Exhibit 10.1


MANAGEMENT AGREEMENT


          THIS MANAGEMENT AGREEMENT is made as of August 31, 2009 by and among FIXED INCOME DISCOUNT ADVISORY COMPANY,
a Delaware corporation (together with its permitted assignees, the “Manager”), CREXUS INVESTMENT CORP., a Maryland corporation
 (the “Company”), and each Subsidiary (as defined below) of the Company that becomes a party to the Agreement (as defined below)
pursuant to Section 29, and shall become effective and binding on the Manager and the Company as of the date of the pricing of the Company’s initial public offering. 


          WHEREAS,
the Company intends to elect to be taxed as a “real estate investment trust” (“REIT”)
as defined under the Internal Revenue Code of 1986, as amended (the “Code”);
and 


          WHEREAS,
the Company and the Subsidiaries each desire to retain the Manager to provide
investment advisory services to the Company and the Subsidiaries 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)
“Affiliate” means (i) any Person directly or indirectly controlling,
controlled by, or under common control with such other Person, (ii) any executive
officer, general partner or employee of such other Person, (iii) any member of
the board of directors or board of managers (or bodies performing similar
functions) of such Person, and (iv) any legal entity for which such Person acts
as an executive officer or general partner.


                    (b)
“Agreement” means this Management Agreement, as amended
from time to time. 


                    (c)
“Annaly” means Annaly Capital Management, Inc.


                    (d)
“Assets” means the assets of the Company and the
Subsidiaries.


                    (e)
“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.






                    (f)
“Board of Directors” means the Board of Directors of the
Company. 


                    (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” has the meaning set forth in the recitals of the
Agreement. 


                    (i)
“Common Stock” means the common stock, par value $0.01 per share, of the
Company.


                    (j)
“Company” has the meaning
set forth in the preamble of the Agreement. 


                    (k)
“Company Account” has the
meaning set forth in Section 5 of the Agreement. 


                    (l)
“Company Indemnified Party”
has the meaning set forth in Section 11(b) of the Agreement. 


                    (m)
“Effective Termination Date”
has the meaning set forth in Section 13(a) of the Agreement.


                    (n)
“Excess Funds” has the
meaning set forth in Section 2(m) of the Agreement. 


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


                    (p)
“Expenses” has the meaning
set forth in Section 9 of the 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 


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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” has the
meaning set forth in Section 2(b)(i) of the Agreement.


                    (t)
“Indemnitee” has the
meaning set forth in Section 11(b) of the Agreement. 


                    (u)
“Indemnitor” has the meaning set forth in Section 11(c) of
the Agreement. 


                    (v)
“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. 


                    (w)
“Initial Term” has the meaning set forth in Section 13(a)
of the Agreement.


                    (x)
“Investment Company Act” means the Investment Company Act
of 1940, as amended.


                    (y)
“Management Fee” means a management fee equal to 0.50% per annum for the first six months following the completion of the Company’s initial public
offering, 1.00% per annum for the second six months following the completion of the Company’s initial
public offering, and 1.50% per annum after the first twelve months following the completion of the
Company’s initial public offering, calculated and paid (in cash) quarterly in arrears, of the Stockholders’
Equity. The Management Fee will be reduced, but not below zero, by the
Company’s or a Subsidiary’s proportionate share of any management fees the
Manager receives in connection with any investment vehicle in which the Company
or such Subsidiary, as applicable, invests, based on the percentage of equity
the Company or such Subsidiary, as applicable, holds in such vehicle. 


                    (z)
“Manager” has the meaning set forth in the preamble of the
Agreement. 


                    (aa)
“Manager Indemnified Party” has the meaning set forth in
Section 11(a) of the Agreement.


                    (bb)
“Monitoring Services” has the meaning set forth in Section
2(b) of the Agreement.


                    (cc)
“MOSAs” mean mortgage loan origination and servicing agreements.


                    (dd)
“Notice of Proposal to Negotiate” has the meaning set
forth in Section 13(a) of the Agreement.


                    (ee)
“NYSE” means the New York Stock Exchange LLC.


                    (ff)
“Person” means any individual, corporation, partnership,
joint venture, limited liability company, estate, trust, unincorporated
association, any federal, state, county or 


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municipal
government or any bureau, department or agency thereof and any fiduciary acting
in such capacity on behalf of any of the foregoing. 


                    (gg)
“Portfolio Management Services” has the meaning set forth
in Section 2(b) of the Agreement.


                    (hh)
 “Qualified REIT
Subsidiary” has the meaning set forth in Section 856(i)(2) of the Code.


                    (ii)
“REIT” has the meaning set forth in the recitals of the Agreement. 


                    (jj)
“Renewal Term” has the meaning set forth in Section 13(a)
of the Agreement.


                    (kk)
“Securities Act” means the Securities Act of 1933, as amended.


                    (ll)
“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 consolidated 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 


	
 

	
 


	
 

	
          (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. 





                    (mm)
“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.


                    (nn)
“Taxable REIT Subsidiary” has the meaning set forth in
Section 856(l) of the Code. 


                    (oo)
“Termination Fee” has the meaning set forth in Section
13(b) of the Agreement.


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                    (pp)
“Termination Notice” has the meaning set forth in Section
13(a) of the Agreement.


                    (qq)
“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 and each Subsidiary that becomes a party to this
Agreement each hereby appoints the Manager to manage the Assets of the Company
and each Subsidiary that becomes a party to this Agreement 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. Unless otherwise provided, the appointment gives the
Manager discretionary authority over the Assets and in the performance of the
Portfolio Management Services, as defined below. 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 its Subsidiaries, 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 and its Subsidiaries 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 its Subsidiaries
and will perform (or cause to be performed) such services and activities
relating to the Assets and operations of the Company and its Subsidiaries as
may be appropriate, including, without limitation: 


	
 

	
 


	
 

	
                    (i)
 serving as consultant for the Company and its Subsidiaries with
 respect to the periodic review of the investment criteria and parameters for
 the Assets, 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 asset
 acquisition 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 its
 Subsidiaries, with sellers and purchasers and their respective agents,
 representatives and investment bankers; 


	
 

	
 


	
 

	
                    (iv)
 negotiating and entering into, on behalf of the Company and its Subsidiaries,
 repurchase agreements, securitizations, commercial paper, CDOs, interest rate
 swap agreements, warehouse facilities and other agreements and instruments
 required for the Company and its Subsidiaries to conduct its business;





5









	
 

	
 


	
 

	
                    (v)
 engaging and supervising, on behalf of the Company and its
 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, and
 all other services as may be required relating to the Company’s and the
 Subsidiaries’ operations or Assets (or potential Assets); 


	
 

	
 


	
 

	
                    (vi)
 advising the Company and its Subsidiaries on, preparing, negotiating and
 entering into, on the Company’s behalf, applications and agreements relating
 to programs established by the U.S. Government;


	
 

	
 


	
 

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


	
 

	
 


	
 

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


	
 

	
 


	
 

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


	
 

	
 


	
 

	
                    (x)
 communicating on behalf of the Company and its Subsidiaries
 with the holders of any equity or debt securities of the Company and its
 Subsidiaries 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; 


	
 

	
 


	
 

	
                    (xi)
 counseling the Company in connection with policy decisions to
 be made by the Board of Directors; 


	
 

	
 


	
 

	
                    (xii)
 evaluating and recommending to the Board of Directors hedging
 strategies and engaging in hedging activities on behalf of the Company and
 its Subsidiaries, consistent with such strategies, as so modified from time
 to time, with the Company’s status as a REIT, and with the Guidelines; 


	
 

	
 


	
 

	
                    (xiii)
 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;


	
 

	
 


	
 

	
                    (xiv)
 counseling the Company and its Subsidiaries regarding Asset
 holdings in order for the Company or any Subsidiary not to fall within the
 definition of “investment company” under the Investment Company Act or
 otherwise satisfying an exemption or exclusion from the Investment Company
 Act and monitoring compliance 





6









	
 

	
 


	
 

	
with the
 requirements for maintaining an exemption from that the Investment Company
 Act and using commercially reasonable efforts to cause the Company and its
 Subsidiaries to maintain such exemption from the registration as an
 investment company under the Investment Company Act;


	
 

	
 


	
 

	
                    (xv)
 assisting the Company and its Subsidiaries in developing
 criteria for asset purchase commitments that are specifically tailored to the
 investment objectives of the Company and its Subsidiaries and making
 available to the Company and its Subsidiaries 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; 


	
 

	
 


	
 

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


	
 

	
 


	
 

	
                    (xvii)
 monitoring the operating performance of the Assets and
 providing periodic reports with respect to Asset performance to the Board of
 Directors, including comparative information with respect to such operating
 performance and budgeted or projected operating results; 


	
 

	
 


	
 

	
                    (xviii)
 investing and re-investing any moneys and securities of the
 Company and its Subsidiaries (including investing Assets in short-term
 financial instruments pending investment of such Assets, payment of fees,
 costs and expenses, or payments of dividends or distributions to stockholders
 and partners of the Company and its Subsidiaries) and advising the Company
 and its Subsidiaries as to its capital structure and capital raising; 


	
 

	
 


	
 

	
                    (xix)
 causing the Company and its Subsidiaries 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; 


	
 

	
 


	
 

	
                    (xx)
 assisting the Company and its Subsidiaries in qualifying to do
 business in all applicable jurisdictions and to obtain and maintain all
 appropriate licenses; 


	
 

	
 


	
 

	
                    (xxi)
 assisting the Company in establishing any new Subsidiaries,
 which may be Taxable REIT Subsidiaries or Qualified REIT Subsidiaries;


	
 

	
 


	
 

	
                    (xxii)
 assisting the Company and its Subsidiaries in complying with
 all regulatory requirements applicable to the Company and its Subsidiaries in
 respect of its business activities, including preparing or causing the
 preparation of 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; 





7









	
 

	
 


	
 

	
                    (xxiii)
 assisting the Company and its Subsidiaries 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; 


	
 

	
 


	
 

	
                    (xxiv)
 placing, or arranging for the placement of, all portfolio management orders
 pursuant to its investment determinations for the Company and its
 Subsidiaries either directly with the issuer or with a broker or dealer
 (including any Affiliated broker or dealer); 


	
 

	
 


	
 

	
                    (xxv)
 handling and resolving all claims, disputes or controversies
 (including all litigation, arbitration, settlement or other proceedings or
 negotiations) in which the Company and its Subsidiaries may be involved or to
 which the Company may be subject arising out of the day-to-day operations of
 the Company and its Subsidiaries (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; 


	
 

	
 


	
 

	
                    (xxvi)
 using commercially reasonable efforts to cause expenses
 incurred by or on behalf of the Company and its Subsidiaries 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;
 


	
 

	
 


	
 

	
                    (xxvii)
 representing and making recommendations to the Company and its
 Subsidiaries 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; 


	
 

	
 


	
 

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


	
 

	
 


	
 

	
                    (xxix)
 serving as the consultant for the Company and its Subsidiaries with respect
 to decisions regarding any of its financings, hedging activities or
 borrowings undertaken by the Company and its Subsidiaries including (1)
 assisting the Company and its Subsidiaries in developing criteria for debt
 and equity financing that is specifically tailored to its objectives; and (2)
 advising the Company and its Subsidiaries with respect to obtaining
 appropriate financing for its Assets;


	
 

	
 


	
 

	
                    (xxx)
 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 its
 Subsidiaries;


	
 

	
 


	
 

	
                    (xxxi)
 performing such other services as may be reasonably required
 from time to time for management and other activities relating to the Assets
 and business of the Company and its Subsidiaries as the Board of Directors
 shall reasonably request or the Manager shall deem appropriate under the particular
 circumstances; and 





8









	
 

	
 


	
 

	
                    (xxxii)
 using commercially reasonable efforts to cause the Company and
 its Subsidiaries to materially 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 its
Subsidiaries with respect to the Assets. Such services will include, but not be
limited to: (i) consulting with the Company and its Subsidiaries on the
purchase and sale of portfolio Assets; (ii) identifying other investment
opportunities in connection with managing the portfolio of Assets; (iii)
collecting information on, and submitting reports pertaining to Assets,
interest rates and general economic conditions; (iv) periodically reviewing and
evaluating the performance of the portfolio of Assets; (v) acting as liaison
between the Company and its Subsidiaries and banking, mortgage banking,
investment banking and other parties with respect to the purchase, financing
and disposition of Assets; and (vi) performing other customary functions
related to portfolio management. Additionally, the Manager will perform
monitoring services (the “Monitoring Services”) on behalf of the Company
and its Subsidiaries with respect to any loan servicing activities provided by
third parties. Such Monitoring Services will include, but not be limited to:
(i) negotiating MOSAs with third parties to originate, underwrite, conduct due
diligence, close and service commercial real estate loans; (ii) acting as a
liaison between the servicers of the assets and the Company and its
Subsidiaries; (iii) reviewing servicers’ delinquency, foreclosure and other
reports on Assets; supervising claims filed under any insurance policies; and
(iv) 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 its 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 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 and its
Subsidiaries to provide property management, asset management, leasing,
development and/or other services to the Company and its 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 its
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 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. 


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                    (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
service providers for the provision of sub-advisory services to the Manager in
order to enable the Manager to provide the services to the Company and its
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 its Subsidiaries,
(ii) shall not result in an increased 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 and its Subsidiaries, such services of accountants,
legal counsel, appraisers, insurers, brokers, dealers, 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 its 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. 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 to comparable 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 and its
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
transaction costs, including commissions, mark-ups, markdowns or other expenses,
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” 


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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 its 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 affect the best interests of the Company and its 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 its Subsidiaries, 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 and its Subsidiaries, all reports, financial or
otherwise, with respect to the Company and its Subsidiaries reasonably required
by the Board of Directors in order for the Company and its Subsidiaries 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 such reports and other
materials including, without limitation, an annual audit of the Company’s and
its Subsidiaries’ 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 and its
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 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 and its Subsidiaries’ sole
cost and expense. 


11






          SECTION 3. DEVOTION
OF TIME; ADDITIONAL ACTIVITIES. 


                    (a)
The Manager will provide the Company and its Subsidiaries with a
management team, including a Chief Executive Officer, President, a Head of
Commercial Underwriting, a Chief Financial Officer, and other support
personnel, to provide the management services to be provided by the Manager to
the Company and its Subsidiaries hereunder, the members of which team shall
devote such of their time to the management of the Company and its Subsidiaries
as the Board of Directors commensurate with the level of activity of the
Company and its Subsidiaries from time to time. None of the officers or employees
of the Manager will be dedicated exclusively to the Company and its
Subsidiaries.


                    (b)
Except to the extent set forth in clause (a) above, nothing in
this Agreement shall (i) prevent the Manager, Annaly or any of their
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,
investments that meet the principal investment objectives of the Company and
its Subsidiaries), whether or not the investment objectives or policies of any
such other Person or entity are similar to those of the Company and its
Subsidiaries or (ii) in any way bind or restrict the Manager, Annaly or any of
their Affiliates, officers, directors, employees or personnel from buying,
selling or trading any securities or investments for their own accounts or for
the account of others for whom the Manager, Annaly or any of their Affiliates,
officers, directors, employees or personnel may be acting. Furthermore, the
Manager serves as investment adviser to other REITs, 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 REITs and funds, that may be different from, or
competing with, 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
its Subsidiaries and other clients. The Manager may at certain times be
simultaneously seeking to purchase (or sell) investments from the Company and
its Subsidiaries and sell (or purchase) the same investment for a similar
entity, including other REITs and 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 then existing 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 and its Subsidiaries to the extent permitted by applicable law. The
Manager may (but is not obligated to) aggregate securities trades of the
Company and its Subsidiaries with securities trades of other clients of the
Manager, if in the reasonable and sole determination of the Manager aggregating
such trades will be of benefit to the Company and its Subsidiaries and the
Manager’s other clients and if such aggregation will be consistent with the
Manager’s duties of best execution.


                    (c)
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 


12






capacities for
the Company or the Subsidiary, such persons shall use their respective titles
in the Company or the Subsidiary. 


                    (d)
The Manager is authorized, for and on behalf of, and at the sole cost and
expense of the Company and the Subsidiaries, to employ securities dealers for
the purchase and sale of Assets as the Manager deems necessary or appropriate,
in its sole discretion. All trades will be executed with established securities
dealers which are approved by the Manager selected in a manner consistent with
best execution. No concessions on prices will be made to any dealer by reason
of services or goods provided or offered to be provided. In addition to the
gross dealing price, the Manager will take into account the level of charges,
mark up or mark down made by the counterparty and the creditworthiness of the
counterparty.


                    (e)
The Company (including the Board of Directors) agrees to take, or cause to be
taken, all actions reasonably required to permit and enable the Manager to
carry out its duties and obligations under this Agreement, including, without
limitation, all steps reasonably necessary to allow the Company to file any
registration statement in a timely manner or to deliver any financial
statements or other reports with respect to the Company or any Subsidiary. If
the Manager is not able to provide a service, or in the reasonable judgment of
the Manager it is not prudent to provide a service, without the approval of the
Board of Directors or the Independent Directors, as applicable, then the
Manager shall use good faith reasonable efforts to promptly obtain such
approval and shall be excused from providing such service (and shall not be in
breach of this Agreement) until the applicable approval has been obtained.


          SECTION 4. AGENCY.
The Manager shall act as agent of the Company and each Subsidiary in making,
acquiring, financing and disposing of Assets, disbursing and collecting the
Company’s funds, paying the debts and fulfilling the obligations of the Company
and each Subsidiary, 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 or Subsidiary, the Board of
Directors, and holders of the Company’s and the Subsidiaries’ Assets. 


          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 non-Affiliated third
parties 


13






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 and its
Subsidiaries’ 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 or Subsidiary 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 and its 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 affect the status of the Company as a REIT under the Code,
(iii) would adversely affect the status of the Company or the Subsidiary under the
Investment Company Act or the Company’s or any Subsidiary’s reliance on any
exemption from registration as an “investment company” 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 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 Assets 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 any investment vehicle managed by the Manager
or any Affiliate thereof, unless (i) the investment is made in accordance with
the


14






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 and its Subsidiaries, in
an 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 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 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 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 Management Fee is subject to adjustment pursuant to and in
accordance with the provisions of Section 13(a) of this Agreement. 


                    (d)
The Manager agrees to reduce the Management Fee (but not below zero) in respect
of any equity investment in any investment vehicle managed by the Manager or
any Affiliate thereof by the amount of the fees payable to the Manager or its
Affiliates under the investment vehicle with regard to the Company’s equity
investment. The Manager’s Management Fee shall not be reduced in respect of any
equity investment the Company may decide to make in any investment vehicle
managed by an entity other than the Manager or any of its Affiliates.


          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, including any expenses of the Manager incurred prior to the Company’s
initial public offering (collectively, the “Expenses”), excepting those
expenses that are specifically the responsibility of the Manager as set forth
herein. Without limiting the generality of the foregoing, expenses include, but
are not limited to, the following: 


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


15






                    (b)
costs of legal, tax, accounting, consulting, auditing,
administrative and other similar services rendered for the Company and its
Subsidiaries 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
directors and officers of the Company and its Subsidiaries; 


                    (d)
costs associated with the establishment and maintenance of any
credit facilities or other indebtedness of the Company and its Subsidiaries
(including commitment fees, accounting fees, legal fees, closing and other
similar costs) or any securities offerings of the Company and its Subsidiaries;



                    (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 or other
market center, 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 and its Subsidiaries; 


                    (g)
expenses incurred by managers, officers, employees and agents of
the Manager for travel on behalf of the Company and its Subsidiaries 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 Assets or establishment and maintenance of any credit
facilities and other indebtedness or any securities offerings of the Company
and its Subsidiaries; 


                    (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 custodian and transfer agent of
the Company and its Subsidiaries, 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; 


16






                    (l)
all insurance costs incurred in connection with the operation of
the business of the Company and its Subsidiaries except for the costs
attributable to the insurance that the Manager elects or is required by Section
7(e) 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 and its Subsidiaries;


                    (n)
all other costs and expenses relating to the business and
investment operations of the Company and its 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;


                    (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 and its Subsidiaries or Assets 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 pro rata portion of rent,
telephone, utilities, office furniture, equipment, machinery and other office,
internal and overhead expenses of the Company and its Subsidiaries of the
Manager and its Affiliates required for the operations of the Company and its
Subsidiaries. These expenses will be allocated between the Manager and the
Company based on the ratio of the proportion of gross assets of the Company and
its Subsidiaries 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 and
expenses incident to the performance of its duties under this Agreement,
including compensation of the Manager’s executives and employees and other


17






related
expenses and overhead. In the event that the Company’s initial public offering
is consummated, the Company will reimburse the Manager for all organizational,
formation and offering costs and expenses 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 and have not yet been paid 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
its Subsidiaries 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 and each Subsidiary 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 


18






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. 


                    (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 each Subsidiary 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, 2013 (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 and its 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 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 


19






payable to the
Manager is unfair, the Manager shall have the right to renegotiate such
compensation by delivering to the Company, 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 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, 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 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. 


20






          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 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 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, (iv) there is a commencement of any proceeding
relating to the Manager’s Bankruptcy or insolvency, (v) there is a dissolution
of the Manager or (vi) there is a Change of Control.


                    (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 


21






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
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 


22






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. REPRESENTATIONS AND WARRANTIES.


                    (a)
The Company hereby represents and warrants to the Manager as follows: 


	
 

	
 


	
 

	
                    (i)
 The Company is duly organized, validly existing and in good standing under
 the laws of the State of Maryland, has the corporate power and authority and
 the legal right to own and operate its assets, to lease any property it may
 operate as lessee and to conduct the business in which it is now engaged and
 is duly qualified as a foreign corporation and in good standing under the
 laws of each jurisdiction where its ownership or lease of property or the
 conduct of its business requires such qualification, except for failures to
 be so qualified, authorized or licensed that could not in the aggregate have
 a material adverse effect on the business operations, assets or financial
 condition of the Company. 


	
 

	
 


	
 

	
                    (ii)
 The Company has the corporate power and authority and the legal right to
 make, deliver and perform this Agreement and all obligations required hereunder
 and has taken all necessary corporate action to authorize this Agreement on
 the terms and conditions hereof and the execution, delivery and performance
 of this Agreement and all obligations required hereunder. No consent of any
 other Person, including stockholders and creditors of the Company, and no
 license, permit, approval or authorization of, exemption by, notice or report
 to, or registration, filing or declaration with, any governmental authority
 is required by the Company in connection with this Agreement or the
 execution, delivery, performance, validity or enforceability of this
 Agreement and all obligations required hereunder. This Agreement has been,
 and each instrument or document required hereunder will be, executed and
 delivered by a duly authorized officer of the Company, and this Agreement
 constitutes, and each instrument or document required hereunder when executed
 and delivered hereunder will constitute, the legally valid and binding
 obligation of the Company enforceable against the Company in accordance with
 its terms. 


	
 

	
 


	
 

	
                    (iii)
 The execution, delivery and performance of this Agreement and the documents
 or instruments required hereunder will not violate any provision of any
 existing law or regulation binding on the Company, or any order, judgment,
 award or decree of any court, arbitrator or governmental authority binding on
 the Company, or the Governing Instruments of, or any securities issued by the
 Company or of any mortgage, indenture, lease, contract or other agreement,
 instrument or undertaking to which the Company is a party or by which the
 Company or any of its assets may be bound, the violation of which would have
 a material adverse effect on the business operations, assets or financial
 condition of the Company and its Subsidiaries, if any, taken as a whole, and
 will not result in, or require, the creation or imposition of any lien or any
 of its property, assets or revenues pursuant to the provisions of any such
 mortgage, indenture, lease, contract or other agreement, instrument or
 undertaking. 





23






                    (b)
The Manager hereby represents and warrants to the Company as follows: 


	
 

	
 


	
 

	
                    (i)
 The Manager is duly organized, validly existing and in good standing under
 the laws of the State of Delaware, has the corporate power and authority and
 the legal right to own and operate its assets, to lease the property it
 operates as lessee and to conduct the business in which it is now engaged and
 is duly qualified as a foreign corporation and in good standing under the
 laws of each jurisdiction where its ownership or lease of property or the
 conduct of its business requires such qualification, except for failures to
 be so qualified, authorized or licensed that could not in the aggregate have a
 material adverse effect on the business operations, assets or financial
 condition of the Manager. 


	
 

	
 


	
 

	
                    (ii)
 The Manager has the corporate power and authority and the legal right to
 make, deliver and perform this Agreement and all obligations required
 hereunder and has taken all necessary corporate action to authorize this
 Agreement on the terms and conditions hereof and the execution, delivery and
 performance of this Agreement and all obligations required hereunder. No
 consent of any other Person, including members and creditors of the Manager,
 and no license, permit, approval or authorization of, exemption by, notice or
 report to, or registration, filing or declaration with, any governmental
 authority is required by the Manager in connection with this Agreement or the
 execution, delivery, performance, validity or enforceability of this
 Agreement and all obligations required hereunder. This Agreement has been,
 and each instrument or document required hereunder will be, executed and delivered
 by a duly authorized officer of the Manager, and this Agreement constitutes,
 and each instrument or document required hereunder when executed and
 delivered hereunder will constitute, the legally valid and binding obligation
 of the Manager enforceable against the Manager in accordance with its terms. 


	
 

	
 


	
 

	
                    (iii)
 The execution, delivery and performance of this Agreement and the documents
 or instruments required hereunder will not violate any provision of any
 existing law or regulation binding on the Manager, or any order, judgment,
 award or decree of any court, arbitrator or governmental authority binding on
 the Manager, or the Governing Instruments of, or any securities issued by the
 Manager or of any mortgage, indenture, lease, contract or other agreement,
 instrument or undertaking to which the Manager is a party or by which the
 Manager or any of its assets may be bound, the violation of which would have
 a material adverse effect on the business operations, assets or financial
 condition of the Manager, and will not result in, or require, the creation or
 imposition of any lien or any of its property, assets or revenues pursuant to
 the provisions of any such mortgage, indenture, lease, contract or other
 agreement, instrument or undertaking.





24






          SECTION
19. 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: 


	
 

	
 

	
 


	
 

	
 

	
CreXus
 Investment Corp.


	
 

	
 

	
1211 Avenue
 of the Americas 


	
 

	
 

	
Suite 2902


	
 

	
 

	
New York,
 New York 10036


	
 

	
 

	
Attention:
 Kevin Riordan


	
 

	
 

	
 


	
 

	
(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 19 for the giving of notice. 


          SECTION
20. 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
21. 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. 


          SECTION
22. AMENDMENTS. This Agreement may not be modified or amended other than
by an agreement in writing signed by the parties hereto. 


          SECTION
23. 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 


25






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).


          SECTION
24. 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
25. 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
26. 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
27. 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
28. 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. 


          SECTION
29. JOINDER. Each
Subsidiary of the Company will become a party to this Agreement by executing a
Joinder Agreement substantially in the form attached hereto as Exhibit B. 


[SIGNATURE
PAGE FOLLOWS]


26






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


	
 
	
 
	
 
	
 

	
 
	
CREXUS
 INVESTMENT CORP.

	
 
	
By:   
	
 /s/ Kevin Riordan
	
 

	
 
	
 
	

	
 

	
 
	
Name: 
	Kevin Riordan	
 

	
 
	
Title: 
	President	
 

	
 
	
 

	
 
	
FIXED INCOME
 DISCOUNT ADVISORY COMPANY

	
 
	
 

	
 
	
By:
	
 /s/ Wellington Denahan-Norris
	
 

	
 
	
 
	

	
 

	
 
	
Name: 
	Wellington Denahan-Norris	
 

	
 
	
Title: 
	Chief Operating Officer	
 











EXHIBIT
A


GUIDELINES


	
 

	
 


	
•

	
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;


	
 

	
 


	
•

	
Any assets
 the Company purchases will be in the targeted assets of the Company (as
 determined from time to time by the Board of Directors); and


	
 

	
 


	
•

	
Until
 appropriate assets can be identified, the Manager may deploy the proceeds of
 any offerings of capital stock of the Company or other cash of the Company in
 interest-bearing, short-term investments, including money market accounts
 and/or funds, that are consistent with the Company’s intention to qualify as
 a REIT.












EXHIBIT
B


FORM OF JOINDER AGREEMENT