WILSHIRE REAL ESTATE INVESTMENT TRUST INC.

                             1998 STOCK OPTION PLAN

<PAGE>




                                TABLE OF CONTENTS
                                -----------------

ARTICLE I.     PURPOSE.........................................................1

ARTICLE II.    DEFINITIONS.....................................................1

ARTICLE III.   ADMINISTRATION..................................................4

ARTICLE IV.    SHARES AND OTHER LIMITATIONS....................................7

ARTICLE V.     ELIGIBILITY.....................................................9

ARTICLE VI.    STOCK OPTIONS...................................................9

ARTICLE VII.   STOCK APPRECIATION RIGHTS......................................11

ARTICLE VIII.  RESTRICTED STOCK...............................................13

ARTICLE IX.    INDEPENDENT DIRECTOR AND NONEMPLOYEE DIRECTOR
               STOCK OPTIONS..................................................15

ARTICLE X.     NONTRANSFERABILITY.............................................17

ARTICLE XI.    TERMINATION PROVISIONS.........................................17

ARTICLE XII.   CHANGE IN CONTROL..............................................18

ARTICLE XIII.  TERMINATION OR AMENDMENT OF PLAN...............................20

ARTICLE XIV.   UNFUNDED PLAN..................................................21

ARTICLE XV.    GENERAL PROVISIONS.............................................21

ARTICLE XVI.   EFFECTIVE DATE OF PLAN.........................................24

ARTICLE XVII.  TERM OF PLAN...................................................24

ARTICLE XVIII. NAME OF PLAN...................................................24



<PAGE>



                   Wilshire Real Estate Investment Trust Inc.
                             1998 Stock Option Plan


                                   ARTICLE I.

                                     PURPOSE

     The purpose of the Wilshire Real Estate Investment Trust Inc. 1998 Stock
Option Plan (the "Plan") is to enhance the profitability and value of Wilshire
Real Estate Investment Trust Inc. (the "Company") for the benefit of its
stockholders by enabling the Company: (i) to offer stock based incentives and
other equity interests to Independent Directors, Non-Employee Directors and/or
Managers of the Company thereby attracting, retaining and rewarding such
Independent Directors, Non-Employee Directors and Managers and strengthening the
mutuality of interests between such individuals and the Company's stockholders
and (ii) to make automatic grants of Stock Options to Independent Directors and
Non-Employee Directors, thereby attracting, retaining and rewarding such
individuals and strengthening the mutuality of interests between such
individuals and the Company's stockholders.


                                   ARTICLE II.

                                   DEFINITIONS

     For purposes of the Plan, the following terms shall have the following
meanings:

          2.1.     "Affiliate" shall mean: (i) any person directly or indirectly
     owning, controlling, or holding, with power to vote ten percent (10%) or
     more of the outstanding voting securities of such other person, (ii) any
     person ten percent (10%) or more of whose outstanding voting securities are
     directly or indirectly owned, controlled, or held, with power to vote, by
     such other person, (iii) any person directly or indirectly controlling,
     controlled by, or under common control with such other person, (iv) any
     executive officer, director, trustee or general partner of such other
     person, and (v) any legal entity for which such person acts as an executive
     officer, director, trustee or general partner. For purposes of this
     definition, the term "person" means and includes any natural person,
     corporation, partnership, association, limited liability company or any
     other legal entity. For purposes of this definition, an indirect
     relationship shall include circumstances in which a person's spouse,
     children, parents, siblings or mothers-, fathers-, sisters- or
     brothers-in-law is or has been associated with a person.

          2.2.     "Award" shall mean any award under the Plan of any Stock
     Option, Restricted Stock or Stock Appreciation Right. All Awards shall be
     confirmed by, and subject to the terms of, a written agreement executed by
     the Company and the Participant.



                                       -1-

<PAGE>



          2.3.     "Board" shall mean the Board of Directors of the Company or
     an authorized committee thereof.

          2.4.     "Cause" shall mean, with respect to a Participant's
     Termination of Directorship, an act or failure to act that constitutes
     "cause" for removal of a director under applicable Maryland law.

          2.5.     "Change in Control" shall have the meaning set forth in
     Article XII.

          2.6.     "Code" shall mean the Internal Revenue Code of 1986, as
     amended. Any reference to any section of the Code shall also be a reference
     to any successor provision.

          2.7.     "Common Stock" shall mean the common stock, par value $0.0001
     per share, of the Company.

          2.8.     "Company" shall mean Wilshire Real Estate Investment Trust
     Inc., a Maryland corporation, and its successors and assigns.

          2.9.     "Disability" shall mean a total and permanent disability, as
     defined in Section 22(e)(3) of the Code.

          2.10.    "Effective Date" shall mean the effective date of the Plan
     as defined in Article XV.

          2.11.    "Exchange Act" shall mean the Securities Exchange Act of
     1934, as amended.

          2.12.    "Fair Market Value" for purposes of the Plan, unless
     otherwise required by any applicable provision of the Code or any
     regulations issued thereunder, shall mean, as of any date, the last sales
     price reported for the Common Stock on the applicable date: (i) as reported
     on the principal national securities exchange on which it is then traded or
     the Nasdaq Stock Market, Inc., or (ii) if not traded on any such national
     securities exchange or the Nasdaq Stock Market, Inc., as quoted on an
     automated quotation system sponsored by the National Association of
     Securities Dealers. If the Common Stock is not readily tradable on a
     national securities exchange, the Nasdaq Stock Market, Inc., or any
     automated quotation system sponsored by the National Association of
     Securities Dealers, its Fair Market Value shall be set in good faith by the
     Board. For purposes of the grant of any Stock Option, the applicable date
     shall be the date on which the Option is granted or, if the sale of the
     Common Stock shall not have been reported or quoted on such date, on the
     first day prior thereto on which the sale of the Common Stock was reported
     or quoted. For purposes of the exercise of any Stock Appreciation Right the
     applicable date shall be the date a notice of exercise is received by the
     Board or, if not a day on which the applicable market is open, the next day
     that it is open.



                                       -2-

<PAGE>



          2.13.    "Independent Director" shall mean a director who within the
     last two years, has not (i) been employed by WFSG or any of its Affiliates,
     (ii) been an officer or director of WFSG or any of its Affiliates, (iii) or
     whose business or employer within the last two years has not performed
     services for WFSG or any of its Affiliates that annually exceeded the
     lesser of (a) the dollar amount provided in Item 404(a) of Regulation S-K
     or (b) 10% of the gross revenue of the entity that provided such services,
     or (iv) had any material business or professional relationship with WFSG or
     any of its Affiliates.

          2.14.    "Manager" shall mean WRSC, or any other person or entity
     that the Board determines, in its sole discretion, to be a manager of the
     Company.

          2.15.    "Non-Employee Director" shall mean any director of the
     Company who is neither an employee of the Company nor an Independent
     Director.

          2.16.    "Non-Tandem Stock Appreciation Right" shall mean a Stock
     Appreciation Right entitling the holder to receive an amount in cash or
     stock equal to the excess of: (i) the Fair Market Value of a share of
     Common Stock as of the date such right is exercised, over (ii) the
     aggregate exercise price of such right, otherwise than on surrender of a
     Stock Option.

          2.17.    "Participant" shall mean any Independent Director,
     Non-Employee Director or Manager to whom an Award has been made under the
     Plan.

          2.18.    "Reference Stock Option" shall have the meaning set forth in
     Section 7.2.

          2.19.    "Restricted Stock" shall mean an award of shares of Common
     Stock under the Plan that is subject to restrictions under Article VIII.

          2.20.    "Restriction Period" shall have the meaning set forth in
     Subsection 8.3(a) with respect to Restricted Stock.

          2.21.    "Rule 16b-3" shall mean Rule 16b-3 under Section 16(b) of
     the Exchange Act as then in effect or any successor provisions.

          2.22.    "Stock Appreciation Right" shall mean the right pursuant to
     an Award granted under Article VII.

          2.23.    "Stock Option" or "Option" shall mean any Option to
     purchase shares of Common Stock granted to any Independent Director,
     Non-Employee Director or Manager pursuant to Article VI or to any
     Independent Director or Non-Employee Director pursuant to Article IX.

          2.24.    "Tandem Stock Appreciation Right" shall mean a Stock
     Appreciation Right entitling the holder to surrender to the Company all (or
     a portion) of a Stock Option in exchange for an amount in cash or stock
     equal to the excess of: (i) the Fair Market


                                       -3-

<PAGE>



     Value, on the date such Stock Option (or such portion thereof) is
     surrendered, of the Common Stock covered by such Stock Option (or such
     portion thereof), over (ii) the aggregate exercise price of such Stock
     Option (or such portion thereof).

          2.25.    "Termination of Directorship" shall mean, with respect to
     an Independent Director or Non-Employee Director, that the Independent
     Director or Non-Employee Director has ceased to be a director of the
     Company.

          2.26.    "Termination as a Manager" shall mean, with respect to a
     Manager, that the Manager has ceased to be a Manager of the Company.

          2.27.    "Transfer" or "Transferred" shall mean anticipate,
     alienate, attach, sell, assign, pledge, encumber, charge or otherwise
     transfer.

          2.28.    "WFSG" shall mean the Wilshire Financial Services Group
     Inc.

          2.29.    "WRSC" shall mean the Wilshire Realty Services Corporation.


                                  ARTICLE III.

                                 ADMINISTRATION

     3.1.   The Board. The Plan shall be administered and interpreted by the
Board.


     3.2.   Awards. The Board shall have full authority to grant, pursuant to
the terms of the Plan (including Article V hereof), Stock Options, Restricted
Stock and Stock Appreciation Rights to any Independent Director, Non-Employee
Director or Manager and to otherwise administer the Plan. In particular, the
Board shall, except with regard to awards of Stock Options to Independent
Directors and Non-Employee Directors pursuant to Article IX, have the authority:

            (a)  to select the Independent Directors, Non-Employee Directors and
     Managers to whom Stock Options, Restricted Stock and Stock Appreciation
     Rights may from time to time be granted hereunder;

            (b)  to determine whether and to what extent Stock Options,
     Restricted Stock and Stock Appreciation Rights are to be granted hereunder
     to one or more Independent Directors, Non-Employee Directors and Managers;

            (c)  to determine, in accordance with the terms of the Plan, the
     number of shares of Common Stock to be covered by each such Award granted
     to an Independent Director, Non-Employee Director or Manager;

            (d)  to determine the terms and conditions, not inconsistent with
     the terms of the Plan, of any Award granted hereunder to an Independent
     Director, Non-Employee


                                       -4-

<PAGE>



     Director or Manager (including, but not limited to, the exercise or
     purchase price (if any), any restriction or limitation, any vesting
     schedule or acceleration thereof, or any forfeiture restrictions or waiver
     thereof, regarding any Award, and the shares of Common Stock relating
     thereto, based on such factors, if any, as the Board shall determine, in
     its sole discretion);

            (e)  to determine whether and under what circumstances a Stock
     Option may be settled in cash and/or Common Stock under Section
     6.3(d)(iii);

            (f)  to determine whether, to what extent and under what
     circumstances to provide loans (which may be on a recourse basis and shall
     bear interest at the rate the Board shall provide) to Independent
     Directors, Non-Employee Directors and Managers in order to purchase shares
     of Common Stock under the Plan;

            (g)  to determine whether a Stock Appreciation Right shall be a
     Tandem Stock Appreciation Right or a Non-Tandem Stock Appreciation Right;

            (h)  to modify, extend or renew an Award, subject to Article XIII
     hereof, provided, however, that if an Award is modified, extended or
     renewed and thereby deemed to be the issuance of a new Award under the Code
     or the applicable accounting rules, the exercise price of such Award may
     continue to be the original exercise price even if less than the Fair
     Market Value of the Common Stock at the time of such modification,
     extension or renewal; and

            (i)  to offer to buy out an Award previously granted, based on such
     terms and conditions as the Board shall establish and communicate to the
     Participant at the time such offer is made.

     3.3.   Guidelines. Subject to Article XIII hereof, the Board shall have
the authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing the Plan and perform all acts, including the delegation
of its administrative responsibilities, as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of the Plan and
any Award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan. The Board may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or in any
agreement relating thereto in the manner and to the extent it shall deem
necessary to carry the Plan into effect, but only to the extent any such action
would be permitted under the applicable provisions of Rule 16b-3. The Board may
adopt special guidelines and provisions for persons who are residing in, or
subject to, the taxes of, countries other than the United States to comply with
applicable tax and securities laws. To the extent applicable, the Plan is
intended to comply with the applicable requirements of Rule 16b-3 and shall be
limited, construed and interpreted in a manner so as to comply therewith.

     3.4.   Decisions Final. Any decision, interpretation or other action made
or taken in good faith by or at the direction of the Company or the Board (or
any of its members) arising out of or in connection with the Plan shall be
within the absolute discretion of the Company or the


                                      -5-

<PAGE>



Board, as the case may be, and shall be final, binding and conclusive on the
Company and all employees and Participants and their respective heirs,
executors, administrators, successors and assigns.

     3.5.   Reliance on Counsel. The Company or the Board may consult with
legal counsel, who may be counsel for the Company or other counsel, with respect
to its obligations or duties hereunder, or with respect to any action or
proceeding or any question of law, and shall not be liable with respect to any
action taken or omitted by it in good faith pursuant to the advice of such
counsel.

     3.6.   Designation of Consultants/Liability.
            ------------------------------------

            (a)  The Board may designate employees of the Company and
     professional advisors to assist the Board in the administration of the Plan
     and may grant authority to employees to execute agreements or other
     documents on behalf of the Board.

            (b)  The Board may employ such legal counsel, consultants and
     agents as it may deem desirable for the administration of the Plan and may
     rely upon any opinion received from any such counsel or consultant and any
     computation received from any such consultant or agent. Expenses incurred
     by the Board in the engagement of any such counsel, consultant or agent
     shall be paid by the Company. The Board, its members and any person
     designated pursuant to paragraph (a) above shall not be liable for any
     action or determination made in good faith with respect to the Plan. To the
     maximum extent permitted by applicable law, no officer of the Company or
     member or former member of the Board shall be liable for any action or
     determination made in good faith with respect to the Plan or any Awards
     granted under it. To the maximum extent permitted by applicable law and the
     Certificate of Incorporation and By-Laws of the Company and to the extent
     not covered by insurance, each officer and member or former member of the
     Board shall be indemnified and held harmless by the Company against any
     cost or expense (including reasonable fees of counsel reasonably acceptable
     to the Company) or liability (including any sum paid in settlement of a
     claim with the approval of the Company), and advanced amounts necessary to
     pay the foregoing at the earliest time and to the fullest extent permitted,
     arising out of any act or omission to act in connection with the Plan,
     except to the extent arising out of such officer's, member's or former
     member's own fraud or bad faith. Such indemnification shall be in addition
     to any rights of indemnification the officers, directors or members or
     former officers, directors or members may have under applicable law or
     under the Certificate of Incorporation or ByLaws of the Company.
     Notwithstanding anything else herein, this indemnification will not apply
     to the actions or determinations made by an individual with regard to
     Awards granted to him under the Plan.




                                       -6-

<PAGE>



                                   ARTICLE IV.

                          SHARES AND OTHER LIMITATIONS

     4.1.   Shares.
            ------
            (a)  The aggregate number of shares of Common Stock which may be
     issued or used for preference purposes under the Plan shall not exceed
     3,500,000 shares, of which 500,000 shares are reserved for Independent
     Directors and Non-Employee Directors (subject to any increase or decrease
     pursuant to Section 4.2), which may be either authorized and unissued
     Common Stock or Common Stock held in or acquired for the treasury of the
     Company or both. If any Stock Option or Stock Appreciation Right granted
     under the Plan expires, terminates or is cancelled for any reason without
     having been exercised in full, the number of shares of Common Stock
     underlying the unexercised Stock Option or Stock Appreciation Right shall
     again be available for the purposes of Awards under the Plan. If any shares
     of Restricted Stock awarded under the Plan to a Participant are forfeited
     or repurchased by the Company for any reason, the number of forfeited or
     repurchased shares of Restricted Stock shall again be available for the
     purposes of Awards under the Plan. If a Tandem Stock Appreciation Right
     granted in tandem with an Option is granted under the Plan, such grant
     shall only apply once against the maximum number of shares of Common Stock
     which may be issued under the Plan. In determining the number of shares of
     Common Stock available for Awards, if Common Stock has been exchanged by a
     Participant as full or partial payment to the Company, or for withholding,
     in connection with the exercise of an Award or the number shares of Common
     Stock otherwise deliverable has been reduced for withholding, the number of
     shares of Common Stock exchanged as payment in connection with the exercise
     or for withholding or reduced shall again be available under the Plan. Any
     shares of Common Stock that are issued by the Company for, and any awards
     that are granted through the assumption of or in substitution for,
     outstanding awards previously granted by an acquired entity shall not be
     counted against the shares of Common Stock available for issuance under the
     Plan.

     4.2.   Changes.
            -------

            (a)  The existence of the Plan and the Awards granted hereunder
     shall not affect in any way the right or power of the Board or the
     stockholders of the Company to make or authorize any adjustment,
     recapitalization, reorganization or other change in the Company's capital
     structure or its business, any merger or consolidation of the Company, any
     issue of bonds, debentures, preferred or prior preference stock ahead of or
     affecting Common Stock, the authorization or issuance of additional shares
     of Common Stock, the dissolution or liquidation of the Company, any sale or
     transfer of all or part of its assets or business or any other corporate
     act or proceeding.

            (b)  In the event of any change in the capital structure or
     business of the Company by reason of any stock dividend or extraordinary
     dividend, stock split or reverse


                                       -7-

<PAGE>



     stock split, recapitalization, reorganization, merger, consolidation,
     split-up, combination or exchange of shares, non-cash distributions with
     respect to its outstanding Common Stock or capital stock other than Common
     Stock, reclassification of its capital stock, any sale or transfer of all
     or part of the Company's assets or business, or any similar change
     affecting the Company's capital structure or business and the Board
     determines in good faith that an adjustment is necessary or appropriate
     under the Plan to prevent substantial dilution or enlargement of the rights
     granted to, or available for, Participants under the Plan or as otherwise
     necessary to reflect the change, then the aggregate number and kind of
     shares which thereafter may be issued under the Plan, the number and kind
     of shares or other property (including cash) to be issued upon exercise of
     an outstanding Option or other Award granted under the Plan and the
     purchase or exercise price thereof shall be appropriately adjusted
     consistent with such change in such manner as the Board may deem equitable
     to prevent substantial dilution or enlargement of the rights granted to, or
     available for, Participants under the Plan or as otherwise necessary to
     reflect the change, and any such adjustment determined by the Board in good
     faith shall be binding and conclusive on the Company and all Participants
     and employees and their respective heirs, executors, administrators,
     successors and assigns.

            (c)  Fractional shares of Common Stock resulting from any
     adjustment in an Award pursuant to Section 4.2(a) or (b) shall be
     aggregated until, and eliminated at, the time of exercise. No fractional
     shares of Common Stock shall be issued under the Plan. The Board may, in
     its sole discretion, pay cash in lieu of any fractional shares of Common
     Stock in settlement of awards under the Plan. Notice of any adjustment
     shall be given by the Board to each Participant whose Award has been
     adjusted and such adjustment (whether or not such notice is given) shall be
     effective and binding for all purposes of the Plan.

            (d)  In the event of a merger or consolidation in which the
     Company is not the surviving entity or in the event of any transaction that
     results in the acquisition of all or substantially all of the Company's
     outstanding Common Stock by a single person or entity or by a group of
     persons and/or entities acting in concert, or in the event of the sale or
     transfer of all or substantially all of the Company's assets (all of the
     foregoing being referred to as "Acquisition Events"), then the Board may,
     in its sole discretion, terminate all outstanding Options and Stock
     Appreciation Rights of Independent Directors, Non- Employee Directors and
     Managers, effective as of the date of the Acquisition Event, by delivering
     notice of termination to each such Participant at least twenty (20) days
     prior to the date of consummation of the Acquisition Event; provided, that
     during the period from the date on which such notice of termination is
     delivered to the consummation of the Acquisition Event, each such
     Participant shall have the right to exercise in full all of his Options and
     Stock Appreciation Rights that are then outstanding (whether vested or not
     vested and without regard to any limitations on exercisability otherwise
     contained in the Option) but contingent on the occurrence of the
     Acquisition Event, and, provided that, if the Acquisition Event does not
     take place within a specified period after giving such notice for any
     reason whatsoever, the notice and exercise shall be null and void. If an
     Acquisition Event occurs, to the extent the Board does not terminate the
     outstanding


                                       -8-

<PAGE>



     Options and Stock Appreciation Rights pursuant to this Section 4.2(d), then
     the provisions of Section 4.2(b) shall apply.

     4.3.   Purchase Price. Notwithstanding any provision of the Plan to the
contrary, if authorized but previously unissued shares of Common Stock are
issued under the Plan, such shares shall not be issued for a consideration which
is less than as permitted under applicable law.


                                   ARTICLE V.

                                   ELIGIBILITY

     5.1.   Discretionary Awards. Independent Directors, Non-Employee
Directors and Managers of the Company are eligible to be granted Stock Options,
Restricted Stock and Stock Appreciation Rights under the Plan. Eligibility under
the Plan will be determined by the Board in its sole discretion.

     5.2.   Automatic Awards. Independent Directors and Non-Employee Directors
will automatically be granted Stock Options in accordance with Article IX of the
Plan.


                                   ARTICLE VI.

                                  STOCK OPTIONS

     6.1.   Options. Stock Options granted hereunder shall be non-qualified
stock options.

     6.2.   Grants. The Board shall have the authority to grant any
Independent Director, Non-Employee Director or Manager one or more Stock Options
under the Plan (with or without Stock Appreciation Rights).

     6.3.   Terms of Options. Options granted under the Plan shall be
subject to the following terms and conditions, and shall be in such form and
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Board shall deem desirable:

            (a)  Exercise Price. The exercise price per share of Common
     Stock subject to a Stock Option shall be determined by the Board at the
     time of grant, but shall not be less than 100% of the Fair Market Value of
     a share of Common Stock at the time of grant.

            (b)  Option Term. The term of each Stock Option shall be fixed
     by the Board, but no Stock Option shall be exercisable more than ten (10)
     years after the date the Option is granted.



                                       -9-

<PAGE>



            (c)  Exercisability. Stock Options shall be exercisable at such
     time or times and subject to such terms and conditions as shall be
     determined by the Board at grant. If the Board provides, in its discretion,
     that any Stock Option is exercisable subject to certain limitations
     (including, without limitation, that it is exercisable only in installments
     or within certain time periods), the Board may waive such limitations on
     the exercisability at any time at or after grant in whole or in part
     (including, without limitation, that the Board may waive the installment
     exercise provisions or accelerate the time at which Options may be
     exercised), based on such factors, if any, as the Board shall determine, in
     its sole discretion.

            (d)  Method of Exercise. Subject to whatever installment
     exercise and waiting period provisions apply under subsection (c) above,
     Stock Options may be exercised in whole or in part at any time during the
     Option term, by giving written notice of exercise to the Company specifying
     the number of shares to be purchased, accompanied by payment in full of the
     exercise price. Common Stock purchased pursuant to the exercise of a Stock
     Option shall be paid for at the time of exercise as follows: (i) in cash or
     by check, bank draft or money order payable to the order of Company; (ii)
     if the Common Stock is traded on a national securities exchange, the Nasdaq
     Stock Market, Inc., or quoted on a national quotation system sponsored by
     the National Association of Securities Dealers, through the delivery of
     irrevocable instructions to a broker to deliver promptly to the Company an
     amount equal to the purchase price; or (iii) on such other terms and
     conditions as may be acceptable to the Board (which may include payment in
     full or part in the form of Common Stock owned by the Participant for a
     period of at least six (6) months (and for which the Participant has good
     title free and clear of any liens and encumbrances) based on the Fair
     Market Value of the Common Stock on the payment date as determined by the
     Board or the surrender of vested Options owned by the Participant). No
     shares of Common Stock shall be issued until payment therefor, as provided
     herein, has been made or provided for.

            (e)  Form, Modification, Extension and Renewal of Options.
     Subject to the terms and conditions and within the limitations of the Plan,
     an Option shall be evidenced by such form of Stock Option agreement as is
     approved by the Board, and the Board may modify, extend or renew
     outstanding Options granted under the Plan, or accept the surrender of
     outstanding Options (up to the extent not theretofore exercised) and
     authorize the granting of new Options in substitution therefor (to the
     extent not theretofore exercised).

            (f)  Other Terms and Conditions. Options may contain such other
     provisions, which shall not be inconsistent with any of the foregoing terms
     of the Plan, as the Board shall deem appropriate.




                                      -10-

<PAGE>



                                  ARTICLE VII.

                            STOCK APPRECIATION RIGHTS

     7.1.   Stock Appreciation Rights. The Board may, in its sole
discretion, grant Stock Appreciation Rights to any Independent Director,
Non-Employee Director or Manager.

     7.2.   Tandem Stock Appreciation Rights. A Tandem Stock Appreciation
Right may be granted in conjunction with all or part of any Stock Option (a
"Reference Stock Option") granted under Article VI of the Plan either at or
after the time of the grant of such Reference Stock Option.

     7.3.   Terms and Conditions of Tandem Stock Appreciation Rights. Tandem
Stock Appreciation Rights shall be subject to such terms and conditions, not
inconsistent with the provisions of the Plan, as shall be determined from time
to time by the Board, including Article X and Article XI and the following:

            (a)  Term. A Tandem Stock Appreciation Right or applicable
     portion thereof granted with respect to a Reference Stock Option shall
     terminate and no longer be exercisable upon the termination or exercise of
     the Reference Stock Option, except that, unless otherwise determined by the
     Board, in its sole discretion, at the time of grant, a Tandem Stock
     Appreciation Right granted with respect to less than the full number of
     shares covered by the Reference Stock Option shall not be reduced until and
     then only to the extent the exercise or termination of the Reference Stock
     Option causes the number of shares covered by the Tandem Stock Appreciation
     Right to exceed the number of shares remaining available and unexercised
     under the Reference Stock Option.

            (b)  Exercisability. Tandem Stock Appreciation Rights shall be
     exercisable only at such time or times and to the extent that the Reference
     Stock Options to which they relate shall be exercisable in accordance with
     the provisions of Article VI and this Article VII.

            (c)  Method of Exercise. A Tandem Stock Appreciation Right may
     be exercised by an optionee by surrendering the applicable portion of the
     Reference Stock Option. Upon such exercise and surrender, the Participant
     shall be entitled to receive an amount determined in the manner prescribed
     in this Section 7.3 and the Reference Stock Option or part thereof to which
     such Stock Appreciation Right is related shall be deemed to have been
     exercised for the purpose of the limitation set forth in Article IV of the
     Plan on the number of shares of Common Stock to be issued under the Plan.
     The Stock Options which have been so surrendered, in whole or in part,
     shall no longer be exercisable to the extent the related Tandem Stock
     Appreciation Rights have been exercised.

            (d)  Payment. Upon the exercise of a Tandem Stock Appreciation
     Right a Participant shall be entitled to receive an amount in cash and/or
     Common Stock (as


                                      -11-

<PAGE>



     chosen by the Board in its sole discretion) equal in value to the excess of
     the Fair Market Value of one share of Common Stock over the exercise price
     per share specified in the Reference Stock Option multiplied by the number
     of shares in respect of which the Tandem Stock Appreciation Right shall
     have been exercised, with the Board having the right to determine the form
     of payment.

     7.4.   Non-Tandem Stock Appreciation Rights. Non-Tandem Stock
Appreciation Rights may also be granted without reference to any Stock Options
granted under Article VI of the Plan.

     7.5.   Terms and Conditions of Non-Tandem Stock Appreciation
Rights. Non-Tandem Stock Appreciation Rights shall be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as shall be
determined from time to time by the Board, including Article X and Article XI
and the following:

            (a)  Term. The term of each Non-Tandem Stock Appreciation Right
     shall be fixed by the Board, but shall not be greater than ten (10) years
     after the date the right is granted.

            (b)  Exercisability. Non-Tandem Stock Appreciation Rights shall
     be exercisable at such time or times and subject to such terms and
     conditions as shall be determined by the Board at grant. If the Board
     provides, in its discretion, that any such right is exercisable subject to
     certain limitations (including, without limitation, that it is exercisable
     only in installments or within certain time periods), the Board may waive
     such limitation on the exercisability at any time at or after grant in
     whole or in part (including, without limitation, that the Board may waive
     the installment exercise provisions or accelerate the time at which rights
     may be exercised), based on such factors, if any, as the Board shall
     determine, in its sole discretion.

            (c)  Method of Exercise. Subject to whatever installment
     exercise and waiting period provisions apply under subsection (b) above,
     Non-Tandem Stock Appreciation Rights may be exercised in whole or in part
     at any time during its term, by giving written notice of exercise to the
     Company specifying the number of Non-Tandem Stock Appreciation Rights to be
     exercised.

            (d)  Payment. Upon the exercise of a Non-Tandem Stock
     Appreciation Right a Participant shall be entitled to receive, for each
     right exercised, an amount in cash and/or Common Stock (as chosen by the
     Board in its sole discretion) equal in value to the excess of the Fair
     Market Value of one share of Common Stock on the date the right is
     exercised over the Fair Market Value of one share of Common Stock on the
     date the right was awarded to the Participant.




                                      -12-

<PAGE>



                                  ARTICLE VIII.

                                RESTRICTED STOCK

     8.1.   Awards of Restricted Stock. The Board shall have the authority
to grant shares of Restricted Stock to any Independent Director, Non-Employee
Director or Manager which may be issued either alone or in addition to other
Awards granted under the Plan. The Board shall, subject to the provisions of
Article V and Section 8.4 below, determine the eligible Independent Directors,
Non-Employee Directors and Managers to whom, and the time or times at which,
grants of Restricted Stock will be made, the number of shares to be awarded, the
price (if any) to be paid by the recipient (subject to Section 8.2), the time or
times within which such Awards may be subject to forfeiture, the vesting
schedule and rights to acceleration thereof, and all other terms and conditions
of the Awards. The Board may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors as the Board may
determine, in its sole discretion.

     8.2.   Awards and Certificates. The prospective Participant
selected to receive a Restricted Stock Award shall not have any rights with
respect to such Award, unless and until such Participant has delivered a fully
executed copy of the agreement evidencing the Award to the Company and has
otherwise complied with the applicable terms and conditions of such Award.
Further, such Award shall be subject to the following conditions:

            (a)  Purchase Price. The purchase price of Restricted Stock
     shall be fixed by the Board. Subject to Section 4.3, the purchase price for
     shares of Restricted Stock may be zero to the extent permitted by
     applicable law, and, to the extent not so permitted, such purchase price
     may not be less than par value.

            (b)  Acceptance. Awards of Restricted Stock must be accepted
     within a period of sixty (60) days (or such shorter period as the Board may
     specify at grant) after the Award date, by executing a Restricted Stock
     Award agreement and by paying whatever price (if any) the Board has
     designated thereunder.

            (c)  Legend. Each Participant receiving a Restricted Stock Award
     shall be issued a stock certificate in respect of such shares of Restricted
     Stock. Such certificate shall be registered in the name of such
     Participant, and shall bear an appropriate legend referring to the terms,
     conditions, and restrictions applicable to such Award, substantially in the
     following form:

          "The anticipation, alienation, attachment, sale, transfer, assignment,
     pledge, encumbrance or charge of the shares of stock represented hereby are
     subject to the terms and conditions (including forfeiture) of the Wilshire
     Real Estate Investment Trust Inc. 1998 Stock Option Plan and an Agreement
     entered into between the registered owner and the Company dated
     ___________________________. Copies of such Plan and Agreement are on file
     at the principal office of the Company."



                                      -13-

<PAGE>



            (d)  Custody. The Board shall require that the stock
     certificates evidencing such shares be held in custody by the Company until
     the restrictions thereon shall have lapsed, and that, as a condition of any
     Restricted Stock Award, the Participant shall have delivered a duly signed
     stock power, endorsed in blank, relating to the Common Stock covered by
     such Award.

     8.3.   Restrictions and Conditions on Restricted Stock Awards. The
shares of Restricted Stock awarded pursuant to the Plan shall be subject to
Article XII and the following restrictions and conditions:

            (a)  Restriction Period; Vesting and Acceleration of Vesting.
     The Participant shall not be permitted to Transfer shares of Restricted
     Stock awarded under the Plan during a period set by the Board commencing
     with the date of such Award (the "Restriction Period"), as set forth in the
     Award agreement and such Award agreement shall set forth a vesting schedule
     and any events which would accelerate vesting of the shares of Restricted
     Stock. Within these limits, based on service, performance and/or such other
     factors or criteria as the Board may determine in its sole discretion, the
     Board may provide for the lapse of such restrictions in installments in
     whole or in part, or may accelerate the vesting of all or any part of any
     Restricted Stock Award and/or waive the deferral limitations for all or any
     part of such Award.

            (b)  Rights as Stockholder. Except as provided in this
     subsection (b) and subsection (a) above, the Participant shall have, with
     respect to the shares of Restricted Stock, all of the rights of a holder of
     shares of Common Stock of the Company including, without limitation, the
     right to receive any dividends and the right to vote or tender such shares.
     The Board, in its sole discretion, as determined at the time of Award, may
     permit or require the payment of dividends to be deferred.

            (c)  Lapse of Restrictions. If and when the Restriction Period
     expires without a prior forfeiture of the Restricted Stock subject to such
     Restriction Period, the certificates for such shares shall be delivered to
     the Participant. All legends shall be removed from said certificates at the
     time of delivery to the Participant.

     8.4.   Termination of Directorship or Termination as a Manager. Subject
to the applicable provisions of the Award agreement and the Plan, upon a
Participant's Termination of Directorship or Termination as a Manger, as
applicable, for any reason during the relevant Restriction Period, all
Restricted Stock still subject to restriction will vest or be forfeited in
accordance with the terms and conditions established by the Board at grant or
thereafter.




                                      -14-

<PAGE>



                                   ARTICLE IX.

          INDEPENDENT DIRECTOR AND NON-EMPLOYEE DIRECTOR STOCK OPTIONS

     9.1.   Options. This Article IX shall apply only to Stock Options
granted to Independent Directors and Non-Employee Directors pursuant to this
Article IX.

     9.2.   Non-Qualified Stock Options. Stock Options granted hereunder shall
be non- qualified stock options.

     9.3.   Awards. Without further action by the Board or the stockholders of
the Company, each Independent Director or Non-Employee Director shall, subject
to the terms of the Plan, be granted:

            (a)  Stock Options to purchase 1,500 shares of Common Stock on
     the last trading date of each calendar quarter of the Company.

            (b)  Stock Options to purchase 5,000 shares of Common Stock on:
     (i) the date on which the offering price in connection with the initial
     public offering of the Common Stock is established (the "IPO Price"); or
     (ii) if later, the date on which the Independent Director or Non-Employee
     Director commences service as an Independent Director or Non- Employee
     Director.

     9.4.   Terms of Options. Options granted under this Article shall be
subject to the following terms and conditions and shall be in such form and
contain such additional terms and conditions, not inconsistent with terms of the
Plan, as the Board shall deem desirable:

            (a)  Exercise Price. The exercise price per share of Common
     Stock subject to an Option granted pursuant to Section 9.3(a) shall be
     equal to one hundred ten percent (110%) of the Fair Market Value of the
     Common Stock at the time of grant. The exercise price per share of Common
     Stock subject to an Option granted pursuant to Section 9.3(b)(i) shall be
     equal to the IPO Price. The exercise price per share of Common Stock
     subject to an Option granted pursuant to Section 9.3(b)(ii) shall be equal
     to the Fair Market Value at the time of grant.

            (b)  Exercisability. Except as otherwise provided herein,
     one-third (1/3) of the Stock Options granted pursuant to Section 9.3(a)
     shall vest and become exercisable on each anniversary of the date of grant,
     provided that the Participant has not incurred a Termination of
     Directorship prior to the applicable dates. Stock Options granted pursuant
     to Section 9.3(b) shall be fully vested and exercisable at the time of
     grant. Notwithstanding the foregoing, Options granted pursuant to this
     Article IX shall fully vest and become exercisable upon the occurrence of a
     Change in Control.

            (c)  Method of Exercise. Subject to whatever installment
     exercise and waiting period provisions apply under Article IX, Stock
     Options may be exercised in whole or in


                                      -15-

<PAGE>



     part at any time during the Option term, by giving written notice of
     exercise to the Company specifying the number of shares to be purchased,
     accompanied by payment in full of the exercise price. Common Stock
     purchased pursuant to the exercise of a Stock Option shall be paid for at
     the time of exercise in cash or by check, bank draft or money order payable
     to the order of Company or by delivery of Common Stock owned by the
     Participant for a period of at least six (6) months (and for which the
     Participant has good title free and clear of any liens and encumbrances) or
     by such other method approved by the Board. No shares of Common Stock shall
     be issued until payment therefor, as provided herein, has been made or
     provided for.

            (d)  Term. Except as otherwise provided herein, if not
     previously exercised each Option shall expire upon the tenth anniversary of
     the date of the grant thereof.

            (e)  Termination of Directorship. The following rules apply with
     regard to Stock Options granted under this Article IX upon the Termination
     of Directorship of a Participant:

                 (i)   Termination by Reason of Death or Disability. If a
            Participant's Termination of Directorship is by reason or death or
            Disability, any Stock Option held by such Participant may be
            exercised, to the extent exercisable at the Participant's
            Termination of Directorship, by the Participant or the legal
            representative of the estate at any time within a period of two (2)
            years from the date of such Termination of Directorship, but in no
            event beyond the expiration of the stated term of such Stock Option.

                 (ii)  Otherwise Ceasing to be an Independent Director or
            Non- Employee Director other than for Cause. Upon the Termination of
            Directorship, on account of resignation, failure to stand for
            reelection or failure to be reelected or otherwise other than as set
            forth in (i) above or (iii) below, all outstanding Stock Options
            then exercisable and not exercised by the Participant prior to
            such Termination of Directorship shall remain exercisable, to the
            extent exercisable at the Termination of Directorship, at any time
            within a period of one (1) year from the date of such Termination of
            Directorship, at any time within a period of one (1) year from the
            date of such Termination of Directorship, but in no event beyond the
            expiration of the stated term of such Stock Option.

                 (iii) Cause. Upon removal, failure to stand for reelection
            or failure to be renominated for Cause, or if the Company obtains or
            discovers information after Termination of Directorship that such
            Participant had engaged in conduct that would have justified a
            removal for Cause during such directorship, all outstanding Stock
            Options of such Participant shall immediately terminate and shall be
            null and void.

                 (iv)  Cancellation of Stock Options. No Stock Options that
            were not exercisable during the period such person serves as an
            Independent Director or


                                      -16-

<PAGE>



            Non-Employee Director shall thereafter become exercisable upon a
            Termination of Directorship for any reason or no reason whatsoever,
            and such Stock Options shall terminate and become null and void upon
            a Termination of Directorship.


                                   ARTICLE X.

                               NON-TRANSFERABILITY

     10.1.  Non-Transferability. Except as provided in the last sentence of
this Section 10.1, no Award shall be Transferred by the Participant otherwise
than by will or by the laws of descent and distribution. All Stock Options and
Stock Appreciation Rights shall be exercisable, during the Participant's
lifetime, only by the Participant. Shares of Restricted Stock under Article VIII
may not be Transferred prior to the date on which such shares are issued, or, if
later, the date on which any applicable restriction, performance or deferral
period lapses. No Award shall, except as otherwise specifically provided by law
or herein, be Transferred in any manner, and any attempt to Transfer any such
Award shall be void, and no such Award shall in any manner be used for the
payment of, subject to, or otherwise encumbered by or hypothecated for the
debts, contracts, liabilities, engagements or torts of any person who shall be
entitled to such Award, nor shall it be subject to attachment or legal process
for or against such person. Notwithstanding the foregoing, the Board may
determine at the time of grant or thereafter, that a Stock Option (other than a
Stock Option granted pursuant to Article IX) that is otherwise not transferable
pursuant to this Article X is transferable in whole or part and in such
circumstances, and under such conditions, as specified by the Board.


                                   ARTICLE XI.

                             TERMINATION PROVISIONS

     11.1.  Termination of Directorship. The following rules apply with
regard to Stock Options granted under Article VI and Article IX and Stock
Appreciation Rights granted under Article VII upon the Termination of
Directorship of a Participant:

            (a)  Termination by Reason of Death or Disability. If a
     Participant's Termination of Directorship is by reason of death or
     Disability, any Stock Option or Stock Appreciation Right held by such
     Participant, unless otherwise determined by the Board at grant, or if no
     rights of the Participant or his estate are reduced, thereafter, may be
     exercised, to the extent exercisable at the Participant's Termination of
     Directorship, by the Participant or the legal representative of the estate
     at any time within a period of two (2) years from the date of such
     Termination of Directorship, but in no event beyond the expiration of the
     stated term of such Stock Option or Stock Appreciation Right.

            (b)  Otherwise Ceasing to be an Independent Director or
     Non-Employee Director other than for Cause. Upon the Termination of
     Directorship, on account of


                                      -17-

<PAGE>



     resignation, failure to stand for reelection or failure to be reelected or
     otherwise other than as set forth in (a) above or (c) below, all
     outstanding Stock Options and Stock Appreciation Rights then exercisable
     and not exercised by the Participant prior to such Termination of
     Directorship, unless otherwise determined by the Board at grant, or if no
     rights of the Participant or his estate are reduced, thereafter, shall
     remain exercisable, to the extent exercisable at the Termination of
     Directorship, at any time within a period of one (1) year from the date of
     such Termination of Directorship, but in no event beyond the expiration of
     the stated term of such Stock Option or Stock Appreciation Right.

            (c)  Cause. Upon removal, failure to stand for reelection or
     failure to be renominated for Cause, or if the Company obtains or discovers
     information after Termination of Directorship that such Participant had
     engaged in conduct that would have justified a removal for Cause during
     such directorship, all outstanding Stock Options and Stock Appreciation
     Rights of such Participant, unless otherwise determined by the Board at
     grant, or if no rights of the Participant are reduced, thereafter, shall
     immediately terminate and shall be null and void.

            (d)  Cancellation of Stock Options. No Stock Options or Stock
     Appreciation Rights that were not exercisable during the period such person
     serves as an Independent Director or Non-Employee Director, unless
     otherwise determined by the Board at grant, or if no rights of the
     Participant are reduced, thereafter, shall become exercisable upon a
     Termination of Directorship for any reason or no reason whatsoever, and
     such Stock Options and Stock Appreciation Rights shall terminate and become
     null and void upon a Termination of Directorship.

     11.2.  Termination as a Manager. Subject to the applicable provisions
of the Award agreement and the Plan, upon a Participant's Termination as a
Manager, for any reason, all Stock Options and Stock Appreciation Rights will
vest or be forfeited in accordance with the terms and conditions established by
the Board at grant or thereafter.


                                  ARTICLE XII.

                                CHANGE IN CONTROL

     12.1.  Benefits. In the event of a Change in Control of the Company (as
defined below), except as otherwise provided by the Board upon the grant of an
Award (other than an Award granted pursuant to Article IX hereof), or, if no
rights of the Participant are reduced, thereafter, the Participant shall be
entitled to the following benefits:

            (a)  Subject to paragraph (c) below with regard to Options
     granted pursuant to Article VI, all outstanding Stock Options and Stock
     Appreciation Rights granted prior to the Change in Control shall be fully
     vested and immediately exercisable in their entirety. The Board, in its
     sole discretion, may provide for the purchase of any such Stock Options and
     Stock Appreciation Rights by the Company for an amount of cash equal to the
     excess


                                      -18-

<PAGE>



     of the Change in Control Price (as defined below) of the shares of Common
     Stock covered by such Stock Options and Stock Appreciation Rights, over the
     aggregate exercise price of such Stock Options and Stock Appreciation
     Rights. For purposes of this Section 12.1, Change in Control Price shall
     mean the higher of (i) the highest price per share of Common Stock paid in
     any transaction related to a Change in Control of the Company, or (ii) the
     highest Fair Market Value per share of Common Stock at any time during the
     sixty (60) day period preceding a Change in Control.

            (b)  The restrictions to which any shares of Restricted Stock of
     such Participant granted prior to the Change in Control are subject shall
     lapse as if the applicable Restriction Period had ended upon such Change in
     Control.

     12.2.  Change in Control. For purposes of the Plan, a "Change in
Control" shall be deemed to have occurred:

            (a)  upon any person (as defined in Section 3(a)(9) of the
     Exchange Act and as used in Sections 13(d) and 14(d) thereof) excluding the
     Company or any employee benefit plan sponsored or maintained by the Company
     (including any trustee of any such plan acting in his capacity as trustee),
     becoming the beneficial owner (as defined in Rule 13(d)-3 under the
     Exchange Act), directly or indirectly, of securities of the Company having
     at least twenty-five percent (25%) of the total number of votes that may be
     cast for the election of directors of the Company;

            (b)  during any period of two (2) consecutive years, individuals
     who at the beginning of such period constitute the Board, and any new
     director (other than a director designated by a person who has entered into
     an agreement with the Company to effect a transaction described in
     paragraph (a), (c), or (d) of this section) or a director whose initial
     assumption of office occurs as a result of either an actual or threatened
     election contest (as such terms are used in Rule 14a-11 of Regulation 14A
     promulgated under the Exchange Act) or other actual or threatened
     solicitation of proxies or consents by or on behalf of a person other than
     the Board whose election by the Board or nomination for election by the
     Company's stockholders was approved by a vote of at least two-thirds (2/3)
     of the directors then still in office who either were directors at the
     beginning of the two (2) year period or whose election or nomination for
     election was previously so approved, cease for any reason to constitute at
     least a majority of the Board;

            (c)  upon the merger or consolidation of the Company with any
     other corporation, other than a merger or consolidation which would result
     in the voting securities of the Company outstanding immediately prior
     thereto continuing to represent (either by remaining outstanding or by
     being converted into voting securities of the surviving entity) more than
     fifty percent (50%) of the combined voting power of the voting securities
     of the Company or such surviving entity outstanding immediately after such
     merger or consolidation, provided, however, that a merger or consolidation
     effected to implement a recapitalization of the Company (or similar
     transaction) in which no person acquires more than fifty percent (50%) of
     the combined voting power of the


                                      -19-

<PAGE>



     Company's then outstanding securities shall not constitute a Change in
     Control of the Company; or

            (d)  upon the stockholder's of the Company approval of a plan of
     complete liquidation of the Company or an agreement for the sale or
     disposition by the Company of all or substantially all of the Company's
     assets other than the sale of all or substantially all of the assets of the
     Company to a person or persons who beneficially own, directly or
     indirectly, at least fifty percent (50%) or more of the combined voting
     power of the outstanding voting securities of the Company at the time of
     the sale.

Notwithstanding anything herein to the contrary, the initial public offering of
the Common Stock will not constitute a Change in Control.


                                  ARTICLE XIII.

                        TERMINATION OR AMENDMENT OF PLAN

     13.1.  Termination or Amendment. Notwithstanding any other provision of the
Plan, the Board may at any time, and from time to time, amend, in whole or in
part, any or all of the provisions of the Plan (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirement
referred to in this Article XIII), or suspend or terminate it entirely,
retroactively or otherwise; provided, however, that, unless otherwise required
by law or specifically provided herein, the rights of a Participant with respect
to Awards granted prior to such amendment, suspension or termination, may not be
impaired without the consent of such Participant and, provided further, that the
Plan may not be amended without the approval of the stockholders of the Company
in accordance with the laws of the State of Maryland and the applicable
provisions of Rule 16b-3, to: (i) increase the aggregate number of shares of
Common Stock that may be issued under the Plan (subject to Section 4.2); (ii)
decrease the minimum Option price of any Award; (iii) change the class of
persons eligible to receive Awards under the Plan; (iv) modify the period within
which Awards may be granted; (v) modify the period within which Awards may be
exercised; (vi) modify the terms upon which Awards may be exercised; (vii)
increase the material benefits accruing to the Participants under the Plan; or
(viii) make any other amendment that would require stockholder approval under
the rules of any exchange or system on which the Company's securities are then
listed or traded.

     Except with regard to Awards under Article IX, the Board may amend the
terms of any Awards theretofore granted, prospectively or retroactively, but,
subject to Article IV above or as otherwise specifically provided herein, no
such amendment or other action by the Board shall impair the rights of any
Option holder without the Option holder's consent.




                                      -20-

<PAGE>



                                  ARTICLE XIV.

                                  UNFUNDED PLAN

     14.1.  Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments as to which a Participant has a fixed and vested interest but which are
not yet made to a Participant by the Company, nothing contained herein shall
give any such Participant any rights that are greater than those of a general
creditor of the Company.


                                   ARTICLE XV.

                               GENERAL PROVISIONS

     15.1.  Legend. The Board may require each person receiving shares of
Common Stock pursuant to the exercise of an Award under the Plan to represent to
and agree with the Company in writing that the Participant is acquiring the
shares of Common Stock without a view to distribution thereof. In addition to
any legend required by the Plan, the certificates for such shares of Common
Stock may include any legend which the Board deems appropriate to reflect any
restrictions on Transfer.

     All certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the Board may
deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock is then listed or any national securities association system upon whose
system the Common Stock is then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Board may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

     15.2.  Other Plans. Nothing contained in the Plan shall prevent the
Board from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.

     15.3.  No Right to Serve as an Independent Director, Non-Employee
Director or Manager. Neither the Plan nor the grant or exercise of any Awards
hereunder shall impose any obligations on the Company to retain any Participant
as an Independent Director, Non-Employee Director or as a Manager nor shall it
impose on the part of any Participant any obligation to continue to serve as an
Independent Director, Non-Employee Director or as a Manager of the Company.

     15.4.  Withholding of Taxes. The Company shall have the right to deduct
from any payment to be made to a Participant, or to otherwise require, prior to
the issuance or delivery of


                                      -21-

<PAGE>



any shares of Common Stock or the payment of any cash hereunder, payment by the
Participant of, any Federal, state or local taxes required by law to be
withheld.

     The Board may permit any such withholding obligation with regard to any
Participant to be satisfied by reducing the number of shares of Common Stock
otherwise deliverable or by delivering shares of Common Stock already owned. Any
fraction of a share of Common Stock required to satisfy such tax obligations
shall be disregarded and the amount due shall be paid instead in cash by the
Participant.

     15.5.  Listing and Other Conditions.

            (a)  Unless otherwise determined by the Board, as long as the
     Common Stock is listed on a national securities exchange or system
     sponsored by a national securities association, the issue of any shares of
     Common Stock pursuant to the exercise of an Award shall be conditioned upon
     such shares being listed on such exchange or system. Notwithstanding the
     foregoing, the grant of an Award hereunder is not intended to be
     conditional and the Company shall have no obligation to issue such shares
     unless and until such shares are so listed; provided, however, that any
     delay in the issuance of such shares shall be based solely on a reasonable
     business decision and the right to exercise any Award with respect to such
     shares shall be suspended until such listing has been effected.

            (b)  If at any time counsel to the Company shall be of the
     opinion that any sale or delivery of shares of Common Stock pursuant to the
     exercise of an Award is or may in the circumstances be unlawful or result
     in the imposition of excise taxes on the Company under the statutes, rules
     or regulations of any applicable jurisdiction, the Company shall have no
     obligation to make such sale or delivery, or to make any application or to
     effect or to maintain any qualification or registration under the
     Securities Act of 1933, as amended, or otherwise with respect to shares of
     Common Stock or Awards, and the right to exercise any Option shall be
     suspended until, in the opinion of said counsel, such sale or delivery
     shall be lawful or will not result in the imposition of excise taxes on the
     Company.

            (c)  Upon termination of any period of suspension under this
     Section 15.5, any Award affected by such suspension which shall not then
     have expired or terminated shall be reinstated as to all shares available
     before such suspension and as to shares which would otherwise have become
     available during the period of such suspension, but no such suspension
     shall extend the term of any Awards.

            (d)  A Participant shall be required to supply the
         Company with any certificates, representations and information that the
         Company requests and otherwise cooperate with the Company in obtaining
         any listing, registration, qualification, exemption, consent or
         approval the Company deems necessary or appropriate.



                                      -22-

<PAGE>



            (e)  If any sale or delivery of shares of Common Stock pursuant
     to an Award is or may cause the Company to not qualify as a real estate
     investment trust within the meaning of Sections 856 through 860 of the
     Code, the Company shall have no obligation to make such sale or delivery
     until such sale or delivery will no longer cause such disqualification.

     15.6.  Governing Law. The Plan shall be governed and construed in
accordance with the laws of the State of Maryland (regardless of the law that
might otherwise govern under applicable Maryland principles of conflict of
laws).

     15.7.  Construction. Wherever any words are used in the Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.

     To the extent applicable, the Plan shall be limited, construed and
interpreted in a manner so as to comply with the applicable requirements of Rule
16b-3; however, noncompliance with Rule 16b-3 shall have no impact on the
effectiveness of an Award under the Plan.

     15.8.  Other Benefits. No Award granted or exercised under the Plan
shall be deemed compensation for purposes of computing benefits under any
retirement plan of the Company nor affect any benefits under any other benefit
plan now or subsequently in effect under which the availability or amount of
benefits is related to the level of compensation.

     15.9.  Costs. The Company shall bear all expenses included in
administering the Plan, including expenses of issuing Common Stock pursuant to
the exercise of any Awards hereunder.

     15.10. No Right to Same Benefits. The provisions and terms of Awards need
not be the same with respect to each Participant, and the Awards granted to
individual Participants need not be the same in subsequent years.

     15.11. Death/Disability. The Board may in its discretion require the
transferee of a Participant's Awards to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Board deems
necessary to establish the validity of the Transfer of an Award. The Board may
also require the agreement of the transferee to be bound by all of the terms and
conditions of the Plan.

     15.12. Severability of Provisions. If any provision of the Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and the Plan shall be construed and enforced
as if such provisions had not been included.



                                      -23-

<PAGE>


     15.13. Headings and Captions. The headings and captions herein are provided
for reference and convenience only, shall not be considered part of the Plan,
and shall not be employed in the construction of the Plan.


                                  ARTICLE XVI.

                             EFFECTIVE DATE OF PLAN

     The Plan has been adopted by the Board effective as of ____________,
subject to and conditioned upon the approval of the Plan by the stockholders of
the Company in accordance with the laws of the State of Maryland and the
requirements of any applicable national securities exchange or automated
quotation system.


                                  ARTICLE XVII.

                                  TERM OF PLAN

     No Award shall be granted pursuant to the Plan on or after the tenth
anniversary of the earlier of the Effective Date or the date of stockholder
approval, but such Awards granted prior to such date may extend beyond that
date.


                                 ARTICLE XVIII.

                                  NAME OF PLAN

     The Plan shall be known as the "Wilshire Real Estate Investment Trust Inc.
1998 Stock Option Plan."



                                      -24-

<PAGE>