MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made as of November 21, 2007 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 is a newly organized corporation that intends to
elect to be taxed as a REIT for federal income tax purposes; and
WHEREAS, the Company desires to retain the Manager to provide
investment advisory services to the Company on the terms and conditions
hereinafter set forth, and the Manager wishes to be retained to provide such
services.
NOW THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. The following terms have the following meanings
assigned to them:
(a) "AGREEMENT" means this Management Agreement, as amended
from time to time.
(b) "ANNALY" means Annaly Capital Management, Inc.
(c) "BANKRUPTCY" means, with respect to any Person, (a) the
filing by such Person of a voluntary petition seeking liquidation,
reorganization, arrangement or readjustment, in any form, of its debts
under Title 11 of the United States Code or any other federal, state or
foreign insolvency law, or such Person's filing an answer consenting to
or acquiescing in any such petition, (b) the making by such Person of
any assignment for the benefit of its creditors, (c) the expiration of
sixty (60) days after the filing of an involuntary petition under Title
11 of the Unites States Code, an application for the appointment of a
receiver for a material portion of the assets of such Person, or an
involuntary petition seeking liquidation, reorganization, arrangement
or readjustment of its debts under any other federal, state or foreign
insolvency law, provided that the same shall not have been vacated, set
aside or stayed within such 60-day period or (d) the entry against it
of a final and non-appealable order for relief under any bankruptcy,
insolvency or similar law now or hereinafter in effect.
(d) "BASE MANAGEMENT FEE" means a base management fee equal to
1.75% 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.
(e) "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
(f) "CDO" means a collateralized debt obligation.
(g) "CHANGE OF CONTROL" means the occurrence of any of the
following:
(i) the sale, lease or transfer, in one or a series
of related transactions, of all or substantially all of the
assets of the Manager, taken as a whole, or Annaly, taken as a
whole, to any Person other than Annaly (in the case of the
Manager) or any of its respective affiliates; or
(ii) the acquisition by any Person or group (within
the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act, or any successor provision), including any group
acting for the purpose of acquiring, holding or disposing of
securities (within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), other than Annaly or any of its respective
affiliates, in a single transaction or in a related series of
transactions, by way of merger, consolidation or other
business combination or purchase of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act, or
any successor provision) of 50% or more of the total voting
power of the voting capital interests of the Manager or
Annaly.
(h) "CODE" means the Internal Revenue Code of 1986, as
amended.
(i) "CORE EARNINGS" means:
(A) GAAP net income (loss) excluding non-cash equity
compensation expense;
(B) excluding any unrealized gains, losses or other
items that do not affect realized net income (regardless of
whether such items are included in other comprehensive income
or loss, or in net income); and
(C) adjusted to exclude one-time events pursuant to
changes in GAAP and certain non-cash charges after discussions
between the Manager and the Independent Directors and approved
by a majority of the Independent Directors.
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(k) "GAAP" means generally accepted accounting principles, as
applied in the United States.
(l) "GOVERNING INSTRUMENTS" means, with regard to any entity,
the articles of incorporation and bylaws in the case of a corporation,
certificate of limited partnership (if applicable) and the partnership
agreement in the case of a general or limited partnership, the articles
of formation and the operating agreement in the case of a limited
liability company, the trust instrument in the case of a trust, or
similar governing documents, in each case as amended from time to time.
(m) "INCENTIVE COMPENSATION" means an incentive management fee
calculated and paid (in cash) each quarter in arrears equal to 20% of
the dollar amount by which Core
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Earnings, on a rolling four-quarter basis and before the Incentive
Compensation, exceeds the product of (1) the weighted average of the
issue price per share of all of our public offerings multiplied by the
weighted average number of shares of common stock outstanding in such
quarter and (2) 0.50% plus one-fourth of the average of the one month
LIBOR rate for such quarter and the previous three quarters. For the
initial four quarters after the date of this Agreement, Core Earnings
and the LIBOR rate will each be calculated on the basis of each of the
previously completed fiscal quarters calculated on an annualized basis,
with Core Earnings and the LIBOR rate for the initial fiscal quarter
calculated from the date of this Agreement on an annualized basis. The
Incentive Compensation will be reduced, but not below zero, by the
Company's proportionate share of any CDO incentive 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.
(n) "INDEPENDENT DIRECTORS" means the members of the Board of
Directors who are not officers or employees of the Manager or any
Person directly or indirectly controlling or controlled by the Manager,
and who are otherwise "independent" in accordance with the Company's
Governing Instruments and, if applicable, the rules of any national
securities exchange on which the Common Stock is listed.
(o) "INVESTMENT COMPANY ACT" means the Investment Company Act
of 1940, as amended.
(p) "INVESTMENTS" means the investments of the Company.
(q) "LIBOR" means London Interbank Offered Rate.
(r) "NYSE" means the New York Stock Exchange, Inc.
(s) "PERSON" means any individual, corporation, partnership,
joint venture, limited liability company, estate, trust, unincorporated
association, any federal, state, county or municipal government or any
bureau, department or agency thereof and any fiduciary acting in such
capacity on behalf of any of the foregoing.
(t) "REIT" means a "real estate investment trust" as defined
under the Code.
(u) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(v) "STOCKHOLDERS' EQUITY" means:
(A) the sum of the net proceeds from any issuances of
the Company's equity securities since inception (allocated on
a pro rata daily basis for such issuances during the fiscal
quarter of any such issuance), plus
(B) the Company's retained earnings at the end of
such quarter (without taking into account any non-cash equity
compensation expense incurred in current or prior periods),
less
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(C) any amount that the Company pays for repurchases
of its common stock, and less any unrealized gains, losses or
other items that do not affect realized net income (regardless
of whether such items are included in other comprehensive
income or loss, or in net income), as adjusted to exclude
(D) one-time events pursuant to changes in GAAP and
certain non-cash charges after discussions between the Manager
and the Company's Independent Directors and approved by a
majority of the Company's Independent Directors.
(w) "SUBSIDIARY" means any subsidiary of the Company; any
partnership, the general partner of which is the Company or any
subsidiary of the Company; and any limited liability company, the
managing member of which is the Company or any subsidiary of the
Company.
(x) "TREASURY REGULATIONS" means the regulations promulgated
under the Code from time to time, as amended.
SECTION 2. APPOINTMENT AND DUTIES OF THE MANAGER.
(a) The Company hereby appoints the Manager to manage the
assets of the Company subject to the further terms and conditions set
forth in this Agreement and the Manager hereby agrees to use its
commercially reasonable efforts to perform each of the duties set forth
herein. The appointment of the Manager shall be exclusive to the
Manager except to the extent that the Manager otherwise agrees, in its
sole and absolute discretion, and except to the extent that the Manager
elects, pursuant to the terms of this Agreement, to cause the duties of
the Manager hereunder to be provided by third parties.
(b) The Manager, in its capacity as manager of the assets and
the day-to-day operations of the Company, at all times will be subject
to the supervision of the Company's Board of Directors and will have
only such functions and authority as the Company may delegate to it
including, without limitation, the functions and authority identified
herein and delegated to the Manager hereby. The Manager will be
responsible for the day-to-day operations of the Company and will
perform (or cause to be performed) such services and activities
relating to the assets and operations of the Company as may be
appropriate, including, without limitation:
(i) serving as the Company's consultant with respect
to the periodic review of the investment criteria and
parameters for the Investments, borrowings and operations, any
modifications to which shall be approved by a majority of the
Independent Directors (such policy guidelines as initially
approved and attached hereto as EXHIBIT A, as the same may be
modified with such approval, the "GUIDELINES"), and other
policies for approval by the Board of Directors;
(ii) investigating, analyzing and selecting possible
investment opportunities and acquiring, financing, retaining,
selling, restructuring, or disposing of Investments consistent
with the Guidelines;
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(iii) with respect to prospective purchases, sales,
or exchanges of Investments, conducting negotiations, on
behalf of the Company, with sellers and purchasers and their
respective agents, representatives and investment bankers;
(iv) negotiating and entering into, on behalf of the
Company, credit finance agreements, repurchase agreements,
securitizations, commercial paper, CDOs, interest rate swaps,
warehouse facilities and all other agreements and instruments
required for the Company to conduct its business;
(v) engaging and supervising, on behalf of the
Company and at the Company's expense, independent contractors
which provide investment banking, mortgage brokerage,
securities brokerage, other financial services, due diligence
services, underwriting review services, and all other services
as may be required relating to the Investments;
(vi) coordinating and managing operations of any
joint venture or co-investment interests held by the Company
and conducting all matters with the joint venture or
co-investment partners;
(vii) providing executive and administrative
personnel, office space and office services required in
rendering services to the Company;
(viii) administering the day-to-day operations of the
Company and performing and supervising the performance of such
other administrative functions necessary in the management of
the Company as may be agreed upon by the Manager and the Board
of Directors, including, without limitation, the collection of
revenues and the payment of the Company's debts and
obligations and maintenance of appropriate computer services
to perform such administrative functions;
(ix) communicating on behalf of the Company with the
holders of any equity or debt securities of the Company as
required to satisfy the reporting and other requirements of
any governmental bodies or agencies or trading markets and to
maintain effective relations with such holders;
(x) counseling the Company in connection with policy
decisions to be made by the Board of Directors;
(xi) evaluating and recommending to the Board of
Directors hedging strategies and engaging in hedging
activities on behalf of the Company, consistent with such
strategies, as so modified from time to time, with the
Company's status as a REIT, and with the Guidelines;
(xii) counseling the Company regarding the
maintenance of its status as a REIT and monitoring compliance
with the various REIT qualification tests and other rules set
out in the Code and Treasury Regulations thereunder and using
commercially reasonable efforts to cause the Company to
qualify for taxation as a REIT;
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(xiii) counseling the Company regarding the
maintenance of its exemption from the Investment Company Act
and monitoring compliance with the requirements for
maintaining an exemption from that the Investment Company Act
and using commercially reasonable efforts to cause the Company
to maintain such exclusion from the status as an investment
company under the Investment Company Act;
(xiv) assisting the Company in developing criteria
for asset purchase commitments that are specifically tailored
to the Company's investment objectives and making available to
the Company its knowledge and experience with respect to
mortgage loans, real estate, real estate-related securities,
other real estate-related assets and non-real estate related
assets;
(xv) furnishing reports and statistical and economic
research to the Company regarding the Company's activities and
services performed for the Company by the Manager;
(xvi) monitoring the operating performance of the
Investments and providing periodic reports with respect
thereto to the Board of Directors, including comparative
information with respect to such operating performance and
budgeted or projected operating results;
(xvii) investing and re-investing any moneys and
securities of the Company (including investing in short-term
Investments pending investment in other Investments, payment
of fees, costs and expenses, or payments of dividends or
distributions to stockholders and partners of the Company) and
advising the Company as to its capital structure and capital
raising;
(xviii) causing the Company to retain qualified
accountants and legal counsel, as applicable, to assist in
developing appropriate accounting procedures, compliance
procedures and testing systems with respect to financial
reporting obligations and compliance with the provisions of
the Code applicable to REITs and to conduct quarterly
compliance reviews with respect thereto;
(xix) assisting the Company in qualifying to do
business in all applicable jurisdictions and to obtain and
maintain all appropriate licenses;
(xx) assisting the Company in complying with all
regulatory requirements applicable to the Company in respect
of its business activities, including preparing or causing to
be prepared all financial statements required under applicable
regulations and contractual undertakings and all reports and
documents, if any, required under the Exchange Act and the
Securities Act or by the NYSE;
(xxi) assisting the Company in taking all necessary
actions to enable the Company to make required tax filings and
reports, including soliciting stockholders for required
information to the extent provided by the provisions of the
Code applicable to REITs;
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(xxii) placing, or arranging for the placement of,
all orders pursuant to its investment determinations for the
Company either directly with the issuer or with a broker or
dealer (including any affiliated broker or dealer);
(xxiii) handling and resolving all claims, disputes
or controversies (including all litigation, arbitration,
settlement or other proceedings or negotiations) in which the
Company may be involved or to which the Company may be subject
arising out of the Company's day-to-day operations (other than
with the Manager or its affiliates), subject to such
limitations or parameters as may be imposed from time to time
by the Board of Directors;
(xxiv) using commercially reasonable efforts to cause
expenses incurred by or on behalf of the Company to be
commercially reasonable or commercially customary and within
any budgeted parameters or expense guidelines set by the Board
of Directors from time to time;
(xxv) representing and making recommendations to the
Company in connection with the purchase and finance of, and
commitment to purchase and finance, mortgage loans (including
on a portfolio basis), real estate, real estate-related
securities, other real estate-related assets and non-real
estate-related assets, and the sale and commitment to sell
such assets;
(xxvi) advising the Company with respect to and
structuring long-term financing vehicles for the Company's
portfolio of assets, and offering and selling securities
publicly or privately in connection with any such structured
financing;
(xxvii) performing such other services as may be
required from time to time for management and other activities
relating to the assets and business of the Company as the
Board of Directors shall reasonably request or the Manager
shall deem appropriate under the particular circumstances; and
(xxviii) using commercially reasonable efforts to
cause the Company to comply with all applicable laws.
Without limiting the foregoing, the Manager will perform portfolio management
services (the "PORTFOLIO MANAGEMENT SERVICES") on behalf of the Company with
respect to the Investments. Such services will include, but not be limited to,
consulting with the Company on the purchase and sale of, and other investment
opportunities in connection with, the Company's portfolio of assets; the
collection of information and the submission of reports pertaining to the
Company's assets, interest rates and general economic conditions; periodic
review and evaluation of the performance of the Company's portfolio of assets;
acting as liaison between the Company and banking, mortgage banking, investment
banking and other parties with respect to the purchase, financing and
disposition of assets; and other customary functions related to portfolio
management. Additionally, the Manager will perform monitoring services (the
"MONITORING SERVICES") on behalf of the Company with respect to any loan
servicing activities provided by third parties. Such Monitoring Services will
include, but not be limited to, negotiating servicing agreements; acting as a
liaison between the servicers of the assets and the Company; review of
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servicers' delinquency, foreclosure and other reports on assets; supervising
claims filed under any insurance policies; and enforcing the obligation of any
servicer to repurchase assets.
(c) For the period and on the terms and conditions set forth in this
Agreement, the Company hereby constitutes, appoints and authorizes the Manager
as its true and lawful agent and attorney-in-fact, in its name, place and stead,
to negotiate, execute, deliver and enter into such credit finance agreements and
arrangements and securities repurchase and reverse repurchase agreements and
arrangements, brokerage agreements, interest rate swap agreements and such other
agreements, instruments and authorizations on its behalf on such terms and
conditions as the Manager, acting in its sole and absolute discretion, deems
necessary or appropriate. This power of attorney is deemed to be coupled with an
interest.
(d) The Manager may enter into agreements with other parties, including
its affiliates, for the purpose of engaging one or more parties for and on
behalf, and at the sole cost and expense, of the Company to provide property
management, asset management, leasing, development and/or other services to the
Company (including, without limitation, Portfolio Management Services and
Monitoring Services) pursuant to agreement(s) with terms which are then
customary for agreements regarding the provision of services to companies that
have assets similar in type, quality and value to the assets of the Company;
PROVIDED that (i) any such agreements entered into with affiliates of the
Manager shall be (A) on terms no more favorable to such affiliate than would be
obtained from a third party on an arm's-length basis and (B) to the extent the
same do not fall within the provisions of the Guidelines, approved by a majority
of the Independent Directors, (ii) with respect to Portfolio Management
Services, (A) any such agreements shall be subject to the Company's prior
written approval and (B) the Manager shall remain liable for the performance of
such Portfolio Management Services, and (iii) with respect to Monitoring
Services, any such agreements shall be subject to the Company's prior written
approval.
(e) To the extent that the Manager deems necessary or advisable, the
Manager may, from time to time, propose to retain one or more additional
entities for the provision of sub-advisory services to the Manager in order to
enable the Manager to provide the services to the Company specified by this
Agreement; PROVIDED that any such agreement (i) shall be on terms and conditions
substantially identical to the terms and conditions of this Agreement or
otherwise not adverse to the Company, (ii) shall not result in an increased Base
Management Fee, Incentive Compensation, or expenses to the Company, and (iii)
shall be approved by the Independent Directors of the Company.
(f) The Manager may retain, for and on behalf and at the sole cost and
expense of the Company, such services of accountants, legal counsel, appraisers,
insurers, brokers, transfer agents, registrars, developers, investment banks,
financial advisors, due diligence firms, underwriting review firms, banks and
other lenders and others as the Manager deems necessary or advisable in
connection with the management and operations of the Company. Notwithstanding
anything contained herein to the contrary, the Manager shall have the right to
cause any such services to be rendered by its employees or affiliates. The
Company shall pay or reimburse the Manager or its affiliates performing such
services for the cost thereof; PROVIDED that such costs and reimbursements are
no greater than those which would be payable
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to outside professionals or consultants engaged to perform such services
pursuant to agreements negotiated on an arm's-length basis.
(g) The Manager may effect transactions by or through the agency of
another person with it or its affiliates which have an arrangement under which
that party or its affiliates will from time to time provide to or procure for
the Manager and/or its affiliates goods, services or other benefits (including,
but not limited to, research and advisory services; economic and political
analysis, including valuation and performance measurement; market analysis, data
and quotation services; computer hardware and software incidental to the above
goods and services; clearing and custodian services and investment related
publications), the nature of which is such that provision can reasonably be
expected to benefit the Company as a whole and may contribute to an improvement
in the performance of the Company or the Manager or its affiliates in providing
services to the Company on terms that no direct payment is made but instead the
Manager and/or its affiliates undertake to place business with that party.
(h) In executing portfolio transactions and selecting brokers or
dealers, the Manager will use its best efforts to seek on behalf of the Company
the best overall terms available. In assessing the best overall terms available
for any transaction, the Manager shall consider all factors that it deems
relevant, including without limitation the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis. In evaluating
the best overall terms available, and in selecting the broker or dealer to
execute a particular transaction, the Manager may also consider whether such
broker or dealer furnishes research and other information or services to the
Manager.
(i) The Manager has no duty or obligation to seek in advance
competitive bidding for the most favorable commission rate applicable to any
particular purchase, sale or other transaction, or to select any broker-dealer
on the basis of its purported or "posted" commission rate, but will endeavor to
be aware of the current level of charges of eligible broker-dealers and to
minimize the expense incurred for effecting purchases, sales and other
transactions to the extent consistent with the interests and policies of the
Company. Although the Manager will generally seek competitive commission rates,
it is not required to pay the lowest commission or commission equivalent,
provided that such decision is made in good faith to affect the best interests
of the Company.
(j) As frequently as the Manager may deem necessary or advisable, or at
the direction of the Board of Directors, the Manager shall, at the sole cost and
expense of the Company, prepare, or cause to be prepared, with respect to any
Investment, reports and other information with respect to such Investment as may
be reasonably requested by the Company.
(k) The Manager shall prepare, or cause to be prepared, at the sole
cost and expense of the Company, all reports, financial or otherwise, with
respect to the Company reasonably required by the Board of Directors in order
for the Company to comply with its Governing Instruments or any other materials
required to be filed with any governmental body or agency, and shall prepare, or
cause to be prepared, all materials and data necessary to complete
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such reports and other materials including, without limitation, an annual audit
of the Company's books of account by a nationally recognized independent
accounting firm.
(l) The Manager shall prepare regular reports for the Board of
Directors to enable the Board of Directors to review the Company's acquisitions,
portfolio composition and characteristics, credit quality, performance and
compliance with the Guidelines and policies approved by the Board of Directors.
(m) Notwithstanding anything contained in this Agreement to the
contrary, except to the extent that the payment of additional moneys is proven
by the Company to have been required as a direct result of the Manager's acts or
omissions which result in the right of the Company to terminate this Agreement
pursuant to Section 15 of this Agreement, the Manager shall not be required to
expend money ("EXCESS FUNDS") in connection with any expenses that are required
to be paid for or reimbursed by the Company pursuant to Section 9 in excess of
that contained in any applicable Company Account (as herein defined) or
otherwise made available by the Company to be expended by the Manager hereunder.
Failure of the Manager to expend Excess Funds out-of-pocket shall not give rise
or be a contributing factor to the right of the Company under Section 13(a) of
this Agreement to terminate this Agreement due to the Manager's unsatisfactory
performance.
(n) In performing its duties under this Section 2, the Manager shall be
entitled to rely reasonably on qualified experts and professionals (including,
without limitation, accountants, legal counsel and other service providers)
hired by the Manager at the Company's sole cost and expense.
SECTION 3. DEVOTION OF TIME; ADDITIONAL ACTIVITIES.
(a) The Manager will provide the Company with a management team,
including a Chief Executive Officer, President, a Chief Investment Officer, a
Chief Credit Officer, a Chief Financial Officer, and other support personnel, to
provide the management services to be provided by the Manager to the Company
hereunder, the members of which team shall devote such of their time to the
management of the Company as the Board of Directors reasonably deems necessary
and appropriate, commensurate with the level of activity of the Company from
time to time.
(b) The Company shall have the benefit of the Manager's best judgment
and best effort in rendering services and, in furtherance of the foregoing, the
Manager shall not undertake activities which, in its reasonable judgment, will
substantially and adversely affect the performance of its obligations under this
Agreement.
(c) Except to the extent set forth in clauses (a) and (b) above,
nothing herein shall prevent the Manager or any of its affiliates or any of the
officers and employees of any of the foregoing from engaging in other businesses
or from rendering services of any kind to any other person or entity, including
investment in, or advisory service to others investing in, any type of
investment, including investments which meet the principal investment objectives
of the Company. The Manager and its affiliates may invest for their own accounts
and for the accounts of clients in various investments that are senior, pari
passu or junior to, or have interests different
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from or adverse to, the investments that are owned by the Company. Furthermore,
the Manager serves as investment adviser to other funds and accounts, and its
affiliates manage their own accounts, and the Manager and its affiliates may
make investment decisions for their own accounts and for the accounts of others,
including other funds, that may be different from those that will be made by the
Manager for the Company. When making investment decisions where a conflict of
interest may arise, the Manager will endeavor to act in a fair and equitable
manner as between the Company and other clients. The Manager may at certain
times be simultaneously seeking to purchase (or sell) investments from the
Company and sell (or purchase) the same investment for a similar entity,
including other funds, for which it serves as asset manager now or in the
future, or for its clients or affiliates. All such activities will be conducted
in accordance with the Manager's allocation policy (as such policy may be
amended from time to time). In addition, the Manager and its affiliates may buy
securities from or sell securities to the Company to the extent permitted by
applicable law.
(d) Managers, partners, officers, employees and agents of the Manager
or affiliates of the Manager may serve as directors, officers, employees,
agents, nominees or signatories for the Company or any Subsidiary, to the extent
permitted by their Governing Instruments or by any resolutions duly adopted by
the Board of Directors pursuant to the Company's Governing Instruments. When
executing documents or otherwise acting in such capacities for the Company, such
persons shall use their respective titles in the Company.
SECTION 4. AGENCY. The Manager shall act as agent of the Company in
making, acquiring, financing and disposing of Investments, disbursing and
collecting the Company's funds, paying the debts and fulfilling the obligations
of the Company, supervising the performance of professionals engaged by or on
behalf of the Company and handling, prosecuting and settling any claims of or
against the Company, the Board of Directors, holders of the Company's securities
or the Company's representatives or properties.
SECTION 5. 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 (any such account, a "COMPANY ACCOUNT"), and may
collect and deposit funds into any such Company Account or Company Accounts, and
disburse funds from any such Company Account or Company 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.
SECTION 6. RECORDS; CONFIDENTIALITY. The Manager shall maintain
appropriate books of accounts and records relating to services performed under
this Agreement, and such books of account and records shall be accessible for
inspection by representatives of the Company or any Subsidiary at any time
during normal business hours upon reasonable advance notice. The Manager shall
keep confidential any and all information obtained in connection with the
services rendered under this Agreement and shall not disclose any such
information (or use the same except in furtherance of its duties under this
Agreement) to nonaffiliated third parties except (i) with the prior written
consent of the Board of Directors; (ii) to legal counsel, accountants and other
professional advisors; (iii) to appraisers, financing sources and others in the
ordinary course of the Company's business; (iv) to governmental officials having
jurisdiction
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over the Company; (v) in connection with any governmental or regulatory filings
of the Company or disclosure or presentations to Company investors; or (vi) as
required by law or legal process to which the Manager or any Person to whom
disclosure is permitted hereunder is a party. The foregoing shall not apply to
information which has previously become publicly available through the actions
of a Person other than the Manager not resulting from the Manager's violation of
this Section 6. The provisions of this Section 6 shall survive the expiration or
earlier termination of this Agreement for a period of one (1) year.
SECTION 7. OBLIGATIONS OF MANAGER; RESTRICTIONS.
(a) The Manager shall require each seller or transferor of investment
assets to the Company to make such representations and warranties regarding such
assets as may, in the judgment of the Manager, be necessary and appropriate. In
addition, the Manager shall take such other action as it deems necessary or
appropriate with regard to the protection of the Investments.
(b) The Manager shall refrain from any action that, in its sole
judgment made in good faith, (i) is not in compliance with the Guidelines, (ii)
would adversely affect the status of the Company as a REIT under the Code or
(iii) would violate any law, rule or regulation of any governmental body or
agency having jurisdiction over the Company or any Subsidiary or that would
otherwise not be permitted by the Company's Governing Instruments. If the
Manager is ordered to take any such action by the Board of Directors, the
Manager shall promptly notify the Board of Directors of the Manager's judgment
that such action would adversely affect such status or violate any such law,
rule or regulation or the Governing Instruments. Notwithstanding the foregoing,
the Manager, its directors, officers, stockholders and employees shall not be
liable to the Company or any Subsidiary, the Board of Directors, or the
Company's or any Subsidiary's stockholders or partners, for any act or omission
by the Manager, its directors, officers, stockholders or employees except as
provided in Section 11 of this Agreement.
(c) The Board of Directors periodically reviews the Guidelines and the
Company's portfolio of Investments but will not review each proposed investment,
except as otherwise provided herein. If a majority of the Independent Directors
determine in their periodic review of transactions that a particular transaction
does not comply with the Guidelines, then a majority of the Independent
Directors will consider what corrective action, if any, can be taken. The
Manager shall be permitted to rely upon the direction of the Secretary of the
Company to evidence the approval of the Board of Directors or the Independent
Directors with respect to a proposed investment.
(d) The Company shall not invest in CDOs or any security structured or
managed by the Manager or any affiliate thereof, unless (i) the Investment is
made in accordance with the Guidelines and (ii) such Investment is approved in
advance by a majority of the Independent Directors.
(e) The Manager shall at all times during the term of this Agreement
maintain "errors and omissions" insurance coverage and other insurance coverage
which is customarily carried by property, asset and investment managers
performing functions similar to those of the Manager under this Agreement with
respect to assets similar to the assets of the Company, in an
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amount which is comparable to that customarily maintained by other managers or
servicers of similar assets.
SECTION 8. COMPENSATION.
(a) During the Initial Term and any Renewal Term (each as defined
below), the Company shall pay the Manager the Base Management Fee quarterly in
arrears commencing with the quarter in which this Agreement was executed (with
such initial payment pro-rated based on the number of days during such quarter
that this Agreement was in effect).
(b) The Manager shall compute each installment of the Base Management
Fee within thirty (30) days after the end of the fiscal quarter with respect to
which such installment is payable. A copy of the computations made by the
Manager to calculate such installment shall thereafter, for informational
purposes only and subject in any event to Section 13(a) of this Agreement,
promptly be delivered to the Board of Directors and, upon such delivery, payment
of such installment of the Base Management Fee shown therein shall be due and
payable no later than the date which is five (5) business days after the date of
delivery to the Board of Directors of such computations.
(c) The Base Management Fee is subject to adjustment pursuant to and in
accordance with the provisions of Section 13(a) of this Agreement.
(d) In addition to the Base Management Fee otherwise payable hereunder,
the Company shall pay the Manager quarterly Incentive Compensation. The Company
shall pay the Incentive Compensation quarterly in arrears commencing with the
quarter in which this Agreement was executed (with such initial payment
pro-rated based on the number of days during such quarter that this Agreement
was in effect).
(e) The Manager shall compute each installment of the Incentive
Compensation within thirty (30) days after the end of each fiscal quarter with
respect to which such installment is payable. A copy of the computations made by
the Manager to calculate such installment shall thereafter, for informational
purposes only and subject in any event to Section 13(a) of this Agreement,
promptly be delivered to the Board of Directors and, upon such delivery, payment
of such installment of the Incentive Compensation shown therein shall be due and
payable no later than the date which is five (5) business days after the date of
delivery to the Board of Directors of such computations.
SECTION 9. EXPENSES OF THE COMPANY. The Company shall pay all of its
expenses and shall reimburse the Manager for documented expenses of the Manager
incurred on its behalf (collectively, the "EXPENSES") excepting those expenses
that are specifically the responsibility of the Manager as set forth herein.
Expenses include all costs and expenses which are expressly designated elsewhere
in this Agreement as the Company's, together with the following:
(a) expenses in connection with the issuance and transaction costs
incident to the acquisition, disposition and financing of Investments;
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(b) costs of legal, tax, accounting, consulting, auditing,
administrative and other similar services rendered for the Company by providers
retained by the Manager or, if provided by the Manager's employees, in amounts
which are no greater than those which would be payable to outside professionals
or consultants engaged to perform such services pursuant to agreements
negotiated on an arm's-length basis;
(c) the compensation of the Independent Directors and expenses of the
Company's directors and the cost of liability insurance to indemnify the
Company's directors and officers;
(d) costs associated with the establishment and maintenance of any
credit facilities or other indebtedness of the Company (including commitment
fees, accounting fees, legal fees, closing and other similar costs) or any
securities offerings of the Company;
(e) expenses connected with communications to holders of securities of
the Company or its Subsidiaries and 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, without limitation, all costs of preparing and
filing required reports with the Securities and Exchange Commission, the costs
payable by the Company to any transfer agent and registrar in connection with
the listing and/or trading of the Company's stock on any exchange, the fees
payable by the Company to any such exchange in connection with its listing,
costs of preparing, printing and mailing the Company's annual report to its
stockholders and proxy materials with respect to any meeting of the stockholders
of the Company;
(f) costs associated with any computer software or hardware, electronic
equipment or purchased information technology services from third party vendors
that is used solely for the Company;
(g) expenses incurred by managers, officers, employees and agents of
the Manager for travel on the Company's behalf and other out-of-pocket expenses
incurred by managers, officers, employees and agents of the Manager in
connection with the purchase, financing, refinancing, sale or other disposition
of an Investment or establishment and maintenance of any credit facilities and
other indebtedness or any securities offerings of the Company;
(h) costs and expenses incurred with respect to market information
systems and publications, research publications and materials, and settlement,
clearing and custodial fees and expenses;
(i) compensation and expenses of the Company's custodian and transfer
agent, if any;
(j) the costs of maintaining compliance with all federal, state and
local rules and regulations or any other regulatory agency;
(k) all taxes and license fees;
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(l) all insurance costs incurred in connection with the operation of
the Company's business except for the costs attributable to the insurance that
the Manager elects to carry for itself and its employees;
(m) costs and expenses incurred in contracting with third parties,
including affiliates of the Manager, for the servicing and special servicing of
assets of the Company;
(n) all other costs and expenses relating to the Company's business and
investment operations, including, without limitation, the costs and expenses of
acquiring, owning, protecting, maintaining, developing and disposing of
Investments, including appraisal, reporting, audit and legal fees;
(o) expenses relating to any office(s) or office facilities, including
but not limited to disaster backup recovery sites and facilities, maintained for
the Company or Investments separate from the office or offices of the Manager;
(p) expenses connected with the payments of interest, dividends or
distributions in cash or any other form authorized or caused to be made by the
Board of Directors to or on account of the holders of securities of the Company
or its Subsidiaries, including, without limitation, in connection with any
dividend reinvestment plan;
(q) any judgment or settlement of pending or threatened proceedings
(whether civil, criminal or otherwise) against the Company or any Subsidiary, or
against any trustee, director or officer of the Company or of any Subsidiary in
his capacity as such for which the Company or any Subsidiary is required to
indemnify such trustee, director or officer by any court or governmental agency;
and
(r) all other expenses actually incurred by the Manager which are
reasonably necessary for the performance by the Manager of its duties and
functions under this Agreement.
In addition, the Company will be required to pay the Company's pro rata
portion of rent, telephone, utilities, office furniture, equipment, machinery
and other office, internal and overhead expenses of the Manager and its
affiliates required for the Company's operations. These expenses will be
allocated between the Manager and the Company based on the ratio of the
Company's proportion of gross assets compared to all remaining gross assets
managed by the Manager as calculated at each quarter end. The Manager and the
Company will modify this allocation methodology, subject to the Board of
Directors' approval if the allocation becomes inequitable (i.e., if the Company
becomes highly leveraged compared to the Manager's other funds and accounts).
The Manager hereby waives its right to request reimbursement from the Company of
these expenses until such time as it determines to rescind that waiver.
The Manager may, at its option, elect not to seek reimbursement for
certain expenses during a given quarterly period, which determination shall not
be deemed to construe a waiver of reimbursement for similar expenses in future
periods. Except as noted above, the Manager is responsible for all costs
incident to the performance of its duties under this Agreement, including
compensation of the Manager's executives and employees and other related
expenses and overhead (except those expenses that are specifically the
responsibility of the Manager as set forth herein). In the event that the
Company's initial public offering is consummated, the
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Company will reimburse the Manager for all organizational, formation and
offering costs it has incurred on behalf of the Company.
The provisions of this Section 9 shall survive the expiration or
earlier termination of this Agreement to the extent such expenses have
previously been incurred or are incurred in connection with such expiration or
termination.
SECTION 10. CALCULATIONS OF EXPENSES.
The Manager shall prepare a statement documenting the Expenses of the
Company and the Expenses incurred by the Manager on behalf of the Company during
each fiscal quarter, and shall deliver such statement to the Company within 30
days after the end of each fiscal quarter. Expenses incurred by the Manager on
behalf of the Company shall be reimbursed by the Company to the Manager on the
fifth (5th) business day immediately following the date of delivery of such
statement; PROVIDED, however, that such reimbursements may be offset by the
Manager against amounts due to the Company. The provisions of this Section 10
shall survive the expiration or earlier termination of this Agreement.
SECTION 11. LIMITS OF MANAGER RESPONSIBILITY; INDEMNIFICATION.
(a) The Manager assumes no responsibility under this Agreement other
than to render the services called for under this Agreement 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, including
as set forth in Section 7(b) of this Agreement. The Manager, its officers,
directors, employees, any Person controlling or controlled by the Manager and
any Person providing sub-advisory services to the Manager and the officers,
directors and employees of the Manager, its officers, directors, employees and
any such Person will not be liable to the Company or any Subsidiary, to the
Board of Directors, or the Company's or any Subsidiary's stockholders or
partners for any acts or omissions by any such Person, pursuant to or in
accordance with this Agreement, except by reason of acts constituting bad faith,
willful misconduct, gross negligence or reckless disregard of the Manager's
duties under this Agreement. The Company shall, to the full extent lawful,
reimburse, indemnify and hold the Manager, its officers, stockholders,
directors, employees, any Person controlling or controlled by the Manager and
any Person providing sub-advisory services to the Manager, together with the
managers, officers, directors and employees of the Manager, its officers,
members, directors, employees, and any such Person (each a "MANAGER INDEMNIFIED
PARTY"), harmless of and from any and all expenses, losses, damages,
liabilities, demands, charges and claims of any nature whatsoever (including
attorneys' fees) in respect of or arising from any acts or omissions of such
Manager Indemnified Party made in good faith in the performance of the Manager's
duties under this Agreement and not constituting such Manager Indemnified
Party's bad faith, willful misconduct, gross negligence or reckless disregard of
the Manager's duties under this Agreement.
(b) The Manager shall, to the full extent lawful, reimburse, indemnify
and hold the Company (or any Subsidiary), its stockholders, directors, officers
and employees and each other Person, if any, controlling the Company (each, a
"COMPANY INDEMNIFIED PARTY" and together with a Manager Indemnified Party, the
"INDEMNITEE"), harmless of and from any and all
16
expenses, losses, damages, liabilities, demands, charges and claims of any
nature whatsoever (including attorneys' fees) in respect of or arising from the
Manager's bad faith, willful misconduct, gross negligence or reckless disregard
of its duties under this Agreement.
(c) The Indemnitee will promptly notify the party against whom
indemnity is claimed (the "INDEMNITOR") of any claim for which it seeks
indemnification; provided, however, that the failure to so notify the Indemnitor
will not relieve the Indemnitor from any liability which it may have hereunder,
except to the extent such failure actually prejudices the Indemnitor. The
Indemnitor shall have the right to assume the defense and settlement of such
claim; provided, that the Indemnitor notifies the Indemnitee of its election to
assume such defense and settlement within thirty (30) days after the Indemnitee
gives the Indemnitor notice of the claim. In such case, the Indemnitee will not
settle or compromise such claim, and the Indemnitor will not be liable for any
such settlement made without its prior written consent. If the Indemnitor is
entitled to, and does, assume such defense by delivering the aforementioned
notice to the Indemnitee, the Indemnitee will (i) have the right to approve the
Indemnitor's counsel (which approval will not be unreasonably withheld, delayed
or conditioned), (ii) be obligated to cooperate in furnishing evidence and
testimony and in any other manner in which the Indemnitor may reasonably request
and (iii) be entitled to participate in (but not control) the defense of any
such action, with its own counsel and at its own expense.
SECTION 12. NO JOINT VENTURE. Nothing in this Agreement shall be
construed to make the Company and the Manager partners or joint venturers or
impose any liability as such on either of them.
SECTION 13. TERM; TERMINATION.
(a) Until this Agreement is terminated in accordance with its terms,
this Agreement shall be in effect until December 31, 2010 (the "INITIAL TERM")
and shall be automatically renewed for a one-year term each anniversary date
thereafter (a "RENEWAL TERM") unless at least two-thirds of the Independent
Directors or the holders of a majority of the outstanding shares of common stock
(other than those shares held by Annaly or its affiliates) agree that (i) there
has been unsatisfactory performance by the Manager that is materially
detrimental to the Company or (ii) the compensation payable to the Manager
hereunder is unfair; PROVIDED that the Company shall not have the right to
terminate this Agreement under clause (ii) above if the Manager agrees to
continue to provide the services under this Agreement at a reduced fee that at
least two-thirds of the Independent Directors determines to be fair pursuant to
the procedure set forth below. If the Company elects not to renew this Agreement
at the expiration of the Initial Term or any Renewal Term as set forth above,
the Company shall deliver to the Manager prior written notice (the "TERMINATION
NOTICE") of the Company's intention not to renew this Agreement based upon the
terms set forth in this Section 13(a) not less than one hundred eighty (180)
days prior to the expiration of the then existing term. If the Company so elects
not to renew this Agreement, the Company shall designate the date (the
"EFFECTIVE TERMINATION DATE"), not less than one hundred eighty (180) days from
the date of the notice, on which the Manager shall cease to provide services
under this Agreement and this Agreement shall terminate on such date; PROVIDED,
however, that in the event that such Termination Notice is given in connection
with a determination that the compensation payable to the Manager is unfair, the
Manager shall have the right to renegotiate such compensation by delivering to
the Company,
17
no fewer than forty-five (45) days prior to the prospective Effective
Termination Date, written notice (any such notice, a "NOTICE OF PROPOSAL TO
Negotiate") of its intention to renegotiate its compensation under this
Agreement. Thereupon, the Company (represented by the Independent Directors) and
the Manager shall endeavor to negotiate in good faith the revised compensation
payable to the Manager under this Agreement. Provided that the Manager and at
least two-thirds of the Independent Directors agree to the terms of the revised
compensation to be payable to the Manager within forty-five (45) days following
the receipt of the Notice of Proposal to Negotiate, the Termination Notice shall
be deemed of no force and effect and this Agreement shall continue in full force
and effect on the terms stated in this Agreement, except that the compensation
payable to the Manager hereunder shall be the revised compensation then agreed
upon by the parties to this Agreement. The Company and the Manager agree to
execute and deliver an amendment to this Agreement setting forth such revised
compensation promptly upon reaching an agreement regarding same. In the event
that the Company and the Manager are unable to agree to the terms of the revised
compensation to be payable to the Manager during such 45-day period, this
Agreement shall terminate, such termination to be effective on the date which is
the later of (A) ten (10) days following the end of such 45-day period and (B)
the Effective Termination Date originally set forth in the Termination Notice.
(b) In the event that this Agreement is terminated in accordance with
the provisions of Section 13(a) of this Agreement, the Company shall pay to the
Manager, on the date on which such termination is effective, a termination fee
(the "TERMINATION FEE") equal to three (3) times the sum of (a) the average
annual Base Management Fee and (b) the average annual Incentive Compensation
earned by the Manager during the 24-month period immediately preceding the date
of such termination, calculated as of the end of the most recently completed
fiscal quarter prior to the date of termination. The obligation of the Company
to pay the Termination Fee shall survive the termination of this Agreement.
(c) No later than one hundred eighty (180) days prior to the
anniversary date of this Agreement of any year during the Initial Term or
Renewal Term, the Manager may deliver written notice to the Company informing it
of the Manager's intention to decline to renew this Agreement, whereupon this
Agreement shall not be renewed and extended and this Agreement shall terminate
effective on the anniversary date of this Agreement next following the delivery
of such notice. The Company is not required to pay to the Manager the
Termination Fee if the Manager terminates this Agreement pursuant to this
Section 13(c).
(d) If this Agreement is terminated pursuant to Section 13, such
termination shall be without any further liability or obligation of either party
to the other, except as provided in Sections 6, 9, 10, 13(b), 15(b), and 16 of
this Agreement. In addition, Sections 11 and 21 of this Agreement shall survive
termination of this Agreement.
SECTION 14. ASSIGNMENT.
(a) Except as set forth in Section 14(b) of this Agreement, this
Agreement shall terminate automatically in the event of its assignment, in whole
or in part, by the Manager, unless such assignment is consented to in writing by
the Company with the consent of a majority of the Independent Directors;
PROVIDED, however, that no such consent shall be required in the case of an
assignment by the Manager to an affiliate of Annaly. Any such permitted
assignment
18
shall bind the assignee under this Agreement in the same manner as the Manager
is bound, and the Manager shall be liable to the Company for all errors or
omissions of the assignee under any such assignment. 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 another REIT or other organization which is a
successor (by merger, consolidation, purchase of assets, or similar transaction)
to the Company, in which case such successor organization shall be bound under
this Agreement and by the terms of such assignment in the same manner as the
Company is bound under this Agreement.
(b) Notwithstanding any provision of this Agreement, the Manager may
subcontract and assign any or all of its responsibilities under Sections 2(b),
2(c) and 2(d) of this Agreement to any of its affiliates in accordance with the
terms of this Agreement applicable to any such subcontract or assignment, and
the Company hereby consents to any such assignment and subcontracting. In
addition, provided that the Manager provides prior written notice to the Company
for informational purposes only, nothing contained in this Agreement shall
preclude any pledge, hypothecation or other transfer of any amounts payable to
the Manager under this Agreement. In addition, the Manager may assign this
Agreement to any of its affiliates without the Company's approval if such
assignment does not require the Company's approval under the Investment Advisers
Act of 1940, as amended.
SECTION 15. TERMINATION FOR CAUSE.
(a) The Company may terminate this Agreement effective upon thirty (30)
days' prior written notice of termination from the Company to the Manager,
without payment of any Termination Fee, if (i) the Manager, its agents or its
assignees materially breaches any provision of this Agreement and such breach
shall continue for a period of thirty (30) days after written notice thereof
specifying such breach and requesting that the same be remedied in such 30-day
period (or forty-five (45) days after written notice of such breach if the
Manager takes steps to cure such breach within thirty (30) days of the written
notice), (ii) the Manager engages in any act of fraud, misappropriation of
funds, or embezzlement against the Company, (iii) there is an event of any gross
negligence on the part of the Manager in the performance of its duties under
this Agreement, (iv) there is a commencement of any proceeding relating to the
Manager's Bankruptcy or insolvency, (v) there is a dissolution of the Manager,
(vi) there is a Change of Control, or (vii) the Manager is convicted of
(including a plea of nolo contendere) a felony.
(b) The Manager may terminate this Agreement effective upon sixty (60)
days' prior written notice of termination to the Company in the event that the
Company shall default in the performance or observance of any material term,
condition or covenant contained in this Agreement and such default shall
continue for a period of thirty (30) days after written notice thereof
specifying such default and requesting that the same be remedied in such 30-day
period. The Company is required to pay to the Manager the Termination Fee if the
termination of this Agreement is made pursuant to this Section 15(b).
(c) The Manager may terminate this Agreement, without payment of any
Termination Fee, in the event the Company becomes regulated as an "investment
company"
19
under the Investment Company Act, with such termination deemed to have occurred
immediately prior to such event.
SECTION 16. ACTION UPON TERMINATION. From and after the effective date
of termination of this Agreement, pursuant to Sections 13 or 15 of this
Agreement, the Manager shall not be entitled to compensation for further
services under this Agreement, but shall be paid all compensation accruing to
the date of termination and, if terminated pursuant to Section 13(a) or Section
15(b), the applicable Termination Fee. Upon such termination, the Manager shall
forthwith:
(i) after deducting any accrued compensation and reimbursement
for its expenses to which it is then entitled, pay over to the Company
or a Subsidiary all money collected and held for the account of the
Company or a Subsidiary pursuant to this Agreement;
(ii) 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 a Subsidiary; and
(iii) deliver to the Board of Directors all property and
documents of the Company or any Subsidiary then in the custody of the
Manager.
SECTION 17. RELEASE OF MONEY OR OTHER PROPERTY UPON WRITTEN REQUEST.
The Manager agrees that any money or other property of the Company or Subsidiary
held by the Manager under this Agreement shall be held by the Manager as
custodian for the Company or 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 any money or other
property then held by the Manager for the account of the Company or any
Subsidiary under this Agreement, the Manager shall release such money or other
property to the Company or any Subsidiary within a reasonable period of time,
but in no event later than thirty (30) days following such request. The Manager
shall not be liable to the Company, any Subsidiary, the Independent Directors,
or the Company's or a Subsidiary's stockholders or partners for any acts
performed or omissions to act by the Company or any Subsidiary in connection
with the money or other property released to the Company or any Subsidiary in
accordance with the second sentence of this Section 17. The Company and any
Subsidiary shall indemnify the Manager and its officers, directors, employees,
managers, officers 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 in accordance with the terms of this Section 17.
Indemnification pursuant to this provision shall be in addition to any right of
the Manager to indemnification under Section 11 of this Agreement.
SECTION 18. NOTICES. Unless expressly provided otherwise in this
Agreement, all notices, requests, demands and other communications required or
permitted under this
20
Agreement shall be in writing and shall be deemed to have been duly given, made
and received when delivered against receipt or upon actual receipt of (i)
personal delivery, (ii) delivery by reputable overnight courier, (iii) delivery
by facsimile transmission with telephonic confirmation or (iv) delivery by
registered or certified mail, postage prepaid, return receipt requested,
addressed as set forth below:
(a) If to the Company:
Chimera Investment Corporation
1211 Avenue of the Americas
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx
(b) If to the Manager:
Fixed Income Discount Advisory Company
1211 Avenue of the Americas
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: R. Xxxxxxxx Xxxxx, Esq.
Either party may alter the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this Section 18 for the giving of notice.
SECTION 19. BINDING NATURE OF AGREEMENT; SUCCESSORS AND ASSIGNS. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors and permitted
assigns as provided in this Agreement.
SECTION 20. ENTIRE AGREEMENT. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter of this Agreement, 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 of this
Agreement. The express terms of this Agreement control and supersede any course
of performance and/or usage of the trade inconsistent with any of the terms of
this Agreement. This Agreement may not be modified or amended other than by an
agreement in writing signed by the parties hereto.
SECTION 21. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES TO THE CONTRARY (BUT WITH
REFERENCE TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATION LAW, WHICH BY ITS
TERMS APPLIES TO THIS AGREEMENT).
21
SECTION 22. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and
no delay in exercising, on the part of any party hereto, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law. No waiver of any provision hereto shall be
effective unless it is in writing and is signed by the party asserted to have
granted such waiver.
SECTION 23. HEADINGS. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed
part of this Agreement.
SECTION 24. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts of this Agreement, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
SECTION 25. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 26. GENDER. Words used herein regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context requires.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement 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
Exhibit A
o No investment shall be made that would cause the Company to fail to
qualify as a REIT for federal income tax purposes;
o No investment shall be made that would cause the Company to be
regulated as an investment company under the Investment Company Act;
o With the exception of real estate and housing, no single industry shall
represent greater than 20% of the securities or aggregate risk exposure
in the Company's portfolio; and
o Investments in non-rated or deeply subordinated Asset-Backed Securities
or other securities that are non-qualifying assets for purposes of the
75% REIT asset test will be limited to an amount not to exceed 50% of
the Company's stockholders' equity.
