Exhibit 10.1


MANAGEMENT AGREEMENT


          THIS
MANAGEMENT AGREEMENT is made as of ________________, 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 


2






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 





3






	
 

	
 


	
 

	
       (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; 





4






	
 

	
 


	
 

	
                    (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; 





5






	
 

	
 


	
 

	
                    (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; 





6






	
 

	
 


	
 

	
                    (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


7







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


8








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


9








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 


10






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


11






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


12








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; 


13








                    (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; 


14








                    (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 


15








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 

  Suite 2902

  New York, New York 10036

  Attention: Matthew Lambiase


	
 

	
 

	
 


	
 

	
(b)

	
If to the
  Manager: 


	
 

	
 

	
 


	
 

	
 

	
Fixed Income
  Discount Advisory Company 

  1211 Avenue of the Americas 

  Suite 2902

  New York, New York 10036

  Attention: R. Nicholas Singh, 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: 

	
 


	
 

	
 

	



	
 

	
Name:


	
 

	
Title:


	
 


	
 

	
FIXED INCOME DISCOUNT ADVISORY COMPANY


	
 

	
 


	
 

	
By: 

	
 


	
 

	
 

	



	
 

	
Name:


	
 

	
Title:










Exhibit A


	
 

	
 


	
•

	
No
  investment shall be made that would cause the Company to fail to qualify as a
  REIT for federal income tax purposes;


	
 

	
 


	
•

	
No
  investment shall be made that would cause the Company to be regulated as an
  investment company under the Investment Company Act;


	
 

	
 


	
•

	
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


	
 

	
 


	
•

	
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.