Exhibit 10.1

REGISTRATION RIGHTS AGREEMENT

BY AND AMONG

TWO HARBORS INVESTMENT CORP.,

CAPITOL ACQUISITION CORP.

AND

CERTAIN PERSONS LISTED ON SCHEDULE 1 HERETO

dated as of

October 28, 2009

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TABLE OF CONTENTS

 

          Page

SECTION 1.

   DEFINITIONS.    1

SECTION 2.

   SHELF REGISTRATIONS.    3

SECTION 3.

   BLACK-OUT PERIODS.    4

SECTION 4.

   REGISTRATION PROCEDURES.    5

SECTION 5.

   INDEMNIFICATION.    7

SECTION 6.

   COVENANTS RELATING TO RULE 144.    9

SECTION 7.

   MISCELLANEOUS.    9

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REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of October 28,
2009, is made and entered into by and among Two Harbors Investment Corp., a
Maryland corporation (the “Company”), Capitol Acquisition Corp., a Delaware
corporation (“Capitol”), and certain persons listed on Schedule 1 hereto (such
persons, in their capacity as holders of Registrable Securities (as defined
below), the “Holders” and each a “Holder”). Capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in Section 1 hereto.

RECITALS:

WHEREAS, Pine River Capital Management L.P., a Delaware limited partnership
(“Pine River”), the Company, Two Harbors Merger Corp., a Delaware corporation
and a wholly-owned subsidiary of the Company (“Merger Sub”), and Capitol have
entered into an Agreement and Plan of Merger, dated as of June 11, 2009, as
amended as of August 17, 2009 and as of September 20, 2009 (the “Merger
Agreement”);

WHEREAS, the Company is in the process of registering shares of its common
stock, par value $0.01 per share (“Common Stock”), to be issued in connection
with the Merger (as defined below), warrants to purchase shares of Common Stock
(“Warrants”) and the shares of Common Stock issuable upon exercise of the
Warrants with the Securities and Exchange Commission (the “Commission”) under
the Securities Act (as defined below) pursuant to the registration statement of
the Company on Form S-4 (File No. 333-160199) (the “Registration Statement”);
and

WHEREAS, the officers, directors and stockholders of Capitol set forth on
Schedule 1 hereto (each a “Sponsor” and collectively the “Sponsors”) and Nisswa
Acquisition Master Fund Ltd, an investment vehicle managed by Pine River (the
“Fund”), own certain warrants (“Capitol Warrants”) to purchase shares of common
stock, par value $0.0001 per share, of Capitol;

WHEREAS, in connection with the consummation of the Merger, the Capitol Warrants
owned by the Sponsors and the Fund will become Warrants to purchase Common Stock
and, pursuant to the Merger Agreement, the Company has agreed to file, at
Capitol’s expense, a registration statement with the Commission registering for
resale such Warrants (and the underlying shares of Common Stock);

WHEREAS, the Company and Capitol desire to enter into this Agreement with the
Holders in order to grant the Holders the registration rights contained herein.

NOW, THEREFORE, in consideration of the premises and the mutual promises and
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

Section 1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:

“Affiliate” shall mean, when used with reference to a specified Person, (i) any
Person that directly or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the specified Person;
(ii) any Person who, from time to time, is a member of the immediate family of a
specified Person; (iii) any Person who, from time to time, is an officer or
director or manager of a specified Person; or (iv) any Person who, directly or
indirectly, is the beneficial owner of

 

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50% or more of any class of equity securities or other ownership interests of
the specified Person, or of which the specified Person is directly or indirectly
the owner of 50% or more of any class of equity securities or other ownership
interests.

“Agreement” shall mean this Registration Rights Agreement as originally executed
and as amended, supplemented or restated from time to time.

“Board” shall mean the Board of Directors of the Company.

“Business Day” shall mean each day other than a Saturday, a Sunday or any other
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to be closed.

“Capitol” shall have the meaning set forth in the introductory paragraph hereof.

“Capitol Warrants” shall have the meaning set forth in the Recitals hereof.

“Closing Date” shall have the meaning set forth in the Merger Agreement.

“Common Stock” shall have the meaning set forth in the Recitals hereof.

“Commission” shall have the meaning set forth in the Recitals hereof.

“Company” shall have the meaning set forth in the introductory paragraph hereof.

“Control” (including the terms “Controlling,” “Controlled by” and “under common
Control with”) shall mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person through
the ownership of Voting Power, by contract or otherwise.

“Effective Time” shall have the meaning set forth in the Merger Agreement.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended (or
any corresponding provision of succeeding law), and the rules and regulations
thereunder.

“Fund” shall have the meaning set forth in the Recitals hereof.

“Holder” shall mean each holder of the Capitol Warrants, listed in Schedule 1
hereto, in his, her or its capacity as a holder, on or after the Effective Time,
of Registrable Securities. For purposes of this Agreement, the Company may deem
and treat the registered holder of a Registrable Security as the Holder and
absolute owner thereof, unless notified to the contrary in writing by the
registered Holder thereof.

“Merger” shall have the meaning set forth in the Merger Agreement.

“Merger Agreement” shall have the meaning set forth in the Recitals hereof.

“Merger Sub” shall have the meaning set forth in the Recitals hereof.

“Person” shall mean any individual, partnership, corporation, limited liability
company, joint venture, association, trust, unincorporated organization or other
governmental or legal entity.

“Pine River” shall have the meaning set forth in the Recitals hereof.

 

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“Registrable Securities” shall mean at any time on or after the Effective Time
(i) Warrants issued in connection with the Merger in exchange for the Capitol
Warrants listed in Schedule 1 hereto, (ii) the shares of Common Stock that may
be purchased upon exercise of such Warrants and (iii) any class of equity
securities of the Company or of a successor to the entire business of the
Company which are issued in exchange for such Warrants or shares of Common
Stock; provided, however, such Registrable Securities shall cease to be
Registrable Securities when (A) a registration statement with respect to the
sale of such Registrable Securities shall have become effective under the
Securities Act and all such Registrable Securities shall have been disposed of
in accordance with such registration statement or (B) such Registrable
Securities shall have been sold under circumstances in which all of the
applicable conditions of Rule 144 (or any successor provision) under the
Securities Act are met.

“Registration Expenses” shall mean (i) the fees and disbursements of counsel and
independent public accountants for the Company incurred in connection with the
Company’s performance of or compliance with this Agreement, including the
expenses of any special audits or “comfort” letters required by or incident to
such performance and compliance and (ii) all registration, filing and stock
exchange fees, all fees and expenses of complying with securities or “blue sky”
laws, all fees and expenses of custodians, transfer agents and registrars, all
printing expenses, messenger and delivery expenses and any fees and
disbursements of one common counsel retained by Holders of a majority of the
then outstanding Registrable Securities; provided, however, “Registration
Expenses” shall not include any out-of-pocket expenses of the Holders, transfer
taxes, underwriting or brokerage commissions or discounts associated with
effecting any sales of Registrable Securities that may be offered, which
expenses shall be borne by each Holder of Registrable Securities on a pro rata
basis with respect to the Registrable Securities so sold.

“Securities Act” shall mean the Securities Act of 1933, as amended (or any
successor corresponding provision of succeeding law), and the rules and
regulations thereunder.

“Shelf Registration Statement” shall have the meaning set forth in Section 2(a)
hereof.

“Sponsor” shall have the meaning set forth in the Recitals hereof.

“Stand-Off Period” shall have the meaning set forth in Section 5(f) hereof.

“Voting Power” shall mean voting securities or other voting interests ordinarily
(and apart from rights accruing under special circumstances) having the right to
vote in the election of board members or Persons performing substantially
equivalent tasks and responsibilities with respect to a particular entity.

“Warrants” shall have the meaning set forth in the Recitals hereof.

Section 2. Shelf Registrations.

(a) Shelf Registration. The Company agrees to use commercially reasonable
efforts to file with the Commission a registration statement with respect to the
Registrable Securities under the Securities Act on the appropriate form for the
offering to be made on a continuous basis pursuant to Rule 415 under the
Securities Act (the “Shelf Registration Statement”), and will use commercially
reasonable efforts to cause such Shelf Registration Statement to be declared
effective by the Commission at, or as soon as practicable after, the Closing
Date. The Shelf Registration Statement shall be on an appropriate form and the
Shelf Registration Statement and any form of prospectus included therein (or
prospectus supplement relating thereto) shall reflect the plan of distribution
or method of sale as the Holders may from time to time notify the Company.

 

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(b) Effectiveness. Subject to the following sentences of this Section 2(b) and
to Section 3 hereof, the Company shall use commercially reasonable efforts to
keep the Shelf Registration Statement continuously effective for the period
beginning on the date on which the Shelf Registration Statement is declared
effective and ending on the second anniversary thereof. During the period that
the Shelf Registration Statement is effective, the Company shall supplement or
make amendments to the Shelf Registration Statement, if required by the
Securities Act (including to include any prospectus required by Section 10(a)(3)
of the Securities Act) or if reasonably requested by the Holders (whether or not
required by the form on which the Registrable Securities are being registered),
including to reflect any specific plan of distribution or method of sale, and
shall use its commercially reasonable efforts to have such supplements and
amendments declared effective, if required, as soon as practicable after filing.
In addition, if the Shelf Registration Statement is not on Form S-3 (or any
similar or successor form) and during the period that the Shelf Registration
Statement is effective the Company becomes eligible to use Form S-3 (or any
similar or successor form), the Company shall be entitled to amend the Shelf
Registration Statement so that it becomes a registration statement on Form S-3
(or any similar or successor form), provided, however, that the Company shall
use its best efforts to have such amendment declared effective as soon as
practicable after filing. Each Holder agrees that, in connection with any
amendment filed pursuant to this Section 2(b) that is required to be declared
effective by the Commission, upon the filing of such amendment, such Holder will
forthwith discontinue its disposition of Registrable Securities pursuant to the
Shelf Registration Statement until such amendment is declared effective.

Section 3. Black-Out Periods.

Notwithstanding anything herein to the contrary, the Company shall have the
right, exercisable from time to time by delivery of a notice authorized by the
Board, on not more than four occasions during the period of effectiveness of the
Shelf Registration Statement, to require the Holders not to sell pursuant to the
Shelf Registration Statement or similar document under the Securities Act filed
pursuant to Section 2 hereof or to suspend the effectiveness thereof if at the
time of the delivery of such notice, (i) the Board has considered a plan to
engage no later than 90 days following the date of such notice in a firm
commitment underwritten public offering or (ii) a majority of the independent
directors of the Company has reasonably and in good faith determined that such
registration and offering, continued effectiveness or sale would materially
interfere with any material transaction involving the Company. If the
consummation of any business combination by the Company has occurred or is
probable for purposes of Rule 3-05 or Article 11 of Regulation S-X under the
Securities Act, the rights of the Holders to offer, sell or distribute any
Registrable Securities pursuant to the Shelf Registration Statement shall be
suspended until the date on which the Company has filed the financial
information required by Rule 3-05 or Article 11 of Regulation S-X to be included
or incorporated by reference, as applicable, in the Shelf Registration
Statement. The Company, as soon as practicable, shall (i) give the Holders
prompt written notice in the event that the Company has suspended sales of
Registrable Securities pursuant to this Section 3, (ii) give the Holders prompt
written notice of the completion of such offering, the completion or disclosure
of the material transaction, the filing of the required financial information
with the Commission, as the case may be, and (iii) promptly file any amendment
or supplement necessary for the Shelf Registration Statement or the form of
prospectus included therein in connection with the completion of such event.

Each Holder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in this Section 3, such Holder will
forthwith discontinue its disposition of Registrable Securities pursuant to the
Shelf Registration Statement until such Holder’s receipt of the notice of
completion of such event.

 

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Section 4. Registration Procedures.

(a) In connection with the filing of the Shelf Registration Statement as
provided in this Agreement, the Company shall use commercially reasonable
efforts to, as expeditiously as reasonably practicable:

(i) prepare and file with the Commission the Shelf Registration Statement
(including the prospectus included therein and any amendment or supplement
thereto) to effect such registration and use its commercially reasonable efforts
to cause the Shelf Registration Statement to become and remain effective for the
period set forth in Section 2(b); provided, however, that before filing the
Shelf Registration Statement or any amendments or supplements thereto, the
Company will furnish copies of all such documents proposed to be filed to
counsel for the sellers of Registrable Securities covered by the Shelf
Registration Statement and provide reasonable time for such sellers and their
counsel to comment upon such documents if so requested by a Holder;

(ii) prepare and file with the Commission such amendments and supplements to the
Shelf Registration Statement and the prospectus used in connection therewith as
may be necessary to maintain the effectiveness of such registration and to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by the Shelf Registration Statement during the period
in which the Shelf Registration Statement is required to be kept effective;

(iii) furnish to each Holder of the securities being registered, without charge,
such number of conformed copies of the Shelf Registration Statement and of each
such amendment and supplement thereto (in each case including all exhibits)
other than those which are being incorporated into the Shelf Registration
Statement by reference, such number of copies of the prospectus contained in the
Shelf Registration Statement (including each complete prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the Securities
Act in conformity with the requirements of the Securities Act, and such other
documents, including documents incorporated by reference, as the Holders may
reasonably request;

(iv) register or qualify all Registrable Securities under such other securities
or “blue sky” laws of such jurisdictions as the Holders and the underwriters of
the Registrable Securities, if any, shall reasonably request, to keep such
registration or qualification in effect for so long as the Shelf Registration
Statement remains in effect, and take any other action which may be reasonably
necessary or advisable to enable the Holders to consummate the disposition in
such jurisdiction of the Registrable Securities owned by the Holders, except
that the Company shall not for any such purpose be required to qualify generally
to do business as a foreign company or to register as a broker or dealer in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 4(a)(iv), or to consent to general service of process in any such
jurisdiction, or to be subject to any material tax obligation in any such
jurisdiction where it is not then so subject;

(v) immediately notify the Holders if the Company becomes aware of the happening
of any event as a result of which the prospectus included in the Shelf
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances under which they were made, and, at the request of the Holders,
promptly prepare and furnish to the Holders a reasonable number of copies of a

 

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supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of Registrable Securities, such
prospectus shall not include 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 in the light of the circumstances under which
they were made;

(vi) comply or continue to comply in all material respects with the Securities
Act and the Exchange Act and with all applicable rules and regulations of the
Commission thereunder so as to enable any Holder to sell its Registrable
Securities pursuant to Rule 144 promulgated under the Securities Act, as further
agreed to in Section 6 hereof;

(vii) make available to its security holders, as soon as reasonably practicable,
an earnings statement covering the period of at least 12 months, but not more
than 18 months, beginning with the first calendar month after the effective date
of the Shelf Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act;

(viii) provide a transfer agent and registrar for all Registrable Securities
covered by the Shelf Registration Statement not later than the effective date of
the Shelf Registration Statement;

(ix) in connection with any sale, transfer or other disposition by any Holder of
any Registrable Securities pursuant to the Shelf Registration Statement,
cooperate with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
Securities Act legend, and enable certificates for such Registrable Securities
to be issued for such number of shares or warrants and registered in such names
as the Holders may reasonably request in writing at least two Business Days
prior to any sale of Registrable Securities;

(x) list all Registrable Securities covered by the Shelf Registration Statement
on any securities exchange or national quotation system on which any such class
of securities is then listed or quoted and cause to be satisfied all
requirements and conditions of such securities exchange or national quotation
system to the listing or quoting of such securities that are reasonably within
the control of the Company, including registering the applicable class of
Registrable Securities under the Exchange Act, if appropriate, and using
commercially reasonable efforts to cause such registration to become effective
pursuant to the rules of the Commission;

(xi) in connection with any sale, transfer or other disposition by any Holder of
any Registrable Securities pursuant to Rule 144 promulgated under the Securities
Act, cooperate with such Holder to facilitate the timely preparation and
delivery of certificates representing the Registrable Securities to be sold and
not bearing any Securities Act legend, and enable certificates for such
Registrable Securities to be for such number of shares or warrants and
registered in such name as the Holders may reasonably request in writing at
least three Business Days prior to any sale of Registrable Securities;

(xii) notify each Holder, promptly after it shall receive notice thereof, of the
time when the Shelf Registration Statement, or any post-effective amendments to
the Shelf Registration Statement, shall have become effective, or a supplement
to any prospectus forming part of the Shelf Registration Statement has been
filed or when any document is filed with the Commission which would be
incorporated by reference into the prospectus;

 

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(xiii) notify each Holder of any request by the Commission for the amendment or
supplement of the Shelf Registration Statement or prospectus for additional
information; and

(xiv) advise each Holder, promptly after it shall receive notice or obtain
knowledge thereof, of (A) the issuance of any stop order, injunction or other
order or requirement by the Commission suspending the effectiveness of the Shelf
Registration Statement or the initiation or threatening of any proceeding for
such purpose and use all commercially reasonable efforts to prevent the issuance
of any stop order, injunction or other order or requirement or to obtain its
withdrawal if such stop order, injunction or other order or requirement should
be issued, (B) the suspension of the registration of the Registrable Securities
in any state jurisdiction and (C) the removal of any such stop order, injunction
or other order or requirement or proceeding or the lifting of any such
suspension.

(b) In connection with the filing of the Shelf Registration Statement, each
Holder shall furnish in writing to the Company such information regarding such
Holder (and any of its Affiliates), the Registrable Securities to be sold, the
intended method of distribution of such Registrable Securities and such other
information requested by the Company as is necessary or it deems advisable for
inclusion in the Shelf Registration Statement pursuant to the Securities Act.
Such writing shall expressly state that it is being furnished to the Company for
use in the preparation of a registration statement, preliminary prospectus,
supplementary prospectus, final prospectus or amendment or supplement thereto,
as the case may be.

Each Holder agrees that (i) upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4(a)(v), such Holder
will forthwith discontinue its disposition of Registrable Securities pursuant to
the Shelf Registration Statement until such Holder’s receipt of the copies of
the supplemented or amended prospectus contemplated by Section 4(a)(v);
(ii) upon receipt of any notice from the Company of the happening of any event
of the kind described in clause (A) of Section 4(a)(xiv), such Holder will
discontinue its disposition of Registrable Securities pursuant to the Shelf
Registration Statement until such Holder’s receipt of the notice described in
clause (C) of Section 4(a)(xiv); and (iii) upon receipt of any notice from the
Company of the happening of any event of the kind described in clause (B) of
Section 4(a)(xiv), such Holder will discontinue its disposition of Registrable
Securities pursuant to the Shelf Registration Statement in the applicable state
jurisdiction(s) until such Holder’s receipt of the notice described in clause
(C) of Section 4(a)(xiv).

Section 5. Indemnification.

(a) Indemnification by the Company. The Company agrees to indemnify and hold
harmless each Holder and each Person, if any, who Controls such Holder against
any losses, claims, damages, and expenses (including reasonable attorneys’
fees), joint or several, to which the Holders or any such indemnitees may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities and expenses (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Shelf Registration Statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement thereto, or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading or any violation of the Securities Act or state securities laws or
rules thereunder by the Company relating to any action or inaction by the
Company in connection with such registration, and the Company will reimburse
each Holder for any reasonable legal or any other expenses reasonably incurred
by it in connection with investigating or defending any such loss, claim,
liability, action or proceedings; provided, however, that the Company shall not
be liable in any such case to the extent that any such loss,

 

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claim, damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon an untrue statement or alleged statement or
omission or alleged omission made in the Shelf Registration Statement or any
such preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by any Holder specifically stating that it is for use in the
preparation thereof.

(b) Indemnification by the Holders. Each Holder agrees to indemnify and hold
harmless (in the same manner and to the same extent as set forth in
Section 5(a)) the Company, each member of the Board, each officer of the Company
and each Person, if any, who Controls the Company, with respect to any untrue
statement or alleged untrue statement of a material fact in or omission or
alleged omission to state a material fact from the Shelf Registration Statement,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if 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 the Company by such
Holder specifically stating that it is for use in the preparation of the Shelf
Registration Statement or any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Company or any such Board member, officer or Controlling Person and shall
survive the transfer of Registrable Securities by any Holder. The obligation of
a Holder to indemnify will be several and not joint among the Holders of
Registrable Securities and the liability of each such Holder of Registrable
Securities will be in proportion to and limited in all events to the net amount
received by such Holder from the sale of Registrable Securities pursuant to the
Shelf Registration Statement.

(c) Notices of Claims, etc. Promptly after receipt by an indemnified party of
notice of the commencement of any action or proceeding involving a claim
referred to in the preceding paragraphs of this Section 5, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action;
provided, however, that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under the preceding paragraphs of this Section 5, except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice. In
case any such action is brought against a Holder or a Person who Controls a
Holder, the Company shall be entitled to assume the defense thereof, and after
notice from the Company to such indemnified party of its election so to assume
the defense thereof, the Company shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof. To the extent that the Company does not
assume the defense of an action brought against a Holder or a Person who
Controls a Holder as provided in this Section 5(c), such indemnified party (or
parties if there is more than one) shall be entitled to the reasonable legal
expenses of common counsel for such indemnified party (or parties). In no event,
shall the Company be liable for any settlement effected without its written
consent, which consent shall not be unreasonably withheld.

(d) Indemnification Payments. The indemnification required by this Section 5
shall be made by periodic payments of the amount thereof during the course of an
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred. The indemnifying party shall not settle any
claim without the consent of the indemnified party unless such settlement
involves a complete release of such indemnified party without any admission of
liability by the indemnified party.

(e) Contribution. If, for any reason, the foregoing indemnity is unavailable, or
is insufficient to hold harmless an indemnified party, then the indemnifying
party shall contribute to the amount paid or payable by the indemnified party as
a result of the expense, loss, damage or liability, (i) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and the indemnified party on the other (determined by reference to, among
other things, whether the untrue or

 

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alleged untrue statement of a material fact or omission relates to information
supplied by the indemnifying party or the indemnified party and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission) or (ii) if the allocation provided by
subclause (i) above is not permitted by applicable law in the proportion as is
appropriate to reflect not only the relative fault of the indemnifying party and
the indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other, as
well as any other relevant equitable considerations. No indemnified party guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any indemnifying party
who was not guilty of such fraudulent misrepresentation, and the liability for
contribution of each Holder of Registrable Securities will be in proportion to
and limited in all events to the net amount received by such Holder from the
sale of Registrable Securities pursuant to the Shelf Registration Statement.

(f) Market Stand-Off Agreement. Each Holder hereby agrees that it shall not, to
the extent requested by the Company or an underwriter of securities of the
Company, directly or indirectly sell, offer, pledge, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell
(including any short sale), grant any option, right or warrant for the sale of
or otherwise transfer or dispose of any Registrable Securities (other than to
donees or partners of the Holder who agree to be similarly bound) within seven
days prior to and for up to 60 days following the effective date of a
registration statement of the Company filed under the Securities Act or the date
of an underwriting agreement with respect to an underwritten public offering of
the Company’s securities (the “Stand-Off Period”).

In order to enforce the foregoing covenant, the Company shall have the right to
place restrictive legends on the certificates representing the Registrable
Securities subject to this Section 5 and to impose stop transfer instructions
with respect to the Registrable Securities and such other Common Stock and
Warrants of each Holder (and the Common Stock, Warrants or securities of every
other person subject to the foregoing restriction) until the end of such period.

Section 6. Covenants Relating To Rule 144. At such times as the Company becomes
obligated to file reports in compliance with either Section 13 or 15(d) of the
Exchange Act, the Company covenants that it will file any reports required to be
filed by it under the Securities Act and the Exchange Act and that it will take
such further action as any Holder may reasonably request, all to the extent
required from time to time to enable Holders to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act, as such rule may
be amended from time to time or (b) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any Holder, the Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements.

Section 7. Miscellaneous.

(a) Termination; Survival. The rights of each Holder under this Agreement shall
terminate upon the date that all of the Registrable Securities held by such
Holder may be sold during any three-month period in a single transaction or
series of transactions without volume limitations under Rule 144 (or any
successor provision) under the Securities Act. Notwithstanding the foregoing,
the obligations of the parties under Section 5 and paragraphs (d), (e) and
(g) of this Section 7 shall survive the termination of this Agreement.

(b) Expenses. All Registration Expenses incurred in connection with the Shelf
Registration Statement under Section 2 shall be borne by Capitol, whether or not
the Shelf Registration Statement becomes effective.

 

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(c) Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall become
effective when one or more such counterparts have been signed by each of the
parties and delivered to each of the other parties.

(d) Applicable Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
the choice of law provisions thereof. The parties consent to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York in connection with any civil action concerning any controversy, dispute
or claim arising out of or relating to this Agreement, or any other agreement
contemplated by, or otherwise with respect to, this Agreement or the breach
hereof, unless such court would not have subject matter jurisdiction thereof, in
which event the parties consent to the jurisdiction of the State of New York.
The parties hereby waive and agree not to assert in any litigation concerning
this Agreement the doctrine of forum non conveniens.

(e) Waiver Of Jury Trial. THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

(f) Prior Agreement; Construction; Entire Agreement. This Agreement, including
the schedules hereto, constitutes the entire agreement of the parties with
respect to the subject matter hereof, and supersedes all prior agreements and
understandings between the parties, and all such prior agreements and
understandings are merged herein and shall not survive the execution and
delivery hereof.

(g) Notices. All notices or other communications required or permitted to be
given hereunder shall be in writing and shall be delivered by hand or sent,
postage prepaid, by registered, certified or express mail or reputable overnight
courier service or be telecopier and shall be deemed given when so delivered by
hand or, if mailed, three days after mailing (one Business Day in the case of
express mail or overnight courier service), addressed as follows:

 

    If to the Holder:    To the address indicated for such Holder in Schedule 1
hereto.     If to the Company:   

Two Harbors Investment Corp.

601 Carlson Parkway, Suite 330

Minnetonka, MN 55305

Attention: Tim O’Brien

Facsimile: (612) 238-3301

   with a copy to:   

Clifford Chance US LLP

31 West 52nd Street

New York, New York 10019

Attention: Jay L. Bernstein

Facsimile: 212-878-8375

(h) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder. The Company may assign its rights or
obligations hereunder to any successor to the Company’s business or with the
prior written consent of Holders of a majority of the then outstanding

 

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Registrable Securities. Notwithstanding the foregoing, no assignee of the
Company shall have any of the rights granted under this Agreement until such
assignee shall acknowledge its rights and obligations hereunder by a signed
written agreement pursuant to which such assignee accepts such rights and
obligations.

(i) Headings. Headings are included solely for convenience of reference and if
there is any conflict between headings and the text of this Agreement, the text
shall control.

(j) Amendments And Waivers. The provisions of this Agreement may be amended or
waived at any time only by the written agreement of the Company and the Holders
of a majority of the then outstanding Registrable Securities. Any waiver,
permit, consent or approval of any kind or character on the part of any such
Holders of any provision or condition of this Agreement must be made in writing
and shall be effective only to the extent specifically set forth in writing. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each Holder of Registrable Securities and the Company.

(k) Interpretation; Absence Of Presumption. For the purposes hereof, (i) words
in the singular shall be held to include the plural and vice versa and words of
one gender shall be held to include the other gender as the context requires,
(ii) the terms “hereof,” “herein,” and “herewith” and words of similar import
shall, unless otherwise stated, be construed to refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
paragraph or other references are to the Sections, paragraphs, or other
references to this Agreement unless otherwise specified, (iii) the word
“including” and words of similar import when used in this Agreement shall mean
“including, without limitation,” unless the context otherwise requires or unless
otherwise specified, (iv) the word “or” shall not be exclusive and
(v) provisions shall apply, when appropriate, to successive events and
transactions.

This Agreement shall be construed without regard to any presumption or rule
requiring construction or interpretation against the party drafting or causing
any instruments to be drafted.

(l) Severability. If any provision of this Agreement shall be or shall be held
or deemed by a final order by a competent authority to be invalid, inoperative
or unenforceable, such circumstance shall not have the effect of rendering any
other provision or provisions herein contained invalid, inoperative or
unenforceable, but this Agreement shall be construed as if such invalid,
inoperative or unenforceable provision had never been contained herein so as to
give full force and effect to the remaining such terms and provisions.

(m) Specific Performance; Other Rights. The parties recognize that various other
rights rendered under this Agreement are unique and, accordingly, the parties
shall, in addition to such other remedies as may be available to them at law or
in equity, have the right to enforce the rights under this Agreement by actions
for injunctive relief and specific performance.

(n) Further Assurances. In connection with this Agreement, as well as all
transactions and covenants contemplated by this Agreement, each party hereto
agrees to execute and deliver or cause to be executed and delivered such
additional documents and instruments and to perform or cause to be performed
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions and conditions of this Agreement and
all such transactions and covenants contemplated by this Agreement.

(o) No Waiver. The waiver of any breach of any term or condition of this
Agreement shall not operate as a waiver of any other breach of such term or
condition or of any other term or condition, nor shall any failure to enforce
any provision hereof operate as a waiver of such provision or of any other
provision hereof.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date first written above.

 

TWO HARBORS INVESTMENT CORP.,

a Maryland corporation

By:  

/s/ Jeff Stolt

    Name:   Jeff Stolt     Title:   Chief Financial Officer

CAPITOL ACQUISITION CORP.,

a Delaware corporation

By:  

/s/ Mark Ein

    Name:   Mark Ein     Title:   CEO HOLDERS: By:  

/s/ Lawrence Calcano

    Lawrence Calcano By:  

/s/ Brooke B. Coburn

    Brooke B. Coburn By:  

/s/ Amanda Eilan

    Amanda Eilan By:  

/s/ Mark D. Ein

    Mark D. Ein By:  

/s/ Richard C. Donaldson

    Richard C. Donaldson By:  

/s/ Raul J. Fernandez

    Raul J. Fernandez

 

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By:  

/s/ Dr. Jeong H. Kim

    Dr. Jeong H. Kim By:  

/s/ Ted Leonsis

    Ted Leonsis By:  

/s/ Hugh Panero

    Hugh Panero By:  

/s/ Arno Penzias

    Arno Penzias By:  

/s/ Piyush Sodha

    Piyush Sodha By:  

/s/ Thomas E. Wheeler

    Thomas E. Wheeler ZG VENTURES LLC By:  

/s/ Miles Gilburne

 

  Name:

  Miles Gilburne  

  Title:

  Managing Member

NISSWA ACQUISITION MASTER FUND LTD

By:

 

/s/ Jeff Stolt

 

  Name:

  Jeff Stolt  

  Title:

  CFO-Pine River Capital Management, LP     Its:   Investment Manager

 

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Schedule 1

THE HOLDERS

Sponsors:

 

Name of the Holder

  

Number of

Capitol Warrants Held

  

Address of the Holder

Lawrence Calcano

   250,000    [Address]

Brooke B. Coburn

   100,000    [Address]

Amanda Eilian

   160,000    [Address]

Mark D. Ein

   3,040,000    [Address]

Richard C. Donaldson

   200,000    [Address]

Raul J. Fernandez

   750,000    [Address]

Dr. Jeong H. Kim

   750,000    [Address]

Ted Leonsis

   100,000    [Address]

Hugh Panero

   100,000    [Address]

Arno Penzias

   200,000    [Address]

Piyush Sodha

   1,000,000    [Address]

Thomas E. Wheeler

   100,000    [Address]

ZG Ventures LLC

   250,000    [Address]        

The Fund:

     

Name of the Holder

   Number of
Capitol Warrants Held   

Address of the Holder

Nisswa Acquisition Master Fund Ltd

   2,906,918   

601 Carlson Parkway, Suite 330

Minnetonka, MN 55305

 

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