Document:

EXECUTION VERSION

ZAIS FINANCIAL PARTNERS, L.P.
ZAIS
FINANCIAL CORP. 

8.0% Exchangeable Senior Notes due
2016 

Registration Rights
Agreement 

November 25, 2013 

Credit Suisse Securities (USA)
LLC
Eleven Madison Avenue
New York, New York
10010-3629
          As the Initial Purchaser 

Ladies and Gentlemen: 

          ZAIS
Financial Partners, L.P., a Delaware limited partnership (the “Company”), proposes to
issue and sell to Credit Suisse Securities (USA) LLC (the “Initial Purchaser”) upon
the terms set forth in the Purchase Agreement (as defined herein) the Company’s
8.0% Exchangeable Senior Notes due 2016 (the “Notes”), exchangeable into common
stock, par value $0.0001 per share (“ZFC
Common Stock”) of ZAIS Financial Corp., a
Maryland corporation (“ZAIS Financial
Corp.”). As an inducement to the Initial
Purchaser to enter into the Purchase Agreement and in satisfaction of a
condition to the obligations of the Initial Purchaser thereunder, the Company
and ZAIS Financial Corp. agree with the Initial Purchaser for the benefit of
Holders (as defined herein) from time to time of the Registrable Securities (as
defined herein) as follows: 

          1. Definitions. 

          (a) Capitalized terms used herein
without definition shall have the meanings ascribed to them in the Purchase
Agreement. As used in this Agreement, the following defined terms shall have the
following meanings: 

          “Act”
or “Securities Act” means the United States
Securities Act of 1933, as amended.

          “Affiliate” of any specified
person means any other person which, directly or indirectly, is in control of,
is controlled by, or is under common control with such specified person. For
purposes of this definition, control of a person means the power, direct or
indirect, to direct or cause the direction of the management and policies of
such person whether by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing. 

          “Automatic Shelf Registration Statement” shall mean a Shelf Registration Statement which shall become
effective upon filing thereof pursuant to General Instruction I.D of Form
S-3.

          “Closing
Date” has the meaning set forth in the
Purchase Agreement. 

          “Commission” means the
United States Securities and Exchange Commission, or any other federal agency at
the time administering the Exchange Act or the Securities Act, whichever is the
relevant statute for the particular purpose. 

          “DTC” means The Depository
Trust Company. 

          “Effective Failure” has the
meaning assigned thereto in Section 7(b) hereof. 

          “Effectiveness Period” has
the meaning assigned thereto in Section 2(b)(i) hereof.

          “Effective Time” means the
time at which the Commission declares the Shelf Registration Statement effective
or at which the Shelf Registration Statement otherwise becomes effective or, in
the case of designation of an Automatic Shelf Registration Statement as the
Shelf Registration Statement, the date a Prospectus is first made available for
use thereunder by the Holders. 

          “Electing Holder” has the
meaning assigned thereto in Section 3(a)(iii) hereof. 

          “Exchange Act” means the
United States Securities Exchange Act of 1934, as amended. 

          “Filing Default” has the
meaning assigned thereto in Section 7(a) hereof. 

          “FINRA Rules” means the
Conduct Rules of the Financial Industry Regulatory Authority, Inc., as amended
from time to time. 

          “Holder” means any person
that is the record owner of Registrable Securities (and includes any person that
has a beneficial interest in any Registrable Security in book-entry form).

          “Indenture” means the
Indenture, dated as of November 25, 2013, by and among the Company, ZAIS
Financial Corp. and the Trustee, as amended and supplemented from time to time
in accordance with its terms.

          “Liquidated Damages” has the
meaning assigned thereto in Section 7 hereof. 

          “Managing Underwriters”
means the investment banker or investment bankers and manager or managers that
shall administer an underwritten offering, if any, conducted pursuant to Section
6 hereof. 

          “Notice and Questionnaire”
means a Notice of Registration Statement and Selling Securityholder
Questionnaire substantially in the form of Appendix A hereto. 

          The
term “person” means an individual, partnership, corporation, trust or unincorporated
organization, or a government or agency or political subdivision thereof.

          “Prospectus” means the
prospectus (including, without limitation, any preliminary prospectus, any final
prospectus and any prospectus that discloses information previously omitted from
a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A or 430B under the Act) included in the Shelf Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by the Shelf Registration Statement and by all other amendments and
supplements to such prospectus, including all material incorporated by reference
in such prospectus and all documents filed after the date of such prospectus by
ZAIS Financial Corp. under the Exchange Act and incorporated by reference
therein and, to the extent applicable and permitted in
connection with any transaction, any “issuer free writing prospectus,” as such
term is defined in Rule 433 under the Securities Act. 

         “Purchase Agreement” means
the purchase agreement, dated as of November 19, 2013, among the Initial
Purchaser, the Company, ZAIS Financial Corp. and ZAIS REIT Management, LLC
relating to the Notes. 

         “Registrable Securities”
means all shares of ZFC Common Stock issuable upon exchange, repurchase or
redemption of the Notes; provided, however, that a security ceases to be
a Registrable Security when it is no longer a Restricted Security. 

         “Registration Default” has
the meaning assigned thereto in Section 7 hereof. 

         “Restricted Security” means
any share of ZFC Common Stock issuable upon exchange of the Notes except any
such share of ZFC Common Stock which (i) has been effectively registered under
the Securities Act and sold in a manner contemplated by the Shelf Registration
Statement, (ii) has been transferred in compliance with Rule 144 under the
Securities Act (or any successor provision thereto) or are transferable pursuant
to Rule 144 (or any successor provision thereto), or (iii) has otherwise been
transferred and a new share of ZFC Common Stock not subject to transfer
restrictions under the Securities Act has been delivered by or on behalf of ZAIS
Financial Corp. in accordance with the Indenture.

         “Rule 415” means Rule 415
promulgated pursuant to the Securities Act, as such rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the
Commission. 

         “Rules and Regulations”
means the published rules and regulations of the Commission promulgated under
the Securities Act or the Exchange Act, as in effect at any relevant time.

         “Shelf Registration” means a
registration effected pursuant to Section 2 hereof. 

         “Shelf Registration Statement” means a “shelf” registration statement filed under the Securities Act
on Form S-3 or, if not then available to ZAIS Financial Corp., on another
appropriate form, of ZAIS Financial Corp. pursuant to the provisions of Section
2 of this Agreement, providing for the registration of, and the sale on a
continuous or delayed basis by the Holders of, all of the Registrable Securities
pursuant to Rule 415 and/or any similar rule that may be adopted by the
Commission, filed by ZAIS Financial Corp. pursuant to the provisions of Section
2 of this Agreement, including the Prospectus contained therein, any amendments
and supplements to such registration statement, including post-effective
amendments, and all exhibits and all material incorporated by reference in such
registration statement. 

         “Suspension Period” has the
meaning assigned thereto in Section 2(d) hereof. 

         “Trustee” shall have the
meaning set forth in the Indenture. 

         The term
“underwriter” means any underwriter of Registrable Securities in connection with an
offering thereof under a Shelf Registration Statement. 

          “ZFC Common
Stock” means ZAIS Financial Corp.’s common
stock, par value $0.0001 per share. 

          Wherever
there is a reference in this Agreement to a percentage of the “principal amount”
of Notes, ZFC Common Stock shall be treated as representing the principal amount
of Notes that was surrendered for conversion or exchange in order to receive
such number of shares of ZFC Common Stock. 

          2. Shelf Registration.

          (a) ZAIS Financial Corp. shall, no
later than 120 calendar days following the Closing Date, (1) file with the
Commission a Shelf Registration Statement relating to the offer and sale of the
Registrable Securities by the Holders from time to time in accordance with the
methods of distribution elected by such Holders and set forth in such Shelf
Registration Statement and, if the Shelf Registration Statement is not an
Automatic Shelf Registration Statement, ZAIS Financial Corp. thereafter shall
use its commercially reasonable efforts to cause such Shelf Registration
Statement to be declared effective under the Act no later than 180 calendar days
following the Closing Date or (2) solely at its option, in lieu of filing a
shelf registration statement and causing such registration statement to be
declared effective as described in clause (i) above, designate, no later than
120 calendar days following the Closing Date, by means of an Officers’
Certificate (as defined in the Indenture), an effective Automatic Shelf
Registration Statement as a Shelf Registration Statement able to be used for
resales of the Registrable Securities. In the event that ZAIS Financial Corp.
exercises this option (which it is not obligated to do), it shall be obligated
to use its commercially reasonable efforts to prepare and file a supplement to
the Prospectus, if necessary, to cover resales of the Registrable Securities by
the Holders no later than 180 calendar days following the Closing
Date.

          (b) ZAIS Financial Corp. shall use
its commercially reasonable efforts: 

          (i) to keep the Shelf Registration
Statement continuously effective under the Act in order to permit the Prospectus
forming a part thereof to be usable by Holders for a period expiring on the
earlier of (1) the sale of all Registrable Securities registered under the Shelf
Registration Statement and (2) one year after the last date that Notes have been
exchanged for shares of ZFC Common Stock (such period being referred to herein
as the “Effectiveness Period”); 

          (ii) after the Effective Time of
the Shelf Registration Statement, promptly upon the request of any Electing
Holder of Registrable Securities, to take any action reasonably necessary to
enable such Electing Holder to use the Prospectus forming a part thereof for
resales of Registrable Securities, including, without limitation, any action
necessary to identify such Electing Holder as a selling securityholder in the
Shelf Registration Statement; and 

          (iii) if at any time the Notes,
pursuant to Article 15.05(g) of the Indenture, are exchangeable into securities
other than ZFC Common Stock, to cause, or to cause any successor under the
Indenture to cause such securities to be included in the Shelf Registration
Statement or a replacement shelf registration statement no later than the date
on which the Notes may then be exchangeable or convertible into such securities.

          (c) ZAIS Financial Corp. shall be
deemed not to have used its commercially reasonable efforts to keep the Shelf
Registration Statement effective during the requisite period if ZAIS Financial
Corp. voluntarily takes any action that would result in Holders of Registrable
Securities covered thereby not being able to offer and sell any of such
Registrable Securities during that period, unless (i) ZAIS Financial Corp.'s action is required by applicable law, or (ii) if
the CEO or CFO of ZAIS Financial Corp. shall have determined in good faith that
under circumstances related to acquisition or divestiture of assets, pending
corporate developments, public filings with the Commission, or other similar
events, it is in the best interests of ZAIS Financial Corp. to suspend the use
of the Prospectus. 

          (d) ZAIS Financial Corp. may
suspend the use of the Prospectus for a period not to exceed 30 days in any
90-day period or an aggregate of 90 days in any 360-day period (each a
“Suspension Period”) for the reasons set forth in 2(c) above if, prior to suspending such
use, ZAIS Financial Corp. provides the Holders with written notice of such
suspension, which notice need not specify the nature of the event giving rise to
such suspension; provided, however, that in the event of any such suspension,
the Effectiveness Period shall be extended by the number of days equal to the
suspension period. 

          3. Registration
Procedures. In connection with the Shelf
Registration Statement, the following provisions shall apply: 

          (a) 

          (i) Not less than 30 calendar days
prior to the Effective Time of the Shelf Registration Statement, ZAIS Financial
Corp. shall furnish the Notice and Questionnaire to the Trustee for delivery to
the Holders. No Holder shall be entitled to be named as a selling securityholder
in the Shelf Registration Statement as of the Effective Time, and no Holder
shall be entitled to use the Prospectus forming a part thereof for resales of
Registrable Securities at any time, unless such Holder has returned a completed
and signed Notice and Questionnaire to ZAIS Financial Corp. by the deadline for
response set forth therein determined by ZAIS Financial Corp. in its reasonable
discretion; provided, however, Holders of Registrable Securities shall have at least 14
calendar days from the date on which the Notice and Questionnaire is first
mailed to such Holders to return a completed and signed Notice and Questionnaire
to ZAIS Financial Corp. 

          (ii) After the Effective Time of
the Shelf Registration Statement, ZAIS Financial Corp. shall, upon the request
of any Holder of Registrable Securities that is not then an Electing Holder,
promptly send a Notice and Questionnaire to such Holder. ZAIS Financial Corp.
shall not be required to take any action to name such Holder as a selling
securityholder in the Shelf Registration Statement or to enable such Holder to
use the Prospectus forming a part thereof for resales of Registrable Securities
until such Holder has returned a completed and signed Notice and Questionnaire
to ZAIS Financial Corp. If a Notice and Questionnaire is delivered to ZAIS
Financial Corp. during a Suspension Period, ZAIS Financial Corp. shall not be
obligated to take actions to name the Holder delivering such Notice and
Questionnaire as a selling security holder in the Shelf Registration Statement
until the termination of such Suspension Period.

          (iii) The term “Electing Holder” shall mean
any Holder of Registrable Securities that has returned a completed and signed
Notice and Questionnaire to ZAIS Financial Corp. in accordance with Section
3(a)(i) or 3(a)(ii) hereof. 

          (b) ZAIS Financial Corp. shall
furnish to each Electing Holder a draft of any disclosure about such Electing
Holder (the "Holder's
Information") to be included in the Shelf
Registration Statement or any amendment thereto pursuant to Item 507 of
Regulation S-K of the Securities Act prior to the inclusion of such Holder's
Information in the Shelf Registration Statement or any amendment thereto, and
any such Electing Holder may provide comments to such Holder's Information, and
ZAIS Financial Corp. shall use its commercially reasonable efforts to reflect
any such Electing Holder's comments to such Holder's Information in such Shelf
Registration Statement or amendment thereto, provided
that all such comments to the Holder's Information must be delivered to ZAIS
Financial Corp. no more than two business days after ZAIS Financial Corp. sends
draft Holder's Information to an Electing Holder for review and
comment.

          (c) ZAIS Financial Corp. shall promptly take such action as may be necessary
so that (i) each of the Shelf Registration Statement and any amendment thereto
and the Prospectus forming a part thereof and any amendment or supplement
thereto (and each report or other document incorporated therein by reference in
each case) complies in all material respects with the Securities Act and the
Exchange Act and the Rules and Regulations, (ii) each of the Shelf Registration
Statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and (iii) each of the Prospectus forming a part of the Shelf Registration
Statement, and any amendment or supplement to such Prospectus, does not at any
time during the Effectiveness Period include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. 

          (d) ZAIS Financial Corp. shall
promptly advise the Trustee, and shall confirm such advice in writing if so
requested by the Trustee:

          (i) when a Shelf Registration
Statement and any amendment thereto has been filed with the Commission and when
a Shelf Registration Statement or any post-effective amendment thereto has
become effective; 

          (ii) after its effectiveness, of
any request by the Commission for amendments or supplements to the Shelf
Registration Statement or the Prospectus included therein or for additional
information;

          (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the Shelf
Registration Statement or the initiation of any proceedings for either such
purpose;

          (iv) of the receipt by ZAIS
Financial Corp. of any notification with respect to the suspension of the
qualification of the securities included in the Shelf Registration Statement for
sale in any jurisdiction or the initiation of any proceeding for such purpose;
and 

          (v) of the happening of any event
or the existence of any state of facts that requires the making of any changes
in the Shelf Registration Statement or the Prospectus included therein so that,
as of such date, such Shelf Registration Statement and Prospectus do not contain
an untrue statement of a material fact and do not omit to state a material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus, in light of the circumstances under which they were
made) not misleading (which advice shall be accompanied by an instruction to
such Holders to suspend the use of the Prospectus until the requisite changes
have been made, which notice need not specify the nature of the event giving
rise to such suspension). 

          (e) ZAIS Financial Corp. shall use
its commercially reasonable efforts to prevent the issuance, and if issued to
obtain the withdrawal as soon as practicable, of any order suspending the
effectiveness of the Shelf Registration Statement that would prevent its use.

          (f) ZAIS Financial Corp. consents
(except during a Suspension Period or during the continuance of any event
described in Section 3(d)(v) above) to the use of the Prospectus and any amendment or supplement thereto by each of the Electing
Holders in connection with the offering and sale of the Registrable Securities
covered by the Prospectus and any amendment or supplement thereto during the
Effectiveness Period. 

          (g) Prior to any offering of Registrable Securities pursuant to the Shelf
Registration Statement, ZAIS Financial Corp. shall (i) register or qualify such
Registrable Securities for offer and sale under the securities or “blue sky”
laws of such jurisdictions within the United States to the extent reasonably
requested by any Electing Holder and to the extent required by law, (ii) keep,
to the extent required by law, such registrations or qualifications in effect
and comply with such laws so as to permit the continuance of offers and sales in
such jurisdictions for so long as may be necessary to enable any Electing Holder
or underwriter, if any, to complete its distribution of Registrable Securities
pursuant to the Shelf Registration Statement, and (iii) take any and all other
actions necessary or advisable to enable the disposition in such jurisdictions
of such Registrable Securities; provided,
however, that in no event shall ZAIS
Financial Corp. be obligated to (A) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise be
required to so qualify but for this Section 3(g) or (B) file any general consent
to service of process in any jurisdiction where it is not as of the date hereof
so subject. 

          (h) Unless any Registrable
Securities shall be in book-entry only form, ZAIS Financial Corp. shall
cooperate with the Electing Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold pursuant
to the Shelf Registration Statement, which certificates, if so required by any
securities exchange upon which any Registrable Securities are listed, shall be
penned, lithographed or engraved, or produced by any combination of such
methods, as may reasonably be required, and which certificates shall be free of
any restrictive legends (other than certain REIT related legends) and in such
permitted denominations and registered in such names as Electing Holders may
reasonably request in connection with the sale of Registrable Securities
pursuant to the Shelf Registration Statement. 

          (i) Upon the occurrence of any
fact or event contemplated by paragraph 3(d)(v) above, ZAIS Financial Corp.
shall promptly prepare a post-effective amendment to any Shelf Registration
Statement or an amendment or supplement to the related Prospectus or file any
other required document with the Commission so that, as thereafter delivered to
purchasers of the Registrable Securities included therein, the Prospectus will
not include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. If ZAIS Financial Corp. notifies the
Trustee of the occurrence of any fact or event contemplated by paragraph 3(d)(v)
above, the Electing Holder shall suspend the use of the Prospectus until the
requisite changes to the Prospectus have been made. 

          (j) ZAIS Financial Corp. shall use
its commercially reasonable efforts to comply with all applicable Rules and
Regulations in all material respects, and to make generally available to its
securityholders as soon as practicable, but in any event not later than eighteen
months after (i) the effective date (as defined in Rule 158(c) under the
Securities Act) of the Shelf Registration Statement, and (ii) the effective date
of each post-effective amendment to the Shelf Registration Statement, an earning
statement of ZAIS Financial Corp. and its subsidiaries complying with Section
11(a) of the Securities Act and the rules and regulations of the Commission
thereunder (including, at the option of ZAIS Financial Corp., Rule 158).

          (k) In the event of an
underwritten offering conducted pursuant to Section 6 hereof, ZAIS Financial
Corp. shall, if requested, promptly include or incorporate in a Prospectus
supplement or post-effective amendment to the Shelf Registration Statement such
information as the Managing Underwriters reasonably
agree should be included therein and to which ZAIS Financial Corp. does not
reasonably object and shall make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after it is
notified of the matters to be included or incorporated in such Prospectus
supplement or post-effective amendment. 

          (l) ZAIS Financial Corp. shall enter into such customary agreements
(including an underwriting agreement in customary form in the event of an
underwritten offering conducted pursuant to Section 6 hereof) and take all other
appropriate action in order to expedite and facilitate the registration and
disposition of the Registrable Securities, and in connection therewith, if an
underwriting agreement is entered into, cause the same to contain customary
indemnification provisions reasonably acceptable to ZAIS Financial Corp.
covering all parties to be indemnified pursuant to Section 5 hereof. 

          (m) ZAIS Financial Corp. shall:

          (i) (A) make reasonably available
for inspection by the Electing Holders, any underwriter participating in any
disposition pursuant to the Shelf Registration Statement, and any attorney,
accountant or other agent retained by such Electing Holders or any such
underwriter all relevant financial and other records, pertinent corporate
documents and properties of ZAIS Financial Corp. and its subsidiaries, and (B)
cause ZAIS Financial Corp.’s officers, directors and employees to supply all
information reasonably requested by such Electing Holders or any such
underwriter, attorney, accountant or agent in connection with the Shelf
Registration Statement, in each case, as is customary for similar due diligence
examinations; provided,
however, that all records, information and
documents provided by ZAIS Financial Corp., pursuant to this section shall be
kept confidential by such Electing Holders and any such underwriter, attorney,
accountant or agent, unless such disclosure is made in connection with a court
proceeding or required by law, or such records, information or documents become
available to the public generally or through a third party without an
accompanying obligation of confidentiality; and provided further that, if the
foregoing inspection and information gathering would otherwise disrupt ZAIS
Financial Corp.’s conduct of its business, such inspection and information
gathering shall, to the greatest extent possible, be coordinated on behalf of
the Electing Holders and the other parties entitled thereto by one counsel
designated by and on behalf of the Electing Holders and other parties;

          (ii) in connection with any
underwritten offering conducted pursuant to Section 6 hereof, make such
representations and warranties to the Electing Holders participating in such
underwritten offering and to the Managing Underwriters, in form, substance and
scope as are customarily made by ZAIS Financial Corp. to underwriters in primary
underwritten offerings of equity securities, provided, that in no event shall
the representations and warranties be broader than those set forth in the
Purchase Agreement, other than appropriate changes to reflect changed
circumstances or changed legal requirements; 

          (iii) in connection with any
underwritten offering conducted pursuant to Section 6 hereof, obtain opinions of
counsel to ZAIS Financial Corp. (which counsel and opinions (in form, scope and
substance) shall be consistent with the opinions of counsel of ZAIS Financial
Corp. delivered in underwritten public offerings and be reasonably satisfactory
to the Managing Underwriters) addressed to each Electing Holder participating in
such underwritten offering and the underwriters, covering such matters as are
customarily covered in opinions requested in primary underwritten offerings of
equity and exchangeable or convertible debt securities and such other matters as
may be reasonably requested by such Electing Holders and underwriters (it being
agreed that the matters to be covered by such opinions shall include, without
limitation, as of the date of the opinion and as of the
Effective Time of the Shelf Registration Statement or most recent post-effective
amendment thereto, as the case may be, the absence from the Shelf Registration
Statement and the Prospectus, including, without limitation, the documents
incorporated by reference therein, of an untrue statement of a material fact or
the omission of a material fact required to be stated therein (in the case of
the Prospectus, in light of the circumstances in which they were made) or
necessary to make the statements therein not misleading); 

          (iv) in connection with any underwritten offering conducted pursuant to
Section 6 hereof, obtain “cold comfort” letters and updates thereof from the
independent public accountants of ZAIS Financial Corp. (and, if necessary, from
the independent public accountants of any subsidiary of ZAIS Financial Corp. or
of any business acquired by ZAIS Financial Corp. for which financial statements
and financial data are, or are required to be, included in the Shelf
Registration Statement), addressed to each Electing Holder participating in such
underwritten offering (if such Electing Holder has provided such letter,
representations or documentation, if any, required for such cold comfort letter
to be so addressed) and the underwriters, in customary form and covering matters
of the type customarily covered in “cold comfort” letters in connection with
primary underwritten offerings; 

          (v) in connection with any
underwritten offering conducted pursuant to Section 6 hereof, deliver such
documents and certificates as may be reasonably requested by any Electing
Holders participating in such underwritten offering and the Managing
Underwriters, if any, including, without limitation, certificates to evidence
compliance with Section 3(h) hereof and with any conditions contained in the
underwriting agreement or other agreements entered into by ZAIS Financial Corp.;
provided that in no event shall the Company, ZAIS Financial Corp. nor any of its
officers and directors be required to enter into any agreements not to offer or
sell ZFC Common Stock or other securities (i.e., “lock-up letters”). 

          (n) ZAIS Financial Corp. will use
its commercially reasonable efforts to cause the ZFC Common Stock issuable upon
exchange of the Notes to be listed on the New York Stock Exchange or other stock
exchange or trading system on which the ZFC Common Stock primarily trades on or
prior to the Effective Time of the Shelf Registration Statement. 

          (o) ZAIS Financial Corp. shall use
its commercially reasonable efforts to take all other steps necessary to effect
the registration, offering and sale of the Registrable Securities covered by the
Shelf Registration Statement contemplated hereby. 

          (p) Notwithstanding any provision
of this Section 3 to the contrary, ZAIS Financial Corp. shall not be required to
amend or supplement the Shelf Registration Statement during a Suspension Period.
The Managing Underwriter(s), if any, used in any underwritten offering, shall be
reasonably acceptable to ZAIS Financial Corp. 

          4. Registration Expenses. Except as
otherwise provided in Section 3 or 6, ZAIS Financial Corp. shall bear all fees
and expenses reasonably incurred in connection with the performance of its
obligations under Sections 2, 3 and 6 hereof and shall bear or reimburse the
Electing Holders for the reasonable fees and disbursements of a single counsel
selected by a plurality of all Electing Holders who own an aggregate of not less
than 25% of the Registrable Securities covered by the Shelf Registration
Statement to act as counsel therefore in connection therewith. Each Electing
Holder shall pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Electing Holder’s
Registrable Securities pursuant to the Shelf Registration Statement. 

          5. Indemnification and
Contribution.

          (a) Indemnification by ZAIS
Financial Corp. Upon the registration of the
Registrable Securities pursuant to Section 2 hereof, ZAIS Financial Corp. shall
indemnify and hold harmless each Electing Holder and each underwriter, selling
agent or other securities professional, if any, which facilitates the
disposition of Registrable Securities, and each of their respective officers and
directors and each person who controls such Electing Holder, underwriter,
selling agent or other securities professional within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act (each such person being
sometimes referred to as an “Indemnified
Person”) against any losses, claims, damages
or liabilities, joint or several, to which such Indemnified Person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Shelf Registration Statement under which such Registrable
Securities are to be registered under the Securities Act, any Prospectus
contained therein or furnished by ZAIS Financial Corp. to any Indemnified
Person, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state in the Shelf Registration
Statement a material fact required to be stated therein or necessary to make the
statements therein not misleading or to state in a prospectus a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which such statements are made, not misleading,
and ZAIS Financial Corp. hereby agrees to reimburse such Indemnified Person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that ZAIS Financial Corp. shall not be liable to any such
Indemnified Person in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such Shelf
Registration Statement or Prospectus, or amendment or supplement, in reliance
upon and in conformity with written information furnished to ZAIS Financial
Corp. by such Indemnified Person expressly for use therein. 

          (b) Indemnification by the
Electing Holders and any Agents and Underwriters. Each Electing Holder agrees, as a consequence of the inclusion of any
of such Electing Holder’s Registrable Securities in such Shelf Registration
Statement, and each underwriter, selling agent or other securities professional,
if any, which facilitates the disposition of Registrable Securities shall agree,
as a consequence of facilitating such disposition of Registrable Securities,
severally and not jointly, to (i) indemnify and hold harmless the Company, ZAIS
Financial Corp. and the directors and officers of ZAIS Financial Corp. and each
person, if any, who controls ZAIS Financial Corp. within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, against any
losses, claims, damages or liabilities to which the Company, ZAIS Financial
Corp. or such other persons may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in such Shelf Registration
Statement or Prospectus, or any amendment or supplement, or arise out of or are
based upon the omission or alleged omission to state in the Shelf Registration
Statement a material fact required to be stated therein or necessary to make the statements therein not misleading, or to state in a
prospectus a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which such statements
are made, not misleading in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to ZAIS Financial Corp. by such Electing Holder, underwriter, selling
agent or other securities professional expressly for use therein, and (ii)
reimburse ZAIS Financial Corp. for any legal or other expenses reasonably
incurred by ZAIS Financial Corp. in connection with investigating or defending
any such action or claim as such expenses are incurred. 

          (c) Notices of Claims, Etc. Promptly after
receipt by an indemnified party under subsection (a) or (b) above of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party under this Section
5, notify such indemnifying party in writing of the commencement thereof; but
the omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under the
indemnification provisions of or contemplated by subsection (a) or (b) above. In
case any such action shall be brought against any indemnified party and it shall
notify an indemnifying party of the commencement thereof, such indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party, and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, such indemnifying party shall not be
liable to such indemnified party under this Section 5 for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to,
or an admission of, fault, culpability or a failure to act, by or on behalf of
any indemnified party. No indemnifying party shall have any liability hereunder
for any settlement of any claim effective without the consent of the
indemnifying party, which consent will not be unreasonably withheld, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party against any loss,
claim, damage, liability or expense by reason of such settlement or judgment.

          (d) Contribution. If the indemnification
provided for in this Section 5 is unavailable to or insufficient to hold
harmless an indemnified party under subsection (a) or (b) above in respect of
any losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by such indemnifying party or by such indemnified party,
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 5(d) were determined by pro rata allocation (even if the Electing
Holders or any underwriters, selling agents or other securities professionals or all of them were treated as one entity for such purpose)
or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 5(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
obligations of the Electing Holders and any underwriters, selling agents or
other securities professionals in this Section 5(d) to contribute shall be
several in proportion to the percentage of principal amount of Registrable
Securities registered or underwritten, as the case may be, by them and not
joint. 

          (e) Notwithstanding any other provision of this Section 5, in no event will
any (i) Electing Holder be required to undertake liability to any person under
this Section 5 for any amounts in excess of the dollar amount of the proceeds to
be received by such Holder from the sale of such Holder’s Registrable Securities
(after deducting any fees, discounts and commissions applicable thereto)
pursuant to any Shelf Registration Statement under which such Registrable
Securities are to be registered under the Securities Act and (ii) underwriter,
selling agent or other securities professional be required to undertake
liability to any person hereunder for any amounts in excess of the discount,
commission or other compensation payable to such underwriter, selling agent or
other securities professional with respect to the Registrable Securities
underwritten by it and distributed to the public. 

          (f) The obligations of ZAIS
Financial Corp. under this Section 5 shall be in addition to any liability which
ZAIS Financial Corp. may otherwise have to any Indemnified Person and the
obligations of any Indemnified Person under this Section 5 shall be in addition
to any liability which such Indemnified Person may otherwise have to ZAIS
Financial Corp. The remedies provided in this Section 5 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to an
indemnified party at law or in equity. 

          6. Underwritten
Offering. Any Holder of Registrable
Securities who desires to do so may sell Registrable Securities (in whole or in part) in an underwritten offering;
provided that (i) notwithstanding any provision to the contrary in this agreement,
no underwritten offering is required to occur without the consent of ZAIS
Financial Corp., (ii) the Electing Holders of at least 33-1/3% of the
Registrable Securities then covered by the Shelf Registration Statement shall
request such an offering (and holding in the aggregate an amount of Registrable
Securities having a value based on the closing price of the Registrable
Securities on the New York Stock Exchange on the date preceding the request for
an underwritten offering of at least $25 million) and (iii) at least such amount
of such Registrable Securities shall be included in such offering; and
provided further that ZAIS Financial Corp. shall not be obligated to cooperate with more
than one underwritten offering during the Effectiveness Period. Upon receipt of
such a request, and subject to ZAIS Financial Corp.'s consent to pursue an
underwritten offering, ZAIS Financial Corp. shall provide all Holders of
Registrable Securities written notice of the request, which notice shall inform
such Holders that they have the opportunity to participate in the offering. In
any such underwritten offering, the investment banker or bankers and manager or
managers that will administer the offering will be selected by ZAIS Financial
Corp, and the underwriting arrangements with respect thereto (including the size
of the offering) will be approved by, the holders of a majority of the
Registrable Securities to be included in such offering; provided, however, that
such underwriting arrangements must be reasonably satisfactory to ZAIS Financial
Corp. No Holder may participate in any underwritten offering contemplated hereby
unless (a) such Holder agrees to sell such Holder’s Registrable Securities to be
included in the underwritten offering in accordance with any approved
underwriting arrangements, (b) such Holder completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents required under the terms of such approved
underwriting arrangements, and (c) if such Holder is not
then an Electing Holder, such Holder returns a completed and signed Notice and
Questionnaire to ZAIS Financial Corp. in accordance with Section 3(a)(ii) hereof
within a reasonable amount of time before such underwritten offering. The
Holders participating in any underwritten offering shall be responsible for any
underwriting discounts and commissions and fees and, subject to Section 4
hereof, expenses of their own counsel. ZAIS Financial Corp. shall pay all
expenses customarily borne by issuers in an underwritten offering, including but
not limited to filing fees, the fees and disbursements of its counsel and
independent public accountants and any printing expenses incurred in connection
with such underwritten offering. Notwithstanding the foregoing or the provisions
of Section 3(k) hereof, and subject to ZAIS Financial Corp.'s consent to pursue
an underwritten offering, upon receipt of a request from the Managing
Underwriter or a representative of holders of a majority of the Registrable
Securities to be included in an underwritten offering to prepare and file an
amendment or supplement to the Shelf Registration Statement and Prospectus in
connection with an underwritten offering, ZAIS Financial Corp. may delay the
filing of any such amendment or supplement for up to 90 days if the Board of
Directors or the CEO or CFO of ZAIS Financial Corp. shall have determined in
good faith that ZAIS Financial Corp. has a bona fide business reason for such
delay. 

          7. Liquidated Damages. 

          (a) Notwithstanding any
postponement of effectiveness pursuant to Section 2(a) hereof, (i) if on or
prior to the 120th calendar day following the Closing Date, a Shelf
Registration Statement has not been filed with the Commission (and ZAIS
Financial Corp. has not exercised its option under Section 2(a)(2) hereof to
designate by means of an Officers’ Certificate (as defined in the Indenture) an
Automatic Shelf Registration Statement as a Shelf Registration Statement able to
be used for resales of the Registrable Securities), (ii) if the Shelf
Registration Statement is not an Automatic Shelf Registration Statement and on
or prior to the 180th calendar day following the Closing Date, such
Shelf Registration Statement is not declared effective by the Commission or
(iii) if an Automatic Shelf Registration Statement has been designated by ZAIS
Financial Corp. solely at its option and in the manner set forth in Section
2(a)(2) and on or prior to the 180th calendar day following the
Closing Date, ZAIS Financial Corp. has not prepared and filed with the
Commission a supplement to the Prospectus to cover resales of the Registrable
Securities, if necessary (each, a “Filing
Default”), the Company shall be required to
pay liquidated damages on the Notes (“Liquidated Damages”), from and including
the day following such Filing Default until the earlier of (i) the date such
Shelf Registration Statement or in the case of an Automatic Shelf Registration
Statement, such supplement to the Prospectus is either so filed or so filed and
subsequently declared effective, as applicable or (ii) or (2) the time the
Effectiveness Period expires, at a rate per annum equal to an additional
one-quarter of one percent (0.25%) of the principal amount of the Notes, to and
including the 90th day following such Filing Default and one-half of one percent
(0.50%) thereof from and after the 91st day following such Filing Default.

          (b) In the event that the Shelf
Registration Statement ceases to be effective (without being succeeded
immediately by an additional Shelf Registration Statement that is filed and
immediately becomes effective) or usable other than as a result of a Suspension
Period (or the Holders of Registrable Securities are otherwise prevented or
restricted by ZAIS Financial Corp. from effecting sales pursuant thereto) (an
“Effective Failure” and, together with a Filing Default, a “Registration Default”) for more than ten
business days and ZAIS Financial Corp. does not restore effectiveness or, if
applicable, ZAIS Financial Corp. does not terminate a Suspension Period by the
30th day in any 90-day period or if suspension exceeds 90 days in any 360-day
period, then the Company shall pay Liquidated Damages at a rate per annum equal
to an additional one-quarter of one percent (0.25%) of the principal amount of
the Notes from the day following the 10th business day following the date that
such Shelf Registration Statement ceases to be effective (or the Holders of
Registrable Securities are otherwise prevented or restricted by ZAIS Financial Corp. from effecting sales pursuant thereto) or on
the 31st or 91st day, as the case may be, in the case of a Suspension Period, for a period of 90 days,
and thereafter shall pay Liquidated Damages at a rate per annum equal to an additional one-half of one
percent (0.50%), until the earlier of (i) the time the Shelf Registration Statement again becomes
effective or the Holders of Registrable Securities are again able to make sales under the Shelf
Registration Statement or (2) the time the Effectiveness Period expires. For the purpose of determining
an Effective Failure, days on which the Company has been obligated to pay Liquidated Damages in
accordance with the foregoing in respect of a prior Effective Failure within the applicable period, as
the case may be, shall not be included.

         
(c) [Intentionally omitted].

         
(d) Any amounts to be paid as Liquidated Damages
pursuant to paragraphs (a) or (b) of this Section 7 shall be paid in cash
semi-annually in arrears, with the first semi-annual payment due on the first
Interest Payment Date (as defined in the Indenture), as applicable, following
the date of such Registration Default. Such Liquidated Damages will accrue in
respect of the Notes at the rates set forth in paragraphs (a) or (b) of this
Section 7, as applicable, on the principal amount of the Notes.

         
(e) The Liquidated Damages as set forth in this
Section 7 shall be the exclusive monetary remedy available to the Holders of
Registrable Securities for such Registration Default or Effective Failure. In no
event shall the Company be required to pay Liquidated Damages in excess of the
applicable maximum amount of one half of one percent (0.50%) set forth above,
regardless of whether one or multiple Registration Defaults exists.

         
(f) Notwithstanding any provision in this Agreement,
if a Holder exchanges some or all of such Holder's Notes into ZFC Common Stock
when there exists a Registration Default, such Holder will not be entitled to
Liquidated Damages with respect to the Notes so exchanged. In lieu thereof, the
Company shall increase the Exchange Rate (as defined in the Indenture) by 3% for
each $1,000 principal amount of Notes exchanged; provided, however, that (i) the
foregoing adjustment shall not be applied more than once to the same $1,000
principal amount of Notes and (ii) if a Registration Default occurs after a
Holder has exchanged its Notes into ZFC Common Stock, such Holder shall not be
entitled to any Liquidated Damages or other compensation with respect to such
ZFC Common Stock. If a Note ceases to be Outstanding (whether as a result of a
Holder exercising its exchange rights or otherwise) during any period for which
Liquidated Damages are accruing, the Company will prorate the Liquidated Damages
to be paid with respect to that Note. 

         
8. Miscellaneous. 

         
(a) Other Registration Rights. ZAIS Financial Corp. may grant registration
rights that would permit any person that is a third party the right to
piggy-back on any Shelf Registration Statement.

         
(b) Specific Performance. The parties hereto acknowledge that there would
be no adequate remedy at law if ZAIS Financial Corp. fails to perform any of its
obligations hereunder and that the Initial Purchaser and the Holders from time
to time may be irreparably harmed by any such failure, and accordingly agree
that the Initial Purchaser and such Holders, in addition to any other remedy to
which they may be entitled at law or in equity and without limiting the remedies
available to the Electing Holders under Section 7 hereof, shall be entitled to
compel specific performance of the obligations of ZAIS Financial Corp. under
this Registration Rights Agreement in accordance with the terms and conditions
of this Registration Rights Agreement, in any court of the United States or any
State thereof having jurisdiction. 

          (c)
Amendments and
Waivers. This Agreement,
including this Section 8(c), may be amended, and waivers or consents to
departures from the provisions hereof may be given, only by a written instrument
duly executed by ZAIS Financial Corp. and the holders of a majority of
Registrable Securities then outstanding. Each Holder of Registrable Securities
outstanding at the time of any such amendment, waiver or consent or thereafter
shall be bound by any amendment, waiver or consent effected pursuant to this
Section 8(c), whether or not any notice, writing or marking indicating such
amendment, waiver or consent appears on the Registrable Securities or is
delivered to such Holder.

         
(d) Notices. Unless otherwise specified herein, all notices and other communications
provided for or permitted hereunder shall be given as provided in the Indenture.
For so long as the Notes are in Book Entry Form, and as permitted by the DTC,
all notices, reports and other documents to the Holders shall be delivered
through the facilities of the DTC by the Trustee in accordance with their
standard practices and procedures.

         
(e) Parties in Interest. The parties to this Agreement intend that all
Holders of Registrable Securities shall be entitled to receive the benefits of
this Agreement and that any Electing Holder shall be bound by the terms and
provisions of this Agreement by reason of such election with respect to the
Registrable Securities which are included in a Shelf Registration Statement. All
the terms and provisions of this Agreement shall be binding upon, shall inure to
the benefit of and shall be enforceable by the respective successors and assigns
of the parties hereto and any Holder from time to time of the Registrable
Securities to the aforesaid extent. In the event that any transferee of any
Holder of Registrable Securities shall acquire Registrable Securities, in any
manner, whether by gift, bequest, purchase, operation of law or otherwise, such
transferee shall, without any further writing or action of any kind, be entitled
to receive the benefits of and, if an Electing Holder, be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement to the aforesaid extent.

         
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

         
(g) Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.

         
(h) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, including,
without limitation, Section 5-1401 of the New York General Obligation
Law.

         
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties hereto shall be enforceable to the fullest extent permitted by
law.

         
(j) Survival. The respective indemnities, agreements, representations, warranties and
other provisions set forth in this Agreement or made pursuant hereto shall
remain in full force and effect, regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of any Electing
Holder, any director, officer or partner of such Holder, any agent or
underwriter, any director, officer or partner of such agent or underwriter, or
any controlling person of any of the foregoing, and shall survive the transfer
and registration of the Registrable Securities of such Holder. 

[signature pages
follow]

          Please confirm that the foregoing correctly sets
forth the agreement between the Company, ZAIS Financial Corp. and you.

		Very truly yours,	
			 	
		ZAIS FINANCIAL CORP.	
	 	 	 
				
		By:		/s/ Michael F. Szymanski	
				Name: Michael Szymanski	
			 	Title: President	
			 	
			 	 
		ZAIS FINANCIAL PARTNERS, L.P.	 
		By:   	ZAIS Financial Corp.,	
			as its General Partner	
	 		 	
	 	By:		/s/ Michael F. Szymanski	
			       	Name: Michael Szymanski	
				Title: President	

[Registration Rights
Agreement] 

		
      The foregoing
      Registration Rights Agreement is hereby confirmed and accepted as of the
      date first above written. 

		 
		
      CREDIT SUISSE
      SECURITIES (USA) LLC 
	
			 	
				
		By:   	       	/s/ David Stolzar	
				Name: David Stolzar	
			 	Title: Director	
			 	
			 	 

[Registration Rights
Agreement] 

Appendix A

ZAIS FINANCIAL PARTNERS,
L.P.
ZAIS FINANCIAL CORP. 

INSTRUCTION TO DTC
PARTICIPANTS 

(Date of Mailing)

URGENT - IMMEDIATE
ATTENTION REQUESTED 

DEADLINE FOR
RESPONSE: [DATE]

               The Depository Trust Company (“DTC”) has
identified you as a DTC Participant through which beneficial interests in the
ZAIS Financial Partners, L.P. (the “Company”) 8.0% Exchangeable Senior Notes due
2016 (the “Notes”) are held. 

               ZAIS
Financial Corp. is in the process of registering the shares of common stock, par
value $0.0001 per share, of ZAIS Financial Corp. (the “ZFC Common Stock”) under
the Securities Act of 1933 for resale by the beneficial owners thereof. In order
to have their shares of ZFC Common Stock included in the registration statement,
beneficial owners must complete and return the enclosed Notice of Registration
Statement and Selling Securityholder Questionnaire.

               It
is important that beneficial owners of the Notes (and the shares of ZFC Common
Stock into which the Notes are
exchangeable) receive a copy of the enclosed materials as soon as possible as
their rights to have shares of
ZFC Common Stock included in the registration statement depend upon their
returning the Notice and
Questionnaire by [Deadline for response]. Please forward a copy
of the enclosed documents to each beneficial owner that holds interests in the
Notes through you. If you require more copies of the enclosed materials or have
any questions pertaining to this matter, please contact ZAIS Financial Corp.,
Two Bridge Avenue, Suite 322, Red Bank, New Jersey 07701, Attention:
[       ]. 

ZAIS FINANCIAL PARTNERS,
L.P.
ZAIS FINANCIAL CORP.

Notice of Registration
Statement
and
Selling
Securityholder Questionnaire

[Date] 

              
ZAIS Financial Corp. has filed with the
United States Securities and Exchange Commission (the “Commission”) (or otherwise
designated by means of an Officers Certificate (as defined in the Indenture)
delivered to the trustee) an effective Automatic Shelf Registration Statement
previously filed with the Commission) a registration statement on Form S-3 (the
“Shelf Registration Statement”) for the registration and resale under Rule 415
of the Securities Act of 1933, as amended (the “Securities Act”), shares of ZAIS
Financial Corp. common stock, par value $0.0001 per share (the “ZFC Common
Stock”), issuable upon exchange of the 8.0% Exchangeable Senior Notes due 2016
(the “Notes”) issued by ZAIS Financial Partners L.P., a Delaware limited
partnership (the “Company”), in accordance with the Registration Rights
Agreement, dated as of November 25, 2013 (the “Registration Rights Agreement”),
among the Company, ZAIS Financial Corp. and the initial purchaser named therein.
A copy of the Registration Rights Agreement is available upon request from the
Company at the address set forth herein. All capitalized terms not otherwise
defined below shall have the meanings ascribed thereto in the Registration
Rights Agreement. 

              
In order to have Registrable Securities included in the Shelf
Registration Statement (or, if applicable, a supplement or amendment thereto),
this Notice of Registration Statement and Selling Securityholder Questionnaire
(“Notice and Questionnaire”) must be completed, executed and delivered to ZAIS
Financial Corp. at the address set forth herein for receipt ON OR BEFORE                .
Beneficial owners of Registrable Securities who do not complete, execute and
return this Notice and Questionnaire by such date (i) will not be named as
selling securityholders in the Shelf Registration Statement and (ii) may not use
the Prospectus forming a part thereof for resales of Registrable Securities.

              
Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and related Prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Shelf Registration
Statement and related Prospectus. 

              
The term “Registrable Securities” is defined in the Registration Rights
Agreement to mean all shares of ZFC Common Stock issuable upon exchange of the
Notes; provided, however, that a security
ceases to be a Registrable Security when it is no longer a Restricted Security.

              
The term “Restricted Security” is defined in the Registration Rights
Agreement to mean any share of ZFC Common Stock issuable upon exchange of the
Notes except any such share of ZFC Common Stock which (i) has been effectively
registered under the Securities Act and sold in a manner contemplated by the
Shelf Registration Statement, (ii) has been transferred in compliance with Rule
144 under the Securities Act (or any successor provision thereto) or are
transferable pursuant to Rule 144 (or any successor provision thereto), or (iii)
has otherwise been transferred and a new share of ZFC Common Stock not subject
to transfer restrictions under the Securities Act has been delivered by or on
behalf of ZAIS Financial Corp. in accordance with the Indenture. 

ELECTION 

The undersigned holder (the
“Selling Securityholder”) of Registrable Securities hereby elects to include in
the Shelf Registration Statement the Registrable Securities beneficially owned
by it and listed below in Item (3). The undersigned, by signing and returning
this Notice and Questionnaire, agrees to be bound with respect to such
Registrable Securities by the terms and conditions of this Notice and
Questionnaire and the Registration Rights Agreement, including, without
limitation, Section 5 of the Registration Rights Agreement regarding the
obligation to indemnify and hold harmless certain persons as set forth therein,
as if the undersigned Selling Securityholder were an original party thereto.

              
Upon any sale of Registrable Securities
pursuant to the Shelf Registration Statement, the Selling Securityholder will be
required to deliver to ZAIS Financial Corp. the Notice of Transfer (completed
and signed) set forth in Exhibit 1 to this Notice and Questionnaire. 

              
The Selling Securityholder hereby provides the following information to
ZAIS Financial Corp. and represents and warrants that such information is
accurate and complete: 

QUESTIONNAIRE 

	(1)	
      (a)
	
      Full Legal Name of Selling
      Securityholder:

	     	       	  
	 	 	 
	 	 	 
	 	(b)	Full Legal Name of
      Registered Holder (if not the same as in (a) above) of Registrable
      Securities Listed in Item (3) Below:
			 
	 	 	 
	 	 	 
	 	(c)	Full Legal Name of
      DTC Participant (if applicable and if not the same as (b) above) Through
      Which Registrable Securities Listed in Item (3) Below are
  Held:
			 
	 	 	 
	 	 	 
	(2)	       	Address for Notices to Selling
      Securityholder:

			 	
			 	
			 	
	            	Telephone:		
		Fax:		
		Contact Person:  		

	(3)	 	Beneficial Ownership of Securities:
			 
	     	       	Except as set forth below in this Item (3), the undersigned Selling
      Securityholder does not beneficially own any Registrable
      Securities.

	     	(a)	Principal amount of Notes beneficially
      owned: 	 
		       	 

	     	       	CUSIP No(s). of such
    Notes: 	 

	     	       	Number of shares of ZFC Common Stock
      (if any) issued upon exchange, repurchase or redemption of
      Notes: 	 
  

	     	(b)	Number of shares of Registrable Securities which the undersigned
      wishes to be included in the Shelf Registration Statement: 
  
		       	 

	     	       	CUSIP No(s). of such
      Registrable Securities to be included in the Shelf Registration
      Statement:  
			 

	(4)		Beneficial Ownership
      of Other Securities of ZAIS Financial Corp.:
	     	       	 
			Except as set
      forth below in this Item (4), the undersigned Selling Securityholder is
      not the beneficial or registered owner of any shares of ZFC Common Stock
      or any other securities of ZAIS Financial Corp. (or securities of the
      Company that are convertible or exchangeable for securities of ZAIS
      Financial Corp.), other than the Notes and shares of ZFC Common Stock
      listed above in Item (3).
			 
			State any exceptions
      here:

	(5)	Relationships with the Company or ZAIS Financial
Corp.:
	            	
		Except
      as set forth below, neither the Selling Securityholder nor any of its
      affiliates, officers, directors or principal equity holders (5% or more)
      has held any position or office or has had any other material relationship
      with the Company or ZAIS Financial Corp. (or their predecessors or
      affiliates) during the past three years.
	 
		State any exceptions
      here:
	 
	(6)	Plan of
      Distribution:
	 
		Except
      as set forth below, the undersigned Selling Securityholder intends to
      distribute the Registrable Securities listed above in Item (3) only as
      follows (if at all): Such Registrable Securities may be sold from time to
      time directly by the undersigned Selling Securityholder or, alternatively,
      through underwriters, broker-dealers or agents. Such Registrable
      Securities may be sold in one or more transactions at fixed prices, at
      prevailing market prices at the time of sale, at varying prices determined
      at the time of sale, or at negotiated prices. Such sales may be effected
      in transactions (which may involve crosses or block transactions) (i) on
      any national securities exchange or quotation service on which the
      Registrable Securities may be listed or quoted at the time of sale, (ii)
      in the over-the-counter market, (iii) in transactions otherwise than on
      such exchanges or services or in the over-the-counter market, or (iv)
      through the writing of options. In connection with sales of the
      Registrable Securities or otherwise, the Selling Securityholder may enter
      into hedging transactions with broker-dealers, which may in turn engage in
      short sales of the Registrable Securities in the course of hedging the
      positions they assume. The Selling Securityholder may also sell
      Registrable Securities short and deliver Registrable Securities to close
      out such short positions, or loan or pledge Registrable Securities to
      broker-dealers that in turn may sell such securities.
	  
		State any
      exceptions here:

ACKNOWLEDGEMENTS 

              
Note: In no event may such method(s) of
distribution take the form of an underwritten offering of the Registrable
Securities without the prior agreement of ZAIS Financial Corp. 

              
By signing below, the Selling Securityholder acknowledges that it
understands its obligation to comply, and agrees that it will comply, with the
prospectus delivery and other provisions of the Securities Act and the Exchange
Act and the rules and regulations thereunder, particularly Regulation M.

              
In the event that the Selling Securityholder transfers all or any portion
of the Registrable Securities listed in Item (3) above after the date on which
such information is provided to ZAIS Financial Corp., the Selling Securityholder
agrees to notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Registration Rights
Agreement. 

              
By signing below, the Selling Securityholder consents to the disclosure
of the information contained herein in its answers to Items (1) through (6)
above and the inclusion of such information in the Shelf Registration Statement
and related Prospectus. The Selling Securityholder understands that such
information will be relied upon by ZAIS Financial Corp. in connection with the
preparation of the Shelf Registration Statement and related Prospectus.

              
In accordance with the Selling Securityholder’s obligation under Section
3(a) of the Registration Rights Agreement to provide such information as may be
required by law for inclusion in the Shelf Registration Statement, the Selling
Securityholder agrees to promptly notify ZAIS Financial Corp. of any inaccuracies or
changes in the information provided herein which may occur subsequent to the
date hereof at any time while the Shelf Registration Statement remains in
effect. All notices hereunder and pursuant to the Registration Rights Agreement
shall be made in writing, by hand-delivery, first-class mail, or air courier
guaranteeing overnight delivery as follows: 

	          	
      (i)
	
      To the Company or
      ZAIS Financial Corp.: 
	
		     		 	
			 	 	
				 	
				 	
				 	
	 	(ii)	With a copy to:  	
				 	
				 	
				 	
				 	
				 	

              
Once this Notice and Questionnaire is executed by the Selling
Securityholder and received by ZAIS Financial Corp., the terms of this Notice
and Questionnaire, and the representations and warranties contained herein,
shall be binding on, shall inure to the benefit of and shall be enforceable by
the respective successors, heirs, personal representatives, and assigns of ZAIS
Financial Corp. and the Selling Securityholder (with respect to the Registrable
Securities beneficially owned by such Selling Securityholder and listed in Item
(3) above). This Agreement shall be governed in all respects by the laws of the
State of New York. 

              
IN WITNESS WHEREOF, the undersigned, by
authority duly given, has caused this Notice and Questionnaire to be executed
and delivered either in person or by its duly authorized agent. 

	Dated:   	 

	              
    	 
		 
	 	Selling Securityholder
	 	(Print/type full legal name of beneficial owner of Registrable
      Securities)

	              
    	By:	 
	 	Name:  	
		Title:	

PLEASE RETURN THE COMPLETED
AND EXECUTED NOTICE AND QUESTIONNAIRE TO
THE SELLING STOCKHOLDER'S ZAIS
CLIENT RELATIONS REPRESENTATIVE: 

ZAIS Financial
Corp.
Two Bridge Avenue, Suite 322
Red Bank, New Jersey
07701-1106
(732) 978-9722
Attention:
[              ] 

Exhibit 1
to Appendix A

NOTICE OF TRANSFER PURSUANT
TO REGISTRATION STATEMENT 

ZAIS Financial
Corp.
ZAIS Financial Partners, L.P.
Two Bridge Avenue
Suite 322
Red
Bank, New Jersey 07701
Attention:
[          ] 

U.S. Bank National
Association, as Trustee
[ADDRESS] 
Attention:[         
] 

	              
    	Re:	       	ZAIS
      Financial Partners, L.P. (the “Company”)
				ZAIS
      Financial Corp.
				8.0%
      Exchangeable Senior Notes due 2016 (the
“Notes”)

Dear Sirs:

              
Please be advised that
                         has transferred
     shares of ZAIS Financial Corp.’s common stock,
issued upon exchange, repurchase or redemption of Notes, pursuant to an
effective Registration Statement on Form       (File
No. 333-     ) filed by ZAIS Financial Corp.

              
We hereby certify that the prospectus delivery requirements, if any, of
the Securities Act of 1933, as amended, have been satisfied with respect to the
transfer described above and that the above-named beneficial owner of the ZAIS
Financial Corp. common stock is named as a selling securityholder in the
Prospectus dated [date], or in
amendments or supplements thereto, and that the number of shares of ZAIS
Financial Corp. common stock transferred are [a portion of] the shares of ZAIS
Financial Corp. common stock listed in such Prospectus as amended or
supplemented opposite such owner’s name. 

Dated: 

		Very
      truly yours,	
		 	 
	 		
		(Name)	
		 	
		By:	
	 	 	 
	 	 	
		(Authorized Signature)f8ka1ex10iii_universal.htm

Exhibit 10.3

 

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT dated as of October 22, 2013 (the “Effective Date”), by and between Universal Technology Systems Corp., a Florida Corporation (the "Company"), and John D. Kuhns (the "Executive"). This Agreement supersedes the employment agreement between Executive and Company dated September 24, 2013.

W  I  T  N  E  S  S  E  T  H:

The Executive is presently employed by the Company in the capacity of its Executive Chairman and possesses considerable experience and an intimate knowledge of the business and affairs of the Company, its policies, methods, personnel and operations.  The Company recognizes that the Executive's contributions to Global Photonic Energy Corporation (“GPEC”) have been substantial and meritorious and that the Executive has demonstrated unique qualifications to act in an executive capacity for the Company, not that the merger between it and GPEC is complete.  The Company is desirous of assuring the continued employment of the Executive and the Executive is desirous of having such assurance.

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements of the parties set forth in this Agreement, and of other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1.           Term of Employment.  The Company hereby agrees to employ the Executive and the Executive hereby agrees to continue to serve the Company, in accordance with the terms and conditions set forth herein, for an initial period of five (5) years commencing as of  October 1, 2013 (the "Effective Date"); subject, however, to earlier termination as expressly provided herein.  The initial five (5) year period of employment automatically shall be extended for one (1) additional year at the end of the initial five (5) year term and then again for each successive year thereafter.  However, either party may terminate this Agreement at the end of the initial five (5) year period, or at the end of any successive one (1) year term thereafter, by giving the other party written notice of intent not to renew, delivered at least sixty (60) days prior to the end of such initial period or successive term.  In the event such notice of intent not to renew is properly delivered, this Agreement, along with all corresponding rights, duties and covenants, automatically shall expire at the end of the initial period or successive term then in progress (except as otherwise provided herein).

Regardless of the above, if at any time during the initial period of employment, or any successive term, a Change in Control of the Company occurs (as defined in Section 7 hereof), then the term of this Agreement thereafter shall be the longer of: (a) one (1) year beyond the month in which the effective date of such Change in Control occurs; or (b) the term as otherwise provided by this Section 1.

  

Page 1

  

 

2.         Position and Responsibilities.  During the term of this Agreement, the Executive shall serve as the Executive Chairman of the Company.  The Executive shall have the duties and functions that are generally associated with the position of Executive Chairman and will be responsible for such other duties as may from time to time be reasonably assigned to him by the Company’s Board of Directors.  The Executive’s duties shall be as assigned from time-to-time by the Board, but shall include, but not be limited to, the following:  preside over all Board meetings; utilize his full-time efforts to hands-on manage the Company’s day-to-day affairs, along with the Chief Executive Officer and other Officers; and to perform any other matter as enumerated in the Company’s By-laws.

3.         Performance of Duties.  During the term of this Agreement, the Executive shall devote substantially all of his working time to the performance of his responsibilities and duties hereunder and shall comply with the policies of the Company with respect to conflict of interest and business ethics from time to time in effect.  During the term of this Agreement, the Executive shall not, without the prior written consent of the Board, render services, whether or not compensated, to any other person or entity as an employee, independent contractor or otherwise; provided, however, that, except as provided in Section 8.1 below, nothing contained herein shall restrict the Executive from: (i) rendering services to charitable organizations and from managing his personal investments in such manner as shall not interfere with the performance by the Executive of his duties hereunder; or (ii) serving on the board of directors of any other entity so long as (a) such entity is not in a business which is competitive with that of the Company, (b) such service does not interfere with the performance by the Executive of his duties hereunder and (c) the Executive receives the prior approval of the Board with respect to such service.

4.         Compensation.  As remuneration for all services to be rendered by the Executive during the term of this Agreement, and as consideration for complying with the covenants herein, the Company shall pay and provide to the Executive the following:

4.1             Base Salary.  The Company shall pay the Executive a base salary (the “Base Salary”) in an amount which shall be established from time to time by the Board, provided that such base salary shall not be less than $400,000 per year (“Base Salary”).  The foregoing Base Salary shall be paid on the first of each month and shall have an automatic 3% cost of living increase applied to it on first anniversary date of the Agreement.  This new adjusted salary shall be considered the Base Salary for year two.  Thereafter at each anniversary, of this agreement, the then Base Salary shall have a 3% cost of living increase, which shall be the new Base Salary for that year, and so on.  This Base Salary shall be paid to the Executive in installments throughout the year consistent with the normal payroll practices of the Company.  The Board’s Compensation Committee will review the Executive’s Salary at least once per year and may, in its discretion, increase (but not decrease) the Base Salary in accordance with the Company’s compensation policies.

 

  

Page 2

  

 

4.2           Annual Bonus.  In addition to his Base Salary, the Executive shall be eligible to receive an annual cash bonus (the "Bonus") in respect of each fiscal year during the term of this Agreement on the basis of a formula or criteria to be developed by the Board.  The Bonus shall be payable to the Executive in cash as promptly as practical after the completion by the Company of an audit of its financial statements for the fiscal year to which such bonus relates.  The Bonus amount shall be recommended by the Company’s CEO (after considering the Executive’s performance, the performance of the Company and any other factors considered significant or relevant to the decision) and it shall be subject to approval by the Compensation Committee and then the full Board of Directors.

4.3           Compensation Plans.  The Executive shall be eligible to participate in such profit-sharing, 401K, stock option, bonus and performance award programs as are made available generally to executive officers of the Company, such participation to be on a basis which is commensurate with the Executive's position with the Company.

4.4           Health Care and Other Benefits.  The Executive shall receive full family plan coverage under any health and dental insurance plans established for the company and in addition to the foregoing the Executive will be entitled to participate at Company expense in the Mayo Clinic Executive Health Program, with full examinations no less frequent than annually, throughout the term of this Agreement and its extensions.  In addition to the foregoing, the Executive shall also be entitled to participate in all other benefit programs that the Company establishes and makes available to its employees to the extent the Executive’s position, tenure, salary, age, health and other qualifications make him eligible to participate, and shall be entitled to receive such perquisites as are made available generally to executive officers of the Company.  The Executive shall be entitled to five weeks paid vacation per year to be taken at such times as may be approved by the Board or its designee.  Executive is entitled to accrue their vacation time and shall be paid for any unused vacation upon death, disability or termination of employment or non-renewal of this Agreement.

4.5           [RESERVED]

4.6           Stock Options.  Without limiting the foregoing, on the Effective Date, the Executive shall be entitled to participate in the Company’s 2013 Equity Incentive Plan and any other applicable option plans (the “Plan”).  All issuances under that plan including stock options, shall be determine by the Compensation Committee of the Board and then approved by the full Board, and shall be in such type, amounts, timing and distribution terms as it determines to be appropriate.  In addition, the Executive shall be eligible to receive grants of additional equity and options on an annual basis at the sole discretion of the Board.

5.         Expenses/Stipend Allowance.  The Company shall reimburse the Executive for all reasonable, ordinary and necessary documented travel, entertainment and other out-of-pocket expenses that the Executive incurs on behalf of the Company in the course of his employment hereunder in accordance with the Company’s normal policies and provisions regarding such reimbursements.  This may include a monthly stipend allowance for the Executive in an amount and for the purposes as determined by the Board.

 

  

Page 3

  

 

6.           Employment Terminations.

6.1           Termination Due to Death.  In the event the Executive's employment is terminated while this Agreement is in force by reason of death, the Executive shall receive the elements of vested and unvested pay and benefits described in Sections 4.1, 4.2, 4.3, and 4.4.  In addition, the Company shall pay to the Executive's beneficiaries, estate, or trust, as applicable, a pro rata share of any vested Salary or Bonus to which the Executive would have been entitled for the fiscal year in which employment termination occurs, based on the results of the Company for such fiscal year and any death benefit as determined by the Board.

6.2           Termination Due to Disability.  In the event that the Executive becomes Disabled (as defined below) during the term of this Agreement and is, therefore, unable to perform his duties herein for more than one hundred eighty (180) total calendar days during any period of twelve (12) consecutive months, or in the event of the Board's reasonable expectation that the Executive's Disability will exist for more than a period of one hundred eighty (180) calendar days, the Company shall have the right to terminate the Executive's active employment as provided in this Agreement.  However, the Board shall deliver written notice to the Executive of the Company's intent to terminate for Disability at least thirty (30) calendar days prior to the effective date of such termination.  A termination for Disability shall become effective upon the end of the thirty (30) day notice period. Upon such effective date, the Company's obligation to pay and provide to the Executive the elements of pay described in Sections 4.1, 4.2, 4.3, and 4.4 shall immediately expire, except to the extent that the benefits described in Section 4.4 continue after Disability under the terms of the benefit plans and programs which apply generally to the Company's executives and except that the Executive shall receive all rights and benefits that he is vested in pursuant to other plans and programs of the Company.  In addition, the Company shall pay to the Executive a pro rata share of his Bonus for the fiscal year in which employment termination occurs, based on the results for such fiscal year, determined as provided in Section 6.1, and may award him equity under the Company’s Equity Incentive Plan.

The term "Disability" shall mean, for all purposes of this Agreement, the incapacity of the Executive, due to injury, illness, disease, or bodily or mental infirmity, to engage in the performance of substantially all of the usual duties of employment with the Company as contemplated by Section 2 herein, such Disability to be determined by the Board of Directors of the Company upon receipt and in reliance on competent medical advice from one (1) or more individuals, selected by the Board, who are qualified to give such professional medical advice.

It is expressly understood that the Disability of the Executive for a period of one hundred eighty (180) calendar days or less in the aggregate during any period of twelve (12) consecutive months, in the absence of any reasonable expectation that his Disability will exist for more than such a period of time, shall not constitute a failure by his to perform his duties hereunder and shall not be deemed a breach or default and the Executive shall receive full compensation for any such period of Disability or for any other temporary illness or incapacity during the term of this Agreement.

 

  

Page 4

  

6.3           Voluntary Termination by the Executive.  The Executive may terminate this Agreement at any time by giving the Board written notice of intent to terminate, delivered at least ninety (90) days prior to the effective date of such termination.

Upon the expiration of the ninety (90) day notice period, the termination by the Executive shall become effective.  The Company shall pay the Executive his Base Salary, at the rate then in effect as provided in Section 4.1 herein, through the effective date of termination, plus all other benefits to which the Executive has a vested right to at that time (for this purpose, the Executive shall not be paid any Bonus with respect to the fiscal year in which voluntary termination under this Section 6.3 occurs).  The Company and the Executive shall have no further obligations under this Agreement after the effective date of such termination, except as set forth in this Agreement, including Sections 8 or 9 hereof.

6.4           Involuntary Termination by the Company Without Cause.  The Board may terminate the Executive's employment, as provided under this Agreement, at any time, for reasons other than death, Disability or for Cause (as defined in Section 6.5 hereof), by notifying the Executive in writing of the Company's intent to terminate, at least thirty (30) calendar days prior to the effective date of such termination.  Upon the expiration of the thirty (30) day notice period the termination by the Company shall become effective, and the Company shall pay and provide to the Executive the benefits set forth in this Section 7.1.

6.5           Termination For Cause.  Nothing in this Agreement shall be construed to prevent the Board from terminating the Executive's employment under this Agreement for "Cause."

"Cause" shall be determined by the Board in the exercise of good faith and reasonable judgment, and shall be defined as: (i) conviction of, or plea of nolo contendere to, a felony or serious crime involving moral turpitude; (ii) fraud on or misappropriation of any funds or property of the Company; (iii) personal dishonesty, habitual and willful misconduct, willful violation of any law, rule or regulation (other than minor traffic violations or similar offenses) or breach of fiduciary duty which involves personal profit; (iv) willful misconduct in connection with the Employee's duties; (v) chronic use of alcohol, drugs or other similar substances which affects the Employee’s work performance; (vi) breach of a material provision of any employment, non-disclosure, non-competition, non-solicitation or other similar agreement executed by the Employee for the benefit of the Company; (vii) Executive’s willful refusal to carry out written instructions of his direct supervisor, the CEO or the Board which are consistent with Executive's position with the Company; or (viii) Executive’s willful disclosure of any trade secrets or confidential corporate information of the Corporation to persons not authorized to know same, unless such disclosure is, based upon advice of counsel, reasonably determined by Executive to be required by any law or court order.  In the event this Agreement is terminated by the Board for Cause, the Company shall pay the Executive his Base Salary through the effective date of the employment termination and the Executive shall immediately thereafter forfeit all rights and benefits (other than vested benefits) he would otherwise have been entitled to receive under this Agreement, including any right to a Bonus for the fiscal year in which the termination occurs.  The Company and the Executive thereafter shall have no further obligations under this Agreement, except as set forth in Sections 8 or 9 hereof.  In order to be terminated under subsections (iv), (v), (vi) or (vii) hereunder, the Executive shall first have been given thirty (30) days written notice setting forth the grounds for such discharge and, within, such 30-day period, shall not have ceased or otherwise cured (to the reasonable satisfaction of his supervisor, the CEO or the Board, as applicable) the activity or activities or omissions constituting the grounds for such discharge.

 

  

Page 5

  

 

6.6           Termination for Good Reason.  At any time during the term of this Agreement, the Executive may terminate this Agreement for Good Reason (as defined below) by giving the Board of Directors of the Company thirty (30) calendar days written notice of intent to terminate, which notice sets forth in reasonable detail the facts and circumstances claimed to provide a basis for such termination.  Upon the expiration of the thirty (30) day notice period, the Good Reason termination shall become effective, and the Company shall pay and provide to the Executive the benefits set forth in this Section 6.6.

“Good Reason” shall mean, without the Executive's express written consent, the occurrence of any one or more of the following:

	
  

	
(a)

	
the assignment of the Executive to duties materially inconsistent with the Executive's authorities, duties, responsibilities and status (including offices, titles, and reporting requirements) as an executive of the Company, or a reduction or alteration in the nature or status of the Executive's authorities, duties, or responsibilities from those in effect during the immediately preceding fiscal year, other than an insubstantial and inadvertent act that is remedied by the Company promptly after receipt of notice thereof given by the Executive;

	
  

	
(b)

	
a reduction by the Company in the Executive's Base Salary as in effect on the Effective Date, as provided in Section 4.1 herein; or

	
  

	
(c)

	
the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform this Agreement, as contemplated in Section 10.1 herein.

Upon a termination of the Executive's employment for Good Reason, the Executive shall be entitled to receive the same payments and benefits, payable in the same manner, as he is entitled to receive in Section 7.1.

The Executive's right to terminate employment for Good Reason shall not be affected by the Executive's incapacity due to physical or mental illness.  The Executive's continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason herein.

 

  

Page 6

  

 

6.7           Non-Renewal by Company.  Upon any termination of this Agreement as a result of a notice of non-renewal by the Company pursuant to Section 1 hereof (a “Non-Renewal”), upon the effective date of such termination, the Company shall continue to pay to the Executive his Base Salary then in effect for a period of six (6) full months following the effective date of such termination and shall thereafter provide to the Executive a continuation of his health and welfare benefits, including those related to the Mayo Clinic Executive Health Program, during such six (6) month period.   If for any reason the Company is unable to continue the foregoing benefits as required by the preceding sentence, the Company shall either provide equivalent benefits to the Executive or pay to the Executive a lump sum cash payment equal to the value of the benefits which the Company is unable to provide.  Continuation of health benefits under this Section 6.7 will count against, and will not extend, the period during which benefits are required to be continued under COBRA.  In addition, the Company shall make a prorated payment of the Executive’s Bonus for the fiscal year in which such termination occurs.

6.8           [RESERVED]

6.9           Condition to Payment.  All amounts payable by the Company to the Employee upon or with respect to the termination of the Employee’s employment with the Company shall be contingent upon and in consideration for Employee's execution and delivery to the Company of a general release agreement, in form and substance reasonably acceptable to the Company, which releases all of the Employee's claims against the Company relating in any way to Employee's employment with the Company and the termination of the Employee's employment by the Company or for additional compensation under the terms of this Agreement.

7.         Change In Control.

7.1           Employment Terminations in Connection with a Change in Control.  In the event of a Qualifying Termination (as defined below) during a Change of Control Period, the Company shall pay to the Executive and provide him with benefits in lieu of the benefits which otherwise would have been payable under this Agreement such that the total benefits payable to the Executive shall be as follows:

	
  

	
(a)

	
A lump sum amount equal to three (3) times the highest rate of the Executive's annualized Base Salary rate in effect at any time up to and including the effective date of termination;

	
  

	
(b)

	
A lump sum amount equal to three (3) times the higher of the Executive's Bonus for the last fiscal year prior to the Change in Control or the average annual Bonus paid to the Executive for the last three (3) fiscal years prior to the Change in Control;

 

  

Page 7

  

 

	
  

	
(c)

	
An amount equal to the Executive's unpaid Base Salary and pro rata Bonus through the effective date of termination, determined as provided in Section 6.4; and,

	
  

	
(d)

	
A continuation of health and welfare benefits, including enrollment in the Mayo Clinic Executive Health Program, for twelve (12) full months from the effective date of termination.  If for any reason the Company is unable to continue such benefits as required by the preceding sentence, the Company shall either provide equivalent benefits to the Executive or pay to the Executive a lump sum cash payment equal to the value of the benefits which the Company is unable to provide.  Continuation of health benefits under this Section 7.1 will count against, and will not extend, the period during which benefits are required to be continued under COBRA.  The continuation of these welfare benefits may be discontinued by the Company prior to the end of the twelve (12) month period in the event the Executive has available substantially similar benefits from a subsequent employer, as determined by the Company's Board of Directors.

For purposes of this Section 7, a Qualifying Termination shall mean any termination of the Executive's employment other than: (1) by the Company for Cause; (2) by reason of death, Disability or Retirement; or (3) by the Executive without Good Reason.  Payment of any lump sum amounts pursuant to this Section 7.1 will be made within sixty (60) days after the effective date of the termination of the Executive's Employment.

7.2           Definition of "Change in Control."  A Change in Control of the Company shall be deemed to have occurred as of the first to occur of any one or more of the following:

(a)           the effective time of any merger, share exchange, consolidation or other reorganization or business combination of the Company if immediately after such transaction persons who hold a majority of the outstanding voting securities entitled to vote generally in the election of directors of the surviving entity are not persons who held a majority of the voting capital stock of the Company immediately prior to such transaction;

(b)           the closing of a sale or conveyance of all or substantially all of the assets of the Company or of GPEC (except if it is to the Company or any wholly owned subsidiary of the Company);

(c)           an acquisition (other than from the Company) in a transaction or a series of related transactions by any person, entity or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”), (excluding for this purpose, (A) the Company or its subsidiaries, (B) any employee benefit plan of the Company or its subsidiaries which acquires beneficial ownership of voting securities of the Company, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, or (D) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the then outstanding voting securities of the Company entitled to vote generally in the election of directors) of beneficial ownership, within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 50% or more of either the then outstanding shares of common stock or the combined voting power of the Company’s then outstanding voting securities entitled to vote generally in the election of directors;

 

  

Page 8

  

 

(d)           individuals who were the Board’s nominees for election as directors immediately prior to a meeting of the stockholders of the Company involving an actual or threatened election contest relating to the election of the directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, cease to constitute a majority of the Board following the election; or

(e)           the dissolution or liquidation of the Company;

provided, however, that the term “Change in Control” does not include (1) a public offering of capital stock of the Company that is effected pursuant to a registration statement filed with, and declared effective by, the Securities and Exchange Commission under the Securities Act of 1933, or (2) any transaction pursuant to which shares of capital stock of the Company are transferred or issued to any trust, charitable organization, foundation, family partnership or other entity controlled directly or indirectly by, or established for the benefit of, the Executive or their immediate family members (including spouses, children, grandchildren, parents, and siblings, in each case to include in-laws and adoptive relations), or transferred to any such immediate family members.

In addition, in no event shall a Change in Control be deemed to have occurred, with respect to the Executive, if the Executive is part of a purchasing group which consummates the Change in Control transaction. The Executive shall be deemed "part of a purchasing group" for purposes of the preceding sentence if the Executive is an equity participant in the purchasing company or group (except for: (i) passive ownership of less than two percent (2%) of the stock of the purchasing company; or (ii) ownership of equity participation in the purchasing company or group which is otherwise not significant, as determined prior to the Change in Control by a majority of the non-Executive continuing Directors).

7.3           Change of Control Period.  "Change in Control Period" shall mean the period of time commencing with the date on which the Company becomes aware of the Change in Control or becomes aware of a proposed transaction which reasonably could be expected to result in a Change in Control and ending on the first to occur of two (2) years after the effective date of the Change in Control or the date on which the proposed transaction no longer is reasonably expected to occur.

7.4           [RESERVED]

7.5           [RESERVED]

7.6           [RESERVED]

 

  

Page 9

  

 

8.         Noncompetition/Nondisclosure.

 

8.1         Executive’s Acknowledgment.  The Executive agrees and acknowledges that in order to assure the Company that it will retain its value as a going concern, it is necessary that the Executive undertake not to utilize his special knowledge of the Company’s business of developing, commercializing and licensing organic and Gallium Arsenide photovoltaic technologies and intellectual properties related thereto (the “Business”) and his relationships with those in the Company’s industry, customers and suppliers to compete with the Company.  Executive further acknowledges that: (i) the Company is and will be engaged in the Business; (ii) Executive has occupied a position of trust and confidence with the Company prior to the date of this Agreement and, during such period the Executive has, and during the term of this Agreement the Executive will, become familiar with the Company’s trade secrets and with other proprietary and confidential information concerning the Company and the Business; (iii) the agreements and covenants contained in this Section 8 are essential to protect the Company and the goodwill of the Business; and (iv) the Executive’s employment with the Company has special, unique and extraordinary value to the Company and the Company would suffer irreparable harm, for which money damages would not constitute adequate compensation, if Executive were to provide services to any person or entity in violation of the provisions of this Agreement or otherwise violate any of the terms of this Section 8.

8.2        Competitive Activities.  The Executive hereby agrees that for a period (the “Restricted Period”) commencing on the date hereof and ending three years following the termination of Executive’s employment with the Company for whatever reason, Executive shall not, on behalf of himself or any other individual or group of individuals, firm, company, corporation, partnership, trust or other entity or enterprise or successor in interest to any of the foregoing, or any employee, partner, officer, director, partner, or stockholder of any of the foregoing (each individually, a Person and collectively, “Persons”), directly or indirectly, as an employee, proprietor, stockholder, partner, consultant, or otherwise, engage in any business or activity directly competitive with the Business or any of the business activities of the Company as they are now, currently proposed to be, or are, at the time in question, undertaken by the Company, anywhere in North America (the “Territory”), except as expressly approved by the Board in writing.  With respect to the Territory, Executive specifically acknowledges that the Company has conducted the Business throughout those areas comprising the Territory and the Company intends to continue to expand the Business throughout the Territory.

8.3         Blue-Pencil.  If any court of competent jurisdiction shall at any time deem the term of this Agreement or any particular covenant contained in this Section 8, including, without limitation, the Restricted Period, to be too lengthy or the Territory to be too extensive, the other provisions of this Section 8 shall nevertheless stand, the Restricted Period shall be deemed to be the longest period permissible by law under the circumstances and the Territory shall be deemed to comprise the largest territory permissible by law under the circumstances.  The court in each case shall reduce the Restricted Period and/or the Territory to permissible duration or size.

  

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8.4         Confidential Information.  During the term of this Agreement and for a period of three (3) years thereafter, the Executive shall keep secret and retain in strictest confidence, and shall not, without the prior written consent of the Board, furnish, make available or disclose to any third party or use for the benefit of herself or any third party, any Confidential Information.  As used in this Section 8.4, the term “Confidential Information” shall mean any information relating to the business or affairs of the Company or the Business, including, but not limited to, information relating to financial statements, customer identities, potential customers, employees, suppliers, servicing methods, equipment, programs, strategies and information, analyses, profit margins or other proprietary information used by the Company in connection with the Business such as its pending or contemplated research projects, technical limitations or developments and any content of attorney/Company communications to which Executive was privy; provided, however, that Confidential Information shall not include any information which is the public domain, becomes generally known in the industry through no wrongful act on the part of the Executive or as required to be disclosed by a court of competent jurisdiction.  The Executive acknowledges that the Confidential Information is vital, sensitive, confidential and proprietary to the Company.

9.         Inventions and Other Intellectual Property.  The Executive hereby agrees that all right, title and interest in and to all of Executive’s “Creations” and work product made during the term of the Executive’s employment with the Company, whether pursuant to this Agreement or otherwise, shall belong solely to the Company, whether or not they are protected or protectible under applicable patent, trademark, service mark, copyright or trade secret laws.  For purposes of this Section 9, the term “Creations” shall mean all inventions, designs, discoveries, books, newsletters, manuscripts, articles, research, compilations, improvements, and other works which are or may be copyrighted, trade-marked or patented or otherwise constitute works of intellectual property which may be protected (including, without limitation, any information relating to the Company’s software products, source code, know-how, processes, designs, algorithms, computer programs and routines, formulae, techniques, developments or experimental work, works-in-progress, or business trade secrets whether now existing, or hereafter developed during the Employment Period) made or conceived or reduced to practice by the Company.  Executive agrees that all work or other material containing or reflecting any such Creations shall be deemed work made for hire as defined in Section 101 of the Copyright Act, 15 U.S.C. Section 101.  If a court of competent jurisdiction determines that any such works are not works made for hire, Executive hereby assigns to the Company all of Executive’s right, title and interest, including all rights of copyright, patent, and other intellectual property rights, to or in such Creations.

 

Executive covenants that he shall keep the Company informed of the development of all Creations made, conceived or reduced to practice by the Company, in whole or in part, by Executive or any other alone or with others, which either result from any work Executive may do for, or at the request of, the Company, or are related to the Company’s present or contemplated activities, investigations, or obligations.  Executive further agrees that (i) at the Company’s request and expense, he will execute any assignments or any other documents or instruments necessary to transfer all rights any such Creations to the Company and (ii) he will cooperate with the Company or its nominee in perfecting the Company’s title (or the title of the Company’s nominee) in any or all such materials.

 

  

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10.           Interference with Relationships.

 

10.1           Suppliers, Customers, Service Providers. During the Restricted Period, Executive shall not, directly or indirectly, as employee, agent, consultant, stockholder, director, partner or in any other individual or representative capacity intentionally solicit or encourage any present or future customer, employee, consultant, service provider, stockholder, officer, director or supplier of or service provider to the Company to terminate or otherwise alter his, their or its relationship with the Company in a manner having an adverse effect on the Company or the Business.

 

10.2           No Breach.  Executive represents and warrants that he is not under any contractual obligation to any party, which obligation would prevent him from accepting full-time employment with the Company or from otherwise fulfilling any of his obligations under this Agreement.  Executive hereby agrees to indemnify the Company and hold it and its officers and directors harmless from and against any and all claims against or any losses or liabilities, including reasonable attorney’s fees, incurred by, the Company or any of its officers or directors derived from any breach or failure of the representation and warranty contained in this Section10.2.

 

11.           Return of Company Materials Upon Termination.  Executive acknowledges that all email or other written information involving or concerning any Company research project, results or ideas (from or to any company employee, consultant or researcher), as well as any attorney communication of any kind, related to the Company’s Business, price lists, sales manuals, catalogs, binders, customer lists and other customer information, supplier lists, financial information, business plans, corporate records, working notes, work product, sales manuals, catalogs, binders and other records or documents containing any Confidential Information prepared by Executive or coming into Executive’s possession by virtue of Executive’s employment by the Company, other than personal information belonging to the Executive, is and shall remain the property of the Company and that immediately upon termination of Executive’s employment hereunder, Executive shall return all such items in his possession, together with all copies thereof, to the Company.

12.           Indemnification.  The Company hereby covenants and agrees to indemnify and hold harmless the Executive fully, completely, and absolutely against and in respect to any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including attorney's fees), losses, and damages resulting from the Executive's good faith performance of his duties and obligations under the terms of this Agreement, and as it relates to any such other duties performed by the Executive at or for the Company or any subsidiary of the Company, such as GPEC, subject to compliance with any applicable requirements and limitations improved by the Company's Certificate of Incorporation and By-Laws as in effect on the date hereof and applicable law.

  

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13.           Assignment

13.1           Assignment by Company.  This Agreement may and shall be assigned or transferred to, and shall be binding upon and shall inure to the benefit of, any successor of the Company, and any such successor shall be deemed substituted for all purposes of the "Company" under the terms of this Agreement. As used in this Agreement, the term "successor" shall mean any person, firm, corporation, or business entity which at any time, whether by merger, purchase, or otherwise, acquires all or substantially all of the assets or the business of the Company. Notwithstanding such assignment, the Company shall remain, with such successor, jointly and severally liable for all its obligations hereunder.

Except as herein provided, this Agreement may not otherwise be assigned by the Company.

13.2           Assignment by Executive.  The services to be provided by the Executive to the Company hereunder are personal to the Executive, and the Executive's duties may not be assigned by the Executive; provided, however that this Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, and administrators, successors, heirs, distributees, devisees, and legatees.  If the Executive dies while any amounts payable to the Executive hereunder remain outstanding, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee, or other designee or, in the absence of such designee, to the Executive's estate or trust.

13.3           Name Change.  Upon any name change by Company, no assignment need occur as the same entity is bound by the terms of this Agreement.

14.           Dispute Resolution and Notice.

14.1           Dispute Resolution.  Either the Executive or the Company may elect to have any good faith dispute or controversy arising under or in connection with this Agreement settled by arbitration, by providing written notice of such election to the other party hereto, specifying the nature of the dispute to be arbitrated, provided that if the other party objects to the use of arbitration within thirty (30) days of the receipt of such notice, the dispute may only be settled by litigation unless otherwise agreed.

If arbitration is selected, such proceeding shall be conducted before a panel of three (3) arbitrators sitting in a location agreed to by the Company and the Executive within fifty (50) miles from the location of the Executive's principal place of employment, in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association then in effect. Judgment may be entered on the award of the arbitrators in any court having competent jurisdiction.

 

  

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To the extent that the Executive prevails in any litigation or arbitration seeking to enforce the provisions of this Agreement, the Executive shall be entitled to reimbursement by the Company of all expenses of such litigation or arbitration, including the reasonable fees and expenses of the legal representative for the Executive, and necessary costs and disbursements incurred as a result of such dispute or legal proceeding.

14.2           Notice.  Any notices, requests, demands, or other communications provided for by this Agreement shall be sufficient if in writing and if sent by registered or certified mail to the Executive at the last address he has filed in writing with the Company or, in the case of the Company, at its principal offices.

15.           No Mitigation.  The Executive shall have no duty to seek other employment and the amounts, benefits and entitlements payable to the Executive hereunder or otherwise shall not be subject to reduction, offset or repayment for any compensation received by the Executive from services provided by the Executive following the termination of the Executive’s employment with the Company.

 

16.           Section 409A.

 

16.1           The intent of the parties is that payments and benefits under this Agreement comply with Internal Revenue Code Section 409A and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.  In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on the Executive by Code Section 409A or damages for failing to comply with Code Section 409A.

 

16.2           A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”  Notwithstanding anything to the contrary in this Agreement, if the Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is considered deferred compensation under Code Section 409A payable on account of a “separation from service,” such payment or benefit shall not be made or provided until the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such “separation from service” of the Executive, and (B) the date of the Executive’s death, to the extent required under Code Section 409A.  Upon the expiration of the foregoing delay period, all payments and benefits delayed pursuant to this Agreement (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

 

  

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16.3           To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Code Section 409A, (A) all such expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive, (B) any right to such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (C) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

 

16.4           For purposes of Code Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.  Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.

 

16.5           Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

 

17.          Adjustment. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that as a result of any payment or distribution by the Company to or for Executive’s benefit whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Payments”), Executive would be subject to the excise tax imposed by Sections 409A, 280G or Section 4999 of the Internal Revenue Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that, after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes and Excise Tax imposed upon the Gross-Up Payment, Executive is in the same after-tax position as if no Excise Tax had been imposed upon Executive with respect to the Payments, provided further that such Gross-Up Payment shall be made prior to April 15th of the calendar year following the year in which Executive receive any payment or distribution from the Company which gives rise to a Gross-Up Payment.

 

18.         Miscellaneous

18.1           Entire Agreement.  This Agreement supersedes any prior agreements or understandings, oral or written, between the parties hereto, or between the Executive and the Company, with respect to the subject matter hereof and constitutes the entire agreement of the parties with respect thereto.

 

  

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18.2           Modification.  This Agreement shall not be varied, altered, modified, canceled, changed, or in any way amended except by mutual agreement of the parties in a written instrument executed by the parties hereto or their legal representatives.

18.3           Severability.  In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.

18.4           Tax Withholding.  The Company may withhold from any benefits payable under this Agreement all Federal, state, city, or other taxes as may be required pursuant to any law or governmental regulation or ruling.

18.5           Beneficiaries.  The Executive may designate one or more persons or entities as the primary and/or contingent beneficiaries of any amounts to be received under this Agreement.  Such designation must be in the form of a signed writing acceptable to the Board or the Board's designee. The Executive may make or change such designation at any time.

18.6           Board Committee.  Any action to be taken, or determination to be made, by the Board of Directors under this Agreement may be taken or made by the Compensation Committee or any other Committee authorized by the Board of Directors to act on its behalf.

18.7           Governing Law.  To the extent not preempted by Federal law, the provisions of this Agreement shall be construed and enforced in accordance with the internal, substantive laws of the State of New York, without regards to the principles of conflicts of laws thereof.

18.8           Inurement.  This Agreement is binding on the parties and on their heirs, personal representatives, administrators, successors and assigns.

* * * * *

 

  

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IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement on October 22, 2013.

	
Universal Technology Systems Corp.

	  	
Executive:

	  	  	  	  	  
	
By:

	
/s/ Dean L. Ledger

	  	
By:

	
/s/ John D. Kuhns

	  	
Dean L. Ledger, CEO

	  	  	
John D. Kuhns

 

 

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