Exhibit 10.29

 
 
 
 
 
 
November 21, 2016
DYNEX CAPITAL, INC.
AS COMPANY,
LADENBURG THALMANN & CO. INC.

AND
JONESTRADING INSTITUTIONAL SERVICES LLC
AS AGENTS

 
_________________________________________________
 
 
 
 
 
EQUITY DISTRIBUTION AGREEMENT
 
 
_________________________________________________
 

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CONTENTS
Clause
Page
1.
Description of Shares.
1
2.
Representations and Warranties.
1
3.
Sale and Delivery of Shares.
15
4.
Agreements.
19
5.
Payment of Expenses.
25
6.
Conditions to the Obligations of the Agent.
25
7.
Indemnification and Contribution.
27
8.
Termination.
30
9.
Representations and Indemnities to Survive.
31
10.
Notices.
31
11.
Successors.
31
12.
No Fiduciary Duty.
31
13.
Integration.
32
14.
Applicable Law.
32
15.
Waiver of Jury Trial.
32
16.
Consent to Jurisdiction.
32
17.
Counterparts.
32
18.
Headings.
32
19.
Definitions.
32

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DYNEX CAPITAL, INC.
Up to $50,000,000
Preferred Stock

EQUITY DISTRIBUTION AGREEMENT
November 21, 2016
Ladenburg Thalmann & Co. Inc.
570 Lexington Avenue
Eleventh Floor
New York, NY 10022
JonesTrading Institutional Services LLC
780 Third Avenue
New York, NY 10017

Ladies and Gentlemen:
Dynex Capital, Inc., a Virginia corporation (the “Company”), confirms its
agreement (this “Agreement”) with Ladenburg Thalmann & Co. Inc. (“Ladenburg”)
and JonesTrading Institutional Services LLC (together with Ladenburg, the
“Agents”) as follows:
1.Description of Shares. The Company proposes to issue and sell through or to
the Agents, as sales agents and/or principals, up to an aggregate value of
$50,000,000 (the “Maximum Amount”) (subject to Section 3(d)) of shares of the
Company’s 8.50% Series A Cumulative Redeemable Preferred Stock (the “Series A
Shares”), par value $0.01 per share (“Series A Preferred Stock”), and/or shares
of the Company’s 7.625% Series B Cumulative Redeemable Preferred Stock (the
“Series B Shares” and, together with the Series A Shares, the “Shares”), par
value $0.01 per share (the “Series B Preferred Stock” and, together with the
Series A Preferred Stock, the “Preferred Stock”), from time to time during the
term of this Agreement and on the terms set forth in Section 3 of this
Agreement. For purposes of selling the Shares through the Agents, the Company
hereby appoints each Agent as an agent of the Company for the purpose of
soliciting purchases of the Shares from the Company pursuant to this Agreement
and each Agent agrees to use its commercially reasonable efforts to solicit
purchases of the Shares on the terms and subject to the conditions stated
herein. The Company agrees that whenever it determines to sell the Shares
directly to the Agents as principals, it will enter into a separate agreement
(each, a “Terms Agreement”) in substantially the form of Annex I hereto,
relating to such sale in accordance with Section 3 of this Agreement. Certain
terms used herein are defined in Section 19 hereof.
2.    Representations and Warranties.
(a)    Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with, each Agent at the Execution Time, and as of each
Representation Date and each Applicable Time as set forth below.

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i.    The Company meets the requirements for use of Form S-3 under the Act and
has prepared and filed with the Securities and Exchange Commission (the
“Commission”) a registration statement (File Number 333-200859) on Form S-3,
including a related Base Prospectus, for registration under the Act of the
offering and sale of securities, including the Shares. Such Registration
Statement, including any amendments thereto filed prior to the Execution Time or
prior to any such time this representation is repeated or deemed to be made, has
been declared effective by the Commission. The Company shall file as promptly as
practicable after the Execution Time with the Commission the Prospectus
Supplement relating to the Shares in accordance with Rule 424(b). As filed, the
Prospectus shall contain in all material respects the information required by
the Act, and, except to the extent the Agents agree in writing to a
modification, shall be in all substantive respects in the form furnished to the
Agents prior to the Execution Time or prior to any such time this representation
is repeated or deemed to be made under this Agreement. The Registration
Statement, at the Execution Time, at each such time this representation is
repeated or deemed to be made under this Agreement, and at all times during
which a prospectus (as such term is defined in the Act) is required by the Act
to be delivered (whether physically or through compliance with Rule 172 or any
similar rule) in connection with any offer or sale of Shares, meets the
requirements set forth in Rule 415(a)(1)(x). The initial Effective Date of the
Registration Statement was not earlier than the date three years before the
Execution Time. Any reference herein to the Registration Statement, the Base
Prospectus, the Prospectus Supplement, any Interim Prospectus Supplement or the
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under the
Exchange Act on or before the Effective Date of the Registration Statement or
the issue date of the Base Prospectus, the Prospectus Supplement, any Interim
Prospectus Supplement or the Prospectus, as the case may be; and any reference
herein to the terms “amend,” “amendment” or “supplement” with respect to the
Registration Statement, the Base Prospectus, the Prospectus Supplement, any
Interim Prospectus Supplement or the Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the Effective
Date of the Registration Statement or the date of the Base Prospectus, the
Prospectus Supplement, any Interim Prospectus Supplement or the Prospectus, as
the case may be, deemed to be incorporated therein by reference.
To the extent that the Registration Statement is not available for the sales of
the Shares as contemplated by this Agreement, the Company shall file a new
registration statement with respect to any additional shares of Preferred Stock
necessary to complete such sales of the Shares and shall cause such registration
statement to become effective as promptly as practicable. After the
effectiveness of any such registration statement, all references to
“Registration Statement” included in this Agreement shall be deemed to include
such new registration statement, including all documents incorporated by
reference therein pursuant to Item 12 of Form S-3, and all references to “Base
Prospectus” included in this Agreement shall be deemed to include the final form
of prospectus, including all documents incorporated therein by reference,
included in any such registration statement at the time such registration
statement became effective.
On each Effective Date, at the Execution Time, at each Applicable Time, and at
each Representation Date, the Registration Statement complied and will comply in
all material respects with the applicable requirements of the Act and the
Exchange Act and did not and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein

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or necessary in order to make the statements therein not misleading; and on the
date of any filing pursuant to Rule 424(b), at the Execution Time and at each
Applicable Time, the Prospectus (together with any prospectus supplement
thereto) complied and will comply in all material respects with the applicable
requirements of the Act and the Exchange Act and did not and will not include
any 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; provided, however,
that the Company makes no representations or warranties as to (i) the
information contained in the Registration Statement or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with
information furnished in writing to the Company by each Agent specifically for
inclusion in the Registration Statement or the Prospectus (or any amendment or
supplement thereto) or (ii) that part of the Registration Statement (including
any new registration statement filed pursuant to Section 2(a)(i) hereof) which
constitutes the Statement of Eligibility on Form T-1 of the trustee under the
Trust Indenture Act of 1939.
At the Execution Time, at each Applicable Time and at each Representation Date,
the Disclosure Package does not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The preceding sentence does not apply to statements in or omissions
from the Disclosure Package based upon and in conformity with written
information furnished to the Company by an Agent specifically for use therein.
ii.    The Company meets the requirements for use of Form S-3 under the
Securities Act specified in FINRA Conduct Rule 5110(B)(7)(C)(i) and satisfies
the pre-October 21, 1992 eligibility requirements for the use of a registration
statement on Form S-3 in connection with the offering of the Shares, including,
without limitation: (i) having a non-affiliate, public common equity float of at
least $150 million as of a date within 60 days of the date of this Agreement and
(ii) having been subject to the Exchange Act reporting requirements for a period
of at least 36 months.
iii.    At the time of filing the Registration Statement and any post-effective
amendment thereto, at the earliest time thereafter that the Company or another
offering participant made a bona fide offer (within the meaning of Rule
164(h)(2) under the Act) of the Shares and at the date hereof, the Company was
not and is not an “ineligible issuer,” as defined in Rule 405, without taking
account of any determination by the Commission pursuant to Rule 405 that it is
not necessary that the Company be considered an ineligible issuer.
iv.    BDO USA, LLP and/or such other audit firm whose report appears in the
Registration Statement, the Disclosure Package and the Prospectus (the “Audit
Firm”) are independent certified public accountants as required by the Act and
the Public Company Accounting Oversight Board (including the rules and
regulations promulgated by such entity, the “PCAOB”). Except as set forth in the
Registration Statement, the Disclosure Package and the Prospectus, the Audit
Firm has not during the periods covered by the financial statements included in
the Registration Statement, the Disclosure Package and the Prospectus, provided
to the Company any material non-audit services, as such term is defined in
Section 10A(g) of the Exchange Act.

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v.    The historical financial statements (including the related notes and
supporting schedules) included in the Registration Statement, the Disclosure
Package and the Prospectus comply as to form in all material respects with the
requirements of Regulation S-X under the Act and present fairly the financial
condition, results of operations, stockholders’ equity and cash flows of the
Company at the dates and for the periods indicated and have been prepared in
conformity with accounting principles generally accepted in the United States
(“GAAP”) applied on a consistent basis throughout the periods involved. The
supporting schedules, if any, present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data included
or incorporated by reference in the Registration Statement, the Disclosure
Package and the Prospectus present fairly the information shown therein and have
been compiled on a basis consistent with the financial statements included
therein and the books and records of the Company. Except as included therein, no
historical or pro forma financial statements or supporting schedules are
required to be included or incorporated by reference in the Registration
Statement, the General Disclosure Package or the Prospectus under the Act. The
interactive data in eXtensible Business Reporting Language incorporated by
reference in the Registration Statement, the Disclosure Package and the
Prospectus fairly presents the information called for in all material respects
and has been prepared in accordance with the Commission’s rules and guidelines
applicable thereto.
vi.    Other than as set forth in the Registration Statement, the Disclosure
Package and the Prospectus, since the date of the most recent balance sheet of
the Company reviewed or audited by the Audit Firm, the Company has not been
advised of any fraud, whether or not material, that involves management or other
employees who have a significant role in the internal controls of the Company.
vii.    There are no contracts or documents which are required to be described
in the Registration Statement, the Disclosure Package or the Prospectus or to be
filed as exhibits to the Registration Statement which have not been so described
and filed as required.
viii.    Commercial Capital Access One, Inc., Financial Asset Securitization,
Inc., Investment Capital Access, Inc., Issued Holdings Capital Corporation,
MERIT Securities Corporation and SMFC Funding Corporation are the Company’s only
material subsidiaries (each of the foregoing, a “Subsidiary” and, collectively,
the “Subsidiaries”). Each of the Company and each Subsidiary has been duly
organized, is validly existing and in good standing as a corporation under the
laws of the Commonwealth of Virginia with full corporate power and authority to
own, lease and operate its properties, to conduct its business as described in
the Registration Statement, the Disclosure Package and the Prospectus. The
Company has full corporate power and authority to enter into the transactions
contemplated by this Agreement. Each of the Company and each Subsidiary is duly
qualified to do business and in good standing as a foreign corporation or
limited liability company, as applicable, in each jurisdiction in which its
ownership or lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified or in good standing
would not, in the aggregate, reasonably be expected to have a material adverse
effect on the business, earnings, condition (financial or otherwise), results of
operations, stockholders’ equity, properties or prospects of the Company and the
Subsidiaries, taken as a whole (a “Material Adverse Effect”). The Company owns
all of the outstanding equity capital of each

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Subsidiary, free and clear of all liens and encumbrances and no Subsidiary has
issued any options, warrants, rights or other securities convertible into or
exercisable for capital stock of any Subsidiary.

ix.    The Company has an authorized, issued and outstanding capitalization as
set forth in the Registration Statement, the Disclosure Package and the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and non-assessable,
conform to the description thereof contained in the Registration Statement, the
Disclosure Package and the Prospectus and were issued in compliance with federal
and state securities laws and not in violation of any preemptive right, resale
right, right of first refusal or similar right. The Company’s stock option,
stock bonus and other stock plans or arrangements, and the options or other
rights granted thereunder conform in all material respects to the descriptions
thereof contained in the Registration Statement, the Disclosure Package and
Prospectus. With respect to the stock options (the “Stock Options”) granted
pursuant to the stock-based compensation plans of the Company (the “Company
Stock Plans”), (i) each grant of a Stock Option was duly authorized no later
than the date on which the grant of such Stock Option was by its terms to be
effective (the “Grant Date”) by all necessary corporate action, including, as
applicable, approval by the Board of Directors of the Company (or a duly
constituted and authorized committee or delegatee thereof) and (ii) each such
grant of Stock Options was made in accordance with the terms of the applicable
Company Stock Plans, the Exchange Act and all other applicable laws and
regulatory rules or requirements, including the rules of the New York Stock
Exchange (the “NYSE”) or such other national securities exchange on which the
Shares may then be listed (the NYSE or such other national securities exchange,
the “Securities Exchange”). The Company has not knowingly granted, and there is
no and has been no policy or practice of the Company of granting, Stock Options
prior to, or otherwise coordinated the grant of Stock Options with, the release
or other public announcement of material information regarding the Company or
its Subsidiaries or their results of operations or prospects. Except as
disclosed in the Registration Statement, the Disclosure Package and the
Prospectus and as may be issued under Company Stock Plans after the Execution
Date, no options, warrants or other rights to purchase or exchange any
securities for shares of the Company’s capital stock are outstanding.

x.    The Shares have been duly authorized and, upon payment and delivery in
accordance with this Agreement, will be validly issued, fully paid and
non-assessable, will conform to the description thereof contained in the
Registration Statement, the Disclosure Package and the Prospectus, will be
issued in compliance with federal and state securities laws and will be free of
preemptive rights, rights of first refusal and similar rights pursuant to
statute, contract or the Company’s charter or bylaws and, except as disclosed in
the Registration Statement, the Disclosure Package and the Prospectus, free of
any restriction upon the voting or transfer thereof pursuant to the Virginia
Stock Corporation Act or the Company’s charter or bylaws or any agreement or
instrument to which the Company is a party. The shares of the common stock of
the Company, par value $0.01 (the “Common Stock”) issuable upon conversion of
the Shares been duly and validly authorized and  reserved for issuance by the
Company and, when issued and delivered upon conversion and in accordance with
the terms of the Company’s charter, including the articles of amendment relating
to the Series A Preferred Stock or Series B Preferred Stock, as the case may be,
will be validly issued and fully-paid and non-assessable; and will not have been
issued in violation of any preemptive or other similar rights of any
securityholder of the Company.

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xi.    Since December 31, 2015, except as disclosed in the Registration
Statement, the Disclosure Package or the Prospectus or otherwise disclosed to
the Agents in writing, neither the Company nor any Subsidiary has (i) incurred
any material liability or obligation, direct or contingent, other than
liabilities and obligations that were incurred in the ordinary course of
business, (ii) entered into any material transaction not in the ordinary course
of business or (iii) redeemed any shares of any class of its capital stock.

xii.    The Company and each Subsidiary (i) is not in violation of its charter
or bylaws, (ii) is not in default, and no event has occurred that, with notice
or lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan or credit agreement, license or other
agreement or instrument to which it is a party or by which it is bound or to
which any of its properties or assets is subject or (iii) is not in violation of
any federal, state, local or foreign law, statute or rule, judgment, order, rule
or regulation, writ or decree of any arbitrator, court or governmental,
regulatory or administrative agency, body or any self-regulatory organization or
other non-governmental regulatory authority having jurisdiction over it or its
property or assets (each, a “Governmental Entity”) or has failed to obtain any
license, permit, certificate, franchise or other governmental authorization or
permit necessary to the ownership of its property or to the conduct of its
business, except in the case of clauses (ii) and (iii), to the extent any such
conflict, breach, violation or default would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

xiii.    This Agreement has been duly authorized, executed and delivered by the
Company and, when executed and delivered by each Agent, will constitute a legal,
valid and binding agreement of the Company that is enforceable against the
Company in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization or other similar legal requirements affecting the
enforcement of creditors’ rights generally and by general principles of equity
and except to the extent that the indemnification provisions hereof may be
limited by federal or state securities laws and public policy considerations in
respect thereof.
xiv.    None of the Company nor any Subsidiary owns any real property. Each of
the Company and such Subsidiary has good and marketable title to all of its
assets and personal property owned by it, free and clear of all liens,
encumbrances and defects, except (i) for any security interest, lien,
encumbrance or claim that may exist under any applicable repurchase agreement,
(ii) such as are described in the Registration Statement, the Disclosure Package
and the Prospectus or (iii) such as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be
made of such property by the Company or such Subsidiary; and all assets and real
and personal property held under lease by the Company or any Subsidiary are held
by it under valid, subsisting and enforceable leases, with such exceptions as do
not materially interfere with the use made and proposed to be made of such
assets by the Company or such Subsidiary, and neither the Company nor any
Subsidiary has written notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any Subsidiary under
any such leases or affecting or questioning the rights of the Company or any
Subsidiary to be in the continued possession of the leased premises under such
leases. The execution, delivery

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and performance of this Agreement and the consummation of the transactions
contemplated herein and in the Registration Statement, the Disclosure Package
and the Prospectus (including the issuance and sale of the Shares and the use of
the proceeds from the sale of the Shares as described therein under the caption
“Use of Proceeds”) and compliance by the Company with its obligations hereunder
and under the charter have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or default or
Repayment Event under, or result in the creation or imposition of any lien,
charge or encumbrance upon any properties or assets of the Company or any
Subsidiary pursuant to contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which it or any of them may
be bound or to which any of the properties or assets of the Company or any
subsidiary is subject (except for such conflicts, breaches, defaults or
Repayment Events or liens, charges or encumbrances that would not, singly or in
the aggregate, result in a Material Adverse Effect), nor will such action result
in any violation of the provisions of the charter, by-laws or similar
organizational document of the Company, or any of its Subsidiaries or any law,
statute, rule, regulation, judgment, order, writ or decree of any Governmental
Entity.
xv.    Except as disclosed in the Registration Statement, the Disclosure Package
and the Prospectus, there is no judicial, regulatory, arbitral or other legal or
governmental proceeding or other litigation or arbitration, domestic or foreign,
to which the Company or any Subsidiary is a party or which is pending or, to the
knowledge of the Company, threatened against the Company or any Subsidiary which
individually or in the aggregate could reasonably be expected to result in a
Material Adverse Effect, and which would materially and adversely affect the
consummation of the transactions contemplated by this Agreement.
xvi.    Other than permitted activity pursuant to Regulation M and Rule 10b-18
under the Exchange Act, the Company has not taken, directly or indirectly, any
action designed to cause or result in, or which has constituted or which could
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Preferred Stock or the Common Stock to facilitate the
sale or resale of the Shares.
xvii.    All United States federal income tax returns of the Company and its
Subsidiaries required by law to be filed have been filed and all taxes shown by
such returns or otherwise assessed, which are due and payable, have been paid,
except assessments against which appeals have been or will be promptly taken and
as to which adequate reserves have been provided. The United States federal
income tax returns of the Company through the fiscal year ended December 31,
2012 have been settled and no assessment in connection therewith has been made
against the Company. The United States federal income tax returns of the Company
for the periods ended December 31, 2013, December 31, 2014 and December 31, 2015
have not yet been settled, but no assessment in connection with such income tax
returns of the Company for such periods has been made, and to the knowledge of
the Company none is proposed to be made, against the Company. The Company and
its Subsidiaries have filed all other tax returns that are required to have been
filed by them pursuant to applicable foreign, state, local or other law except
insofar as the failure to file such returns would not result in a Material
Adverse Effect, and has paid all taxes due pursuant to such returns or pursuant
to any assessment received by the Company and its Subsidiaries, except

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for such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been established by the Company or except insofar as the
failure to pay such taxes would not result in a Material Adverse Effect. The
charges, accruals and reserves on the books of the Company in respect of any
income and corporation tax liability for any years not finally determined are
adequate to meet any assessments or re-assessments for additional income tax for
any years not finally determined, except to the extent of any inadequacy that
would not result in a Material Adverse Effect. There is no tax lien, whether
imposed by any federal, state, local or foreign or other taxing authority,
outstanding against the assets, properties or business of the Company or any
Subsidiary, except for such a tax lien for any tax, assessment, governmental or
other similar charge which is not yet due and payable.
xviii.    Except as disclosed in the Registration Statement, the Disclosure
Package and the Prospectus, the Company (i) has maintained effective internal
control over financial reporting as defined in Rule 13a-15 under the Exchange
Act and a system of internal accounting controls sufficient to provide
reasonable assurance that (A) transactions are executed in accordance with
management’s general or specific authorization, (B) transactions are recorded as
necessary to permit preparation of the Company’s financial statements in
conformity with GAAP and to maintain accountability for its assets, (C) access
to the Company’s and the Subsidiaries’ assets is permitted only in accordance
with management’s general or specific authorization, and (D) the recorded
accountability for the Company’s and the Subsidiaries’ assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences, (ii) has not had a material weakness in the
Company’s internal control over financial reporting (whether or not remediated)
and (iii) has not had a change in the Company’s internal control over financial
reporting that has materially and adversely affected or is reasonably likely to
materially and adversely affect the Company’s internal control over financial
reporting.
xix.    The Company has established and maintains disclosure controls and
procedures (as defined in Rule 13a-15 under the Exchange Act). Except as
disclosed in the Registration Statement, the Disclosure Package and the
Prospectus, to the knowledge of the Company, such disclosure controls and
procedures are effective in timely alerting the Company’s principal executive
officer and principal financial officer to information required to be disclosed
by the Company in its periodic reports under the Exchange Act.
xx.    The Company is not and, after giving effect to the sale of the Shares and
the application of the proceeds thereof as described under the caption “Use of
Proceeds” in the Prospectus will not be, required to register as an “investment
company” as defined in the Investment Company Act of 1940, as amended.
xxi.    The Company has complied with the requirements of the no-action relief
issued on December 7, 2012 by the Division of Swap Dealers and Intermediary
Oversight of the Commodity Futures Trading Commission with respect to
registration of mortgage REITs as commodity pool operators.
xxii.    The Company has taken all necessary actions to ensure that the Company
and its officers and directors, in their respective capacities as such, have
been and will be in

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compliance in all material respects with the applicable provisions of the
Sarbanes-Oxley Act of 2002 (the “SOX”) and the rules and regulations promulgated
thereunder.
xxiii.    No consent, approval, authorization, license or order or decree of, or
filing, qualification by registration with, any Governmental Entity is required
for the consummation of the transactions contemplated by this Agreement in
connection with the issuance and sale of the Shares by the Company, except such
as have been obtained or made, or will be obtained or made on or before the date
hereof, under the Act and such as may be required by the Securities Exchange,
the Financial Industry Regulatory Authority (“FINRA”) or under state securities
laws or the laws of any foreign jurisdiction.
xxiv.    Since the respective dates as of which information is given in the
Registration Statement, the Disclosure Package and the Prospectus, (i) neither
the Company nor any Subsidiary has sustained any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, (ii) there has not been any change in or affecting the business,
earnings, condition (financial or otherwise), results of operations,
stockholders’ equity, properties, management or prospects of the Company that
would be reasonably expected to have a Material Adverse Effect, (iii) there have
been no transactions entered into by the Company or any of its Subsidiaries,
other than those in the ordinary course of business, which are material with
respect to the Company and its Subsidiaries considered as a whole, and
(iv) except for regular dividends on the Common Stock and the Preferred Stock,
in each case in amounts per share that are consistent with past practice, there
has been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
xxv.    Except as described in the Registration Statement, the Disclosure
Package and the Prospectus: (i) each of the Company and each Subsidiary is in
compliance in all material aspects with all statutes, rules and regulations
applicable to the Company and the Subsidiaries, except as could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect; (ii) each of the Company and each Subsidiary possesses all
required permits, consents, licenses, patents, franchises, certificates,
clearances, approvals, authorizations and supplements or amendment thereto
(“Authorizations”) required by any such applicable Law and such required
Authorizations are valid and in full force and effect, and neither the Company
nor any Subsidiary is in violation of any term of any such required
Authorizations, except as could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect; (iii) neither the
Company nor any Subsidiary has received written notice that the Internal Revenue
Service or any other federal, state or other foreign Governmental Entity has
taken, is taking or intends to take action to limit, suspend, modify or revoke
any such required Authorizations, or otherwise impair the rights of the holder
of any such required Authorization, and, to the knowledge of the Company, no
such Governmental Entity is considering such action or that any event has
occurred that allows, or after notice or lapse of time would allow, any such
limitation, suspension, modification or revocation, or other impairment of the
rights of the holder of any such required Authorization, except for any of the
foregoing that would not reasonably be expected to have a Material Adverse
Effect; and (iv) each of the Company and each Subsidiary has filed, obtained,
maintained or submitted all material reports, documents, forms, notices,
applications, records,

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claims, submissions and supplements or amendments as required by any such
applicable laws or any such required Authorizations and that all such reports,
documents, forms, notices, applications, records, claims, submissions and
supplements or amendments were complete and correct in all material respects on
the date filed (or were corrected or supplemented by a subsequent submission),
except for any of the foregoing that would not reasonably be expected to have a
Material Adverse Effect.
xxvi.    Each of the Company and each Subsidiary owns or possesses adequate
rights to use all material patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service mark registrations,
copyrights, licenses, know-how, software, systems and technology (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the conduct of
its business as described in the Registration Statement, the Disclosure Package
and the Prospectus, and has no reason to believe that the conduct of its
business will materially conflict with, and has not received any written notice
of any claim of a material conflict with, any such rights of others. There is no
pending or, to the knowledge of the Company, threatened action, suit,
proceeding, or claim by others challenging the rights of the Company or any
Subsidiary in or to such rights, in each case that would be material to the
Company or each Subsidiary. There is no pending or, to knowledge of the Company,
threatened action, suit, proceeding, or claim by others that the Company or any
Subsidiary infringes, misappropriates, or otherwise violates any such rights of
others, in each case that would be material to the Company or such Subsidiary.
xxvii.    Except as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect, (A) neither the Company nor any
Subsidiary has violated and is not in violation of any federal, state, local or
foreign statute, law, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including, without limitation, laws and regulations
relating to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products, asbestos-containing materials or mold (collectively,
“Materials of Environmental Concern”), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern (collectively, “Environmental
Laws”), which violation includes, but is not limited to, material noncompliance
with any permits or other governmental authorizations required for the operation
of the business of the Company or any Subsidiary under applicable Environmental
Laws, or noncompliance with the terms and conditions thereof, nor has the
Company nor any Subsidiary received any written communication, whether from a
Governmental Entity, citizens group, employee or otherwise, that alleges that
the Company or any Subsidiary is in violation of any Environmental Law; (B)
there is no claim, action or cause of action filed with a court or Governmental
Entity, no investigation with respect to which the Company or any Subsidiary has
received written notice, and no written notice by any person or entity alleging
potential liability for investigatory costs, cleanup costs, governmental
responses costs, natural resources damages, property damages, personal injuries,
attorneys’ fees or penalties arising out of, based on or resulting from the
presence, or release into the environment, of any

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Material of Environmental Concern at any location owned, leased or operated by
the Company or any Subsidiary, now or in the past (collectively, “Environmental
Claims”), pending or, to the knowledge of the Company, threatened against the
Company or any Subsidiary or any person or entity whose liability for any
Environmental Claim the Company or any Subsidiary has retained or assumed either
contractually or by operation of law; and (C) to the knowledge of the Company,
there are no past or present actions, activities, circumstances, conditions,
events or incidents, including, without limitation, the release, emission,
discharge, presence or disposal of any Material of Environmental Concern, that
reasonably could result in a violation of any Environmental Law or form the
basis of a potential Environmental Claim against the Company or any Subsidiary
or against any person or entity whose liability for any Environmental Claim the
Company or any Subsidiary has retained or assumed either contractually or by
operation of law.
xxviii.    (i) Each “employee benefit plan” (within the meaning of Section 3(3)
of the Employee Retirement Security Act of 1974, as amended (“ERISA”)) for which
the Company or any member of its “Controlled Group” (defined as any organization
which is a member of a controlled group of corporations within the meaning of
Section 414 of the Internal Revenue Code of 1986, as amended, and the
regulations and published interpretations thereunder (collectively, the “Code”))
would have any liability (each a “Plan”) has been maintained, in all material
respects, in compliance with its terms and with the requirements of all
applicable statutes, rules and regulations including ERISA and the Code, except
for instances which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; (ii) with respect to each Plan
subject to Title IV of ERISA, except for instances which would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect,
(a) no “reportable event” (within the meaning of Section 4043(c) of ERISA) has
occurred or is reasonably expected to occur, (b) no “accumulated funding
deficiency” (within the meaning of Section 302 of ERISA or Section 412 of the
Code), whether or not waived, has occurred or is reasonably expected to occur,
(c) the fair market value of the assets under each Plan exceeds the present
value of all benefits accrued under such Plan (determined based on those
assumptions used to fund such Plan) and (d) neither the Company or any member of
its Controlled Group has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA (other than contributions to the Plan or premiums to the
Pension Benefit Guaranty Corporation in the ordinary course and without default)
in respect of a Plan (including a “multiemployer plan”, within the meaning of
Section 4001(c)(3) of ERISA); and (iii) each Plan that is intended to be
qualified under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification, the result of which would reasonably be expected to result
in a Material Adverse Effect.
xxix.    There are no outstanding loans or other extensions of credit made by
the Company or any Subsidiary to any executive officer (as defined in Rule 3b-7
under the Exchange Act) or director of the Company. The Company has not taken
any such action prohibited by Section 402 of SOX.
xxx.    The operations of the Company and each Subsidiary have been conducted at
all times in material compliance with all applicable financial recordkeeping and
reporting requirements, the Currency and Foreign Transactions Reporting Act of
1970, as amended, the applicable anti-money laundering statutes of jurisdictions
where the Company and the Subsidiaries

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conduct business, the rules and regulations thereunder and any related or
similar applicable rules, regulations or guidelines, issued, administered or
enforced by any Governmental Entity (collectively, the “Money Laundering Laws”)
and no action, suit or proceeding by or before any Governmental Entity involving
the Company or any Subsidiary with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company, threatened, except, in each case,
as would not reasonably be expected to have a Material Adverse Effect.
xxxi.    None of the Company, any Subsidiary, nor to the knowledge of the
Company, any director, officer, agent, employee or affiliate of the Company is
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will
not directly or indirectly use the proceeds of the sale of the Shares, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint
venture partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions administered by
OFAC.
xxxii.    All statistical and market-related data included in the Registration
Statement, the Disclosure Package and the Prospectus are based on or derived
from sources that the Company reasonably and in good faith believes to be
reliable and accurate in all material respects as of the respective dates that
such data were first included in the Registration Statement, the Disclosure
Package or the Prospectus, and such data agree with the sources from which they
are derived, and, to the extent required, the Company has obtained the written
consent to the use of such data from such sources.
xxxiii.    Each of the Company and each Subsidiary carries, or is covered by,
insurance from insurers of recognized financial responsibility in such amounts
and covering such risks as is adequate for the conduct of its business and the
value of its respective properties and as is customary for companies engaged in
similar businesses in similar industries. All policies of insurance of the
Company and each Subsidiary are in full force and effect, except where the
failure to maintain such insurance would not reasonably be expected to have a
Material Adverse Effect; each of the Company and each Subsidiary is in
compliance with the terms of such policies in all material respects; and neither
the Company nor any Subsidiary has received written notice from any insurer or
agent of such insurer that any expenditures (other than regular premium
payments) are required or necessary to be made in order to continue such
insurance; there are no claims by the Company or any Subsidiary under any such
policy or instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause; and neither the Company nor any
Subsidiary has been refused any insurance coverage sought or applied for, and
has no reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business.
xxxiv.    No relationship, direct or indirect, exists between or among the
Company or any Subsidiary, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any Subsidiary, on the
other hand, that is required to be described in the Registration Statement, the
Disclosure Package and the Prospectus which is not so described.
xxxv.    Neither the Company nor any Subsidiary has been notified that any
executive officer of the Company or any such Subsidiary plans to terminate his
or her employment with his

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or her current employer. Neither the Company, any Subsidiary nor any executive
officer of the Company or any Subsidiary is subject to any noncompete,
nondisclosure, confidentiality, employment, consulting or similar agreement that
would be violated by the present or proposed business activities of the Company
or Subsidiary as described in the Registration Statement, the Disclosure Package
and the Prospectus.
xxxvi.    Neither the Company, any Subsidiary, nor, to the knowledge of the
Company, any director, officer, agent, employee, affiliate or other person
acting on behalf of the Company or any Subsidiary has, (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; (iii) made any unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment; or (iv) engaged in any
transactions, maintained any bank account or used any corporate funds except for
transactions, bank accounts and funds that have been and are reflected in the
normally maintained books and records of the Company and its Subsidiaries.
Neither the Company, any Subsidiary nor, to the knowledge of the Company, any
director, officer, agent, employee or affiliate or other person acting on behalf
of the Company or any Subsidiary is aware of or has taken any action, directly
or indirectly, that would result in a violation by such persons of the Foreign
Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder; and the Company, the Subsidiaries and, to the knowledge of the
Company, their affiliates have instituted and maintain policies and procedures
designed to ensure continued compliance therewith.
xxxvii.    Except as described in the Registration Statement, the Disclosure
Package or the Prospectus, or as contemplated by this Agreement, there are no
(A) claims, payments, arrangements, agreements or understandings relating to the
payment of a finder’s, consulting or origination fee or commission or similar
payment by the Company to the Agents with respect to the transactions
contemplated hereby or (B) arrangements, agreements or understandings of the
Company or any affiliate of the Company that may affect either Agent’s
compensation in connection with the transactions contemplated hereby as
determined by FINRA.
xxxviii.    The Company has previously elected to be subject to taxation as a
“real estate investment trust” (a “REIT”) under Sections 856 through 860 of the
Code. Since at least its taxable year ended December 31, 2006, the Company has
been, and upon the sale of the Shares will continue to be, organized in
conformity with the requirements for qualification and taxation as a REIT. The
Company’s method of operation as described in the Registration Statement, the
Disclosure Package and the Prospectus will enable the Company to continue to
meet the requirements for qualification and taxation as a REIT under the Code
and no actions have been taken (or not taken which are required to be taken)
which would cause such qualification to be lost. The Company operates in a
manner that would permit it to qualify and be taxed as a REIT under the Code,
and the Company has no intention of changing its proposed and current method of
operation or engaging in activities which would cause it to fail to qualify or
make economically undesirable its qualification as a REIT under the Code. Each
of the Company’s Subsidiaries, except for SMFC Funding Corporation, is in
compliance with all requirements applicable to a REIT or a “qualified REIT
subsidiary” within the meaning of Section 856(i) of the Code and all applicable

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regulations under the Code, and, to the knowledge of the Company, there is no
fact that would negatively impact such qualifications.
xxxix.    The description of the organization and method of operation and its
qualification and taxation as a REIT of the Company and each of the Subsidiaries
other than SMFC Funding Corporation set forth in the Registration Statement, the
Disclosure Package and the Prospectus is accurate and presents fairly the
matters referred to therein. Except as otherwise described in the Registration
Statement, the General Disclosure Package and the Prospectus, the Company has no
plan or intention to materially alter its stated investment policies and
operating policies and strategies, as such are described in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2015 and any other report or
document filed with the Commission and deemed to be incorporated by reference in
the Registration Statement and the Prospectus, outside the ordinary course of
business.
xl.    Neither the issuance, sale and delivery of the Securities nor the
application of the proceeds thereof by the Company as described in the
Registration Statement, the General Disclosure Package and the Prospectus will
violate Regulation T, U or X of the Board of Governors of the Federal Reserve
System or any other regulation of such Board of Governors.
xli.    The Company is not party to any other equity distribution or sales
agency agreements or other similar arrangements with any other agent or any
other representative in respect of at the market offerings of the Shares in
accordance with Rule 415(a)(4) of the Act.
xlii.    Except with respect to the Agents in connection with the sale of the
Shares, or as described in the Registration Statement, the Disclosure Package or
the Prospectus, the Company has not entered into any agreement or arrangement
(including, without limitation, any consulting agreement or any other type of
agreement) during the 180-day period prior to the initial filing date of the
Registration Statement, which arrangement or agreement provides for the receipt
of any item of value and/or the transfer or issuance of any warrants, options,
or other securities from the Company to a FINRA member, any person associated
with a member (as defined by FINRA rules), the Agents and/or any related
persons.
xliii.    Except as disclosed in the Registration Statement, the Disclosure
Package and the Prospectus, the Company (i) does not have any material lending
or other relationship with any bank or lending affiliate of any Agent and
(ii) does not intend to use any of the proceeds from the sale of the Shares to
repay any outstanding debt owed to any affiliate of any Agent.
xliv.    The forms of certificate used to evidence the Shares and the shares of
Common Stock issuable upon conversion of the Shares in accordance with the
charter comply in all material respects with all applicable statutory
requirements, with any applicable requirements of the organizational documents
of the Company, including (in the case of the Shares) the charter, and the
requirements of the Securities Exchange.
xlv.    There are no transfer taxes or other similar fees or charges under
Federal law or the laws of any state, or any political subdivision thereof,
required to be paid in connection with the execution and delivery of this
Agreement or the issuance and sale by the Company of the Shares.

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xlvi.    Neither the Company nor any Subsidiary is in violation of or has
received written notice of any violation with respect to any federal or state
law relating to discrimination in the hiring, termination, promotion, terms or
conditions of employment or pay of employees, or any applicable federal or state
wages and hours law, the violation of any of which could have a Material Adverse
Effect.
(b)    Officer’s Certificates. Any certificate signed by any officer of the
Company delivered to the Agents or to counsel for the Agents shall be deemed a
representation and warranty by the Company, as applicable, to the Agents as to
the matters covered thereby.
3.    Sale and Delivery of Shares.
(a)    Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company agrees to issue and
sell Shares from time to time through the Agents, acting as sales agents, and
each Agent agrees to use its commercially reasonable efforts to sell, as sales
agent for the Company, the Shares on the following terms.
i.    The Shares are to be sold on a daily basis or otherwise as shall be agreed
to by the Company and either Agent on any day that (A) is a trading day for the
Securities Exchange on which the Shares may then be listed (other than a day on
which the Securities Exchange is scheduled to close prior to its regular weekday
closing time), (B) the Company has instructed such Agent by telephone (confirmed
promptly by electronic mail) to make such sales and (C) the Company has
satisfied its obligations under Section 6 of this Agreement; provided, however,
the Company agrees that any offer to sell, any solicitation of an offer to buy,
or any sales of Shares shall be effected by or through only one Agent on any
single given day, and the Company shall in no event request that an Agent sell
Shares on the same day as the other Agent. The Company will designate (i) the
maximum amount of the Series A Shares and/or Series B Shares to be sold by such
Agent daily as agreed to by such Agent (in any event not in excess of (x) the
amount available for issuance under the Prospectus and the currently effective
Registration Statement less (y) any amounts already issued and sold pursuant to
this Agreement), (y) the minimum price per Share at which such Series A Shares
and/or Series B Shares may be sold and (z) the maximum price per Share at which
such Series A Shares and/or Series B Shares may be sold (which maximum price
shall not be more than a “de minimis amount” in excess of $25.00, as determined
under the principles of Treasury Regulation §1.1273-1(d) on the date of such
designation). Subject to the terms and conditions hereof, such Agent shall use
its commercially reasonable efforts to sell on a particular day, consistent with
its normal trading practices, all of the Shares designated for the sale by the
Company on such day. The gross sales price of the Shares sold under this Section
3(a) shall be the market price for shares of the Company’s Series A Shares
and/or Series B Shares, as the case may be, sold by such Agent under this
Section 3(a) on the Securities Exchange at the time of sale of such Shares (but
in no event shall such gross sales price be less than the minimum price per
Share designated by the Company at which such Shares may be sold).
ii.    The Company acknowledges and agrees that (A) there can be no assurance
that either Agent will be successful in selling the Shares, (B) neither Agent
will incur any liability or obligation to the Company or any other person or
entity if such Agent does not sell Shares for any reason other than a failure by
such Agent to use its commercially reasonable efforts consistent

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with its normal trading and sales practices and applicable law and regulations
to sell such Shares as required under this Agreement, and (C) no Agent shall be
under any obligation to purchase Shares on a principal basis pursuant to this
Agreement, except as otherwise specifically agreed by such Agent and the Company
pursuant to a Terms Agreement.
iii.    The Company shall not authorize the issuance and sale of, and no Agent
shall be obligated to use its commercially reasonable efforts to sell, any Share
at a price lower than the minimum price therefor designated from time to time by
the Company’s Board of Directors (the “Board”), or a duly authorized committee
thereof, and notified to the Agents in writing. The Company may, upon notice to
each other party hereto by telephone (confirmed promptly by electronic mail),
suspend the offering of the Shares for any reason and at any time; provided,
however, that such suspension or termination shall not affect or impair the
parties’ respective obligations with respect to the Shares sold hereunder prior
to the giving of such notice. Either Agent may, upon notice to each other party
hereto by telephone (confirmed promptly by electronic mail), suspend its
participation in the offering of the Shares for any reason and at any time;
provided, however, that such suspension or termination shall not affect or
impair the parties’ respective obligations with respect to the Shares sold
hereunder prior to the giving of such notice and shall not otherwise effect this
Agreement with respect to the Company and the other Agent.
iv.    Each Agent hereby covenants and agrees not to make any sales of the
Shares on behalf of the Company, pursuant to this Section 3(a), other than (A)
by means of ordinary brokers’ transactions between members of the Securities
Exchange that qualify for delivery of a Prospectus to the Securities Exchange in
accordance with Rule 153 under the Act (such transactions are hereinafter
referred to as “Continuous Offerings”) and (B) such other sales of the Shares on
behalf of the Company in its capacity as agent of the Company as shall be agreed
by the Company and such Agent pursuant to a Terms Agreement.
v.    The compensation to the Agents for sales of the Shares with respect to
which the Agents acts as sales agent under this Agreement shall be at a rate
mutually agreed in writing up to 2.0% of the gross sales price of the Shares
sold pursuant to this Section 3(a) by the Agents and payable as described in the
succeeding subsection (vi) below. The foregoing rate of compensation shall not
apply when an Agent acts as principal, in which case the Company may sell Shares
to such Agent as principal at a price agreed upon at the relevant Applicable
Time pursuant to a Terms Agreement. The remaining proceeds, after further
deduction for any transaction fees imposed on such Agent by any Governmental
Entity in respect of such sales, shall constitute the net proceeds to the
Company for such Shares (the “Net Proceeds”).
vi.    Each Agent shall provide written confirmation (which may be by facsimile
or electronic mail) to the Company promptly following the close of trading on
the Securities Exchange each day in which the Shares are sold by such Agent
under this Section 3(a) setting forth the number of the Shares sold on such day,
the aggregate gross sales proceeds and the Net Proceeds to the Company, and the
compensation payable by the Company to such Agent with respect to such sales. At
the option of the Agents, such compensation shall be deducted from the proceeds
paid by the Agent to the Company in connection with the sale of the Shares or
set forth and invoiced in

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periodic statements from such Agent to the Company, with payment to be made by
the Company promptly after its receipt thereof in the case of the latter.
vii.    Settlement for sales of the Shares pursuant to this Section 3(a) will
occur on the third Business Day following the date on which such sales are made
(each such day, a “Settlement Date”). On each Settlement Date, the Shares sold
through an Agent for settlement on such date shall be issued and delivered by
the Company to such Agent against payment of the Net Proceeds for the sale of
such Shares. Settlement for all such Shares shall be effected by free delivery
of the Shares to such Agent’s account at The Depository Trust Company (“DTC”) in
return for payments in same day funds delivered to the account designated by the
Company. If the Company or its transfer agent (if applicable) shall default on
its obligation to deliver the Shares on any Settlement Date, the Company shall
(A) indemnify and hold the Agents harmless against any loss, claim or damage
arising from or as a result of such default by the Company and (B) pay the
Agents any commission to which they would otherwise be entitled absent such
default. If an Agent breaches this Agreement by failing to deliver the Net
Proceeds to the Company on any Settlement Date for the Shares delivered by the
Company, such Agent will pay the Company interest based on the effective
overnight federal funds rate on such unpaid amount less any compensation due to
such Agent.
viii.    At each Applicable Time and Representation Date, the Company shall be
deemed to have affirmed each representation and warranty contained in this
Agreement as if such representation and warranty were made as of such date,
modified as necessary to relate to the Registration Statement and the Prospectus
as amended as of such date. Any obligation of the Agents to use their
commercially reasonable efforts to sell the Shares on behalf of the Company
shall be subject to the continuing accuracy of the representations and
warranties of the Company herein, to the performance by the Company of its
obligations hereunder and to the continuing satisfaction of the additional
conditions specified in Section 6 of this Agreement.
(b)    If the Company wishes to issue and sell the Shares pursuant to this
Agreement but other than as set forth in Section 3(a) of this Agreement (each, a
“Placement”), it will notify the Agents of the proposed terms of such Placement.
If one or both Agents, acting as principal, wish to accept such proposed terms
(which each Agent may decline to do for any reason in its sole discretion) or,
following discussions with the Company wish to accept amended terms, one or both
Agent(s) and the Company will enter into a Terms Agreement setting forth the
terms of such Placement. The terms set forth in a Terms Agreement will not be
binding on the Company or such Agent(s) unless and until the Company and such
Agent(s) have each executed such Terms Agreement accepting all of the terms of
such Terms Agreement. In the event of a conflict between the terms of this
Agreement and the terms of a Terms Agreement, the terms of such Terms Agreement
will control.
(c)    Each sale of the Shares to the Agents shall be made in accordance with
the terms of this Agreement and, if applicable, a Terms Agreement, which will
provide for the sale of such Shares to, and the purchase thereof by, the Agents.
A Terms Agreement may also specify certain provisions relating to the reoffering
of such Shares by the Agents. The commitment of an Agent to purchase the Shares
pursuant to any Terms Agreement shall be deemed to have been made on the basis
of

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the representations and warranties of the Company herein contained and shall be
subject to the terms and conditions herein set forth. Each Terms Agreement shall
specify the number of the Shares to be purchased by an Agent pursuant thereto,
the price to be paid to the Company for such Shares, any provisions relating to
rights of, and default by, underwriters acting together with such Agent in the
reoffering of the Shares, and the time and date (each such time and date being
referred to herein as a “Time of Delivery”) and place of delivery of and payment
for such Shares. Such Terms Agreement shall also specify any requirements for
opinions of counsel, accountants’ letters and officers’ certificates pursuant to
Section 6 of this Agreement and any other information or documents required by
the Agents.
(d)    Under no circumstances shall the aggregate amount of the Shares sold
pursuant to this Agreement and any Terms Agreement exceed (i) the Maximum
Amount, (ii) the number and/or dollar amount of Shares available for issuance
under the currently effective Registration Statement or (iii) the number and
aggregate amount of the Shares authorized from time to time to be issued and
sold under this Agreement by the Board, or a duly authorized committee thereof,
and notified to the Agents in writing.
(e)    [Intentionally Omitted.]
(f)    Notwithstanding any other provision of this Agreement, the Company shall
not offer, sell or deliver, or request the offer or sale of, any Shares and, by
notice to the Agents given by telephone (confirmed promptly by telecopy or
email), shall cancel any instructions for the offer or sale of any Shares, and
the Agents shall not be obligated to offer or sell any Shares, (i) during any
period in which an event-specific blackout has been imposed on any officer or
director of the Company under the Company’s insider trading policy, as it exists
on the date of this Agreement, (ii) during any other period in which the Company
is in possession of material non-public information or (iii) except as provided
in Section 3(g) below, at any time from and including the date (each, an
“Announcement Date”) on which the Company shall issue a press release
containing, or shall otherwise publicly announce, its earnings, revenues or
other results of operations (each, an “Earnings Announcement”) through and
including the time that is 24 hours after the time that the Company files (a
“Filing Time”) a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K
that includes consolidated financial statements as of and for the same period or
periods, as the case may be, covered by such Earnings Announcement.
(g)    If the Company wishes to offer, sell or deliver Shares pursuant to this
Agreement at any time during the period from and including an Announcement Date
through and including the time that is 24 hours after the corresponding Filing
Time, the Company shall (i) prepare and deliver to each Agent (with a copy to
counsel to the Agents) a Current Report on Form 8-K, which shall include
substantially the same financial and related information as was set forth in the
relevant Earnings Announcement (other than any earnings projections, similar
forward-looking data and officers’ quotations) (each, an “Earnings 8-K”), in
form and substance reasonably satisfactory to the Agents, and obtain the consent
of the Agents to the filing thereof (such consent not to be unreasonably
withheld), (ii) afford the Agents the opportunity to conduct a due diligence
review in accordance with Section 4(n) hereof and (iii) file such Earnings 8-K
with the Commission, then the provisions of clause (iii) of Section 3(f) shall
not be applicable for the period from and after the

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time at which the foregoing conditions shall have been satisfied (or, if later,
the time that is 24 hours after the time that the relevant Earnings Announcement
was first publicly released) through and including the time that is 24 hours
after the Filing Time of the relevant Quarterly Report on Form 10-Q or Annual
Report on Form 10-K, as the case may be. For purposes of clarity, the Company
and the Agents agree that this Section 3(g) shall in no way affect or limit the
operation of the provisions of clauses (i) and (ii) of Section 3(f), which shall
have independent application.
4.    Agreements. The Company agrees with each Agent that:
(a)    The Company shall properly complete the Prospectus, in a form approved by
the Agents, and shall file such Prospectus, as amended at the Execution Time,
with the Commission pursuant to the applicable paragraph of Rule 424(b) promptly
following the Execution Time and will cause any supplement to the Prospectus to
be properly completed, in a form approved by the Agents (provided that no such
approval shall be required in connection with a supplement consisting of a
report or other document filed with the Commission and incorporated by reference
into the Prospectus), and will file such supplement with the Commission pursuant
to the applicable paragraph of Rule 424(b) within the time period prescribed
thereby and will provide evidence satisfactory to the Agents of such timely
filing. The Company will promptly advise the Agents (i) when the Prospectus, and
any supplement thereto (other than a supplement consisting of a report or other
document filed with the Commission and incorporated by reference into the
Prospectus), shall have been filed (if required) with the Commission pursuant to
Rule 424(b), (ii) when, during any period when the delivery of a prospectus
(whether physically or through compliance with Rule 172 or any similar rule) is
required under the Act in connection with the offering or sale of the Shares,
any amendment (other than an amendment consisting of a report or other document
filed with the Commission and incorporated by reference into the Registration
Statement) to the Registration Statement shall have been filed or become
effective, (iii) of any request by the Commission or its staff for any amendment
of the Registration Statement or for any supplement to the Prospectus or for any
additional information, (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any notice
objecting to its use or the institution or threatening of any proceeding for
that purpose and (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the institution or threatening of any proceeding for such
purpose. The Company will use its reasonable best efforts to prevent the
issuance of any such stop order or the occurrence of any such suspension or
objection to the use of the Registration Statement and, upon such issuance,
occurrence or notice of objection, to obtain as soon as possible the withdrawal
of such stop order or relief from such occurrence or objection, including, if
necessary, by filing an amendment to the Registration Statement or a new
registration statement and using its reasonable best efforts to have such
amendment or new registration statement declared effective as soon as
practicable. During any period when the delivery of a prospectus relating to the
Shares is required (including in circumstances where such requirement may be
satisfied pursuant to Rule 172) to be delivered under the Act, the Company will
not file any amendment (other than an amendment consisting of a report or other
document filed with the Commission and incorporated by reference into the
Registration Statement, Base Prospectus, Prospectus Supplement, Interim
Prospectus Supplement or any Rule 462(b) Registration Statement) to the
Registration Statement, the Prospectus Supplement, any Interim Prospectus
Supplement, the Base Prospectus or any Rule 462(b) Registration Statement unless
the

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Company has furnished to the Agents a copy for the Agents’ review prior to
filing and will not file any such proposed amendment or supplement to which the
Agents reasonably object.
(b)    If, at any time on or after an Applicable Time but prior to the related
Settlement Date or Time of Delivery, any event occurs which would cause the
Disclosure Package to include any untrue statement of a material fact or to omit
to state any material fact necessary to make the statements therein in the light
of the circumstances under which they were made or the circumstances then
prevailing not misleading, the Company will (i) notify promptly the Agents so
that any use of the Disclosure Package may cease until it is amended or
supplemented; (ii) amend or supplement the Disclosure Package to correct such
statement or omission; and (iii) supply any amendment or supplement to the
Agents in such quantities as the Agents may reasonably request.
(c)    During any period when the delivery of a prospectus relating to the
Shares is required (including in circumstances where such requirement may be
satisfied pursuant to Rule 172) to be delivered under the Act, any event occurs
which would cause the Prospectus as then supplemented to include any untrue
statement of a material fact or to omit to state any material fact necessary to
make the statements therein in the light of the circumstances under which they
were made at such time not misleading, or if it shall be necessary to amend the
Registration Statement, file a new registration statement or supplement the
Prospectus to comply with the Act or the Exchange Act, including in connection
with use or delivery of the Prospectus, the Company promptly will (i) notify the
Agents of any such event, (ii) prepare and file with the Commission, subject to
paragraph (a) of this Section 4, an amendment or supplement or new registration
statement which will correct such statement or omission or effect such
compliance, (iii) use its reasonable best efforts to have any amendment to the
Registration Statement or new registration statement declared effective by the
Commission as soon as practicable in order to avoid any disruption in use of the
Prospectus and (iv) supply any supplemented Prospectus to the Agents in such
quantities as the Agents may reasonably request.
(d)    As soon as practicable, the Company will make generally available to its
security holders and to the Agents an earnings statement or statements of the
Company and its subsidiaries which will satisfy the provisions of Section 11(a)
of the Act and Rule 158.
(e)    The Company will furnish to the Agents and counsel for the Agents,
without charge, conformed electronic copies of the Registration Statement
(including exhibits thereto) and, so long as delivery of a prospectus by the
Agent or dealer may be required by the Act (including in circumstances where
such requirement may be satisfied pursuant to Rule 172), as many copies of the
Prospectus and each Issuer Free Writing Prospectus and any supplement thereto as
the Agents may reasonably request. The Company will pay the expenses of printing
or other production of all documents relating to the offering.
(f)    The Company will arrange, if necessary, for the qualification of the
Shares for sale under the laws of such jurisdictions as the Agents may designate
and will maintain such qualifications in effect so long as required for the
distribution of the Shares; provided that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action that would subject it to service of process in
suits, other than those arising out of the offering or sale of the Shares, in
any jurisdiction where it is not now so subject.

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(g)    The Company agrees that, unless it has or shall have obtained the prior
written consent of the Agents, and each of the Agents agrees with the Company
that, unless it has or shall have obtained, as the case may be, the prior
written consent of the Company, it has not made and will not make any offer
relating to the Shares that would constitute an Issuer Free Writing Prospectus
or that would otherwise constitute a Free Writing Prospectus required to be
filed by the Company with the Commission or retained by the Company under Rule
433; provided that the prior written consent of the parties hereto shall be
deemed to have been given in respect of the Free Writing Prospectuses included
in Schedule I hereto. Any such free writing prospectus consented to by the
Agents or the Company is hereinafter referred to as a “Permitted Free Writing
Prospectus.” The Company agrees that (i) it has treated and will treat, as the
case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing
Prospectus and (ii) it has complied and will comply, as the case may be, with
the requirements of Rules 164 and 433 applicable to any Permitted Free Writing
Prospectus, including in respect of timely filing with the Commission, legending
and record keeping.
(h)    During the period on or after an Applicable Time but prior to the related
Settlement Date or Time of Delivery, the Company will not (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or file any
registration statement under the Act with respect to any of the foregoing; or
(ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise without (i) giving the Agents at least one
Business Day’s prior written notice, or such shorter period mutually agreed upon
between the Company and the Agents, specifying the nature of the proposed
transaction and the date of such proposed transaction and (ii) the Agents
suspending acting under this Agreement for such period of time requested by the
Company or as deemed appropriate by the Agents in light of the proposed
transaction; provided, however, that the foregoing restriction shall not apply
to issuances or sales (i) pursuant to this Agreement or any Terms Agreement or
(ii) pursuant to the Company’s 2009 Stock and Incentive Plan or any other equity
incentive plan of the Company.
(i)    The Company will not (i) take, directly or indirectly, any action
designed to or that would constitute or that might reasonably be expected to
cause or result in, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares or (ii) sell, bid for, purchase or pay any person (other
than as contemplated by this Agreement or any Terms Agreement) any compensation
for soliciting purchases of the Shares.
(j)    The Company will, at any time during the term of this Agreement, as
supplemented from time to time, advise the Agents promptly after, to the
knowledge of the Company, there shall be any information or fact that would
alter or affect any opinion, certificate, letter and other document provided to
the Agents pursuant to Section 6 herein or the Company shall have received
written notice of such information or fact.

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(k)    Upon commencement of the offering of the Shares under this Agreement (and
upon the recommencement of the offering of the Shares under this Agreement
following the termination of a suspension of sales hereunder), and each time
that the Company (i) amends or supplements (other than a prospectus supplement
relating solely to an offering of securities other than the Shares) the
Registration Statement or the Prospectus relating to the Shares by means of a
post-effective amendment, sticker, or supplement but not by means of
incorporation of documents by reference into the Registration Statement or the
Prospectus relating to the Shares; or (ii) files an annual report on Form 10-K
under the Exchange Act (including any Form 10-K/A containing amended financial
information or a material amendment to the previously filed Form 10-K) (a “10-K
Representation Date”) or (iii) files a quarterly report on Form 10-Q under the
Exchange Act; or (iv) files a current report on Form 8-K containing amended
financial information (other than information “furnished” pursuant to Items 2.02
or 7.01 of Form 8-K or to provide disclosure pursuant to Item 8.01 of Form 8-K
relating to the reclassification of certain properties as discontinued
operations in accordance with Statement of Financial Accounting Standards
No. 144) under the Exchange Act (such commencement date, recommencement date,
10-K Representation Date and each such date referred to in clauses (iii) and
(iv), a “Representation Date”), the Company shall furnish or cause to be
furnished to the Agents forthwith a certificate dated and delivered on a date
that is no later than three Business Days following the applicable
Representation Date (except in the case of the commencement or recommencement of
the offering of Shares under this Agreement, in which case such certificate
shall be dated and delivered on the date of such commencement or
recommencement), as the case may be, in form reasonably satisfactory to the
Agents to the effect that the statements contained in the certificate referred
to in Section 6(d) of this Agreement which were last furnished to the Agents are
true and correct at the time of such commencement or recommencement, amendment,
supplement, filing, or delivery, as the case may be, as though made at and as of
such time (except that such statements shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to such
time) or, in lieu of such certificate, a certificate of the same tenor as the
certificate referred to in said Section 6(d), modified as necessary to relate to
the Registration Statement and the Prospectus as amended and supplemented to the
time of delivery of such certificate. The requirement to provide the certificate
under this Section 4(k) shall be waived for any Representation Date occurring at
a time at which no instruction to the Agents to sell Shares pursuant to Section
3 has been delivered by the Company or is pending, which waiver shall continue
until the date the Company instructs the Agents to sell Shares pursuant to
Section 3 (such date shall be considered a Representation Date).
(l)    Upon commencement of the offering of the Shares under this Agreement and
upon each 10-K Representation Date, the Company shall furnish or cause to be
furnished forthwith to the Agents and to counsel to the Agents written opinions
of Troutman Sanders LLP, counsel to the Company (“Company Counsel”) and Hunton &
Williams LLP (“1940 Act Counsel”), or other counsel satisfactory to the Agents,
dated and delivered on a date that is no later than three Business Days
following the applicable 10-K Representation Date (except in the case of the
commencement of the offering of Shares under this Agreement, in which case such
opinions shall be dated and delivered on the date of such commencement), as the
case may be, in form and substance reasonably satisfactory to the Agents, of the
same tenor as the opinions referred to in Section 6(b) of this Agreement, but
modified as necessary to relate to the Registration Statement and the Prospectus
as amended and supplemented to the time of delivery of such opinion. The
requirement to provide

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opinions under this Section 4(l) shall be waived for any 10-K Representation
Date occurring at a time at which no instruction to the Agents to sell Shares
pursuant to Section 3 has been delivered by the Company or is pending, which
waiver shall continue until the date the Company instructs the Agents to sell
Shares pursuant to Section 3 (such date shall be considered a 10-K
Representation Date).
(m)    Upon commencement of the offering of the Shares under this Agreement and
upon each 10-K Representation Date, the Company shall cause the Audit Firm, or
other independent accountants satisfactory to the Agents forthwith, to furnish
the Agents a letter, dated and delivered on a date that is no later than three
Business Days following the applicable Representation Date (except in the case
of the commencement of the offering of Shares under this Agreement, in which
case such letter shall be dated and delivered on the date of such commencement),
as the case may be, in form and substance satisfactory to the Agents, of the
same tenor as the letter referred to in Section 6(e) of this Agreement but
modified as necessary to relate to the Registration Statement and the
Prospectus, as amended and supplemented to the date of such letter. The
requirement to provide a letter under this Section 4(m) shall be waived for any
10-K Representation Date occurring at a time at which no instruction to the
Agents to sell Shares pursuant to Section 3 has been delivered by the Company or
is pending, which waiver shall continue until the date the Company instructs the
Agents to sell Shares pursuant to Section 3 (such date shall be considered a
10-K Representation Date).
(n)    On or around each Representation Date, the Company will, at the request
of the Agents, conduct a due diligence session, in form and substance reasonably
satisfactory to the Agents, which shall include representatives of the
management and the Audit Firm. The Company shall cooperate timely with any
reasonable due diligence request from or review conducted by the Agents or its
agents from time to time in connection with the transactions contemplated by
this Agreement, including, without limitation, providing information and
available documents and access to appropriate corporate officers and the
Company’s agents during regular business hours and at the Company’s principal
offices, and timely furnishing or causing to be furnished such certificates,
letters and opinions from the Company, its officers and its agents, as the
Agents may reasonably request. The requirement to conduct a diligence session or
cooperate with other due diligence requests or reviews shall be waived for any
Representation Date occurring at a time at which no instruction to the Agents to
sell Shares pursuant to Section 3 has been delivered by the Company or is
pending, which waiver shall continue until the date the Company instructs the
Agent to sell Shares pursuant to Section 3 (such date shall be considered a
Representation Date).
(o)    The Company consents to each Agent trading in the Preferred Stock and the
Common Stock for such Agent’s own account and for the account of its clients at
the same time as sales of the Shares occur pursuant to this Agreement or
pursuant to a Terms Agreement.
(p)    The Company will disclose in its Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q, as applicable, the number of Shares sold through
the Agents under this Agreement, the Net Proceeds to the Company and the
compensation paid by the Company with respect to sales of Shares pursuant to
this Agreement during the relevant quarter.

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(q)    Each acceptance by the Company of an offer to purchase the Shares
hereunder, and each execution and delivery by the Company of a Terms Agreement,
shall be deemed to be an affirmation to the Agents that the representations and
warranties of the Company contained in or made pursuant to this Agreement are
true and correct as of the date of such acceptance or of such Terms Agreement as
though made at and as of such date (except that such representations and
warranties shall be deemed to relate to the Registration Statement and the
Prospectus as amended and supplemented relating to such Shares).
(r)    The Company shall ensure that there are at all times sufficient shares of
Common Stock to provide for the issuance, free of any preemptive rights, out of
its authorized but unissued shares of Common Stock, of the maximum aggregate
number of Shares authorized for issuance by the Board pursuant to the terms of
this Agreement. The Company will use its commercially reasonable efforts to
cause the Shares to be listed for trading on the Securities Exchange and to
maintain such listing.
(s)    During any period when the delivery of a prospectus relating to the
Shares is required (including in circumstances where such requirement may be
satisfied pursuant to Rule 172) to be delivered under the Act, the Company will
file all documents required to be filed with the Commission pursuant to the
Exchange Act within the time periods required by the Exchange Act.
(t)    The Company shall cooperate with the Agents and use its commercially
reasonable efforts to permit the Shares to be eligible for clearance and
settlement through the facilities of DTC.
(u)    The Company will apply the Net Proceeds from the sale of the Shares in
the manner set forth in the Prospectus.
(v)    The Company agrees that on such dates as the Act shall require, the
Company will (i) file a prospectus supplement with the Commission under the
applicable paragraph of Rule 424(b) under the Act, which prospectus supplement
will set forth, within the relevant period, the number of Shares sold through
the Agents pursuant to Section 3(a) of this Agreement in Continuous Offerings,
the Net Proceeds to the Company and the compensation paid by the Company with
respect to such sales of the Shares pursuant to Section 3(a) of this Agreement,
or disclose such information in its Quarterly Reports on Form 10-Q and in its
Annual Report on Form 10-K, and (ii) deliver such number of copies of each such
prospectus supplement to the Securities Exchange as are required by such
exchange.
(w)    Except as contemplated herein or in the Registration Statement, the
Disclosure Package and the Prospectus, the Company will not take, directly or
indirectly, any action designed to or that would constitute or that might
reasonably be expected to cause or result in, stabilization or manipulation of
the price of any securities of the Company to facilitate the sale or resale of
the Shares.
(x)    The Company will comply in all material respects with all applicable
provisions of SOX that are in effect.

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5.    Payment of Expenses. The Company agrees to pay the costs and expenses
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated hereby are consummated, including without
limitation: (i) the preparation, printing or reproduction and filing with the
Commission of the Registration Statement (including financial statements and
exhibits thereto), the Prospectus and each Issuer Free Writing Prospectus, and
each amendment or supplement to any of them; (ii) the printing (or reproduction)
and delivery (including postage, air freight charges and charges for counting
and packaging) of such copies of the Registration Statement, the Prospectus, and
each Issuer Free Writing Prospectus, and all amendments or supplements to any of
them, as may, in each case, be reasonably requested for use in connection with
the offering and sale of the Shares; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Shares, including
any stamp or transfer taxes in connection with the original issuance and sale of
the Shares; (iv) the printing (or reproduction) and delivery of this Agreement,
any blue sky memorandum and all other agreements or documents printed (or
reproduced) and delivered in connection with the offering of the Shares;
(v) listing of the Shares on the Securities Exchange; (vi) any registration or
qualification of the Shares for offer and sale under the securities or blue sky
laws of the several states (including filing fees and the reasonable fees and
expenses of counsel for the Agent relating to such registration and
qualification); (vii) any filings required to be made with FINRA (including
filing fees and the reasonable fees and expenses of counsel for the Agent
relating to such filings in an amount not to exceed $10,000); (viii) the fees
and expenses of the Company’s accountants and the fees and expenses of counsel
(including local and special counsel) for the Company; (ix) the fees and
expenses of the Counsel to the Agents (not to exceed $40,000) and (x) all other
costs and expenses incident to the performance by the Company of its obligations
hereunder.
6.    Conditions to the Obligations of the Agents. The obligations of each of
the Agents under this Agreement and any Terms Agreement shall be subject to (i)
the accuracy of the representations and warranties on the part of the Company
contained herein as of the Execution Time, each Representation Date, and as of
each Applicable Time, (ii) to the performance by the Company of its obligations
hereunder and (iii) the following additional conditions:
(a)    The Prospectus, and any supplement thereto, required by Rule 424 to be
filed with the Commission have been filed in the manner and within the time
period required by Rule 424(b) with respect to any sale of Shares; each Interim
Prospectus Supplement shall have been filed in the manner required by Rule
424(b) within the time period required by Rule 424(b); any other material
required to be filed by the Company pursuant to Rule 433(d) under the Act, shall
have been filed with the Commission within the applicable time periods
prescribed for such filings by Rule 433; and no stop order suspending the
effectiveness of the Registration Statement or any notice objecting to its use
shall have been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b)    The Company shall have requested and caused the Company Counsel to
furnish to the Agents, on every date specified in Section 4(l) of this
Agreement, its written opinions, substantially similar to the form attached
hereto as Annex II-A (legal opinion), Annex II-B (negative assurance letter) and
Annex II-C (REIT tax opinion), dated as of such date and addressed to the
Agents; and the Company shall have requested and caused the 1940 Act Counsel to
furnish to the

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Agents, on every date specified in Section 4(l) of this Agreement, its written
opinions, substantially similar to the form attached hereto as Annex II-D
(Investment Company Act of 1940 opinion), dated as of such date and addressed to
the Agents.
(c)    The Agents shall have received from Blank Rome LLP, counsel for the
Agents, such opinion or opinions, dated as of the Execution Time and addressed
to the Agents, with respect to the issuance and sale of the Shares, the
Registration Statement, the Disclosure Package, the Prospectus (together with
any supplement thereto) and other related matters as the Agents may reasonably
require, and the Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(d)    The Company shall have furnished or caused to be furnished to the Agents,
on every date specified in Section 4(k) of this Agreement, a certificate of the
Company, signed by the chief executive officer, president or vice president of
the Company and the chief financial or chief accounting officer of the Company
to the effect that (i) the representations and warranties of the Company in this
Agreement are true and correct as if made at and as of such date (except to the
extent that such representations and warranties speak as of another date, in
which case such representations and warranties shall be true and correct as of
such other date); (ii) the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to such date; and (iii)  no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose have
been instituted or are pending or, to their knowledge, contemplated by the
Commission.
(e)    On every date specified in Section 4(m) of this Agreement, the Agents
shall have received from the Audit Firm a letter dated such date, in form and
substance satisfactory to the Agents containing statements and information of
the type ordinarily included in accountants’ “comfort letters” to underwriters
with respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus.
(f)    Since the respective dates as of which information is disclosed in the
Registration Statement and the Disclosure Package, except as otherwise stated
therein, there shall not have been any material adverse change in the condition
(financial or otherwise) or in the earnings, business affairs or business
prospects of the Company and its Subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, except as set forth
in or contemplated in the Disclosure Package (exclusive of any amendment or
supplement thereto) the effect of which is, in the sole judgment of the Agents,
so material and adverse as to make it impractical or inadvisable to proceed with
the offering or delivery of the Shares as contemplated by the Registration
Statement (exclusive of any amendment thereof) and the Disclosure Package
(exclusive of any amendment or supplement thereto).
(g)    The Company shall have paid the required Commission filing fees relating
to the Shares within the time period required by Rule 456(b)(1)(i) of the Act
without regard to the proviso therein and otherwise in accordance with Rules
456(b) and 457(r) of the Act and, if applicable, shall have updated the
“Calculation of Registration Fee” table in accordance with Rule 456(b)(1)(ii)
either in a post‑effective amendment to the Registration Statement or on the
cover page of a prospectus filed pursuant to Rule 424(b).

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(h)    Between the Execution Time and the time of any sale of Shares through the
Agents, there shall not have been any decrease in the rating of any of the
Company’s debt securities by any “nationally recognized statistical rating
organization” (as defined for purposes of Rule 436(g) under the Act) or any
notice given of any intended or potential decrease in any such rating or of a
possible change in any such rating that does not indicate the direction of the
possible change.
(i)    FINRA shall not have raised any objection with respect to the fairness
and reasonableness of the terms and arrangements under this Agreement.
(j)    The Shares shall have been listed and admitted and authorized for trading
on the Securities Exchange, and satisfactory evidence of such actions shall have
been provided to the Agents.
(k)    Prior to each Settlement Date and Time of Delivery, as applicable, the
Company shall have furnished to the Agents such further information,
certificates and documents as the Agents may reasonably request.
If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as provided in this Agreement, or if any of the opinions and
certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to either Agent and counsel for
such Agent, this Agreement with respect to such Agent and all obligations of
such Agent hereunder may be canceled at, or at any time prior to, any Settlement
Date or Time of Delivery, as applicable, by such Agent; provided, however, that
such cancellation shall not affect or impair the parties’ respective obligations
with respect to the Shares sold hereunder prior to the giving of such notice of
cancellation. Notice of such cancellation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be delivered at
the office of Blank Rome LLP, counsel for the Agents, at 405 Lexington Avenue,
New York, New York 10174, Attention: Brad L. Shiffman, on each such date as
provided in this Agreement.
7.    Indemnification and Contribution.
(a)    The Company agrees to indemnify and hold harmless each Agent, the
directors, officers, affiliates, employees and agents of such Agent and each
person who controls such Agent within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the Act, the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, any Issuer Free Writing Prospectus that the Company has
filed or was required to file with the Commission or the Prospectus (or any
amendment or supplement to the

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Registration Statement, any such Issuer Free Writing Prospectuses or the
Prospectus) (ii) any omission or alleged omission to state in the Registration
Statement a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (iii) any omission or alleged omission to
state in any such Issuer Free Writing Prospectus or Prospectus a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and
agrees to indemnify and hold harmless each such indemnified party, as incurred,
against any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage or liability (or actions in
respect thereof) arises out of or is based upon any such untrue statement or
omission made therein in reliance upon and in conformity with written
information furnished to the Company by such Agent specifically for inclusion
therein. This indemnity agreement will be in addition to any liability that the
Company may otherwise have.
(b)    Each Agent, acting severally and not jointly, agrees to indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, to the same extent as
the foregoing indemnity from the Company to such Agent, but only with reference
to written information relating to such Agent furnished to the Company by such
Agent specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
such Agent may otherwise have.
(c)    Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party in writing of the commencement thereof
(enclosing a copy of all papers served); but the failure so to notify the
indemnifying party (i) will not relieve it from liability under Section 7(a)
or 7(b) above unless and to the extent it did not otherwise learn of such action
and such failure results in the forfeiture by the indemnifying party of
substantive rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in Section 7(a) or 7(b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party’s choice at the indemnifying party’s expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying party’s
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel, but only if (i) the use of counsel chosen
by the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest (based on advice of counsel to the
indemnified party), (ii) the actual or potential defendants in, or targets of,
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded (based on advice of
counsel to the indemnified party) that there may be legal defenses available to
it and/or other indemnified parties which are different from or additional to

28

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those available to the indemnifying party, (iii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of the
institution of such action or (iv) the indemnifying party shall authorize the
indemnified party to employ separate counsel at the expense of the indemnifying
party. An indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
(x) includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding and (y) 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.
(d)    In the event that the indemnity provided in Section 7(a), 7(b) or 7(c) is
unavailable to or insufficient to hold harmless an indemnified party for any
reason, the Company and each Agent agrees to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending the same) (collectively
“Losses”) to which the Company and such Agent may be subject in such proportion
as is appropriate to reflect the relative benefits received by the Company, on
the one hand, and by such Agent, on the other hand, from the offering of the
Shares; provided, however, that in no case shall either Agent be responsible for
any amount in excess of the sum (the “Agent’s Compensation”) of (i) the
aggregate compensation paid to such Agent under Section 3(a)(v) of this
Agreement and (ii) the aggregate underwriting discounts or commissions given or
paid, as the case may be, to such Agent in connection with Terms Agreements
between such Agent and the Company. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company, on
the one hand, and each Agent, on the other hand, severally and not jointly,
shall contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company, on the one hand,
and of such Agent, on the other, in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and each Agent, on the other hand, shall be deemed to be in the same proportion
as the total Net Proceeds from the offering (before deducting expenses) received
by the Company bear to such Agent’s Compensation (before deducting expenses), in
each case as determined by this Agreement and any applicable Terms Agreements.
Relative fault shall be determined by reference to, among other things, whether
any untrue or any alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information provided by the
Company, on the one hand, or such Agent, on the other hand, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and each Agent
agree that it would not be just and equitable if contribution were determined by
pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 7(d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person who controls an
Agent within the meaning of either the Act or the Exchange Act and each
director, officer, employee and agent of such Agent shall have the same rights
to

29

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contribution as such Agent, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, each officer of the Company who
shall have signed the Registration Statement and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to the applicable terms and conditions of this Section 7(d).
8.    Termination.
(a)    The Company shall have the right, by giving written notice as hereinafter
specified, to terminate this Agreement in its sole discretion at any time. Any
such termination shall be without liability of any party to any other party
except that (i) with respect to any pending sale of Shares, through the Agents
for the Company, the obligations of the Company, including in respect of
compensation of the Agents, shall remain in full force and effect
notwithstanding the termination and (iii) the provisions of Sections 2, 5, 7, 8,
9, 10, 12, 14 and 15 of this Agreement shall remain in full force and effect
notwithstanding such termination.
(b)    Either Agent shall have the right, by giving written notice as
hereinafter specified, to terminate this Agreement solely with respect to such
Agent in its sole discretion at any time. Any such termination shall be without
liability of any party to any other party except that (i) the provisions of
Sections 2, 5, 7, 8, 9, 10, 12, 14 and 15 of this Agreement shall remain in full
force and effect with respect to such Agent notwithstanding such termination and
(ii) this Agreement shall remain in full force and effect with respect to the
Company and the other Agent.
(c)    This Agreement shall automatically terminate on the date on which all of
the Shares have been sold pursuant to this Agreement, except that the provisions
of Sections 2, 5, 7, 9, 10, 12, 14 and 15 of this Agreement shall remain in full
force and effect notwithstanding such termination.
(d)    This Agreement shall remain in full force and effect unless terminated
pursuant to Sections 8(a), (b) or (c) above or otherwise by mutual agreement of
the parties; provided that any such termination by mutual agreement shall in all
cases be deemed to provide that Sections 2, 5, 7, 8, 9, 10, 12, 14 and 15 shall
remain in full force and effect.
(e)    Any termination of this Agreement shall be effective on the date
specified in such notice of termination; provided that such termination shall
not be effective until the close of business on the date of receipt of such
notice by such Agent or the Company, as the case may be. If such termination
shall occur prior to the Settlement Date or Time of Delivery for any sale of the
Shares, such sale shall settle in accordance with the provisions of Section
3(a)(vii) of this Agreement.
(f)    In the case of any purchase of Shares by an Agent pursuant to a Terms
Agreement, the obligations of such Agent pursuant to such Terms Agreement shall
be subject to termination, in the absolute discretion of such Agent, by notice
given to the Company prior to the Time of Delivery relating to such Shares, if
at any time prior to such delivery and payment (i) trading in the Company’s
Common Stock or Preferred Stock shall have been suspended by the Commission or
the Securities Exchange or trading in securities generally on the Securities
Exchange shall have been suspended or limited or minimum prices shall have been
established on such exchange, (ii) a banking moratorium shall have been declared
either by Federal or New York State authorities or (iii) there shall have
occurred any outbreak or escalation of hostilities, declaration by the United
States of a

30

--------------------------------------------------------------------------------

national emergency or war, or other calamity or crisis the effect of which on
financial markets is such as to make it, in the sole judgment of such Agent,
impractical or inadvisable to proceed with the offering or delivery of the
Shares as contemplated by the Prospectus (exclusive of any amendment or
supplement thereto).
9.    Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers and of each Agent set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by
the Agents or the Company or any of the officers, directors, employees, agents
or controlling persons referred to in Section 7 hereof, and will survive
delivery of and payment for the Shares.
10.    Notices. Except with respect to notices for Placements or purchases
pursuant to a Terms Agreement (each as set forth in Sections 3(a)(i) and 3(b)
hereof), all communications hereunder will be in writing and effective only on
receipt, and, if sent to the Agents, will be mailed, delivered or telefaxed to
Ladenburg Thalmann & Co. Inc., 570 Lexington Avenue, Eleventh Floor, New York,
New York 10022 Attention: Steven Kaplan, Managing Director, Facsimile: (212)
409-2169, and JonesTrading Institutional Services LLC, 780 Third Avenue, New
York, New York 10017 Attention: Bryan Turley, Managing Director, Facsimile:
(212) 907-5365; with a copy (which shall not constitute notice) to Blank Rome
LLP, 405 Lexington Avenue, New York, New York 10174, Attention: Brad L.
Shiffman, Facsimile: (917) 332-3725 or, if sent to the Company shall be mailed
or delivered to the Company at 4991 Lake Brook Drive, Suite 100, Glen Allen,
Virginia 23060, Attention: Stephen J. Benedetti; with a copy (which shall not
constitute notice) to Troutman Sanders LLP, Troutman Sanders Building, 1001
Haxall Point, Richmond, Virginia 23219, Attention: Susan S. Ancarrow, Facsimile:
(804) 698-6015.
11.    Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers,
directors, employees, agents and controlling persons referred to in Section 7
hereof, and no other person will have any right or obligation hereunder. No
purchaser of Shares from the Agents shall be deemed to be a successor by reason
of such purchase.
12.    No Fiduciary Duty. The Company hereby acknowledges that (a) the purchase
and sale of the Shares pursuant to this Agreement is an arm’s-length commercial
transaction between the Company, on the one hand, and each Agent and any
affiliate through which such Agent may be acting, on the other hand, (b) each
Agent is acting solely as sales agent and/or principal in connection with the
purchase and sale of the Shares and not as a fiduciary of the Company and (c)
the Company’s engagement of each Agent in connection with the offering and the
process leading up to the offering is as an independent contractor and not in
any other capacity. Furthermore, the Company agrees that it is solely
responsible for making its own judgments in connection with the offering
(irrespective of whether an Agent has advised or is currently advising the
Company on related or other matters). The Company agrees that it will not claim
that either Agent has rendered advisory services of any nature or respect, or
owes an agency, fiduciary or similar duty to the Company, in connection with
such transaction or the process leading thereto.

31

--------------------------------------------------------------------------------

13.    Integration. This Agreement and any Terms Agreement supersede all prior
agreements and understandings (whether written or oral) between the Company, on
the one hand, and each Agent, on the other hand, with respect to the subject
matter hereof.
14.    Applicable Law. This Agreement and any Terms Agreement, and any claim,
controversy or dispute relating to or arising out of this Agreement or any Terms
Agreement, will be governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and to be performed within the
State of New York, without giving effect to the choice of law or conflicts of
laws principles thereof (other than Sections 5-1401 and 5-1402 of the New York
General Obligations Law).
15.    Waiver of Jury Trial. Each of the Company and each Agent hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement, any Terms Agreement or the transactions contemplated hereby or
thereby.
16.    Consent to Jurisdiction. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY
OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION WITH ANY TRANSACTION CONTEMPLATED HEREBY, AND HEREBY
IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING,
ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH
COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM
OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS
BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF
(CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED) TO SUCH PARTY AT THE
ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH
SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT
TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.
17.    Counterparts. This Agreement and any Terms Agreement may be signed in one
or more counterparts, each of which shall constitute an original and all of
which together shall constitute one and the same agreement.
18.    Headings. The section headings used in this Agreement and any Terms
Agreement are for convenience only and shall not affect the construction hereof.
19.    Definitions. The terms that follow, when used in this Agreement and any
Terms Agreement, shall have the meanings indicated.
“Act” shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.

32

--------------------------------------------------------------------------------

“Applicable Time” shall mean, with respect to any Shares, the time of sale of
such Shares pursuant to this Agreement or any relevant Terms Agreement.
“Base Prospectus” shall mean the base prospectus referred to in Section 2(a)
above contained in the Registration Statement at the Execution Time.
“Business Day” shall mean any day other than a Saturday, a Sunday or a legal
holiday or a day on which banking institutions or trust companies are authorized
or obligated by law to close in New York City.
“Commission” shall mean the U.S. Securities and Exchange Commission.
“Disclosure Package” shall mean (i) the Base Prospectus, (ii) the Prospectus
Supplement, (iii) the most recently filed Interim Prospectus Supplement (if
any), (iv) the Issuer Free Writing Prospectuses, if any, identified in Schedule
I hereto and (v) any other Free Writing Prospectus that the parties hereto shall
hereafter expressly agree in writing to treat as part of the Disclosure Package.
“Effective Date” shall mean each date and time that the Registration Statement
and any post-effective amendment or amendments thereto became or becomes
effective under the Act.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
“Execution Time” shall mean the date and time that this Agreement is executed
and delivered by the parties hereto.
“Free Writing Prospectus” shall mean a free writing prospectus, as defined in
Rule 405.
“Interim Prospectus Supplement” shall mean the prospectus supplement relating to
the Shares prepared and filed pursuant to Rule 424(b) from time to time as
provided by Section 4(v) of this Agreement.
“Issuer Free Writing Prospectus” shall mean an issuer free writing prospectus,
as defined in Rule 433.
“Knowledge of the Company” and similar phrases shall mean the actual knowledge
of Byron L. Boston and Stephen J. Benedetti without independent investigation.
“Prospectus” shall mean the Base Prospectus, as supplemented by the Prospectus
Supplement, including any documents incorporated by reference therein by the
Act, and the most recently filed Interim Prospectus Supplement (if any).
“Prospectus Supplement” shall mean the most recent prospectus supplement
relating to the Shares that was first filed pursuant to Rule 424(b) at or as
promptly as practicable after the Execution Time.

33

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“Registration Statement” shall mean the registration statement referred to in
Section 2(a) above, including exhibits and financial statements, any documents
incorporated by reference therein by the Act and any prospectus supplement
relating to the Shares that is filed with the Commission pursuant to Rule 424(b)
and deemed part of such registration statement pursuant to Rule 430B, as amended
on each Effective Date and, in the event any post-effective amendment thereto
becomes effective, shall also mean such registration statement as so amended.
“Rule 153”, “Rule 158”, “Rule 163”, “Rule 164”, “Rule 172”, “Rule 405”,
“Rule 415”, “Rule 424”, “Rule 430B”, “Rule 433” “Rule 456”, “Rule 457” and “Rule
462(b)” refer to such rules under the Act.
“Repayment Event” shall mean any event or condition which gives the holder of
any note, debenture or other evidence of indebtedness (or any person acting on
such holder’s behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any of its
Subsidiaries.
[Signature Pages Follow]

34

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If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement between the
Company and the Agents.
 
 
 
Very truly yours,
 
 
 
 
 
 
 
 
 
 
 
 
 
DYNEX CAPITAL, INC.
 
 
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ Stephen J. Benedetti
 
 
 
 
 
Name:
Stephen J. Benedetti
 
 
 
 
 
Title:
Executive Vice President, Chief Financial Officer and Chief Operating Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The foregoing Agreement is hereby confirmed and accepted as of the date first
written above.
 
 
 
 
 
 
 
 
 
 
 
LADENBURG THALMANN & CO. INC.
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ Steve Kaplan
 
 
 
 
 
Name:
Steve Kaplan
 
 
 
 
 
Title:
Managing Director and Head of Capital Markets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
JONESTRADING INSTITUIONAL SERVICES LLC
 
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ Trent McNair
 
 
 
 
 
Name:
Trent McNair
 
 
 
 
 
Title:
Chief Financial Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

--------------------------------------------------------------------------------

SCHEDULE I
Schedule of Free Writing Prospectuses included in the Disclosure Package
None.

Sch. I-1

--------------------------------------------------------------------------------

ANNEX I
DYNEX CAPITAL, INC.
Preferred Stock
TERMS AGREEMENT
______, 20__
[NAME]
[ADDRESS]

Ladies and Gentlemen:
Dynex Capital, Inc. (the “Company”) proposes, subject to the terms and
conditions stated herein and in the Equity Distribution Agreement, dated [ ],
20[ ] (the “Equity Distribution Agreement”), by and among the Company, Ladenburg
Thalmann & Co. Inc. and JonesTrading Institutional Services LLC, to issue and
sell to [applicable AGENT] the securities specified in the Schedule I hereto
(the “Purchased Shares”)
Each of the provisions of the Equity Distribution Agreement not specifically
related to the solicitation by [applicable AGENT], as agent of the Company, of
offers to purchase securities is incorporated herein by reference in its
entirety, and shall be deemed to be part of this Terms Agreement to the same
extent as if such provisions had been set forth in full herein. Each of the
representations and warranties set forth therein shall be deemed to have been
made at and as of the date of this Terms Agreement, except that each
representation and warranty in Section 2 of the Equity Distribution Agreement
which makes reference to the Prospectus (as therein defined) shall be deemed to
be a representation and warranty as of the date of the Equity Distribution
Agreement in relation to the Prospectus, and also a representation and warranty
as of the date of this Terms Agreement in relation to the Prospectus as amended
and supplemented to relate to the Purchased Shares.
An amendment to the Registration Statement (as defined in the Equity
Distribution Agreement), or a supplement to the Prospectus, as the case may be,
relating to the Purchased Shares, in the form heretofore delivered to the Agent
is now proposed to be filed with the Securities and Exchange Commission.
Subject to the terms and conditions set forth herein and in the Equity
Distribution Agreement which are incorporated herein by reference, the Company
agrees to issue and sell to [applicable AGENT] and the latter agrees to purchase
from the Company the number of shares of the Purchased Shares at the time and
place and at the purchase price set forth in the Schedule I hereto.
If the foregoing is in accordance with your understanding, please sign and
return to us a counterpart hereof, whereupon this Terms Agreement, including
those provisions of the Equity

Annex I-1

--------------------------------------------------------------------------------

Distribution Agreement incorporated herein by reference, shall constitute a
binding agreement between the Agent and the Company.
 
 
 
 
 
 
 
 
 
 
 
DYNEX CAPITAL, INC.
 
 
 
 
 
 
 
 
 
 
 
 
 
By:
 
 
 
 
 
 
Name:
 
 
 
 
 
 
Title:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ACCEPTED as of the date first written above.
 
 
 
 
 
 
 
 
 
 
 
[APPLICABLE AGENT]
 
 
 
 
 
 
 
 
 
 
 
By:
 
 
 
 
 
 
Name:
 
 
 
 
 
 
Title:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Annex I-2

--------------------------------------------------------------------------------

[Form of Schedule 1 to Terms Agreement]
Schedule I to the Terms Agreement
Title of Purchased Shares:
8.5% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share
(the “Series A Shares”)
7.625% Series B Cumulative Redeemable Preferred Stock, par value $0.01 per share
(the “Series B Shares”)
Number of Shares of Purchased Shares:
[  ●   ]Series A Shares
[  ●   ] Series B Shares
[Price to Public:]
$[  ●   ] per Series A Shares
$[  ●   ] per Series B Shares

Purchase Price by [applicable AGENT]
$[  ●   ] per Series A Shares
$[  ●   ] per Series B Share
Method of and Specified Funds for Payment of Purchase Price:
By wire transfer to a bank account specified by the Company in same day funds.
Method of Delivery:
Free delivery of the Shares to the Agent’s account at The Depository Trust
Company in return for payment of the purchase price.
Time of Delivery:
 
Closing Location:
 
Documents to be Delivered:
The following documents referred to in the Equity Distribution Agreement shall
be delivered as a condition to the closing at the Time of Delivery:
 
(1) The opinion referred to in Section 4(l).
 
(2) The accountants’ letter referred to in Section 4(o).
 
(3) The officers’ certificates referred to in Section 4(k).
 
(4) Such other documents as the Agent shall reasonably request.

Annex I-3

--------------------------------------------------------------------------------

ANNEX II-A
FORM OF LEGAL OPINION OF COMPANY’S COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 4(l)

[ ], 20[ ]

Ladenburg Thalmann & Co. Inc.
570 Lexington Avenue
Eleventh Floor
New York, NY 10022
JonesTrading Institutional Services LLC
780 Third Avenue
New York, NY 10017

Ladies and Gentlemen:
We refer to the Equity Distribution Agreement, dated [ ], 20[ ] (the
“Agreement”), by and among Dynex Capital, Inc. (the “Company”), Ladenburg
Thalmann & Co. Inc. (“Ladenburg”) and JonesTrading Institutional Services LLC
(together with Ladenburg, the “Agents”), which provides for the potential offer
and sale through or to the Agents, as sales agents and/or principals (the
“Offering”), up to an aggregate value of $50,000,000 (subject to Section 3(d) of
the Agreement) of shares of the Company’s 8.50% Series A Cumulative Redeemable
Preferred Stock (the “Series A Shares”), par value $0.01 per share (the “Series
A Preferred Stock”) and/or shares of the Company’s 7.625% Series B Cumulative
Preferred Stock (the “Series B Shares” and, together with the Series A Shares,
the “Shares”), par value $0.01 per share (the “Series B Preferred Stock” and,
together with the Series A Preferred Stock, the “Preferred Stock”) from time to
time during the term of, and on the terms set forth in Section 3 of, the
Agreement.
This opinion letter is furnished to you at the Company’s request pursuant to
Sections 4(1) and 6(b) of the Agreement, as counsel to the Company in connection
with the Offering. Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Agreement.
In connection with the foregoing, we have examined originals or copies of the
following:
(a)
the Registration Statement on Form S-3 (File No. 333-200859), as filed by the
Company with the Securities and Exchange Commission (the “Commission”) on
December 11, 2014, which shelf registration statement became effective on
December 30, 2014 (such Registration Statement, as amended at the time it became
effective, is hereinafter referred to as the “Registration Statement.”);

(b)
the Prospectus;

Annex II-A-1

--------------------------------------------------------------------------------

(c)
the Disclosure Package;

(d)
the registration statement of the Company on Form 8-A (File No. 001-09819) filed
with the Commission on August 1, 2012, relating to the registration of the
Series A Preferred Stock under the Exchange Act;

(e)
the registration statement of the Company on Form 8-A (File No. 001-09819) filed
with the Commission on April 17, 2013, relating to the registration of the
Series B Preferred Stock under the Exchange Act;

(f)
the contract and other agreements or instruments that are listed on Schedule 1
hereto;

(g)
the Agreement;

(h)
a certificate of the Secretary of the Company, dated November 21, 2016, to which
the following are attached: (i) the Articles of Incorporation of the Company, as
amended to the date hereof (the “Articles of Incorporation”); (ii) the Bylaws of
the Company, as amended to the date hereof (the “Bylaws”); (iii) resolutions
adopted by the Board of Directors of the Company on September 16, 2014 and
September 13, 2016; and (iv); the forms of certificates used to evidence the
Shares (the “Form Certificates”);

(i)
a certificate, dated the date hereof, issued by the State Corporation Commission
of the Commonwealth of Virginia (the “SCC”) to the effect that the Company is
existing under the laws of the Commonwealth of Virginia and in good standing
(the “Good Standing Certificate”);

(j)
the certificate of the officers of the Company delivered pursuant to Sections
4(k) and 6(d) of the Agreement; and

(k)
the originals (or copies identified to our satisfaction) of such documents and
records of the Company, certificates of public officials and officers of the
Company and such other documents, certificates, records and papers as we have
deemed necessary or appropriate to render the opinions set forth herein.

As to factual matters, we have relied upon and assumed the accuracy of, with
your permission, the representations and warranties of the Company included in
the Agreement and other documents submitted to us, upon certificates of officers
of the Company and upon certificates of public officials.
In our examination, we have assumed (i) the genuineness of all signatures, (ii)
the legal capacity of all natural persons executing documents, (iii) the
authenticity of all documents submitted to us as originals, (iv) the conformity
to authentic original documents of all documents submitted to us as copies, (v)
the due authorization, execution and delivery of all documents by all parties
and the validity and binding effect thereof, (vi) that all parties (other than
the Company) (x) are duly organized, validly existing and in good standing under
the laws of their respective jurisdictions of

Annex II-A-2

--------------------------------------------------------------------------------

organization; and (y) have the requisite power and authority to execute and
deliver the documents and agreements discussed herein and to perform their
respective obligations under the documents and agreements discussed herein to
which they are a party; and (vii) no party nor any other person has acted in a
manner, and no other event has occurred, since the date of the execution,
adoption, effectiveness or delivery of the Agreement or any other document
reviewed by us having a date prior to or as of the date hereof, as the case may
be, that would effect an amendment, modify the interpretation thereof or cause
any statement made therein not to be true and complete.
In addition to our review of the documents listed above, we have made such legal
and factual inquiries for the purpose of rendering our opinions as we have
deemed necessary (except where a statement is qualified as to knowledge or
awareness, in which case we have made only such inquiry as is indicated below).
The opinions expressed herein are limited to the federal laws of the United
States of America and the laws of the Commonwealth of Virginia. We express no
opinion as to the effect of the laws of any other jurisdiction or as to the
securities laws of any state (including, without limitation, the Commonwealth of
Virginia), municipal law or the laws of any local agencies within any state
(including, without limitation, within the Commonwealth of Virginia). This
opinion letter is limited to the matters stated herein, and no opinion is
implied or may be inferred beyond the matters expressly stated herein.
Whenever the phrase “to our knowledge” is used herein, it refers to the actual
conscious awareness of the attorneys of this firm involved in the representation
of the Company in connection with the Offering after due inquiry of those
attorneys of our firm that we deem appropriate. Except as otherwise described
above or indicated herein, we have not undertaken any independent investigation
to determine the accuracy of such statement, and no inference that we have any
knowledge of any matters pertaining to such statement should be drawn from our
representation of the Company. Except to the extent indicated above, no actual
or constructive knowledge of any other attorneys in the firm shall be imputed to
the firm as to any of the matters set forth herein that is qualified by “to our
knowledge” or a similar phrase. Without limiting the generality of the
foregoing, we have not performed any mathematic calculations or made any
financial or accounting determinations and express no opinion with respect to
the ability of any party to perform under any documents (other than, with
respect to the Company, under the Agreement). All assumptions made by us herein
have been made, with your approval, without any investigation or verification by
us.
We have not conducted a docket search or otherwise conducted an independent
review or investigation of any official records of any court or governmental
agency. In rendering our opinions set forth below, we have, with your approval,
assumed without independent verification that the Agent and the Company have
complied and will comply with their respective representations, warranties and
agreements in the Agreement and that the offer, issuance, sale and distribution
of the Shares will be carried out in the manner described in the Registration
Statement.
On the basis of the foregoing, and in reliance thereon, and subject to the
limitations, qualifications, assumptions, exceptions and other matters set forth
herein, we are of the opinion that, as of the date hereof:

Annex II-A-3

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1.
Based solely on the Good Standing Certificate, the Company is a corporation duly
incorporated and is validly existing under and by virtue of the laws of the
Commonwealth of Virginia and is in good standing with the SCC.

2.
The Company has the corporate power to own its properties and conduct its
business as described in the Prospectus under the caption “Summary–The Company”
and to enter into and perform its obligations under the Agreement,

3.
As of the date hereof, the Company has an authorized capitalization of
200,000,000 shares of Common Stock and 50,000,000 shares of preferred stock,
$0.01 par value per share, of which 8,000,000 and 7,000,000 shares have been
designated as Series A Preferred Stock and Series B Preferred Stock,
respectively. The authorized stock of the Company conforms, in all material
respects, to the description thereof set forth in the Prospectus under the
captions “Description of the Offered Stock, “Description of Our Common Stock”
and “Description of Our Preferred Stock,” as the case may be.

4.
The execution and delivery by the Company of, and the performance by the Company
of its obligations under, the Agreement have been duly authorized by all
necessary corporate action on the part of the Company. The Agreement has been
duly executed and delivered by the Company.

5.
The issuance and sale of the Shares have been duly authorized by the Company
and, when and if issued and delivered to and paid for pursuant to the Agreement,
the Shares will be validly issued, fully paid and nonassessable and the Shares
will conform, in all material respects, to the description thereof contained in
the Prospectus under the caption “Description of the Offered Stock.”

6.
The Form Certificates comply in all material respects with the requirements of
the Virginia Stock Corporation Act (the “VSCA”) and with any applicable
requirements of the Articles of Incorporation and the Bylaws.

7.
The statements in the Prospectus under the captions “Description of Our Common
Stock” and “Material Provisions of Virginia Law and of Our Articles of
Incorporation and Bylaws,” and in Item 15 of Part II of the Registration
Statement, insofar as such statements purport to summarize Virginia law, the
Articles of Incorporation or the Bylaws, are accurate in all material respects.

8.
The execution, delivery and performance by the Company of the Agreement and the
consummation of the transactions contemplated by the Agreement and in the
Prospectus (including the issuance and sale of the Shares and the application by
the Company of the proceeds from the sale of the Shares as described under the
caption “Use of Proceeds” in the Prospectus) and the compliance by the Company
with its obligations under the Agreement will not (i) conflict with or result in
a breach or violation of (a) the Articles of Incorporation or Bylaws or (b) any
federal or Virginia statute, rule or regulation applicable to the Company, (ii)
constitute a violation of,

Annex II-A-4

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or a breach or default under, any agreement identified in Schedule I hereto to
which the Company is a party; or (iii) result in a breach of, or constitute a
default under, any judgment, decree or order of any state or federal court or
other governmental authority identified in Schedule II hereto to which the
Company is a party or subject.
9.
No filing with, notice to, or consent, approval, authorization or order of any
court or Governmental Entity of the United States of America or the Commonwealth
of Virginia is required to be made or obtained by the Company pursuant to the
federal laws, rules and regulations of the United States of America and the
Commonwealth of Virginia, respectively, in connection with the execution and
delivery of the Agreement and the issuance and sale of the Shares, except for:
(a) the registration of the Shares under the Securities Act and such consents,
approvals, authorizations, orders and registrations or qualifications as may be
required by the Financial Industry Regulatory Authority, the NYSE and under
applicable state securities laws or (b) those as have been obtained or waived.

10.
The issuance, sale and delivery of the Shares by the Company are not subject to
any preemptive right or other similar right arising under the VSCA, the Articles
of Incorporation, the Bylaws or the agreements or documents listed on Schedule I
hereto.

We express no opinion as to compliance by any of the parties to the documents
and agreements discussed herein (other than the Company) with any state or
federal laws or regulations applicable to the subject transactions because of
the nature of their business.
Our opinions are as of the date hereof and we have no responsibility to update
these opinions for events and circumstances occurring after the date hereof or
as to facts relating to prior events that are subsequently brought to our
attention. We disavow any undertaking to advise you of any changes in law.
Our opinions expressed herein represent the judgment of this law firm as to
certain legal matters, but they are not guarantees or warranties and should not
be construed as such.
Our opinions are furnished to you for your exclusive use solely in connection
with the matters contemplated by the Agreement. These opinions may not be relied
upon by you for any other purposes, or furnished to, quoted, referred to or
relied upon by any other person, firm or corporation for any purpose, without
our prior written consent; provided, however, that Blank Rome LLP, counsel to
the Agent, may rely on the Opinions set forth in this opinion as they relate to
matters of Virginia law.
Very truly yours,

TROUTMAN SANDERS LLP

Annex II-A-5

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Schedule I
Selected Agreements
1.
Severance Agreement between Dynex Capital, Inc. and Stephen J. Benedetti dated
June 11, 2004.

2.
409A Amendment to Severance Agreement between Dynex Capital, Inc. and Stephen J.
Benedetti, dated December 31, 2008.

3.
Dynex Capital, Inc. 2009 Stock and Incentive Plan, effective as of May 13, 2009.

4.
Employment Agreement, dated as of July 31, 2009, between Dynex Capital, Inc. and
Byron L. Boston.

5.
Equity Distribution Agreement between Dynex Capital, Inc. and JMP Securities
LLC, dated June 24, 2010.

6.
Amendment No. 1 to Equity Distribution Agreement between Dynex Capital, Inc. and
JMP Securities LLC, dated December 23, 2011.

7.
Form of Restricted Stock Agreement for Executive Officers under the Dynex
Capital, Inc. 2009 Stock and Incentive Plan.

8.
Base salaries for executive officers of Dynex Capital, Inc.

9.
Non-employee directors’ annual compensation for Dynex Capital, Inc.

10.
Letter Agreement between Dynex Capital, Inc. and Byron L. Boston, dated
September 7, 2011.

11.
Master Repurchase and Securities Contract dated as of August 6, 2012 between
Issued Holdings Capital Corporation, Dynex Capital, Inc. (as guarantor) and
Wells Fargo Bank, National Association.

12.
Amendment No. 1 to Master Repurchase and Securities Contract dated as of October
1, 2013 between Issued Holdings Capital Corporation, Dynex Capital, Inc. (as
guarantor) and Wells Fargo Bank, N.A.

13.
Amendment No. 2 to Master Repurchase and Securities Contract dated as of
February 5, 2015 between Issued Holdings Capital Corporation, Dynex Capital,
Inc. (as guarantor) and Wells Fargo Bank, N.A.

14.
Amendment No. 3 to Master Repurchase and Securities Contract dated as of April
29, 2016 between Issued Holdings Capital Corporation, Dynex Capital, Inc. (as
guarantor) and Wells Fargo Bank, N.A.

15.
Guarantee Agreement dated as of August 6, 2012 by Dynex Capital, Inc. in favor
of Wells Fargo Bank, National Association.

16.
Underwriting Agreement, dated April 11, 2013, by and among Dynex Capital, Inc.,
J.P. Morgan Securities LLC, and Keefe, Bruyette & Woods, Inc.

17.
Dynex Capital, Inc. Executive Incentive Plan.

18.
Form of Restricted Stock Agreement for Non-Employee Directors under the Dynex
Capital, Inc. 2009 Stock and Incentive Plan.

Annex II-A-6

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Schedule II
Judgments, Decrees or Orders of State or Federal Court
or Other Governmental Authorities
None.

Annex II-A-7

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ANNEX II-B
FORM OF NEGATIVE ASSURANCE LETTER OF COMPANY’S COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 4(l)

November 21, 2016
Ladenburg Thalmann & Co. Inc.
570 Lexington Avenue
Eleventh Floor
New York, NY 10022
JonesTrading Institutional Services LLC
780 Third Avenue
New York, NY 10017

Ladies and Gentlemen:
We refer to the Equity Distribution Agreement, dated November 21, 2016 (the
“Agreement”), by and among Dynex Capital, Inc. (the “Company”), Ladenburg
Thalmann & Co. Inc. (“Ladenburg”) and JonesTrading Institutional Services LLC
(together with Ladenburg, the “Agents”), which provides for the potential offer
and sale through or to the Agents, as sales agents and/or principals (the
“Offering”), up to an aggregate value of $50,000,000 (subject to Section 3(d) of
the Agreement) of shares of the Company’s 8.50% Series A Cumulative Redeemable
Preferred Stock (the “Series A Shares”), par value $0.01 per share (the “Series
A Preferred Stock”) and/or shares of the Company’s 7.625% Series B Cumulative
Preferred Stock (the “Series B Shares” and, together with the Series A Shares,
the “Shares”), par value $0.01 per share (the “Series B Preferred Stock” and,
together with the Series A Preferred Stock, the “Preferred Stock”) from time to
time during the term of, and on the terms set forth in Section 3 of, the
Agreement.
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Agreement.
This letter is rendered by us at the Company’s request pursuant to Sections 4(1)
and 6(b) of the Agreement, as counsel to the Company in connection with the
Company’s issuance and sale of the Shares. In this capacity, we have examined
originals or copies of the following:
(a)
the Registration Statement on Form S-3 (File No. 333-200859), as filed by the
Company with the Securities and Exchange Commission (the “Commission”) on
December 11, 2014, which shelf registration statement became effective on
December 30, 2014 (such Registration Statement, as amended at the time it became
effective, is hereinafter referred to as the “Registration Statement”);

(b)
the Prospectus;

Annex II-B-1

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(c)
the Disclosure Package;

(d)
the registration statement of the Company on Form 8-A (File No. 001-09819) filed
with the Commission on August 1, 2012, relating to the registration of the
Series A Preferred Stock under the Exchange Act;

(e)
the registration statement of the Company on Form 8-A (File No. 001-09819) filed
with the Commission on April 17, 2013, relating to the registration of the
Series B Preferred Stock under the Exchange Act;

(f)
the contract and other agreements or instruments that are listed on Schedule 1
hereto;

(g)
the Agreement;

(h)
a certificate of the Secretary of the Company, dated November 21, 2016, to which
the following are attached: (i) the Articles of Incorporation of the Company, as
amended to the date hereof; (ii) the Bylaws of the Company, as amended to the
date hereof; (iii) resolutions adopted by the Board of Directors of the Company
on September 16, 2014 and September 13, 2016; and (iv) the forms of certificates
used to evidence the Shares;

(i)
a certificate, dated the date hereof, issued by the State Corporation Commission
of the Commonwealth of Virginia (the “SCC”) to the effect that the Company is
existing under the laws of the Commonwealth of Virginia and in good standing;

(j)
the certificate of the officers of the Company delivered pursuant to Sections
4(k) and 6(d) of the Agreement; and

(k)
the originals (or copies identified to our satisfaction) of such documents and
records of the Company, certificates of public officials and officers of the
Company and such other documents, certificates, records and papers as we have
deemed necessary or appropriate to render the opinions set forth herein.

Because the primary purpose of our professional engagement was not to establish
or confirm the accuracy of the factual matters set forth in the Registration
Statement, the Disclosure Package or the Prospectus, we do not assume any
responsibility for the accuracy of the factual matters set forth in the
Registration Statement, the Disclosure Package or the Prospectus (except to the
extent expressly set forth in paragraph 7 of our opinion letter addressed to you
of even date herewith), and we have not independently verified the accuracy of
the factual matters set forth in Registration Statement, the Disclosure Package
or the Prospectus (except as aforesaid). Without limiting the foregoing, we
assume no responsibility for and have not independently verified the accuracy,
completeness or fairness of the financial statements and related notes,
financial statement schedules or other financial and statistical data contained
in or omitted from the Registration Statement, the Disclosure Package and the
Prospectus, and we have not examined the accounting, financial or other records
from which such financial statements, schedules and data are derived. We note
that, although certain portions of the Registration Statement, the Disclosure
Package and the Prospectus

Annex II-B-2

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(including certain financial statements) have been included therein on the
authority of experts, we are not such experts with respect to any portion of the
Registration Statement, the Disclosure Package or the Prospectus (including,
without limitation, such the financial statements and related notes, financial
statement schedules or other financial and statistical data contained in or
omitted therefrom) and, accordingly, we are not in a position to comment upon
the appropriateness of any accounting policy, procedure or method.
As counsel to the Company, however, we have participated in conferences with
officers and other representatives of the Company, with representatives of the
independent registered public accountants of the Company and representatives of
the Agents and their counsel at which conferences the contents of the
Registration Statement, the Disclosure Package, the Prospectus and any amendment
and supplement thereto and related matters were discussed and, although we
assume no responsibility for the accuracy, completeness or fairness of the
Registration Statement, the Disclosure Package, the Prospectus and any amendment
and supplement thereto (except to the extent expressly set forth in paragraph 7
of our opinion letter addressed to you of even date herewith), on the basis of
the foregoing, we advise you that:
1.
the Registration Statement, at the Effective Time (as defined below), and the
Prospectus, as of its date, each appeared on its face to be appropriately
responsive, in all material respects, to the requirements of the Securities Act
and the rules and regulations thereunder (except that in each case we do not
express any view as to the financial statements and related notes, financial
statement schedules or other financial and statistical data, or as to any other
financial accounting, numerical or quantitative data or information, included,
incorporated by reference or required to be included or incorporated by
reference therein, or excluded therefrom, or in the exhibits to the Registration
Statement);

2.
to our knowledge, there are no contracts or documents of a character which are
required to be filed as exhibits to the Registration Statement or are required
to be summarized or described in the Prospectus or the Registration Statement
that have not been so filed, summarized or described; and

3.
nothing has come to our attention that has caused us to believe that:  (i) the
Registration Statement, at the Effective Time, contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; or (ii) the
Prospectus, as of its date and as of the date hereof, contained or contains an
untrue statement of a material fact or omitted or omits 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, except that, in each
case in clauses (i) and (ii) above, we do not express any view or belief and
make no statement with respect to (A) the financial statements and related
notes, financial statement schedules or other financial and statistical data, or
as to any other financial accounting, numerical or quantitative data or
information, included, incorporated by reference or required to be included or
incorporated by reference in, or excluded from, the Registration Statement or
the

Annex II-B-3

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Prospectus or the exhibits to the Registration Statement or (B) the written
information that you furnished to the Company specifically for inclusion in, or
excluded from, the Registration Statement or the Prospectus.
We have made no inquiry into the delivery of any documents to any investor, and
have further assumed that pricing information related to the sale of the Shares
will be conveyed to investors at or prior to the time of any sale.
Whenever a statement herein is qualified by the phrase “to our knowledge” is
used herein, it refers to the actual conscious awareness of the attorneys of
this firm involved in the representation of the Company in connection with the
Offering after due inquiry of those attorneys of our firm that we deem
appropriate. As used herein, “Effective Time” means the most recent time of
effectiveness of the Registration Statement for purposes of Section 11 of the
Securities Act, as such section applies to you.
This letter is furnished to you for your exclusive use solely in connection with
the matters contemplated by the Agreement. This letter may not be relied upon by
you for any other purposes, or furnished to, quoted, referred to or relied upon
by any other person, firm or corporation for any purpose, without our prior
written consent in each instance.

 
 
 
 
Very truly yours,
 
 
 
 
 
 
 
 
 
 
 
 
 
TROUTMAN SANDERS LLP
 

 

Annex II-B-4

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ANNEX II-C
FORM OF REIT TAX OPINION
TO BE DELIVERED PURSUANT TO SECTION 4(l)
November 21, 2016
Ladenburg Thalmann & Co. Inc.
570 Lexington Avenue
Eleventh Floor
New York, NY 10022
JonesTrading Institutional Services LLC
780 Third Avenue
New York, NY 10017

Re:    Dynex Capital, Inc.
Ladies and Gentlemen:
We have acted as counsel to Dynex Capital, Inc., a Virginia corporation
(“Dynex”), in connection with the issuance and sale by Dynex of up to
$50,000,000 of Shares, pursuant to the Equity Distribution Agreement, dated
November 21, 2016 (the “Agreement”), by and among Dynex, Ladenburg Thalmann &
Co. Inc. (“Ladenburg”) and JonesTrading Institutional Services LLC (together
with Ladenburg, the “Agents”). This letter is furnished to you pursuant to
Section 4(l) and Section 6(b) of the Agreement. Capitalized terms used in this
letter and not otherwise defined herein shall have the meanings ascribed to such
terms in the Agreement.
Dynex has a number of wholly-owned subsidiaries (“qualified REIT subsidiaries”),
the income, liabilities, and assets of which are consolidated with those of
Dynex for U.S. federal income tax purposes. This letter refers to Dynex,
together with such subsidiaries, as “Consolidated Dynex.” In connection with the
opinions rendered below, we have examined such records, certificates, documents
and other materials as we considered necessary or appropriate as a basis for
such opinion, including, without limitation, the following:
1.
The Restated Articles of Incorporation of Dynex, as amended, effective June 2,
2014;

2.
The Amended and Restated Bylaws of Dynex, adopted as of May 17, 2016;

3.
Consolidated Dynex’s federal income tax return for its taxable year 2014 and
2015;

4.
The 2015 Form 10-K of Consolidated Dynex;    

5.    The Registration Statement, the prospectus filed as a part of the
Registration Statement (the “Prospectus”), and the Prospectus Supplement;

Annex II-C-1

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6.     The representation letter dated the date hereof delivered to us by an
officer of Dynex as to relevant factual matters and covenants as to future
operations dated as of the date hereof (the “Representation Letter”);
7.
The Agreement; and

8.
such other documents as we have deemed necessary or appropriate for purposes of
the opinions provided herein.

In connection with the opinion rendered below, we have assumed that each of the
documents referred to above has been duly authorized, executed, and delivered,
is authentic, if an original, or accurate, if a copy, and has not been amended,
and is accurate, correct and complete in all material respects. We have further
assumed that during Consolidated Dynex’s 2016 taxable year and subsequent
taxable years, it has conducted, and will continue to conduct, its affairs in a
manner that will make the representations set forth in the Representation Letter
true for such years; and that neither Dynex nor any subsidiary of Dynex will
make any amendments to its organizational documents after the date of this
opinion that would affect Consolidated Dynex’s qualification as a real estate
investment trust pursuant to sections 856 through 860 of the Code (a “REIT”) for
any taxable year.
Further the opinion is based on the assumption that (i) Consolidated Dynex met
certain asset, income and distribution requirements applicable to REITs, (ii) if
Consolidated Dynex were ultimately found not to have met the REIT distribution
requirements for any taxable year, such failure was due to reasonable cause and
not due to willful neglect; (iii) each of Dynex and its subsidiaries has been
and will continue to operate in accordance with the laws of the jurisdiction in
which it was formed, and in the manner described in the relevant partnership
agreement, LLC operating agreement or other organizational documents, (iv) there
will be no changes in the applicable law of Virginia or of any other
jurisdiction under the laws of which any of the entities comprising Dynex and
its subsidiaries have been formed, and (v) each of the written agreements to
which Dynex or its subsidiaries is a party has been and will be implemented,
construed and enforced in accordance with its terms, without regard to any
parole evidence. In addition, for the purposes of rendering this opinion, we
have not made an independent investigation or reached independent conclusions as
to the assumptions that we have made or of the facts set forth in any of the
aforementioned documents, including, without limitation, the Registration
Statement, the Prospectus, the Prospectus Supplement, and the Representation
Letter.
Based solely on the documents, assumptions, and representations set forth above,
and without further investigation, we are of the opinion that Consolidated Dynex
qualified as a REIT in its 2014 and 2015 taxable years and that its organization
and contemplated method of operation are such that it will continue to so
qualify for its 2016 taxable year and subsequent taxable years. Except as
described herein we have performed no further due diligence and have made no
efforts to verify the accuracy or genuineness of the documents, assumptions, and
representations set forth above.
The ability of Consolidated Dynex to qualify as a REIT for subsequent taxable
years will depend on future events, some of which are not within the control of
Consolidated Dynex.

Annex II-C-2

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Additionally, it is not possible to predict whether the statements,
representations, warranties, or assumptions on which we have relied to issue
this opinion will continue to be accurate in the future. We will not review
Consolidated Dynex’s compliance with the documents or assumptions, or the
representations set forth above. Accordingly, no assurance can be given that the
actual results of Consolidated Dynex’s operations for any given taxable year
will satisfy the requirements for qualification and taxation as a REIT.
The foregoing opinion is based on the Internal Revenue Code of 1986, as amended
(the “Code”) and Treasury Regulations promulgated thereunder, each as amended
from time to time and as in existence as of the date hereof, and on existing
administrative and judicial interpretations thereof. Legislation enacted,
administrative action taken, administrative interpretations or rulings, or
judicial decisions promulgated or issued subsequent to the date hereof may
result in tax consequences different from those anticipated by our opinion
herein. Additionally, our opinion is not binding on the Internal Revenue Service
or any court, and there can be no assurance that contrary positions may not be
taken by the Internal Revenue Service.
The foregoing opinion is limited to the U.S. federal income tax matters
addressed herein, and no other opinions are rendered with respect to other
federal tax matters or to any issues arising under the tax laws of any other
country, or any state or locality. We undertake no obligation to update the
opinions expressed herein after the date of this letter. This opinion letter is
solely for the information and use of the addressees, and it speaks only as of
the date hereof. This opinion letter may not be distributed, relied upon for any
purpose by any other person, quoted in whole or in part or otherwise reproduced
in any document, or filed with any governmental agency without our express
written consent.

Very truly yours,
TROUTMAN SANDERS LLP

Annex II-C-3

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ANNEX II-D
FORM OF INVESTMENT COMPANY ACT OF 1940 OPINION
TO BE DELIVERED PURSUANT TO SECTION 4(l)
The Company is not required to be registered, and after giving effect to the
offer and sale of the Shares and application of the proceeds from the offering
and sale of the Shares as described in the Disclosure Package and the Prospectus
will not be required to register, as an “investment company” as such term is
defined in the Investment Company Act of 1940, as amended.

Annex II-D-1