AMENDMENT NO. 1
TO
MANAGEMENT AGREEMENT
THIS AMENDMENT NO. 1 dated as of October 13, 2008 (the "AMENDMENT") to
the MANAGEMENT AGREEMENT dated as of November 21, 2007 (the "AGREEMENT") is made
and entered into by and between CHIMERA INVESTMENT CORPORATION, a Maryland
corporation (the "COMPANY"), and FIXED INCOME DISCOUNT ADVISORY COMPANY, a
Delaware corporation (together with its permitted assignees, the "MANAGER").
WHEREAS, the Company and the Manager desire to amend the Agreement to
amend the compensation to be paid by the Company to the Manager under the
Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. AMENDMENT.
(a) The Agreement is hereby amended by striking Section 1(d)
in its entirety and replacing in lieu thereof the following:
"(d) "BASE MANAGEMENT FEE" means a base management
fee equal to 1.50% per annum, calculated and paid (in cash) quarterly
in arrears, of the Stockholders' Equity. The Base Management Fee will
be reduced, but not below zero, by the Company's proportionate share of
any CDO base management fees the Manager receives in connection with
the CDOs in which the Company invests, based on the percentage of
equity the Company holds in such CDOs."
(b) The Agreement is hereby amended by adding after Section
8(e) the following:
"(f) The Board of Directors may, by written notice to
the Manager delivered ten (10) days prior to the date on which any
payment of the Incentive Compensation is payable, elect in its sole
discretion that the Company pay all or a portion of such payment in the
form of common stock of the Company; provided, however, that the
Manager may not receive payment of any portion of the Incentive
Compensation in the form of shares of common stock of the Company if
such payment would result in the Manager directly or indirectly through
one or more subsidiaries owning in the aggregate more than 9.8% of the
outstanding shares of common stock of the Company unless granted a
waiver by the Board of Directors. Notwithstanding the foregoing, the
Board of Directors may not elect to use shares of common stock of the
Company as payment of the Incentive Compensation, except in accordance
with all applicable securities exchange rules and securities laws
(including prohibitions on xxxxxxx xxxxxxx).
(g) The shares of common stock payable as Incentive
Compensation shall be valued as follows: (i) if such shares are traded
on a securities exchange or automated quotation system, the value shall
be deemed to be the average of the closing prices of the shares on such
exchange or automated quotation system over the thirty (30) day period
ending on the last business day of the fiscal quarter for which the
Manager is receiving the Incentive Compensation; (ii) if such shares
are actively traded over-the-counter, the value shall be deemed to be
the average of the closing prices of the shares over the thirty (30)
day period ending on the last business day of the fiscal quarter for
which the Manager is receiving the Incentive Compensation; and (iii) if
there is no active public market for such shares, the value shall be
the fair market value thereof, as reasonably determined in good faith
by the Board of Directors.
(h) If at any time the Manager shall, in connection
with a determination of fair market value made by the Board of
Directors, (i) dispute such determination in good faith by more than
five percent (5%), and (ii) such dispute cannot be resolved between the
Independent Directors and the Manager within ten (10) business days
after the Manager provides written notice to the Company of such
dispute (the "Valuation Notice"), then the matter shall be resolved by
an independent appraiser of recognized standing selected jointly by the
Independent Directors and the Manager within not more than twenty (20)
days after the Valuation Notice. In the event the Independent Directors
and the Manager cannot agree with respect to such selection within the
aforesaid twenty (20) day time-frame, the Independent Directors shall
select one such independent appraiser and the Manager shall select one
independent appraiser within five (5) business days after the
expiration of the twenty (20) day period, with one additional such
appraiser (the "Last Appraiser") to be selected by the appraisers so
designated within five (5) business days after their selection. Any
valuation decision made by the appraisers shall be deemed final and
binding upon the Board of Directors and the Manager and shall be
delivered to the Manager and the Company within not more than fifteen
(15) days after the selection of the Last Appraiser. The expenses of
the appraisal shall be paid by the party with the estimate which
deviated the furthest from the final valuation decision made by the
appraisers.
(i) Shares of common stock delivered as payment of
the Incentive Compensation will be immediately vested. The Manager
agrees that it shall not sell such shares of common stock for a period
of one year from the date it receives the shares; provided, however,
the Manager may, in its sole discretion, distribute the shares of
common stock received by the Manager as Incentive Compensation to
Annaly at any time subject to Annaly's agreement that it shall not sell
such shares of common stock until the one year anniversary of the date
that the Manager originally received such shares, and the Company
agrees to permit the transfer of such shares of common stock in
accordance with the Manager's instructions subject to any transfer
restrictions in the Company's organizational documents and in
accordance with applicable securities laws."
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SECTION 2. STATUS.
This Amendment amends the Agreement, but only to the extent expressly
set forth herein. All other provisions of the Agreement remain in full force and
effect. Unless otherwise defined herein, initially capitalized terms have the
meaning given them in the Agreement.
SECTION 3. REPRESENTATIONS.
In order to induce both the Company and the Manager to execute and
deliver this Amendment, both parties represent that as of the date hereof, each
are in full compliance with all of the terms and conditions of the Agreement,
including, but not limited to, the warranties and representations set forth in
the Agreement.
SECTION 4. GOVERNING LAW.
This Amendment shall be governed by and construed in accordance with
the applicable terms and provisions of Section 21 the Agreement, which terms and
provisions are incorporated herein by reference.
SECTION 5. COUNTERPARTS.
This Amendment may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which shall be considered
one and the same instrument.
SECTION 6. FACSIMILE EXECUTION.
Facsimile signatures on counterparts of this Amendment are hereby
authorized and shall be acknowledged as if such facsimile signatures were an
original execution, and this Amendment shall be deemed as executed when an
executed facsimile hereof is transmitted by a party to any other party.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
CHIMERA INVESTMENT CORPORATION
By: /s/ A. Xxxxxxxxx Xxxxxxx
--------------------------------------
Name: A. Xxxxxxxxx Xxxxxxx
Title: Chief Financial Officer
FIXED INCOME DISCOUNT ADVISORY COMPANY
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Financial Officer and Treasurer
