Exhibit 10.1

 

EXECUTION VERSION

 

AMENDMENT TO MANAGEMENT AGREEMENT

 

THIS AMENDMENT TO MANAGEMENT AGREEMENT (this “Amendment”) is made and entered
into as of this 10th day of April, 2016 by and between Hatteras Financial Corp.,
a Maryland corporation (the “Company”), and Atlantic Capital Advisors LLC, a
North Carolina limited liability company (the “Manager”).  The Company and the
Manager are each sometimes referred to herein as a “Party” and collectively as
the “Parties”.  Capitalized terms used herein but not defined shall have the
meanings ascribed to such terms in the Merger Agreement (as defined below). For
the avoidance of doubt, any reference herein to the Company shall mean, from and
after the Effective Time, the Surviving Corporation.

 

RECITALS

 

WHEREAS, the Parties have entered into that certain Management Agreement, dated
as of February 23, 2012, by and between the Company and the Manager (the
“Management Agreement”);

 

WHEREAS, contemporaneously with the entry into this Amendment, the Company has
entered into that certain Agreement and Plan of Merger, dated as of April 10,
2016, by and among Annaly Capital Management, Inc., a Maryland corporation
(“Parent”), Ridgeback Merger Sub Corporation, a Maryland corporation and a
wholly owned subsidiary of Parent, and the Company (as may be amended, the
“Merger Agreement”); and

 

WHEREAS, in accordance with Section 7.14 of the Merger Agreement, the Parties
desire, subject to the terms and conditions set forth herein, to amend the
Management Agreement to provide, among other things, for: (i) the termination of
the Management Agreement effective as of, and contingent upon, the Acceptance
Time (the “Termination Time”); and (ii) certain additional obligations and
agreements among the Parties, and for the benefit of Parent.

 

NOW THEREFORE, in consideration of the mutual covenants and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:

 

1. TERMINATION

 

Notwithstanding anything to the contrary in the Management Agreement, the
Parties hereby agree that the Management Agreement and all rights and
obligations of the Parties thereunder shall be terminated effective as of the
Termination Time (the “Termination”), contingent upon the prior payment of the
Termination Payment (as defined below) and without any further notice or action
by either Party, except that: (i) the Company shall reimburse the Manager for
the Unreimbursed Expenses (as defined below) within five (5) business days
following delivery to the Company of the Manager’s report of such expenses;
(ii) the Company shall pay to the Manager the Accrued Management Fees (as
defined below) within five (5) business days following delivery to the Company
of the Manager’s written statement setting forth the computation of such fees;
(iii) the Manager shall take those actions required by Section 14 of the
Management Agreement; and (iv) Section 8 and sentences 2 through 5 of Section 15
of the Management Agreement shall survive the Termination.  For the avoidance of
doubt, any covenant or agreement of the Parties contained in this Amendment
which by its terms contemplates performance after the Termination Time shall
survive the Termination, including, without limitation, such covenants and
agreements contained in this Section 1 and Sections 4 through 11 hereof.  For
purposes of this Amendment, “Unreimbursed Expenses” shall mean unreimbursed
expenses incurred by the Manager pursuant to the terms of the Management
Agreement prior to the Termination Time in the ordinary course of business and
consistent with past practice, to the extent reimbursable pursuant to Section 7
of the Management Agreement, subject to compliance with the provisions of
Section 7.3 of the Management Agreement and an aggregate cap of $1,200,000 for
each calendar quarter beginning April 1, 2016 (which cap shall be
proportionately reduced for the calendar quarter in which the Acceptance Time
occurs, and which cap may be increased with the prior written consent of Parent
(not to be unreasonably withheld, conditioned or delayed)), and “Accrued
Management Fees” shall mean unpaid management fees accrued under Section 6 of
the Management Agreement prior to the Termination Time and calculated in a
manner in all respects consistent with past practice and the Management
Agreement; provided, however, that the management fees for the month in which

 

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the Termination Time occurs shall be pro-rated based on the number of days in
such month that have elapsed up to and including the date on which the
Termination Time occurs compared to the total number of days in such month.

 

The Parties shall comply in all respects with all the terms and conditions of
the Management Agreement and shall not amend the Management Agreement or this
Amendment, in each case without the prior written consent of Parent.  Except as
specifically permitted or required by the Merger Agreement, as required by law,
or as consented to in writing by Parent (which consent shall not be unreasonably
withheld, delayed or conditioned), the Manager shall conduct its activities with
respect to the Company and the Company’s subsidiaries in all material respects
in the ordinary course of business consistent with past practice.

 

2. TERMINATION PAYMENT

 

In consideration for the Termination and the other promises, undertakings and
releases of the Manager hereunder, the Company shall pay the amount of
$45,411,000 to the Manager prior to, and conditioned on the Termination Time
(the “Termination Payment”).  Notwithstanding anything to the contrary in the
Management Agreement, the Parties acknowledge and agree that the Termination
Payment, together with any Unreimbursed Expenses and Accrued Management Fees
payable hereunder, if any, shall be the entire amount payable to the Manager or
any of its affiliates in connection with the Termination and thereafter under or
in respect of the Management Agreement, as amended by this Amendment, unless the
Merger Agreement is validly terminated pursuant to Section 9.1 of the Merger
Agreement without the occurrence of the Effective Time, and except with respect
to those rights and obligations which, pursuant to Section 1 of this Amendment,
survive the Termination. For the avoidance of doubt, prior to the Termination,
the Manager shall only be entitled to receive payments from the Company that are
consistent with past practice in all material respects and pursuant to the terms
of the Management Agreement; provided that this sentence shall not be deemed to
limit any bona fide claims the Manager may have (and payment thereof) pursuant
to Section 8 of the Management Agreement.

 

3. NON-SOLICITATION

 

From and after the date hereof until the earlier of the Acceptance Time or the
date, if any, on which the Merger Agreement is validly terminated pursuant to
Section 9.1 of the Merger Agreement without the occurrence of the Effective
Time, the Manager agrees that it shall not take any action, directly or
indirectly, that is inconsistent with, or would if taken by the Company be a
breach of, Section 6.3 of the Merger Agreement. The Manager shall not
intentionally take any action that would reasonably be expected to cause any of
the conditions to the Offer or the Merger to be failed to be satisfied, other
than actions which the Company is permitted to take pursuant to the Merger
Agreement or as required by applicable law. For the avoidance of doubt, nothing
in this Amendment shall restrict the Manager from assisting the Company in
discussions or negotiations regarding an Acquisition Proposal with any Person,
solely to the extent to which the Company is permitted to, and does, engage in
such discussions or negotiations with such Person pursuant to Section 6.3 of the
Merger Agreement, in each case in all respects in accordance with the Merger
Agreement.

 

4. EMPLOYEE MATTERS

 

The Manager hereby agrees to comply with all obligations set forth in
Section 7.16(c) of the Merger Agreement (subject to Parent’s compliance with its
obligations in such section), and the Manager shall not take any action with
respect to its employees or agents whose compensation is reimbursed by the
Company which would be a violation of Section 6.1(e) of the Merger Agreement if
taken by the Company with respect to its employees.

 

5. WAIVER

 

The Parties hereby waive, whether exercisable now or at any time in the future,
any and all rights to notice under the Management Agreement, to the extent
relating to the transactions contemplated by the Merger Agreement or this
Amendment.

 

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6. RELEASE

 

The Manager and its affiliates hereby fully and unconditionally release and
forever discharge the Company, the Company Subsidiaries, Parent, the affiliates
of Parent and the Surviving Corporation, and their respective administrators,
executors, representatives, successors and assigns, from any and all actions,
causes of action, suits, debts, accounts, covenants, liabilities, disputes,
agreements, promises, damages, judgments, executions, claims, and demands
whatsoever in law or in equity that they ever had, now have, or that they or
their administrators, executors, representatives, successors and assigns
hereafter can or may have, arising under or pursuant to the Management
Agreement, except with respect to those rights and obligations which, pursuant
to Section 1 of this Amendment, survive the Termination.

 

7. SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES

 

This Amendment shall be binding upon and inure to the benefit of the Parties and
their respective heirs, personal representatives, successors and assigns as
provided in this Amendment.  Parent and its affiliates, successors and assigns
shall be entitled to rely on this Amendment in connection with the consummation
of the transactions contemplated by the Merger Agreement.  Parent shall be an
express third party beneficiary of this Amendment (including applicable
provisions of the Management Agreement) and Parent shall be entitled to enforce
such provisions as though it was a party hereto or thereto.

 

8. ENTIRE AGREEMENT

 

The Management Agreement and this Amendment constitute the entire understanding
between the Parties with respect to the subject matter hereof and supersede all
prior discussions between them relating thereto.  Any amendment or modification
to this Amendment shall be effective only if in writing and signed by each
Party, with the prior written consent of Parent.  This Amendment shall terminate
and be of no force or effect in the event that the Merger Agreement is
terminated without the occurrence of the Effective Time.

 

9. COUNTERPARTS

 

This Amendment may be executed in multiple counterparts, each of which, when
executed and delivered, shall be deemed an original, but all of which shall
together constitute one and the same instrument.

 

10. PAYMENTS

 

All payments to be made pursuant to Section 1 and Section 2 hereof shall be made
by wire transfer, in immediately available funds, to the account set forth on
Schedule 1.

 

11. GOVERNING LAW

 

This Amendment shall be governed by and interpreted and construed in accordance
with the laws of the State of North Carolina, without regard to conflict of laws
principles thereof.

 

[Signatures Follow On Next Page]

 

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IN WITNESS WHEREOF, the Parties have executed this Amendment to Management
Agreement as of the day and year first above written.

 

 

 

 

 

ATLANTIC CAPITAL ADVISORS LLC

 

 

 

 

By:

/s/ Kenneth A. Steele

 

 

Name: Kenneth A. Steele

 

 

Title: Member and Chief Financial Officer

 

 

 

 

HATTERAS FINANCIAL CORP.

 

 

 

 

By:

/s/ Benjamin M. Hough

 

 

Name: Benjamin M. Hough

 

 

Title: President and Chief Operating Officer

 

[Signature Page to Amendment to Management Agreement]

 

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