Exhibit 10.1


 





 


 


AMENDED AND RESTATED MANAGEMENT AGREEMENT


 


THIS AMENDED AND
RESTATED MANAGEMENT AGREEMENT, dated as of May 9, 2016, among ZAIS FINANCIAL CORP., a Maryland corporation (the "Company"),
ZAIS FINANCIAL PARTNERS, L.P., a Delaware limited partnership (the "Operating Partnership"), ZAIS MERGER SUB,
LLC, a Delaware limited liability company ("Merger Sub"), SUTHERLAND ASSET I, LLC, a Delaware limited liability
company ("Sutherland Asset I"), SUTHERLAND ASSET II, LLC, a Delaware limited liability company ("Sutherland
Asset II"), SAMC REO 2013-01, LLC, a Delaware limited liability company ("SAMC 2013"), ZAIS ASSET I,
LLC, a Delaware limited liability company ("ZAIS Asset I"), ZAIS ASSET II, LLC, a Delaware limited liability company
("ZAIS Asset II"), ZAIS ASSET III, LLC, a Delaware limited liability company ("ZAIS Asset III"),
ZAIS ASSET IV, LLC, a Delaware limited liability company ("ZAIS Asset IV"), ZFC Funding, Inc., a Delaware corporation
("ZFC Funding"), ZFC TRUST, a Maryland trust ("ZFC Trust"), ZFC TRUST TRS I, LLC, a Delaware
limited liability company ("ZFC Trust TRS"), and WATERFALL ASSET MANAGEMENT, LLC, a Delaware limited liability
company (together with its permitted assignees, the "Manager").


 


WHEREAS, the Company
is a party to the Agreement and Plan of Merger, dated as of April 6, 2016 (the "Merger Agreement"), by and among
the Company, ZAIS Financial Partners, L.P., a Delaware limited partnership ("Company Operating Partnership"),
Merger Sub, Sutherland Asset Management Corporation ("Sutherland"), and Sutherland Partners, L.P. ("Sutherland
Operating Partnership"), whereby Sutherland will merge with and into Merger Sub, with Merger Sub being the surviving company
under the name of "Sutherland Asset Management LLC" and a wholly owned subsidiary of the Company, and whereby Company
Operating Partnership will merge with Sutherland Operating Partnership, with Company Operating Partnership being the surviving
entity under the name "Sutherland Partners, L.P.", and whereby the Company will amend its charter to change its name
to "Sutherland Asset Management Corporation", in each case effective as of the Effective Date (as defined below);


 


WHEREAS, as a part
of and effective as of the closing under the Merger Agreement, the investment management agreement that currently covers Company
Operating Partnership's investment activities will be replaced with this Agreement, and the Company and each of the Subsidiaries
desire to retain the Manager to provide investment advisory services to them on the terms and conditions hereinafter set forth,
and the Manager wishes to be retained to provide such services;


 


WHEREAS, this Agreement
will become effective if and when the closing under the Merger Agreement occurs, and will terminate automatically upon any termination
of the Merger Agreement in accordance with its terms;


 


WHEREAS, the Company
is a corporation that intends to elect and to qualify to be taxed as a REIT for federal income tax purposes; and


 


WHEREAS, the parties
have previously entered into the Management Agreement dated as of April 6, 2016 (the “Prior Agreement”), and
the parties desire to amend and restate in its entirety the Prior Agreement, in accordance with the terms and conditions set forth
below.


 




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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 Amended and Restated Management Agreement, as amended, restated or supplemented from time to time.


 


(b)         "Assets"
means the assets of the Company and the Subsidiaries.


 


(c)         "Bankruptcy"
means, with respect to any Person, (i) 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, (ii) the making
by such Person of any assignment for the benefit of its creditors, (iii) the expiration of 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 (iv) 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 calculated and paid (in cash) quarterly in arrears, equal to (i) 1.50%
per annum of the Stockholders' Equity up to $500 million; and (ii) 1.00% per annum of the Stockholders' Equity in excess
of $500 million.


 


(e)         "Board
of Directors" means the Board of Directors of the Company.


 


(f)          "Class A
Special Unit" is defined in the Partnership Agreement as the Class A Special Unit of limited partner interest in
the Operating Partnership.


 


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


 


(h)         "Common
Stock" means the Company’s common stock, par value $0.0001 per share.


 


(i)          "Company
Account" shall have the meaning set forth in Section 5 of this Agreement.


 


(j)          "Company
Indemnified Party" shall have the meaning set forth in Section 11(b) of this Agreement.


 




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(k)         "Core
Earnings" is defined in the Partnership Agreement as GAAP net income (loss) of the Operating Partnership excluding non-cash
equity compensation expense, the expenses incurred in connection with the Operating Partnership's formation or continuation, the
expenses incurred in connection with the Merger Agreement and the transactions contemplated thereby, the Incentive Distribution,
real estate depreciation and amortization (to the extent that the Company forecloses on any properties underlying its assets) and
any unrealized gains, losses or other non-cash items recorded in the period, regardless of whether such items are included in other
comprehensive income or loss, or in net income. The amount will be adjusted to exclude one-time events pursuant to changes in GAAP
and certain other non-cash charges after discussions between the Manager and the Company's independent directors and after approval
by a majority of the Company's independent directors.


 


(l)          "Effective
Date" means the Closing Date (as defined in the Merger Agreement).


 


(m)        "Effective
Termination Date" shall have the meaning set forth in Section 13(a) of this Agreement.


 


(n)         "Excess
Funds" shall have the meaning set forth in Section 2(m) of this Agreement.


 


(o)         "Exchange
Act" means the Securities Exchange Act of 1934, as amended.


 


(p)         "Expenses"
shall have the meaning set forth in Section 9 of this Agreement.


 


(q)         "GAAP"
means generally accepted accounting principles, as applied in the United States.


 


(r)          "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.


 


(s)         "Guidelines"
shall have the meaning set forth in Section 2(b)(i) of this Agreement.


 


(t)          "Incentive
Distribution" shall mean the incentive allocation and distribution received by the Manager pursuant to the Partnership
Agreement.


 


(u)         "Indemnitee"
shall have the meaning set forth in Section 11(b) of this Agreement.


 


(v)         "Indemnitor"
shall have the meaning set forth in Section 11(c) of this Agreement.


 


(w)        "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.


 




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(x)         "Initial
Term" shall have the meaning set forth in Section 13 of this Agreement.


 


(y)         "Internalization
Event" means (i) the actual or effective termination of this Agreement in connection with a transaction that results
in the Company acquiring or otherwise assuming control of the Manager or all or substantially all of its assets, or (ii) the
actual or effective termination of this Agreement in connection with a transaction that results in the Company hiring substantially
all of the management team of the Manager.


 


(z)         "Investment
Committee" means the Manager's investment committee that will oversee the Company's acquisition and financing strategies
as well as compliance with the Company's investment guidelines.


 


(aa)       "Investment
Company Act" means the Investment Company Act of 1940, as amended.


 


(bb)      "Liabilities"
means the liabilities of the Company and the Subsidiaries.


 


(cc)       "LIBOR"
means London Interbank Offered Rate.


 


(dd)      "Manager
Indemnified Party" shall have the meaning set forth in Section 11(a) of this Agreement.


 


(ee)       "Monitoring
Services" shall have the meaning set forth in Section 2(b) of this Agreement.


 


(ff)        "Net
Asset Value" means the value of all of the Assets determined by the Manager as of the close of business on the day on
which the Assets are being valued less all of the Company’s Liabilities. In each case, the Company’s net Assets will
be determined on the accrual basis of accounting utilizing GAAP as a guideline.


 


(gg)      "Notice
of Proposal to Negotiate" shall have the meaning set forth in Section 13(a) of this Agreement.


 


(hh)      "OP
units" mean the operating partnership units of the Operating Partnership.


 


(ii)         "Partnership
Agreement" means the Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated as of the
Effective Date, as amended, supplemented or restated from time to time.


 


(jj)         "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.


 




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(kk)         "Portfolio
Management Services" shall have the meaning set forth in Section 2(b) of this Agreement.


 


(ll)           "REIT"
means a "real estate investment trust," as defined under the Code.


 


(mm)       "Renewal
Term" shall have the meaning set forth in Section 13(a) of this Agreement.


 


(nn)         "SBC"
means small-balance commercial.


 


(oo)         "Securities
Act" means the Securities Act of 1933, as amended.


 


(pp)         "Stockholders'
Equity" means: Net Asset Value of the Operating Partnership as of and after giving effect to the closing of the Merger
Agreement, plus


 


(i)          the
sum of the net proceeds from any issuances of the Company's capital stock and the Operating Partnership's equity securities (exclusive
of Operating Partnership equity securities held by the Company or its controlled subsidiaries) following the closing of the Merger
Agreement (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance),
plus


 


(ii)         the
Company's retained earnings at the end of the most recently completed fiscal quarter (without taking into account any non-cash
equity compensation expense incurred in current or prior periods), less


 


(iii)        any
amount that the Company pays for repurchases of its Common Stock since following the closing of the Merger Agreement, 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


 


(iv)        one-time
events pursuant to changes in GAAP and certain non- cash items after discussions between the Manager and the Company's Independent
Directors and approved by a majority of the Company's Independent Directors.


 


For purposes of calculating Stockholders' Equity, outstanding
OP units (other than OP units held by the Company) shall be treated as outstanding shares of capital stock of the Company.


 


(qq)         "Subsidiary"
means any subsidiary of the Company; any partnership, the general partner of which is the Company or any subsidiary of the Company;
any limited liability company, the managing member of which is the Company or any subsidiary of the Company; and any corporation
or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity
interests is owned, directly or indirectly, by the Company or any subsidiary of the Company. Initially, the Subsidiaries shall
be Merger Sub, Sutherland Asset I, Sutherland Asset II, SAMC 2013, ZAIS Asset I, ZAIS Asset II, ZAIS Asset III,
ZAIS Asset IV, ZFC Funding, ZFC Trust and ZFC Trust TRS.


 


(rr)          "Termination
Fee" shall have the meaning set forth in Section 13(b) of this Agreement.


 




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(ss)         "Termination
Notice" shall have the meaning set forth in Section 13(a) of this Agreement.


 


(tt)          "Treasury
Regulations" means the regulations promulgated under the Code as amended from time to time.


 


SECTION 2.         Appointment
and Duties of the Manager.


 


(a)          The
Company and each of the Subsidiaries hereby appoints the Manager to manage the assets of the Company and the Subsidiaries 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 and the Subsidiaries, at all times
will be subject to the supervision of the 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 the Subsidiaries and will perform (or cause to
be performed) such services and activities relating to the assets and operations of the Company and the Subsidiaries as may be
appropriate, including, without limitation:


 


(i)          serving
as the Company's and the Subsidiaries' consultant with respect to the periodic review of the investment guidelines and other parameters
for acquisitions of Assets, financing activities and operations, any modification to which shall be approved by a majority of the
Independent Directors (such 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 opportunities and acquiring, financing, retaining, selling, restructuring or disposing of Assets
consistent with the Guidelines;


 


(iii)        with
respect to prospective purchases, sales or exchanges of Assets, conducting negotiations on behalf of the Company and the Subsidiaries
with sellers, purchasers and brokers and, if applicable, their respective agents and representatives;


 


(iv)        advising
the Company on and negotiating and entering into, on behalf of the Company and the Subsidiaries, repurchase agreements, resecuritizations,
securitizations, warehouse facilities, bank credit facilities (including term loans and revolving facilities), credit finance agreements,
commercial papers, interest rate swap agreements and other hedging instruments and all other agreements and engagements required
for the Company and the Subsidiaries to conduct their business;


 




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(v)         engaging
and supervising, on behalf of the Company and the Subsidiaries 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, legal and accounting services, and all other services as may be required relating to Assets;


 


(vi)        coordinating
and managing operations of co-investment interests or joint venture held by the Company and the Subsidiaries and conducting all
matters with the co-investment partners or joint venture;


 


(vii)       providing
executive and administrative personnel, office space and office services required in rendering services to the Company and the
Subsidiaries;


 


(viii)      administering
the day-to-day operations and performing and supervising the performance of such other administrative functions necessary to the
management of the Company and the Subsidiaries 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 debts and obligations of the Company and the Subsidiaries and maintenance
of appropriate computer services to perform such administrative functions;


 


(ix)         communicating
on behalf of the Company and the Subsidiaries with the holders of any of their equity or debt securities 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 and the
Subsidiaries, consistent with such strategies as so modified from time to time, with the Company's qualification as a REIT and
with the Guidelines;


 


(xii)        counseling
the Company regarding the maintenance of its qualification 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;


 


(xiii)       counseling
the Company and the Subsidiaries regarding the maintenance of their exclusion from the status of an investment company required
to register under the Investment Company Act, monitoring compliance with the requirements for maintaining such exemptions and using
commercially reasonable efforts to cause them to maintain such exemptions from such status;


 


(xiv)      assisting
the Company and the Subsidiaries in developing criteria for asset purchase commitments that are specifically tailored to the Company's
objectives and strategies and making available to the Company and the Subsidiaries its knowledge and experience with respect to
mortgage-backed securities, mortgage loans, real estate, real estate- related securities, other real estate-related assets and
non-real estate-related assets;


 




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(xv)       furnishing
reports and statistical and economic research to the Company and the Subsidiaries regarding their activities and services performed
for the Company and the Subsidiaries by the Manager;


 


(xvi)      monitoring
the operating performance of Assets 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)     deploying
and redeploying any moneys and securities of the Company and the Subsidiaries (including acquiring short-term Assets pending the
acquisition of other Assets, payment of fees, costs and expenses, or payments of dividends or distributions to stockholders and
partners of the Company and the Subsidiaries) and advising the Company and the Subsidiaries as to their capital structure and capital
raising;


 


(xviii)    assisting
the Company and the Subsidiaries in retaining qualified accountants and legal counsel, as applicable, to assist in developing appropriate
accounting systems and procedures, internal controls and other 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 and the Subsidiaries to qualify to do business in all applicable jurisdictions and to obtain and maintain all appropriate
licenses;


 


(xx)        assisting
the Company and the Subsidiaries in complying with all regulatory requirements applicable to them in respect of their 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, the Securities Act, or by stock exchange requirements;


 


(xxi)       assisting
the Company and the Subsidiaries in taking all necessary action to enable them to make required tax filings and reports, complying
with any tax audits and assisting with any tax controversy, including soliciting stockholders for required information to the extent
required by the provisions of the Code applicable to REITs;


 


(xxii)      placing,
or facilitating the placement of, all orders pursuant to the Manager's investment determinations for the Company and the Subsidiaries,
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) on the Company's and/or the Subsidiaries' behalf in which the Company and/or the Subsidiaries may be involved or
to which they may be subject arising out of their 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;


 




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(xxiv)    using
commercially reasonable efforts to cause expenses incurred by the Company and the Subsidiaries or on their behalf 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)     arranging
marketing materials, advertising, industry group activities (such as conference participations and industry organization memberships)
and other promotional efforts designed to promote the business of the Company and the Subsidiaries;


 


(xxvi)    advising
the Company and the Subsidiaries with respect to and structuring long term financing vehicles for their portfolio of assets, and
offering and selling securities publicly or privately in connection with any such structured financing;


 


(xxvii)   representing
and making recommendations to the Company and the Subsidiaries in connection with the purchase and finance of, and commitment to
purchase and finance, mortgage-backed securities, 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;


 


(xxviii)   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 and the Subsidiaries as the Board of Directors shall reasonably request or the Manager shall deem appropriate under
the particular circumstances; and


 


(xxix)      using
commercially reasonable efforts to cause the Company and the Subsidiaries 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 and the Subsidiaries with respect
to the Assets. Such services will include, but not be limited to, consulting with the Company and the Subsidiaries on the purchase
and sale of, and other 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
the Subsidiaries 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 and the Subsidiaries 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 and the Subsidiaries; review of 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 and each of the Subsidiaries 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, warehouse finance, securities repurchase and reverse repurchase agreements
and arrangements, brokerage agreements, interest rate swap agreements, custodial agreements and such other agreements, instruments
and authorizations on their 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.


 




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(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 and the Subsidiaries to provide property management, asset
management, leasing, development and/or other services to the Company and the Subsidiaries (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 and the
Subsidiaries; 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 members 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 entities
for the provision of sub-advisory services to the Manager in order to enable the Manager to provide the services to the Company
and the Subsidiaries 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 and the
Subsidiaries, and (ii) shall be approved by the Independent Directors.


 


(f)          The
Manager may retain, for and on behalf and at the sole cost and expense of the Company and the Subsidiaries, such services of asset
monitors, servicers, 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 and the Subsidiaries. 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. Except as otherwise provided herein, the Company and the Subsidiaries 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 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 and the Subsidiaries as a whole and may contribute to an improvement
in the performance of the Company and the Subsidiaries or the Manager or its affiliates in providing services to the Company and
the Subsidiaries on terms that no direct payment is made but instead the Manager and/or its affiliates undertake to place business
with that party.


 




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(h)          In
executing portfolio transactions and selecting brokers or dealers, the Manager will use its best efforts to seek on behalf of the
Company and the Subsidiaries 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 and the Subsidiaries. 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 promote
the best interests of the Company and the Subsidiaries.


 


(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 and the Subsidiaries, prepare, or cause to be prepared, with respect to any Asset, reports
and other information with respect to such Asset 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 and the Subsidiaries, all reports,
financial or otherwise, with respect to the Company and the Subsidiaries reasonably required by the Board of Directors in order
for the Company and the Subsidiaries to comply with their 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 such
reports and other materials including, without limitation, an annual audit of the Company's and the Subsidiaries' books of account
by a nationally recognized registered independent public accounting firm.


 




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(l)          The
Manager shall prepare regular reports for the Board of Directors to enable the Board of Directors to review the Company's and the
Subsidiaries' 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 and
the Subsidiaries 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 and the Subsidiaries pursuant to Section 9 in excess of that contained in any applicable Company Account (as herein
defined) or otherwise made available by the Company and the Subsidiaries 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 and the
Subsidiaries 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 and
the Subsidiaries' sole cost and expense.


 


SECTION 3.        Devotion
of Time; Additional Activities.


 


(a)          The
Manager and its affiliates will provide the Company and the Subsidiaries with a management team, including a Chief Executive Officer,
a Chief Financial Officer, and other appropriate support personnel. Other than the Company's Chief Financial Officer and an accounting
professional, the Manager is not obligated to dedicate any of its employees exclusively to the Company, nor is the Manager or its
employees obligated to dedicate any specific portion of its or their time to the Company.


 


(b)          Nothing
in this Agreement shall (i) prevent the Manager or any of its affiliates, officers, directors, employees or personnel, from
engaging in other businesses or from rendering services of any kind to any other Person, including, without limitation, investing
in, or rendering advisory services to others investing in, any type of business (including, without limitation, acquisitions of
assets that meet the principal objectives of the Company), whether or not the objectives or policies of any such other Person or
entity are similar to those of the Company or (ii) in any way bind or restrict the Manager or any of its affiliates, officers,
directors, employees or personnel from buying, selling or trading any securities or assets for their own accounts or for the account
of others for whom the Manager or any of its affiliates, officers, directors, employees or personnel may be acting. When making
decisions where a conflict of interest may arise, the Manager will endeavor to allocate acquisition and financing opportunities
in a fair and equitable manner over time as between the Company and the Subsidiaries and the Manager's other funds and clients.


 




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(c)          Managers,
partners, officers, employees, personnel and agents of the Manager or affiliates of the Manager may serve as directors, officers,
employees, personnel, agents, nominees or signatories for the Company and/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 or the Subsidiaries, such persons shall use their respective
titles in the Company or the Subsidiaries.


 


SECTION 4.        Agency.
The Manager shall act as agent of the Company and the Subsidiaries in making, acquiring, financing and disposing of Assets, disbursing
and collecting the funds of the Company and the Subsidiaries, paying the debts and fulfilling the obligations of the Company and
the Subsidiaries, supervising the performance of professionals engaged by or on behalf of the Company and the Subsidiaries and
handling, prosecuting and settling any claims of or against the Company and the Subsidiaries, the Board of Directors, holders of
the Company's securities or representatives or properties of the Company and the Subsidiaries.


 


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 unaffiliated 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 over the Company or any Subsidiary; (v) in connection with any governmental or regulatory filings of the
Company or any Subsidiary or disclosure or presentations to Company investors; (vi) as required by law or legal process to
which the Manager or any Person to whom disclosure is permitted hereunder is a party; or (vii) to the extent such information
is otherwise publicly available. 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 year.


 




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SECTION 7.        Obligations
of Manager; Restrictions.


 


(a)          The
Manager shall require each seller or transferor of investment assets to the Company and the Subsidiaries 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 Assets.


 


(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 and materially affect the status of the Company as a REIT under the Code, (iii) would adversely
and materially affect the Company's or any Subsidiary's status as an entity intended to be exempted or excluded from investment
company status under the Investment Company Act or (iv) 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 and materially affect such status or violate any
such law, rule or regulation or the Governing Instruments. Notwithstanding the foregoing, the Manager, its directors, members,
officers, stockholders, managers, personnel, employees and any Person controlling or controlled by the Manager and any Person providing
sub-advisory services to the Manager shall not be liable to the Company or any Subsidiary, the Board of Directors, or the Company's
or any Subsidiary's stockholders, members 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 shall periodically review the Guidelines and the Company's portfolio of Assets but will not review each proposed
Asset, except as otherwise provided herein. If a majority of the Independent Directors determines 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 acquisition.


 


(d)          Neither
the Company nor the Subsidiaries shall acquire any security structured or issued by an entity managed by the Manager or any affiliate
thereof, or purchase or sell any Asset from or to any entity managed by the Manager or its affiliates unless (i) the transaction
is made in accordance with the Guidelines; (ii) the transaction is approved in advance by a majority of the Independent Directors;
and (iii) the transaction is made in accordance with applicable laws.


 


(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 and the Subsidiaries, in an amount
which is comparable to that customarily maintained by other managers or servicers of similar assets.


 




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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 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 in cash no later than the date which is five 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)          Under
the Partnership Agreement, the Manager, the holder of the Class A Special Unit in the Operating Partnership, will be entitled
to receive the Incentive Distribution, distributed quarterly in arrears in an amount not less than zero equal to the difference
between (i) the product of (A) 15% and (B) the difference between (x) Core Earnings of the Operating Partnership,
on a rolling four-quarter basis and before the Incentive Distribution for the current quarter, and (y) the product of (1) the
weighted average of the issue price per share of Common Stock or OP units (without double counting) in all of their offerings multiplied
by the weighted average number of shares of Common Stock outstanding (including any restricted shares of Common Stock and any other
shares of Common Stock underlying awards granted under the Equity Incentive Plan (as defined in the Partnership Agreement)) and
OP units (without double counting) in such quarter and (2) 8%, and (ii) the sum of any Incentive Distribution paid to
the Manager with respect to the first three calendar quarters of such previous four quarters; provided, however,
that no Incentive Distribution is payable with respect to any calendar quarter unless Core Earnings is greater than zero
for the most recently completed 12 calendar quarters, or the number of completed calendar quarters since the Effective Date, whichever
is less. For purposes of calculating the Incentive Distribution prior to the completion of a 12-month period following the Effective
Date, Core Earnings will be calculated on an annualized basis. Core Earnings for the initial quarter will be calculated from the
Effective Date on an annualized basis. In addition, for purposes of the calculating the Incentive Distribution, the Effective Date
Issued Stock and Units (as defined below) shall be deemed to be issued at the per share price equal to (i) the sum of (A) the weighted
average of the issue price per share of Sutherland common stock or Sutherland Operating Partnership units (without double counting)
issued prior to the Effective Date multiplied by the number of shares of Sutherland common stock outstanding and Sutherland Operating
Partnership units (without double counting) issued prior to the Effective Date plus (B) the amount by which the net book value
of the Company as of the Effective Date (after giving effect to the closing of the Merger Agreement) exceeds the amount of the
net book value of Sutherland immediately preceding the Effective Date, divided by (ii) all of the shares of Common Stock and OP
units issued and outstanding as of Effective Date (including the Effective Date Issued Stock and Units). “Effective Date
Issued Stock and Units” means the shares of Common Stock and OP units issued on the Effective Date in connection with the
Merger Agreement. The Incentive Distribution is payable 50% in cash and 50% in Common Stock or OP units, as determined by the Company
in its discretion, within five business days after delivery to the Company of the written statement from the holder of the Class A
Special Unit setting forth the computation of the Incentive Distribution for such quarter. The price of the shares of Common Stock
for purposes of determining the number of shares payable as part of the Incentive Distribution will be (i) if the shares are
Publicly Traded (as defined in the Partnership Agreement), the closing price of such shares on the last trading day prior to the
approval by Board of Directors of the Incentive Distribution or (ii) if the shares are not Publicly Traded, then the price
per share as so determined in good faith by a majority of Board of Directors, including a majority of the Independent Directors.


 




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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. Such costs and reimbursements shall not be in amounts which are 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. Expenses include all costs and expenses which are expressly designated elsewhere in this Agreement as the Company's, together
with the following:


 


(i)          expenses
in connection with the issuance and transaction costs incident to the acquisition, disposition and financing of Assets;


 


(ii)         costs
of legal, tax, accounting, third party administrators for the establishment and maintenance of the books and records, consulting,
auditing, administrative and other similar services rendered for the Company and the Subsidiaries by providers retained by the
Manager or, if provided by the Manager's personnel, 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;


 


(iii)        the
compensation and expenses of the Company's directors and the cost of liability insurance to indemnify the Company's directors and
officers;


 


(iv)        costs
associated with the establishment and maintenance of any of the Company's repurchase agreements, resecuritizations, securitizations,
warehouse facilities, bank credit facilities (including term loans and revolving facilities) or other indebtedness of the Company
(including commitment fees, accounting fees, legal fees, closing and other similar costs) or any of the Company's or any Subsidiary's
organizational expenses and securities offerings;


 


(v)         expenses
connected with communications to holders of the Company's or any Subsidiary's securities 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, and the costs of preparing, printing and mailing the Company's annual report to its stockholders and proxy materials
with respect to any meeting of the Company's stockholders;


 




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(vi)        costs
associated with any computer software or hardware, electronic equipment or purchased information technology services from third
party vendors that is used for the Company and the Subsidiaries;


 


(vii)       expenses
incurred by managers, officers, personnel and agents of the Manager for travel on the Company's behalf and other out-of-pocket
expenses incurred by managers, officers, personnel and agents of the Manager in connection with the purchase, financing, refinancing,
sale or other disposition of an Asset or establishment and maintenance of any repurchase agreements, resecuritizations, securitizations,
warehouse facilities, bank credit facilities (including term loans and revolving facilities) or any of the Company's or any of
the Subsidiary's organizational expenses and securities offerings;


 


(viii)      costs
and expenses incurred with respect to market information systems and publications, research publications, and materials and settlement,
clearing and custodial fees and expenses;


 


(ix)         compensation
and expenses of the Company's custodian and transfer agent, if any;


 


(x)          the
costs of maintaining compliance with all federal, state and local rules and regulations or any other regulatory agency;


 


(xi)         all
taxes and license fees;


 


(xii)        all
insurance costs incurred in connection with the operation of the Company's business;


 


(xiii)       costs
and expenses incurred in contracting with third parties, including affiliates of the Manager, for the servicing and special servicing
of the assets of the Company and the Subsidiaries;


 


(xiv)      all
other costs and expenses relating to the business operations of the Company and the Subsidiaries, including, without limitation,
the costs and expenses of acquiring, owning, protecting, maintaining, developing and disposing of Assets, including appraisal,
reporting, audit and legal fees;


 


(xv)       expenses
relating to any office(s) or office facilities, including, but not limited to, disaster backup recovery sites and facilities, maintained
for the Company and the Subsidiaries or Assets separate from the office or offices of the Manager;


 




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(xvi)      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 holders of the Company's or any Subsidiary's securities, including, without limitation,
in connection with any dividend reinvestment plan;


 


(xvii)     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;


 


(xviii)    expenses
incurred in connection with obtaining and maintaining the insurance coverage referred to in Section 7(e) above; and


 


(xix)       all
other expenses actually incurred by the Manager (except as described below) which are reasonably necessary for the performance
by the Manager of its duties and functions under this Agreement.


 


Except as provided
in Section 2(f) of this Agreement, the Company shall have no obligation to reimburse the Manager or its affiliates for the salaries
and other compensation of the Manager's personnel who provide services to the Company under this Agreement except that, the Company
shall reimburse the Manager for (1) the Company's allocable share of the compensation paid to the Manager's personnel serving
as the Company's Chief Financial Officer based on the percentage of his or her time spent managing the Company's affairs and (2) the
allocable share of the compensation of personnel hired by the Manager who are dedicated primarily to the Company. The Company's
share of such costs shall be based upon the percentage of time devoted by such personnel of the Manager to the Company's and its
Subsidiaries' affairs. The Manager shall provide the Company with such written detail as the Company may reasonably request to
support the determination of the Company's share of such costs.


 


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 operations of the
Company and the Subsidiaries. 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 or held by the Manager as calculated at each fiscal quarter
end. The Manager and the Company will modify this allocation methodology, subject to the Independent Directors' approval, if the
allocation becomes inequitable, based on significant leverage differences between the Company and the Manager's other funds and
clients.


 


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.


 




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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 Subsidiaries and the Expenses
incurred by the Manager on behalf of the Company and the Subsidiaries during each month, and shall deliver such statement to the
Company within 30 days after the end of each month. Expenses incurred by the Manager on behalf of the Company and the Subsidiaries
shall be reimbursed by the Company to the Manager on the fifth 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 and the Subsidiaries. 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 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, stockholders, members, managers,
directors, personnel, any Person controlling or controlled by the Manager and any Person providing sub-advisory services to the
Manager will not be liable to the Company or any Subsidiary, to the Board of Directors, or the Company's or any Subsidiary's stockholders,
members or partners for any acts or omissions by any such Person (including, without limitation, trade errors that may result from
ordinary negligence, such as errors in the investment decision making process or in the trade process), pursuant to or in accordance
with this Agreement, except by reason of acts or omissions constituting bad faith, willful misconduct, gross negligence or reckless
disregard of the Manager's duties under this Agreement, as determined by a final non-appealable order of a court of competent jurisdiction.
The Company shall, to the full extent lawful, reimburse, indemnify and hold the Manager, its officers, stockholders, members, managers,
directors, personnel, any Person controlling or controlled by the Manager and any Person providing sub-advisory services to the
Manager, together with such Person's managers, officers, directors and personnel (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.


 




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(b)          The
Manager shall, to the full extent lawful, reimburse, indemnify and hold the Company (or any Subsidiary), its stockholders, directors
and officers 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 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 or any claims
by the Manager's personnel relating to the terms and conditions of their employment by the Manager.


 


(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 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 from the Effective Date until the
third anniversary of the Effective Date (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 members of the Company's
senior management team and affiliates of the Manager) agree that (i) there has been unsatisfactory performance by the Manager
that is materially detrimental to the Company and the Subsidiaries 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 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 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, no fewer than 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 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) 10 days following the end of such 45-day period and (B) the
Effective Termination Date originally set forth in the Termination Notice.


 




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(b)          In
recognition of the level of the upfront effort required by the Manager to structure and acquire the assets of the Company and the
Subsidiaries and the commitment of resources by the Manager, subject to Section 15(a) of this Agreement, 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 times the average annual Base Management Fee 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. Additionally, if this
Agreement is terminated under circumstances in the Company is obligated to pay the Termination Fee to the Manager, under the Partnership
Agreement, the Operating Partnership shall repurchase, concurrently with such termination, the Class A Special Unit for an
amount equal to three times the average annual amount of the Incentive Distribution paid or payable in respect of the Class A
Special Unit during the 24-month period immediately preceding such termination, calculated as of the end of the most recently completed
fiscal quarter before the date of termination.


 


(c)          No
later than 180 days prior to the anniversary of the Effective Date 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 of the Effective
Date 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.


 




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(e)          This
Agreement shall terminate automatically upon any termination of the Merger Agreement in accordance with its terms, and such termination
shall be without any further liability or obligation of either party to the other, except as provided in the Merger 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 approval of a majority
of the Independent Directors; provided, however, that no such approval shall be required in the case of an
assignment by the Manager to an affiliate of the Manager if such assignment does not require the Company's approval under the Investment
Advisers Act of 1940. Any such permitted assignment 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 or the Partnership
Agreement. In addition, the Manager may assign this Agreement to any of its affiliates without the approval of the Company's independent
directors.


 


SECTION 15.      Termination
for Cause.


 


(a)          The
Company may terminate this Agreement effective upon 30 days' prior written notice of termination from the Board of Directors
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 30 days after written notice thereof specifying
such breach and requesting that the same be remedied in such 30-day period (or 45 days after written notice of such breach
if the Manager takes steps to cure such breach within 30 days of the written notice), (ii) the Manager engages in any
act of fraud, misappropriation of funds, or embezzlement against the Company or any Subsidiary, (iii) there is an event of
any gross negligence on the part of the Manager in the performance of its duties under this Agreement resulting in material harm
to the Company, (iv) there is a commencement of any proceeding relating to the Manager's Bankruptcy or insolvency, including
an order for relief in an involuntary bankruptcy case or the Manager authorizing or filing a voluntary bankruptcy petition, (v) the
Manager is convicted (including a plea of nolo contendere) of a felony, (vi) there is a dissolution of the Manager,
or (vii) there is an Internalization Event; provided, that the Company may pay consideration to compensate the
Manager for the Internalization Event in an amount that the Company will negotiate with the Manager in good faith and which will
require the approval of at least a majority of the Company's Independent Directors.


 




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(b)          The
Manager may terminate this Agreement effective upon 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 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" 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 any
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 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, personnel, managers, and officers and 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.


 




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SECTION 18.      Notices.
Unless expressly provided otherwise in this Agreement, all notices, requests, demands and other communications required or permitted
under this Agreement shall be in writing and shall be deemed to have been duly given, made and received when 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:



 


Prior to the Effective Date: The notice address of
the Company as set forth in the Merger Agreement.


 


Following the Effective Date:


 


Sutherland Asset Management Corporation

1140 Avenue of the Americas, 7th Floor

New York, New York 10036

Attention: Kenneth Nick

Facsimile: 212-843-8909

Telephone: (212) 257-4606


 


		(b)	If to the Manager:



 


Waterfall Asset Management, LLC

1140 Avenue of the Americas, 7th Floor

New York, New York 10036

Attention: Kenneth Nick

Facsimile: 212-843-8909

Telephone: (212) 257-4606


 


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.


 




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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.


 


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 hereunder 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.


 




    25 


     


    

 


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]


 




    26 


     


    

 


IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of the date first written above.


 


	 	ZAIS FINANCIAL CORP.
	 	 	 
	 	By:	/s/ Michael F. Szymanski
	 	 	Name: Michael F. Szymanski
	 	 	Title: Chief Executive Officer
	 	 
	 	ZAIS FINANCIAL PARTNERS, L.P.
	 	By: ZAIS Financial Corp., its General Partner
	 	 	 
	 	By:	/s/ Michael F. Szymanski
	 	 	Name: Michael F. Szymanski
	 	 	Title: Chief Executive Officer
	 	 
	 	ZAIS MERGER SUB, LLC
	 	 	 
	 	By:	/s/ Michael F. Szymanski
	 	 	Name: Michael F. Szymanski
	 	 	Title: Chief Executive Officer
	 	 
	 	ZAIS ASSET I, LLC
	 	By: ZAIS Financial Partners, L.P., its Managing Member
	 	By: ZAIS Financial Corp., its General Partner
	 	 	 
	 	By:	/s/ Michael F. Szymanski
	 	 	Name: Michael F. Szymanski
	 	 	Title: Chief Executive Officer
	 	 
	 	ZAIS ASSET II, LLC
	 	By: ZAIS Financial Partners, L.P., its Managing Member
	 	By: ZAIS Financial Corp., its General Partner
	 	 	 
	 	By:	/s/ Michael F. Szymanski
	 	 	Name: Michael F. Szymanski
	 	 	Title: Chief Executive Officer


 


Signature Page to


Waterfall Management Agreement


 




     


     


    

 


	 	ZAIS ASSET III, LLC
	 	By: ZAIS Financial Partners, L.P., its Managing Member
	 	By: ZAIS Financial Corp., its General Partner
	 	 	 
	 	By:	/s/ Michael F. Szymanski
	 	 	Name: Michael F. Szymanski
	 	 	Title: Chief Executive Officer
	 	 
	 	ZAIS ASSET IV, LLC
	 	By: ZAIS Financial Partners, L.P., its Managing Member
	 	By: ZAIS Financial Corp., its General Partner
	 	 	 
	 	By:	/s/ Michael F. Szymanski
	 	 	Name: Michael F. Szymanski
	 	 	Title: Chief Executive Officer
	 	 
	 	ZFC FUNDING, INC.
	 	 	 
	 	By:	/s/ Michael F. Szymanski
	 	 	Name: Michael F. Szymanski
	 	 	Title: Chief Executive Officer
	 	 
	 	ZFC TRUST
	 	 	 
	 	By:	/s/ Michael F. Szymanski
	 	 	Name: Michael F. Szymanski
	 	 	Title: Chief Executive Officer
	 	 
	 	ZAIS TRUST TRS I, LLC
	 	By: ZFC Trust, its Managing Member
	 	 	 
	 	By:	/s/ Michael F. Szymanski
	 	 	Name: Michael F. Szymanski
	 	 	Title: Chief Executive Officer


 


Signature Page to


Waterfall Management Agreement


 




     


     


    

 


	 	SUTHERLAND ASSET I, LLC
	 	 	 
	 	By:	/s/ Frederick C. Herbst
	 	 	Name: Frederick C. Herbst
	 	 	Title: Authorized Person
	 	 
	 	SUTHERLAND ASSET II, LLC
	 	 	 
	 	By:	/s/ Frederick C. Herbst
	 	 	Name: Frederick C. Herbst
	 	 	Title: Authorized Person
	 	 
	 	SAMC REO 2013-01, LLC
	 	 	 
	 	By:	/s/ Frederick C. Herbst
	 	 	Name: Frederick C. Herbst
	 	 	Title: Authorized Person
	 	 
	 	WATERFALL ASSET MANAGEMENT, LLC
	 	 	 
	 	By:	/s/ Thomas Capasse
	 	 	Name: Thomas Capasse
	 	 	Title: Authorized Person


 


Signature Page to


Waterfall Management Agreement


 




     


     


    

 


EXHIBIT A


 


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



 


		·	No investment shall be made that would cause the Company
or any of its subsidiaries to be required to be registered as an investment company under the Investment Company Act.



 


		·	Until appropriate investments can be identified, the Company
may invest the proceeds of debt and equity securities offerings in interest-bearing, short-term investments, including money market
accounts and/or funds, that are consistent with its intention to qualify as a REIT.



 


		·	The Company’s Assets will be predominantly in SBC
Loans; and to a lesser extent, asset-backed securities, where the underlying pool of assets consists primarily of SBC Loans; residential
mortgage loans; Non-Agency RMBS; Agency RMBS; and other real estate-related and financial assets, including, but not limited to,
CMBS and ABS.



 


For purposes of this Exhibit A:


 


"ABS" means asset-backed securities.


 


"Agency RMBS" means residential mortgage-backed
securities for which a U.S. government entity guarantees payment of principal and interest to holders of the securities.


 


"CMBS" means commercial mortgage-backed securities.


 


"Non-Agency RMBS" means residential mortgage-backed
securities that are not issued or guaranteed by a U.S. government agency or federally chartered corporation.


 


"SBC Loans" means small-balance commercial
loans.