Exhibit 10.1

SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement and General Release (this “Separation Agreement”) is
made and entered into on this 11th day of September, 2009 by and between Cypress
Sharpridge Investments, Inc, a Maryland corporation (“CYS”), Cypress Sharpridge
Advisors LLC, a Delaware limited liability company (the “Manager”), and
Sharpridge Capital Management, L.P., a Delaware Limited Partnership
(“Sharpridge”, and collectively with CYS and the Manager, the “Company”), on the
one hand, and William J. Hayes (the “Executive”), on the other hand. The Company
and the Executive are collectively referred to as the “Parties”.

WHEREAS, Sharpridge has terminated the Executive’s employment with Sharpridge
effective as of August 12, 2009 (the “Separation Date”);

WHEREAS, each of the Board of Directors of CYS and the Managing Members of the
Manager have elected not to have the Executive continue to serve as their Chief
Financial Officer and Treasurer effective as of the Separation Date; and

WHEREAS, except as provided herein, this Separation Agreement shall supersede
and replace in all respects any and all agreements and understandings between
Sharpridge and the Executive relating to the Executive’s employment by and/or
separation from Sharpridge, and any and all agreements and understandings
between CYS or the Manager and the Executive relating to the Executive serving
as an officer of such entity.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the Parties agree as follows:

 

1. Effective Date of Agreement. This Separation Agreement shall become effective
and enforceable on the 8th day after the date first written above (the
“Effective Date”). Once effective, all of the terms, conditions, benefits and
restrictions of this Separation Agreement shall be fully enforceable and binding
on the Parties.

 

2. Terms of Termination of Employment.

 

  a. Resignation from Positions. The Executive hereby resigns his employment and
any and all positions (the “Positions”) he holds with Sharpridge, CYS, and the
Manager and each of their subsidiaries and affiliates, including without
limitation, Sharpridge TRS, Inc., a Delaware corporation. Such Positions
include, but are not limited to his positions as Chief Financial Officer of
Sharpridge, Chief Financial Officer and Treasurer of CYS, and Chief Financial
Officer and Treasurer of the Manager, in each case effective as of the
Separation Date. As of the Separation Date, the Executive shall have no further
duties or responsibilities to be performed for Sharpridge, CYS, and the Manager
and each of their subsidiaries and affiliates, other than as specified herein;
he shall have no authority to act or endeavor to act on behalf of Sharpridge,
CYS, and the Manager and each of their subsidiaries and affiliates for any
reason whatsoever; and Executive no longer shall have signing or other authority
with respect to Sharpridge’s, CYS’s, and the Manager’s and each of their
subsidiaries’ and affiliates’ accounts, books or records.

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  b. No Further Compensation or Benefits. The Executive will not receive any
compensation or benefits from Sharpridge, CYS or the Manager after the
Separation Date, except as expressly hereinafter provided in this Separation
Agreement. The Executive and each of Sharpridge, CYS and the Manager acknowledge
and agree that valid consideration exists for the promises contained in this
Separation Agreement.

 

3. Consideration to Executive.

 

  a. The Executive acknowledges that (i) Sharpridge has paid the Executive’s
accrued annual salary that is payable, and accrued and unpaid vacation through
and including the Separation Date in accordance with Sharpridge’s normal payroll
practices, and (ii) he is not owed any compensation, accrued unpaid vacation, or
any other compensation or benefits from CYS or the Manager, or their respective
subsidiaries or affiliates.

After the Effective Date, the Sharpridge shall continue to pay the Executive his
monthly base salary through February 28, 2010 (the period from the Separation
Date to February 28, 2010 being the “Separation Period”), payable in accordance
with the Sharpridge’s monthly payroll practice, and subject to all applicable
Federal and State withholdings (the “Separation Payments”). The first Separation
Payment shall be made on or about September 21, 2009, after the Executive’s
right to revoke this Agreement has expired. The five subsequent Separation
Payments shall be made on or about the 1st of each month after the date hereof,
in accordance with Sharpridge’s payroll practice. Accordingly, the final
Separation Payment shall be due and payable on or about February 1, 2010.

 

  b. For the period from the Separation Date until the earlier of February 28,
2010 and the date on which the Executive is eligible to receive coverage under
another employer’s group health insurance plan, the Executive shall be eligible
to continue coverage for himself and his dependents under the existing group
health insurance plan maintained by Sharpridge for the benefit of its officers
and employees, provided that the Executive timely provides the requisite
election notice required under the Consolidated Omnibus Budget Reconciliation
Act (“COBRA”). During the period that the Executive elects to continue such
coverage, the Executive shall pay the monthly premiums for such coverage and
Sharpridge shall reimburse such premium payments within five (5) business days
after the Executive presents to Sharpridge evidence of his payment of the
premiums. The Executive shall promptly notify Sharpridge in writing when he
becomes eligible to receive health coverage under another employer’s group
health insurance plan.

 

  c. CYS agrees to maintain Director and Officer Insurance Coverage for the
Executive during the Separation Period for his acts and omissions while an
officer of CYS on a basis no less favorable to him than coverage provided to
current officers of CYS.

 

  d. Sharpridge and CYS agree to reimburse Executive for the actual reasonable
out of pocket business expenses incurred by the Executive in connection with the
performance of his duties as Chief Financial Officer of Sharpridge and Chief
Financial Officer and Treasurer of CYS, respectively, prior to the date of this
Agreement, subject to delivery by the Executive to Sharpridge or CYS, as the
case may be, of receipts and other appropriate supporting documentation on or
before August 20, 2009.

 

  e. The Executive understands and agrees that the payments payable to Executive
under Sections 3(a), 3(b) and 3(c) will be treated by Sharpridge as compensation
expense.

 

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4. Waiver, Release of Claims, and Covenant Not to Sue.

 

  a. The Executive, for himself, his agents, personal representatives, heirs and
assigns, hereby unconditionally releases and forever discharges Sharpridge, CYS,
the Manager, and any and all of their affiliated entities and subsidiaries, as
well as their respective officers, directors, partners, owners, employees,
agents, representatives, financial advisors, predecessors and successors, and
all of their respective affiliates, whether in their individual or
representative capacities (collectively “Released Parties”), from any and all
liability of every kind and nature whatsoever arising out of or connected in any
way with the Executive’s employment, or termination of employment, by the
Company and any of its affiliates or subsidiaries, or any other matter relating
to the Company or any of its affiliates or subsidiaries, or the business or
assets of any of them, both as to matters now known and those discovered
hereafter, including, without limitation, any and all claims for monetary
relief, injunctive relief, attorney fees, costs, back pay or unpaid wages,
fringe benefits, employment or reinstatement that could have been raised under
common law, wrongful discharge, breach of any contractual rights, both express
or implied, breach of any covenant of good faith and fair dealing, both express
or implied, any tort, any claim of invasion of privacy, any legal restrictions
on the Released Parties’ rights to terminate employees, and any federal, state,
or other governmental statute, regulation, ordinance, or directive, specifically
including, without limitation, Title VII of the Civil Rights Act of 1964, the
Americans with Disabilities Act, the Age Discrimination in Employment Act, the
Family and Medical Leave Act, the Fair Labor Standards Act, the Employee
Retirement Income Security Act, the Securities Act of 1933, the Securities
Exchange Act of 1934, and state securities laws. The foregoing also includes any
and all claims the Executive could have brought or could bring as a partner,
member, director, officer or employee of any of the Released Parties and any and
all claims the Executive may have, in his capacity as a shareholder of any of
the Released Parties, with respect to events occurring prior to the Separation
Date. The Executive covenants not to sue the Released Parties with respect to
any of the released claims or potential claims described above. The foregoing
release does not waive or infringe the Executive’s right to receive the payments
and benefits described in Section 3 hereof. Notwithstanding anything herein to
the contrary, this Separation Agreement shall not impact or release any rights
that the Executive may have, under the bylaws of the CYS, indemnification
agreements, applicable insurance policies of the Company, including but not
limited to CYS’s existing director and officer liability insurance policy,
and/or under applicable law, to indemnification with respect to liabilities,
costs, losses and claims arising from or related to the Executive’s service as
an officer, director or employee of the Sharpridge, CYS, the Manager, any
parent, subsidiary or affiliate of the CYS, or any of the Released Parties.

 

  b.

Each of Sharpridge, CYS and the Manager hereby unconditionally releases and
forever discharges the Executive, his agents, personal representatives, heirs
and assigns, from any and all liability whatsoever for any acts, occurrences or
omissions arising out of or connected in any way with the Executive’s
performance or discharge of his duties as a director or officer of Sharpridge,
CYS or the Manager, employment, prospective employment, or termination of
employment by Sharpridge and any of its affiliates or subsidiaries, or any other
matter relating to Sharpridge, CYS, or the Manager, or any of their affiliates
or subsidiaries, or the business or assets of any of them, both as to matters
now known and those discovered hereafter, except to the extent that the
Executive has engaged in any self-dealing, embezzlement, intentionally improper
acts, illegal acts, acts not in accordance with Sharpridge’s, CYS’s, or the
Manager’s policies and procedures, or

 

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other fraudulent or criminal conduct in the performance of his duties while
employed by Sharpridge (the “Released Claims”); provided, however, the Released
Claims shall not include, and Sharpridge, CYS and the Manager are not releasing
the Executive for liability with respect to, existing third party claims (“Third
Party Claims”) against any of Sharpridge, CYS, or the Manager for which the
Executive is not entitled to receive indemnification from CYS in accordance with
the CYS’s Charter, Bylaws or Maryland law. Except as provided in the immediately
preceding sentence, the Released Claims shall include, without limitation, any
and all claims for monetary relief, injunctive relief, attorney fees, costs and
claims Sharpridge, CYS, or the Manager could have brought or could bring against
the Executive as a shareholder, partner, member, director, officer or employee
of any of the Released Parties. Each of Sharpridge, CYS and the Manager
covenants not to sue the Executive with respect to any of the Released Claims
except to the extent that Sharpridge, CYS, or the Manager determines in good
faith that the Executive has engaged in any self-dealing, embezzlement,
intentionally improper acts, illegal acts, acts not in accordance with
Sharpridge’s, CYS’s, or the Manager’s policies and procedures, or other
fraudulent or criminal conduct in the performance of his duties while employed
by Sharpridge. Sharpridge, CYS and the Manager represent that as of the date
hereof, they have no knowledge of, and have not received any written notices
relating to, (i) and Third-Party Claims or (ii) self-dealing, embezzlement,
intentionally improper acts, illegal acts, acts, or other fraudulent or criminal
conduct in the performance of Executive’s duties while employed by Sharpridge.

 

  c. The Parties expressly understand and agree that the waivers, releases and
covenants not to sue set forth in clauses (a) and (b) above do not preclude
either Party from acting to enforce the terms, conditions, rights, obligations
and requirements of this Separation Agreement as provided herein.

 

  d. This Separation Agreement is intended by the Parties to comply with the
requirements of the Older Workers Benefits Protection Act (29 U.S.C. § 626(f)).
To that end the Parties acknowledge that (a) the Executive has read and
understands the terms of this Separation Agreement and he accepts them knowingly
and voluntarily, (b) the claims released by the Executive pursuant to this
Separation Agreement include claims arising under the Age Discrimination in
Employment Act (29 U.S.C. § 626 et. seq.), (c) the Executive does not waive any
of his rights or claims that may arise after the date this Separation Agreement
is effective, (d) the consideration provided in Section 3 of this Separation
Agreement in exchange for the Executive’s release of claims is in addition to
anything of value which the Executive is already entitled to receive from
Sharpridge, CYS or the Manager, (e) the Executive has been advised in writing to
consult with an attorney prior to signing this Separation Agreement, and has in
fact been advised by his own attorney prior to signing this agreement , (f) the
Executive has been given a period in excess of 21 days in which to consider the
terms of this Separation Agreement, and (g) the Executive has a period of seven
(7) days following the date he signs this Separation Agreement to revoke it, and
the Separation Agreement shall not become effective or enforceable until the
revocation period has expired, as provided for in Section 1 herein.

 

5.

Nondisclosure of Confidential Information. The Executive shall keep confidential
all secret or Confidential Information, knowledge or data relating to
Sharpridge, CYS or the Manager, or any of their affiliated companies, and their
respective businesses and assets, which shall have been obtained by the
Executive during the Executive’s employment by Sharpridge, except for
Confidential Information that becomes public knowledge (other than as a result
of any act by the Executive or any representatives of the Executive in violation
of this Separation Agreement).

 

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The Executive shall not, without the prior written consent of Sharpridge or CYS,
or as may otherwise be required by law or legal process, communicate or divulge
any such Confidential Information to anyone other than the Company and those
designated by it. The agreement made in this Section 5 shall be in addition to,
and not in limitation or derogation of, any obligations otherwise imposed by law
upon the Executive in respect of confidential information of the Company.
“Confidential Information,” as used in this Separation Agreement, means any and
all confidential information (whether recorded in documentary form or by
electronic or other means) relating to the assets, business methods, investment
strategies, hedging strategies, liability management strategies, corporate
plans, business plans, strategic plans, employee information (including
compensation, qualifications, and utilization), management systems, finances,
existing or developing business opportunities. Confidential Information also
includes any other information in respect of which Sharpridge or CYS owes an
obligation of confidentiality to any third party, knowledge of which the
Executive acquired at any time during his employment by Sharpridge and which is
not readily ascertainable to persons not connected with Sharpridge or CYS,
either at all or without significant expenditure of labor, skill or money. The
nondisclosure obligation set forth in this Paragraph is in addition to any
fiduciary duties of the Executive to maintain the confidentiality of the
Confidential Information and, to the extent not otherwise provided herein, the
trade secrets of Sharpridge or CYS.

 

6. Consultation in Advance of Action. Before the Executive engages in any action
which may reasonably be construed as a violation of this Separation Agreement,
or as to which the Executive believes the application of the Separation
Agreement is not clear, specifically including the provisions of Section 5
above, the Executive agrees to contact and confer with the Chief Executive
Officer of Sharpridge, or his designee, regarding the Executive’s intended
action, to make a good faith effort to avoid a violation, and to discuss the
availability of alternative courses of action that would not result in a
violation. Both Parties agree to engage in such discussions in good faith.

 

7. Return of Company Property. All files, records, correspondence, memoranda,
notes or other documents (including, without limitation, those in
computer-readable form) or property relating or belonging to the Sharpridge,
CYS, the Manager or their respective affiliates, whether prepared by the
Executive or otherwise coming into his possession in the course of his
employment with Sharpridge or CYS, shall be the exclusive property of Sharpridge
or CYS, as the case may be, and shall be delivered to Sharpridge and not
retained by the Executive (including, without limitations, any copies thereof)
upon execution of this Agreement.

 

8. Injunctive and Contractual Relief. The Executive understands and agrees that
the covenants contained in this Agreement are special, unique and of an
extraordinary character. Because of the difficulty of measuring economic losses
to Sharpridge, CYS or the Manager as a result of a breach of this Agreement, and
because of the immediate and irreparable damage that could be caused to the
Sharpridge, CYS or the Manager for which they would have no other adequate
remedy, in the event of any default, breach or threatened breach of these
covenant by the Executive, Sharpridge, CYS, or the Manager shall be entitled to
institute and prosecute legal proceedings to enforce its rights hereunder, and
shall be entitled specifically to injunctive relief and to such other and
further relief as may be available to Sharpridge, CYS, or the Manager at law
and/or in equity. The Executive hereby waives any right to require the posting
of a bond in the event Sharpridge, CYS, or the Manager seeks injunctive and/or
other equitable relief to enforce this Separation Agreement. The rights,
obligations and remedies provided in this Section 8 shall be in addition to, and
not in lieu of, any rights, obligations and/or remedies imposed by applicable
law under statutes enforcing the protection of trade secrets and other
confidential and proprietary information.

 

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9. No Filings or Proceedings. The Executive acknowledges and represents to
Sharpridge, CYS, or the Manager that neither he, nor any counsel representing
the Executive has filed any charges, complaints, actions, or lawsuits, or
commenced any proceedings against Sharpridge, CYS, or the Manager or their
respective affiliates, in any court or before any governmental agency, except
for claims for unemployment insurance benefits.

 

10. Non-Solicitation. The Executive agrees that for a period of one (1) year
following the Separation Date:

 

  a. The Executive shall not, without Sharpridge’s prior written consent,
directly or indirectly, knowingly (i) solicit or encourage to leave the
employment or other service of the Sharpridge, CYS, or the Manager, or their
respective affiliates, any current employee or independent contractor thereof;
and

 

  b. The Executive shall not, whether for his own account or the account of any
other person, firm, corporation or other business organization, intentionally
interfere with the Sharpridge’s, CYS’s, or the Manager’s or any of their
respective affiliates’ relationships with any other person, who during the term
of the Executive’s employment with Sharpridge is or was a shareholder or
business partner of Sharpridge, CYS, or the Manager.

 

11. Severability. The Parties understand and agree that every Section, and each
subpart, sub-paragraph or provision therein, of this Separation Agreement is
separable, severable and divisible from the rest of the Separation Agreement. If
any Section, subpart, sub-paragraph or provision herein is ruled invalid,
illegal, unenforceable or void by any arbitrator, regulatory agency or court of
competent jurisdiction, the Parties understand and agree that the remainder of
this Separation Agreement shall continue to be enforceable to the fullest extent
permitted by law.

 

12. Choice of Governing Law and Venue. The Parties (a) understand and agree that
the validity, interpretation, construction and performance of this Separation
Agreement, as well as the rights of the Parties under this Separation Agreement,
shall be governed in accordance with the laws of the Commonwealth of
Massachusetts, without regard to its conflicts of law principles; and
(b) irrevocably and unconditionally submit to the exclusive jurisdiction of the
courts of the Commonwealth of Massachusetts and federal courts sitting in the
Commonwealth of Massachusetts with respect to all actions and proceedings
arising out of or relating to this Separation Agreement and the transactions
contemplated hereby.

 

13. Full Integration. This Separation Agreement constitutes the entire agreement
between the parties regarding the termination of the Executive’s employment with
Sharpridge, CYS or the Manager. It fully supersedes any and all prior oral or
written representations, communications or agreements between the parties
pertaining to its subject matter. The Parties acknowledge that no written or
oral representations inconsistent with or additional to the terms and conditions
of this Separation Agreement have been made or reached. Except as provided
herein, the parties further agree that no modification, amendment or waiver of
any of the provisions of this Separation Agreement shall be effective unless
made in writing, specifically referring to this Separation Agreement, and signed
by the Executive and Sharpridge, CYS and the Manager.

 

14.

Disputes. Each Party to this Separation Agreement shall be entitled to seek any
and all relief to which it or he, as applicable, is entitled with respect to any
violation or threatened violation by the other Party of this Separation
Agreement. Except as otherwise set forth herein, in the event a Party institutes
any proceeding to enforce his or its legal rights under, or to recover

 

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damages for breach by the other Party of, this Separation Agreement, the
prevailing Party shall be entitled to recover from the other Party any actual
expenses for attorney’s fees and disbursements incurred by such prevailing
Party.

 

15. No Waiver. The Parties acknowledge and agree that the failure to enforce at
any time any of the provisions of this Separation Agreement or to require at any
time performance by any party of any of the provisions hereto shall in no way be
construed as a waiver of such provision or affect the validity of this
Separation Agreement or any part thereof, or the right of each party thereafter
to enforce each and every provision in accordance with the terms of this
Separation Agreement.

 

16. Assignability. This Separation Agreement is not assignable by the Executive
but is assignable by Sharpridge, CYS, or the Manager. This Separation Agreement
shall be binding upon and inure to the benefit of Sharpridge, CYS, or the
Manager and its successors and assigns. Sharpridge, CYS, or the Manager agree to
cause its successors and assigns to assume Sharpridge’s and CYS’s liabilities
and obligations set forth in this Separation Agreement.

 

17. Non-Disclosure of Agreement. The Parties agree to keep any and all matters
relating to this Separation Agreement, including its existence, terms and the
negotiations and circumstances which led to this Separation Agreement,
confidential such that they will not disclose such matters to any person or
entity at any time; provided, however that (1) Sharpridge, CYS, or the Manager
may disclose such matters to (i) any of its officers, directors, partners,
owners, agents, auditors, representatives and employees (and their respective
advisors), to the extent necessary to implement this Separation Agreement,
(ii) any prospective purchaser of Sharpridge’s, CYS’s, or the Manager’s business
in order to comply with Sharpridge’s, CYS’s, or the Manager’s disclosure
obligations to or due diligence requests by any prospective purchaser of
Sharpridge’s, CYS’s, or the Manager’s business, (iii) through press releases or
filings with the Securities and Exchange Commission in order to comply with its
public company reporting and disclosure obligations, and (iv) any party to the
extent required by law, and (2) the Executive may disclose this Separation
Agreement to his counsel, his tax and financial advisors and his immediate
family members, and the Executive may discuss his separation from Sharpridge,
CYS, or the Manager and this Separation Agreement with persons with whom he has
a personal relationship to the extent such persons inquire of him regarding
these matters so long as the Executive does not misrepresent in any manner the
terms of his separation.

 

18. Non-Disparagement. The Parties agree that they will not take any action or
make any comment which impugns, defames, disparages, criticizes, negatively
characterizes or casts in an unfavorable light, the other. The Executive’s
obligation under this Paragraph shall apply to the Sharpridge, CYS, and the
Manager, and to the Released Parties, including their respective officers,
directors, management, employees, agents and other representatives. Nothing
herein shall be construed to prohibit or limit the Company’s right to
communicate internally and with its counsel and auditors about Executive solely
for and to the extent necessary for its legitimate business purposes. The
Executive agrees not to voluntarily provide assistance or information to any
person or entity pursuing any claim, charge or complaint against Sharpridge,
CYS, the Manager, or to the Released Parties, except that nothing herein shall
be interpreted to limit the Executive’s right to confer with counsel or to
provide truthful testimony pursuant to subpoena or notice of deposition or as
otherwise required by law.

 

19. Counterparts. This Separation Agreement may be executed in counterparts,
each of which shall be deemed an original for all purposes.

 

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20. Executive’s Personnel File. The Parties agree that documents bearing label
numbers C-S 007 through C-S 015 that were produced by the Company to Executive
on September 8, 2009 shall be removed from the Executive’s personnel file that
is maintained by the Company.

The Parties have read this Separation Agreement, understand and agree to its
terms and enter into it voluntarily. By signing below, the Executive
acknowledges that he is receiving a signed copy of this Separation Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK –

SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Separation Agreement to
be signed as of the day and year indicated below.

 

    SHARPRIDGE CAPITAL MANAGEMENT, L.P.     By:  

/s/ Kevin E. Grant

Dated: September 11, 2009       Kevin E. Grant, Chief Executive Officer    
CYPRESS SHARPRIDGE INVESTMENTS, INC.     By:  

/s/ Kevin E. Grant

Dated: September 11, 2009       Kevin E. Grant, Chief Executive Officer    
CYPRESS SHARPRIDGE ADVISORS, LLC     By:  

/s/ Kevin E. Grant

Dated: September 11, 2009       Kevin E. Grant, Chief Executive Officer    
EXECUTIVE    

/s/ William J. Hayes

Dated: September 11, 2009     William J. Hayes

 

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