EX-10.1






Exhibit 10.1




MANAGEMENT AGREEMENT




     THIS MANAGEMENT AGREEMENT is made as of                     , 2009 by and among SUTHERLAND ASSET
MANAGEMENT CORPORATION , a Maryland corporation (the “Company”), SUTHERLAND ASSET I, LLC, a
Delaware limited liability company (“Asset I”), SUTHERLAND ASSET II, LLC, a Delaware
limited liability company (“Asset II”) and WATERFALL ASSET MANAGEMENT, LLC, a Delaware
limited liability company (together with its permitted assignees, the “Manager”).



     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 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.



     NOW THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereto
agree as follows:



     Section 1. Definitions. The following terms have the following meanings assigned to
them:



          (a) “Agreement” means this Management Agreement, as amended, restated or supplemented
from time to time.



          (b) “Asset I” means Sutherland Asset I, LLC , a Delaware limited liability company.



          (c) “Asset II” means Sutherland Asset II, LLC, a Delaware limited liability company.



          (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 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) “Base Management Fee” means a base management fee equal to 1.50% per annum,
calculated and paid (in cash) quarterly in arrears, equal to
(i) 2.00% per annum of the Stockholders’ Equity up to
$500 billion; (ii) 1.75% per annum of Stockholders’
Equity between $500 million and $1 billion; and
(iii) 1.50% per annum of Stockholders’ Equity in excess of
$1 billion.



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




 









 








          (h) “Code” means the Internal Revenue Code of 1986, as amended.



          (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.



          (k) “Contingent Shares” means the shares of common stock of the Company sold by the
Company, and purchased by the Manager, pursuant to the Contingent Share Placement Agreement.



          (l) “Contingent Share Placement Agreement: means the contingent share private placement
agreement, dated as of [     ], 2009, between the Company and the Manager.



          (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) “Foregone Amount’ means an amount equal to $0.375 per share of common stock of the
Company sold in the IPO, the receipt of which the underwriters of the IPO have agreed to forego
until the Company satisfies certain conditions set forth in the underwriting agreement, dated as of
[     ], 2009, among the Company, the Manager and the underwriters named therein.




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          (r) “GAAP” means generally accepted accounting principles, as applied in the United
States.



          (s) “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.



          (t) “Guidelines” shall have the meaning set forth in Section 2(b)(i) of this
Agreement.



          (u) “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.



          (v) “Indemnitee” shall have the meaning set forth in Section 11(b) of this
Agreement.



          (w) “Indemnitor” shall have the meaning set forth in Section 11(c) of this
Agreement.



          (x) “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
Company’s common stock is listed.



          (y) “Initial Term” shall have the meaning set forth in Section 12 of this
Agreement.



          (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) “IPO” means the initial public offering of shares of common stock of the Company.



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



          (gg) “NYSE” means the New York Stock Exchange Euronext.



          (hh) “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.



          (ii) “Portfolio Management Services” shall have the meaning set forth in Section
2(b) of this Agreement.



          (jj) “REIT” means a “real estate investment trust,” as defined under the Code.



          (kk) “Renewal Term” shall have the meaning set forth in Section 13(a) of this
Agreement.



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



          (mm) “Stockholders’ Equity” means:



               (i) the sum of the net proceeds from all 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



               (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 inception,
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.



          (nn) “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



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outstanding equity interests is owned, directly or indirectly, by the Company or any
subsidiary of the Company. Initially, the Subsidiaries shall be Asset I and Asset II.



          (oo) “Sub-Advisory Agreement” means the sub-advisory agreement, dated as of
[     ], 2009, by and among the Company, the Manager, and M.D. Sass Investor Services, Inc.



          (pp) “Termination Fee” shall have the meaning set forth in Section 13(b) of
this Agreement.



          (qq) “Termination Notice” shall have the meaning set forth in Section 13(a) of
this Agreement.



          (rr) “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,



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agreements relating to borrowings under programs established by the U.S. government,
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;



               (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) advising the Company on, preparing, negotiating and entering into, on behalf of the
Company, applications and agreements relating to programs established by the U.S. government;



               (vii) 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;



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



               (ix) 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;



               (x) 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;



               (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 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;



               (xiii) 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;



               (xiv) counseling the Company and the Subsidiaries regarding the maintenance of their
exemptions 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;



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               (xv) 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;



               (xvi) 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;



               (xvii) 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;



               (xviii) 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;



               (xix) 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;



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



               (xxi) 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;



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



               (xxiii) 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);



               (xxiv) 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;



               (xxv) using commercially reasonable efforts to cause expenses incurred by the Company and the
Subsidiaries or on their behalf to be commercially reasonable or commercially



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customary and within any budgeted parameters or expense guidelines set by the Board of
Directors from time to time;



               (xxvi) 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;



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



               (xxviii) using commercially reasonable efforts to cause the Company 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.



          (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



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the extent the same do not fall within the provisions of the Guidelines, approved by a
majority of the Independent Directors, (ii) with respect to Portfolio Management Services, (A) any
such agreements shall be subject to the Company’s prior written approval and (B) the Manager shall
remain liable for the performance of such Portfolio Management Services, and (iii) with respect to
Monitoring Services, any such agreements shall be subject to the Company’s prior written approval.



          (e) The Manager, the Company and M.D. Sass Investor Services, Inc. have entered into the
Sub-Advisory Agreement pursuant to which the Company and the Manager will have access to the
personnel and resources of M.D. Sass Investor Services, Inc. in the implementation of the Company’s
business strategy.



          (f) In addition, to the extent that the Manager deems necessary or advisable, the Manager may,
from time to time, propose to retain one or more additional entities for the provision of
sub-advisory services to the Manager in order to enable the Manager to provide the services to the
Company 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 of the Company.



          (g) The Manager may retain, for and on behalf and at the sole cost and expense of the Company
and the Subsidiaries, such services of accountants, legal counsel, appraisers, insurers, brokers,
transfer agents, registrars, developers, investment banks, financial advisors, due diligence firms,
underwriting review firms, banks and other lenders and others as the Manager deems necessary or
advisable in connection with the management and operations of the Company 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.



          (h) 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.



          (i) 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



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transaction, the Manager may also consider whether such broker or dealer furnishes research
and other information or services to the Manager.



          (j) 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.



          (k) 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.



          (l) 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.



          (m) 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.



          (n) 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.



          (o) 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.



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     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. 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) The Manager agrees to offer the Company and the Subsidiaries the right to participate in
all opportunities that the Manager determines are appropriate for the Company and the Subsidiaries
in view of their objectives, policies and strategies, and other relevant factors, subject to the
exception that the Company and the Subsidiaries might not participate in each such opportunity but
will on an overall basis equitably participate with the Manager’s other funds and clients in
relevant opportunities. 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.



          (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.



- 11 -









 





     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.



     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



- 12 -









 







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.



          (f) The Manager shall provide the Company with at least [30] days’ prior written notice of any
proposed changes to its allocation policies, which notice shall set forth the proposed changes.



     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.




- 13 -









 






     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



- 14 -









 







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 securities offerings;



               (v) expenses in connection with the application for, and participation in, programs
established by the U.S. government;



               (vi) 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;



               (vii) 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;



               (viii) 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) and borrowings under programs established by the U.S. government or
any of the Company’s or any of the Subsidiary’s securities offerings;



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



- 15 -









 





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



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



               (xii) all taxes and license fees;



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



               (xiv) 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;



               (xv) 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;



               (xvi) 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;



               (xvii) 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;



               (xviii) 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;



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



               (xx) 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.



     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) personnel hired by the Manager who are dedicated exclusively 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.



- 16 -









 





     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. In the event that the IPO is consummated,
the Company will reimburse the Manager for all organizational, formation and offering costs it has
incurred on behalf of the Company.



     The provisions of this Section 9 shall survive the expiration or earlier termination
of this Agreement to the extent such expenses have previously been incurred or are incurred in
connection with such expiration or termination.



     Section 10. Calculations of Expenses. The Manager shall prepare a statement
documenting the Expenses of the Company and the Subsidiaries and the Expenses incurred by the
Manager on behalf of the Company and the Subsidiaries 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 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



- 17 -









 







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 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 until [     ], 2012 (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



- 18 -









 







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.



          (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
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.



          (c) No later than 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.



          (e) If this Agreement is terminated for any reason, including pursuant to Section 13
or Section 15 hereof, the Contingent Shares shall vest
immediately.



     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


- 19 -









 







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.
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 of 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 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, (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.



          (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.



- 20 -









 





     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.



     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:



- 21 -









 






	 	(a)	 	If to the Company:
	 
	 	 	 	Sutherland Asset Management Corporation

1185 Avenue of the Americas, 18th Floor

New York, New York 10036

Attention: [•]

Facsimile: [•]
	 
	 	(b)	 	If to the Manager:
	 
	 	 	 	Waterfall Asset Management, LLC

1185 Avenue of the Americas, 18th Floor

New York, New York 10036

Attention: [•]

Facsimile: [•]




Either party may alter the address to which communications or copies are to be sent by giving
notice of such change of address in conformity with the provisions of this Section 18 for
the giving of notice.




     Section 19. Binding Nature of Agreement; Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns as provided in this Agreement.



     Section 20. Entire Agreement. This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter of this Agreement, and
supersedes all prior and contemporaneous agreements, understandings, inducements and conditions,
express or implied, oral or written, of any nature whatsoever with respect to the subject matter of
this Agreement. The express terms of this Agreement control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms of this Agreement. This
Agreement may not be modified or amended other than by an agreement in writing signed by the
parties hereto.



     Section 21. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES TO THE
CONTRARY.



     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



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when one or more counterparts of this Agreement, individually or taken together, shall bear
the signatures of all of the parties reflected hereon as the signatories.



     Section 25. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.



     Section 26. Gender. Words used herein regardless of the number and gender
specifically used, shall be deemed and construed to include any other number, singular or plural,
and any other gender, masculine, feminine or neuter, as the context requires.



[SIGNATURE PAGE FOLLOWS]




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Exhibit 10.1




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



	 	 	 	 	 
	 	SUTHERLAND ASSET MANAGEMENT CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	SUTHERLAND ASSET I, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	SUTHERLAND ASSET II, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	WATERFALL ASSET MANAGEMENT, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




 









 





Exhibit A





	•	 	No acquisition shall be made that would cause the Company to fail to qualify as a REIT for
U.S. federal income tax purposes;
	 
	•	 	No acquisition shall be made that would cause the Company to be required to register as an
investment company under the Investment Company Act; and
	 
	•	 	With the exception of real estate and housing, no single industry shall represent greater
than 20% of the securities or aggregate risk exposure in the Company’s portfolio.










Exh. A-1