to which the Company
or any subsidiary of the Company is a party;

     13. Transfer agent's and registrar's fees and charges;

     14. Fees and  expenses  paid to trustees or directors of the Company or any
subsidiary of the Company,  the cost of director and officer liability insurance
and premiums for fidelity and errors and omissions insurance;

     15. Any  judgment  rendered  against the Company or any  subsidiary  of the
Company,  or against any trustee or director of the Company or any subsidiary of
the Company in his capacity as such for which the Company or any  subsidiary  of
the Company is required to indemnify  such trustee or director,  or any court or
governmental agency; and

     16. Other  miscellaneous  expenses of the Company or any  subsidiary of the
Company that are not specified expenses of the Manager under this Agreement.

        Section 8. Limits of Manager Responsibility; Indemnification. The
Manager assumes no responsibility under this Agreement other than to render the
services called for in good faith and shall not be responsible for any action of
the Board of Directors in following or declining to follow any advice or
recommendations of the Manager. The Manager, its directors, officers,
stockholders and employees will not be liable to the Company, any subsidiary of
the Company, its subsidiary's stockholders or the unaffiliated directors for any
acts or omissions by the Manager, its directors, officers, stockholders or
employees under or in connection with this Agreement, except by reason of acts
or omissions constituting bad faith, willful misconduct, gross negligence or
reckless disregard of their duties under this Agreement. The Company and its
subsidiaries shall reimburse, indemnify and hold harmless the Manager, its
directors, officers, stockholders and employees of and from any and all
expenses, losses, damages, liabilities, demands, charges and claims of any
nature whatsoever, including, without limitation, attorneys' fees, in respect of
or arising from any acts or omissions of the Manager, its stockholders,
directors, officers and employees made in good faith in the performance of the
Manager's duties under this Agreement and not constituting bad faith, willful
misconduct, gross negligence or reckless disregard of its duties.

         Section 9.        Term; Termination Fee.

     (a) This  amended  agreement  shall  commence  January  1,  2001 and  shall
continue  until  January  1,  2004,  and  shall  be  renewed  automatically  for
successive one-year periods beginning January 1,2004.

     (b) In addition to such further  liability or obligation of either party to
the  other  due  upon  termination  of  this  Agreement,  if this  Agreement  is
terminated  without cause (as "cause" is defined  below),  or in the case of any
determination  by the Company to  liquidate  its assets other than in the normal
course of business or wind-up its affairs,  the Company  shall pay the Manager a

                                       5
<PAGE>

termination fee (the "Termination  Fee") in an amount equal to four percent (4%)
of the total commitment amount of all loans, ADC contracts and REO Properties as
of the date of notice of termination or notice of intent to liquidate other than
in the normal course of business,  or wind up its affairs.  The  Termination Fee
shall be paid within 30 days  following the date that the notice of  termination
is given,  provided  further that the balance of any amount due from the Manager
to the  Company  under  the  Agreement  Regarding  Affiliate  Loans  ("Affiliate
Agreement"),  entered  into  concurrently  herewith,  shall  be paid  out of the
Termination Fee proceeds.

         Section 10. Termination by Company for Cause. At the option of the
Company, this Agreement shall be and become terminated upon written notice of
termination to the Manager if any of the following events shall occur.
Termination for any of these events shall constitute termination for "cause":

     (a) If a majority of the unaffiliated  directors,  if any,  determines that
the Manager has  violated  this  agreement in any  material  respect and,  after
notice of such violation,  the Manager has failed to cure such violation  within
60 days; or

     (b) There is entered  an order for  relief or similar  decree or order with
respect  to  the  Manager  by  a  court  having  competent  jurisdiction  in  an
involuntary  case  under  the  federal  bankruptcy  laws  as  now  or  hereafter
constituted or under any applicable  federal or state bankruptcy,  insolvency or
other similar laws; or

     (c) The Manager:

     1.  ceases,  or admits in writing its  inability,  to pay its debts as they
become due and  payable,  or makes a general  assignment  for the benefit of, or
enters into any composition or arrangement with, creditors;

     2.  applies for, or consents,  by  admission of material  allegations  of a
petition or otherwise,  to the  appointment  of a receiver,  trustee,  assignee,
custodian, liquidator or sequestrator, or other similar official, of the Manager
or of any  substantial  part of its properties or assets,  or authorizes such an
application or consent,  or proceedings  seeking such  appointment are commenced
without  such  authorization,  consent or  application  against  the Manager and
continue undismissed for 60 days;

     3. authorizes or files a voluntary  petition in bankruptcy,  or applies for
or consents, by admission of material allegations of a petition or otherwise, to
the application of any bankruptcy, reorganization,  arrangement, readjustment of
debt,  insolvency,  dissolution,   liquidation  or  other  similar  law  of  any
jurisdiction,  or authorizes such application or consent, or proceedings to such
end are instituted against the Manager without such  authorization,  application
or consent and are approved as properly instituted and remain undismissed for 60
days or result in adjudication of bankruptcy or insolvency; or

     4.  permits or suffers all or any  substantial  part of its  properties  or
assets to be  sequestered  or  attached  by court  order  and the order  remains
undismissed for 60 days.

     If any of the events  specified  above shall occur,  the Manager shall give
prompt  written  notice  thereof to the Board of Directors upon the happening of
such event.

         Section 11. Action Upon Termination. From and after the effective date
of termination of this Agreement, except as otherwise specified, the Manager
shall not be entitled to compensation for further services, but shall be paid
all compensation accruing to the date of termination and any Termination Fee due
under this Agreement. Upon such termination, the Manager shall:

     (a) After  deducting any accrued  compensation  and  reimbursement  for its
expenses to which it is then entitled, pay over to the Company or any subsidiary
of the  Company all money  collected  and held for the account of the Company or
any subsidiary of the Company pursuant to this Agreement;

     (b)  Deliver  to the Board of  Directors  a full  accounting,  including  a
statement showing all payments collected by it and a statement of all money held
by it, covering the period  following the date of the last accounting  furnished
to the Board of Directors  with respect to the Company or any  subsidiary of the
Company; and


                                       6
<PAGE>

     (c) Deliver to the Board of Directors all property and documents of the
Company or any subsidiary of the Company then in the custody of the Manager.

         Section 12. Release of Money or Other Property Upon Written Request.
The Manager agrees that any money or other property of the Company or any
subsidiary of the Company held by the Manager under this Agreement shall be held
by the Manager as custodian for the Company or such subsidiary, and the
Manager's records shall be appropriately marked clearly to reflect the ownership
of such money or other property by the Company or such subsidiary. Upon the
receipt by the Manager of a written request signed by a duly authorized officer
of the Company requesting the Manager to release to the Company or any
subsidiary of the Company any money or other property then held by the Manager
for the account of the Company or any subsidiary of the Company under this
Agreement, the Manager shall release such money or other property to the Company
or such subsidiary of the Company within a reasonable period of time, but in no
event later than the later to occur of (1) 30 days following such request and
(2) the earliest time following such request that remittance will not cause the
Manager to violate any law or breach any agreement to which it or the Company is
a party. The Manager shall not be liable to the Company, any subsidiaries of the
Company, the unaffiliated directors, or the Company's or its subsidiaries'
stockholders for any acts performed or omissions to act by the Company or any
subsidiary of the Company in connection with the money or other property
released to the Company or any subsidiary of the Company and not constituting
bad faith, willful misconduct, gross negligence or reckless disregard of its
duties. The Company and any subsidiary of the Company shall indemnify the
Manager, its directors, officers, stockholders and employees against any and all
expenses, losses, damages, liabilities, demands, charges and claims of any
nature whatsoever, which arise in connection with the Manager's release of such
money or other property to the Company or any subsidiary of the Company unless
such expenses, losses, damages, liabilities, demands, charges and claims arise
in connection with acts or omissions which constitute bad faith, willful
misconduct, gross negligence or reckless disregard of its duties.
Indemnification pursuant to this provision shall be in addition to any right of
the Manager to indemnification under this Agreement.

         Section 13.       Representations and Warranties.

     (a) The Company represents and warrants to the Manager as follows:

     1. The Company is duly  organized,  validly  existing and in good  standing
under the laws of Maryland,  has the power to own its assets and to transact the
business in which it is now engaged and is duly  qualified  and in good standing
under the laws of each jurisdiction  where its ownership or lease of property or
the conduct of its business requires such qualification,  except for failures to
be so qualified,  authorized or licensed that could not in the aggregate  have a
material  adverse  effect  on  the  business  operations,  assets  or  financial
condition of the Company and its subsidiaries, taken as a whole.

     2. The Company has the power and authority to execute,  deliver and perform
this Agreement and all obligations  required and has taken all necessary  action
to authorize this Agreement and the execution,  delivery and performance of this
Agreement and all obligations  required.  Except as shall have been obtained, no
consent of any other person  including,  without  limitation,  stockholders  and
creditors of the Company, and no license,  permit, approval or authorization of,
exemption by, notice or report to, or registration,  filing or declaration with,
any  governmental  authority is required by the Company in connection  with this
Agreement or the execution, delivery, performance, validity or enforceability of
this Agreement and all obligations  required.  This Agreement has been, and each
instrument  or document  required  will be,  executed  and  delivered  by a duly
authorized  officer of the Company,  and this  Agreement  constitutes,  and each
instrument  or document  required when  executed and  delivered  hereunder  will
constitute,  the legally valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.

     3. The  execution,  delivery  and  performance  of this  Agreement  and the
documents or instruments required will not violate any provision of any existing
law or  regulation  binding on the  Company,  or any order,  judgment,  award or
decree  of any  court,  arbitrator  or  governmental  authority  binding  on the

                                       7
<PAGE>

Company,  or the  governing  instruments  of, or any  securities  issued by, the
Company or of any  mortgage,  indenture,  lease,  contract  or other  agreement,
instrument  or  undertaking  to which  the  Company  is a party or by which  the
Company or any of its assets may be bound,  the  violation of which would have a
material  adverse  effect  on  the  business  operations,  assets  or  financial
condition of the Company and its  subsidiaries,  taken as a whole,  and will not
result in, or  require,  the  creation or  imposition  of any lien on any of its
property,  assets or revenues  pursuant to the  provisions of any such mortgage,
indenture, lease, contract or other agreement,  instrument or undertaking (other
than the pledge of  amounts  payable  to the  Manager  to secure  the  Manager's
obligations to its lenders).

     (b) The Manager represents and warrants to the Company that:

     1. The Manager is duly  organized,  validly  existing and in good  standing
under the laws of California,  has the corporate  power to own its assets and to
transact  the  business in which it is now engaged and is duly  qualified  to do
business and is in good standing under the laws of each  jurisdiction  where its
ownership  or lease of  property or the conduct of its  business  requires  such
qualification,  except for failures to be so  qualified,  authorized or licensed
that could not in the aggregate  have a material  adverse effect on the business
operations,  assets or financial  condition of the Manager and its subsidiaries,
taken as a whole.

     2. The Manager has the corporate  power and  authority to execute,  deliver
and  perform  this  Agreement  and all  obligations  required  and has taken all
necessary  corporate  action to  authorize  this  Agreement  and the  execution,
delivery and performance of this Agreement and all obligations required.  Except
as shall have been obtained,  no consent of any other person including,  without
limitation,  stockholders and creditors of the Manager, and no license,  permit,
approval  or   authorization   of,   exemption  by,  notice  or  report  to,  or
registration, filing or declaration with, any governmental authority is required
by the Manager in connection  with this  Agreement or the  execution,  delivery,
performance,  validity or  enforceability  of this Agreement and all obligations
required.  This Agreement has been and each instrument or document required will
be executed and delivered by a duly authorized officer of the Manager,  and this
Agreement  constitutes,  and each instrument or document  required when executed
and delivered will constitute,  the legally valid and binding  obligation of the
Manager enforceable against the Manager in accordance with its terms.

     3. The  execution,  delivery  and  performance  of this  Agreement  and the
documents  or  instruments  required,  will not  violate  any  provision  of any
existing law or regulation binding on the Manager, or any order, judgment, award
or decree of any court,  arbitrator  or  governmental  authority  binding on the
Manager,  or the  governing  instruments  of, or any  securities  issued by, the
Manager or of any  mortgage,  indenture,  lease,  contract  or other  agreement,
instrument  or  undertaking  to which  the  Manager  is a party or by which  the
Manager or any of its assets may be bound,  the  violation of which would have a
material  adverse  effect  on the  business  operations,  assets,  or  financial
condition of the Manager and its  subsidiaries,  taken as a whole,  and will not
result in, or  require,  the  creation or  imposition  of any lien on any of its
property,  assets or revenues  pursuant to the  provisions  of any such mortgage
indenture, lease, contract or other agreement, instrument or undertaking.

         Section 14. Notices. Unless expressly provided otherwise, all notices,
requests, demands and other communications required or permitted under this
agreement shall be in writing and shall be deemed to have been duly given, made
and received when (1) delivered by hand or (2) upon actual receipt of registered
or certified mail, postage prepaid. The parties may deliver to each other notice
by electronically transmitted facsimile copies provided that such facsimile
notice is followed within twenty-four hours by any type of notice otherwise
provided for in this paragraph. Any notice shall be duly addressed to the
parties as follows:

(a) If to the Company:

                Board of Directors
                Primecore Mortgage Trust
                99 El Camino Real
                Menlo Park, CA 94025
                Fax: (650) 328-3066


                                       8
<PAGE>

         (b) If to the Manager:

                 Primecore Funding Group
                 99 El Camino Real
                 Menlo Park, CA 94025
                 Attn: Susan Fox, President
                 Fax: (650) 328-3066

         Any party may alter the address to which communications or copies are
to be sent by giving notice of such change of address.

         Section 15. Assignments. Except as set forth in this section, this
Agreement shall terminate automatically in the event of its assignment, in whole
or in part, by the Manager, other than the pledge of amounts payable to the
Manager to secure the Manager's obligations to its lenders, unless such
assignment is consented to in writing by the Company. Any such consented
assignment shall bind the assignee in the same manner as the Manager is bound.
In addition, the assignee shall execute and deliver to the Company a counterpart
of this Agreement naming such assignee as Manager. This Agreement shall not be
assigned by the Company without the prior written consent of the Manager, except
in the case of assignment by the Company to a REIT or other organization which
is a successor, by merger, consolidation or purchase of assets, to the Company,
in which case such successor organization shall be bound by this Agreement and
by the terms of such assignment in the same manner as the Company is bound.

         Section 16. Entire Agreement. This Agreement is intended to amend and
restate, in one full and complete document, the entire agreement of the parties
with respect to the matters set forth herein, and restates and amends the
Management Agreement dated March 30, 1999, as previously amended on October 1,
2000 and January 2, 2002. In the event that this Agreement is for any reason
deemed to be invalid or unenforceable, or if the Affiliate Agreement, as to
which this Agreement constitutes additional consideration, is for any reason
deemed to be invalid or unenforceable, then the previous Management Agreement,
as amended, shall be binding on the parties from the date of this Agreement
forward, and this Agreement shall be of no force or effect; otherwise, this
Agreement alone contains the entire agreement and understanding among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements, understandings, inducements and
conditions, express or implied, oral or written, of any nature whatsoever with
respect to the subject matter. The express terms hereof control and supersede
any course of performance or usage of the trade inconsistent with any of the
terms. This Agreement may not be modified or amended other than by an agreement
in writing.

         Section 17. Controlling Law. This Agreement and all questions relating
to its validity, interpretation, performance and enforcement shall be governed
by and construed, interpreted and enforced in accordance with the laws of the
State of California.

         Section 18. Mediation, Arbitration and Jury Trial Waiver. The parties
acknowledge that there are significant costs and expenses, both monetary and
otherwise, and possible delays in connection with the resolution of disputes
through the judicial system. Accordingly, the parties agree that it would be in
each of their best interests that any and all disputes, claims or controversies
arising out of or relating to this Agreement or to the relationship that is
contemplated by this Agreement, whether based on tort, contract, statutory, or
equitable law, or otherwise, should first be submitted to mediation conducted
under the auspices of a neutral, commercial mediation and arbitration firm,
selected in accordance with Ca. Code Civ. Proc. Section 1281.6. The parties
agree that participation in such a mediation shall be a precondition to seeking
to enforce any alleged rights or claims. The parties further agree that if such
mediation is unsuccessful, then any and all disputes, claims or controversies
arising out of or relating to this Agreement or to the relationship that is

                                       9
<PAGE>

contemplated by this Agreement, whether based on tort, contract, statutory, or
equitable law, or otherwise, shall be determined exclusively by binding
arbitration under the Federal Arbitration Act, in conformity with the procedures
of the California Arbitration Act (Ca. Code Civ. Proc. Section 1280, et. seq.);
provided, however, that in addition to requirements imposed by law, such
arbitration shall be conducted in San Mateo County, California under the
commercial arbitration rules of a neutral, commercial mediation and arbitration
firm, selected in accordance with Ca. Code Civ. Proc. Section 1281.6, and any
arbitrator shall be a retired California Superior Court Judge who shall be
subject to disqualification on the same grounds as would apply to a judge of
such court. To the extent applicable in civil actions in California courts, the
following shall apply and be observed: all rules of pleading (including the
right of demurrer), all rules of evidence, all rights to resolution of the
dispute by means of motions for summary judgment, judgment on the pleadings, and
judgment under Code of Civil Procedure section 631.8. Resolution of the dispute
shall be based solely upon the law governing the claims and defenses pleaded,
and the arbitrator may not invoke any basis for decision other than such
controlling law. As reasonably required to allow full use and benefit of this
agreement's modifications to the Arbitration Act's procedures, the arbitrator
shall extend the times set by the Arbitration Act for the giving of notices and
settings of hearings. Awards exceeding $50,000 shall include the Arbitrator's
written reasoned opinion, and, at either party's written request within twenty
days after issuance of the award, shall be subject to review, reversal, remand,
modification or reduction following review of the record and arguments of the
parties by a second arbitrator who shall also be a retired California Superior
Court Judge, and shall, as far as practicable, proceed according to the law and
procedures applicable to appellate review by the California Court of Appeal of a
civil judgment following court trial. Any court of competent jurisdiction in San
Mateo County may enforce the provisions of this clause and any arbitration
award, and any party seeking enforcement shall be entitled to an award of all
costs, fees and expenses, including attorneys' fees, to be paid by the party
against whom enforcement is ordered. In agreeing to the foregoing procedure, the
parties understand, acknowledge and agree that each will be liable for an equal
share of all costs of mediation and arbitration, except as otherwise provided
herein or by law, and that there shall be no right to any trial by court or
jury.

         Section 19. Waivers. Neither the failure nor any delay on the part of a
party to exercise any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege preclude any other or further exercise of
the same or of any right, remedy, power or privilege, nor shall any waiver of
any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to
any other occurrence. No waiver shall be effective unless it is in writing and
is signed by the party asserted to have granted such waiver.

         Section 20. Execution in Counterparts. This Agreement may be executed
in any number of counterparts.

         Section 21. Provisions Separable. Except as otherwise provided in
Section 16 of this Agreement, the provisions of this Agreement are independent
of and separable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.


                                             Primecore Mortgage Trust, Inc.,
                                             a Maryland corporation



                                             By /s/ MICHAEL RIDER
                                                Michael Rider
                                                Chief Financial Officer



                                             Primecore Funding Group, Inc.,
                                             a California corporation



                                             By /s/ SUSAN FOX
                                                Susan Fox
                                                President


                                       10
<PAGE>



--------------------------------------------------------------------------------
1                 Accrual income before management fees and dividends
--------------------------------------------------------------------------------
2a                Management fee base
--------------------------------------------------------------------------------
2b                Management fee Cash Flow Bonus
--------------------------------------------------------------------------------
2c                Loan impairments
--------------------------------------------------------------------------------
3                 Add lines 2a through 2c
--------------------------------------------------------------------------------
4                 Return Bonus income (line 1 minus line 3)
--------------------------------------------------------------------------------
5                 Weighted average number of shares
--------------------------------------------------------------------------------
6                 Return Bonus income per share (line 4 divided by line 5)
--------------------------------------------------------------------------------
7                 Threshold (from Bonus Rate Table column 1)
--------------------------------------------------------------------------------
8                 Difference (line 6 - 7)
--------------------------------------------------------------------------------
9                 Bonus rate (from Bonus Rate Table column 4)
--------------------------------------------------------------------------------
10                Pay rate (multiply lines 8 and 9)
--------------------------------------------------------------------------------
11                Beginning rate (from Bonus Rate Table column 3)
--------------------------------------------------------------------------------
12                Bonus rate per share (add lines 10 and 12)
--------------------------------------------------------------------------------
13                Weighted average number of shares (enter line 5)
--------------------------------------------------------------------------------
14                Return Bonus (multiply lines 12 and 13)
--------------------------------------------------------------------------------




Quarterly Bonus Rate Table


--------------------------------------------------------------------------------
    If the Return Bonus income per share is:     Then the bonus rates are:
--------------------------------------------------------------------------------
 Greater than or       Less than or                        Bracket          Pay
--------------------------------------------------------------------------------
 equal to              equal to                              bonus         Rate
--------------------------------------------------------------------------------
  $ -                   $       0.44         $              -                0%
--------------------------------------------------------------------------------
  $ 0.45                $       0.59         $              -            1.250%
--------------------------------------------------------------------------------
  $ 0.60                $       0.74         $       0.0018750           1.875%
--------------------------------------------------------------------------------
  $ 0.75                $       0.89         $       0.0046875           2.500%
--------------------------------------------------------------------------------
  $ 0.90                and over             $       0.0084375           3.125%

--------------------------------------------------------------------------------


Definitions:

     1. Accrual income shall be the income computed for tax purposes.

     2c. Loan impairments shall be the determined as the difference,  if greater
than zero, between the accrued loan balance and the projected fair market value.

     5.  Weighted  average  number of shares shall be  calculated  over the same
period as the bonus calculation.






                                       11