Exhibit
10.6
   EMPLOYMENT
AGREEMENT
  This
EMPLOYMENT AGREEMENT (this “Agreement”) is
entered into as of this 31st day
of July, 2009 by and between Dynex Capital, Inc., a Virginia corporation (the
“Company”), and
Thomas B. Akin (“Executive”).
   W1TNESSETH:
  WHEREAS,
Executive commenced employment with the Company on February 4,
2008;
  WHEREAS,
the Company desires to continue to employ and secure the exclusive services of
Executive on the terms and conditions set forth in this Agreement;
and
  WHEREAS,
Executive desires to accept such employment on such terms and
conditions.
  NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
promises contained herein and for other good and valuable consideration, the
Company and Executive hereby agree as follows:
  1.  Agreement to
Employ.  Upon the terms and subject to the conditions of this
Agreement, the Company hereby agrees to continue to employ Executive, and
Executive hereby accepts such continued employment with the Company.
  2.  Term; Position and
Responsibilities; Location.
  (a)  Term of
Employment.  Unless Executive’s employment shall sooner
terminate pursuant to Section 7, the Company shall continue to employ Executive
on the terms and subject to the conditions of this Agreement from the date first
written above through February 5, 2010 (the “Employment
Period”).
  (b)  Position and
Responsibilities.  During the Employment Period, Executive
shall serve as Chief Executive Officer (“CEO”) and shall have
such duties and responsibilities as are customarily assigned to individuals
serving in such position and such other duties consistent with Executive’s title
and position as the Board of Directors (or any committee thereof) of the Company
(the Board or such committee referred to as the “Board”) specifies
from time to time (it being understood by the parties that, notwithstanding the
foregoing, the Company is free, at any time and from time to time, to reorganize
its business operations, and that Executive’s duties and scope of responsibility
may change in connection with such reorganization).  Executive agrees
that during his employment with the Company, Executive shall devote as much of
his skill, knowledge, commercial efforts and business time as the Board shall
reasonably require to
   1821793v4
  (c)  the
conscientious and good faith performance of his duties and responsibilities to
the Company to the best of his ability.
  (d)  Location.  During
the Employment Period, Executive’s services shall be performed primarily in the
San Francisco, California metropolitan area.  However, Executive may
be required to travel in and outside of such area as the needs of the Company’s
business dictate.  Executive will also work from time-to-time out of
the Company’s office in Richmond, Virginia.
  3.  Base
Salary.  During the Employment Period, the Company shall pay
Executive a base salary at an annualized rate of $300,000, payable in
installments on the Company’s regular payroll dates but not less frequently than
monthly.  The Board shall review Executive’s base salary annually
during the Employment Period and may increase (but not decrease) such base
salary from time to time, based on its periodic review of Executive’s
performance in accordance with the Company’s regular policies and
procedures.  The annual base salary payable to Executive from time to
time under this Section 4 shall hereinafter be referred to as the “Base
Salary.”  Until the Company and the Executive decide otherwise,
the Base Salary shall be paid in shares of unrestricted common stock of the
Company issued under the Company’s stock incentive plan in effect at the time of
payment, provided that the portion of the Base Salary attributable to payroll
deductions and tax withholdings shall always be paid in cash.  The
number of shares of unrestricted common stock to be paid to the Executive shall
be based on the fair market value of the common stock (as defined in the
applicable stock incentive plan) on the applicable payroll
date.  Notwithstanding the above, all payments of Base Salary shall be
paid in cash on any payroll date on which (i) the Company’s stock incentive plan
does not allow for the issuance of unrestricted common stock, or (ii) the Executive’s
ownership position in the Company exceeds amounts authorized by the Company’s
Articles of Incorporation or its Bylaws, as they both may be amended or restated
from time to time, unless such ownership limits have been waived or revised by
the Board of Directors specifically for the Executive, in which case Executive’s
ownership position cannot exceed the revised
limits.  All payments of Base Salary paid after the
Executive’s termination of employment under Section 7 shall be paid in
cash.
  4.  Annual Incentive
Compensation.  The Company has established an annual bonus
program based on the return on adjusted equity of the Company (the “ROAE
Bonus”).  The Company also has established a bonus pool for
2009 related to the capital raising activities of the Company (the “Capital Bonus
Pool”).  For the duration of this Agreement, the Executive will
be eligible for the ROAE Bonus and will participate in the Capital Bonus Pool
and any other bonus programs for executives.  Eligibility and
participation by the Executive in the bonus programs shall be subject to the
terms of the bonus programs adopted by the Compensation Committee of the Board
of Directors.
  5.  Employee
Benefits.
  (a)  General.  During
the Employment Period, Executive will be eligible to participate in the employee
and executive benefit plans and programs maintained by the Company from time to
time in which executives of the Company at
   
  (b)  Executive’s
grade level are eligible to participate, including to the extent maintained by
the Company, life, medical, dental, accidental and disability insurance plans
and retirement, deferred compensation and savings plans, in accordance with the
terms and conditions thereof as in effect from time to time.
  (c)  Vacation.  During
the Employment Period, Executive shall be entitled to vacation on an annualized
basis of four (4) weeks per year, without carry-over
accumulation.  Executive shall also be entitled to Company-designated
holidays.
  6.  Expenses.
  (a)  Business Travel,
Lodging.  During the Employment Period, the Company will
reimburse Executive for reasonable travel, lodging, meal and other reasonable
expenses incurred by him in connection with the performance of his duties and
responsibilities hereunder upon submission of evidence satisfactory to the
Company of the incurrence and purpose of each such expense, provided that such
expenses are permitted under the terms and conditions of the Company’s business
expense reimbursement policy.
  7.  Termination of
Employment.
  (a)  Termination for Any
Reason.  Executive’s employment may be terminated by the
Company or the Executive for any reason.  In the event that
Executive’s employment is terminated, no termination benefits shall be payable
to or in respect of Executive except as provided in Section 7(c).
  (b)  Notice of Termination; Date
of Termination.
  (i)  Notice of
Termination.  Any termination of Executive’s employment by the
Company or by Executive (other than as a result of Executive’s death) shall be
communicated by a written Notice of Termination addressed to the other party to
this Agreement.  A “Notice of
Termination” shall mean a notice stating that Executive or the Company,
as the case may be, is electing to terminate Executive’s employment with the
Company (and thereby terminating the Employment Period), stating the proposed
effective date of such termination, indicating the specific provision of this
Section 7 under which such termination is being effected and, if applicable,
setting forth in reasonable detail the circumstances claimed to provide the
basis for such termination.
  (ii)  Date of
Termination.  The term “Date of Termination”
shall mean (i) if Executive’s employment is terminated by his death, the date of
his death, (ii) if Executive’s employment is terminated by Executive, a date
which is at least 30 days following the issuance of the Notice of Termination
and (iv) if Executive’s employment is terminated for any other reason, the
effective date of termination specified in such Notice of
Termination.  The Employment Period shall expire on the Date of
Termination.
   
  (iii)  Payments
Upon Certain Terminations.
  (iv)  In the
event of a termination of Executive’s employment, the Company shall pay to
Executive, within thirty (30) days of the Date of Termination, his Base Salary
through the Date of Termination, to the extent not previously paid,
reimbursement for any unreimbursed business expenses incurred by Executive prior
to the Date of Termination that are subject to reimbursement pursuant to Section
7(a) and payment for vacation time accrued as of the Date of Termination but
unused (the “Accrued
Obligations”).  In addition, in the event of any such
termination of Executive’s employment unless such termination was for Cause (as
defined in Section 7(e) below), if Executive executes and delivers to the
Company a Separation Agreement and General Release substantially in the form
approved by the Company, Executive shall be entitled to the following payments
and benefits:
  (A)  the
portion of the ROAE Bonus for the calendar year of the Company during which
Executive was employed that includes the Date of Termination, such portion to
equal the product (such product, the “Pro-Rata ROAE Bonus”)
of the ROAE Bonus that would have been payable to Executive for such calendar
year had Executive remained employed for the entire calendar year, determined
based on the extent to which the Company actually achieves the performance goals
for such year, multiplied by a fraction, the numerator of which is equal to the
number of days in such calendar year that precede the Date of Termination and
the denominator of which is equal to 365, such amount to be payable to Executive
at the time such bonus would otherwise have been paid under the terms of the
ROAE Bonus program if the Executive was still employed (the “Bonus Payment
Date”);
  (B)  to the extent not already paid, the portion
of the Capital Bonus Pool due the Executive under the terms of the Capital Bonus
Pool for a Determination Date (as that term is defined in the Capital Bonus Pool
governing document) that precedes the Date of Termination (the “Unpaid Capital
Bonus”) payable in cash on the Bonus Payment Date;
  (C)  to the
extent any other incentive stock awards such as stock options, stock
appreciation rights, restricted stock, or similar which were awarded to
Executive during the Employment Period and which have not vested as of the Date
of Termination, such incentive stock awards will immediately become 100% vested
and exercisable and will be payable at the times and in the forms provided in
the individual award agreements; and
  Executive
shall not have a duty to mitigate the costs to the Company under this Section
7(c)(i), nor shall any payments from the Company to Executive under items (A),
(B) or (C) of this Section 7(c)(i) be reduced, offset or canceled by any
compensation or fees earned by (whether or not paid currently) or offered to
Executive by a subsequent employer or other Person (as defined in below) for
which Executive performs services, including but not limited to consulting
services.
   
  Except as
specifically set forth in this Section 7(c), no termination benefits shall be
payable to or in respect of Executive’s employment with the
Company.
  (c)  For
purposes of this Agreement, “Cause” means (i) a
material breach by Executive of any provision of this Agreement; (ii) a material
and willful violation by Executive of any of the Company Policies; (iii) the
failure by Executive to reasonably and substantially perform the duties of his
position (other than as a result of physical or mental illness or injury); (iv)
Executive’s willful misconduct or gross negligence that has caused or is
reasonably expected to result in material injury to the business, reputation or
prospects of the Company; (v) Executive’s fraud or misappropriation of funds; or
(vi) the commission by Executive of a felony or other serious crime involving
moral turpitude; provided that in the case of any breach of clauses (i), (ii) or
(iii) that is curable, no termination there under shall be effective unless the
Company shall have given Executive notice of the event or events constituting
Cause and Executive shall have failed to cure such event or events within thirty
(30) business days after receipt of such notice.
  8.  Code Section 409A
Compliance.
  (a)           The
intent of the parties is that payments and benefits under this Agreement comply
with Section 409A of the Internal Revenue Code of 1986, as amended, and
applicable guidance thereunder (“Code Section409A”) or comply with
an exemption from the application of Code Section 409A and, accordingly, all
provisions of this Agreement shall be construed in a manner consistent with the
requirements for avoiding taxes or penalties under Code Section
409A.
  (b)           Neither
the Executive nor the Company shall take any action to accelerate or delay the
payment of any monies and/or provision of any benefits in any matter which would
not be in compliance with Code Section 409A.
  (c)           A
termination of employment shall not be deemed to have occurred for purposes of
any provision of this Agreement providing for the form or timing of payment of
any amounts or benefits upon or following a termination of employment unless
such termination is also a “separation from service” (within the meaning of Code
Section 409A) and, for purposes of any such provision of this Agreement under
which (and to the extent) deferred compensation subject to Code Section 409A is
paid, references to a “termination” or “termination of employment” or like
references shall mean separation from service.  If the Executive is
deemed on the date of separation from service with the Company to be a
“specified employee”, within the meaning of that term under Code Section
409A(a)(2)(B) and using the identification methodology selected by the Company
from time to time, or if none, the default methodology, then with regard to any
payment or benefit that is required to be delayed in compliance with Code
Section 409A(a)(2)(B), such payment or benefit shall not be made or provided
prior to the earlier of (i) the expiration of the six- month period measured
from the date of the Executive’s separation from service or (ii) the date of the
Executive’s death.  In the case of benefits required to be delayed
under Code Section 409A, however, the Executive may pay the cost of benefit
coverage, and thereby obtain benefits, during
   
  such six
month delay period and then be reimbursed by the Company thereafter when delayed
payments are made pursuant to the next sentence.  On the first day of
the seventh month following the date of the Executive’s separation from service
or, if earlier, on the date of the Executive’s death, all payments delayed
pursuant to this Section 8(c) (whether they would have otherwise been payable in
a single sum or in installments in the absence of such delay) shall be paid or
reimbursed to the Executive in a lump sum, and any remaining payments and
benefits due under this Agreement shall be paid or provided in accordance with
the normal payment dates specified for them herein.
  (d)           With
regard to any provision herein that provides for reimbursement of expenses or
in-kind benefits subject to Code Section 409A, except as permitted by Code
Section 409A, (i) the right to reimbursement or in-kind benefits is not subject
to liquidation or exchange for another benefit, and (ii) the amount of expenses
eligible for reimbursement, or in-kind benefits, provided during any taxable
year shall not affect the expenses eligible for reimbursement, or in-kind
benefits to be provided, in any other taxable year, provided that the foregoing
clause (ii) shall not be violated with regard to expenses reimbursed under any
arrangement covered by Code Section 105(b) solely because such expenses are
subject to a limit related to the period the arrangement is in
effect.  All reimbursements shall be reimbursed in accordance with the
Company’s reimbursement policies but in no event later than the calendar year
following the calendar year in which the related expense is
incurred.
  (e)           If
under this Agreement, an amount is to be paid in two or more installments, for
purposes of Code Section 409A, each installment shall be treated as a separate
payment.
  (f)           When,
if ever, a payment under this Agreement specifies a payment period with
reference to a number of days (e.g., “payment shall be made within ten (10) days
following the date of termination”), the actual date of payment within the
specified period shall be within the sole discretion of the
Company.”
  (g)           Notwithstanding
any of the provisions of this Agreement, the Company shall not be liable to the
Executive if any payment or benefit which is to be provided pursuant to this
Agreement and which is considered deferred compensation subject to Code Section
409A otherwise fails to comply with, or be exempt from, the requirements of Code
Section 409A.
  9.  Restrictive
Covenants.  Each of the Company and Executive agrees that the
Executive will have a prominent role in the management of the business, and the
development of the goodwill, of the Company, and will establish and develop
relations and contacts with customers and counterparties of the Company, all of
which constitute valuable goodwill of, and could be used by Executive to compete
unfairly with, the Company.  In addition, Executive recognizes that he
will have access to and become familiar with or exposed to Confidential
Information (as such term is defined below), in particular, trade secrets,
proprietary information, customer lists, counterparty lists and other valuable
business information of the Company pertaining or related to the
speciality
   
  10.  finance
industry, specifically as it relates to being a mortgage real estate investment
trust (the “Business
of the Company”).  Executive agrees that Executive could cause
grave harm to the Company if he, among other things, worked for the Company’s
competitors, solicited the Company’s employees away from the Company, solicited
the Company’s customers or business counterparties upon the termination of
Executive’s employment with the Company, or misappropriated or divulged the
Company’s Confidential Information; and that as such, the Company has legitimate
business interests in protecting its goodwill and Confidential Information; and,
as such, these legitimate business interests justify the following restrictive
covenants:
  (a)  Confidentiality and
Non-Disclosure Covenant.
  (i)  Executive
acknowledges and agrees that the terms of this Agreement, including all
addendums and attachments hereto, are confidential.  Except as
required by law or the requirements of any stock exchange, Executive agrees not
to disclose any information contained in this Agreement to anyone, other than to
Executive’s lawyer, financial advisor or immediate family members.  If
Executive discloses any Information contained in this Agreement to his lawyer,
financial advisor or immediate family members as permitted herein, Executive
agrees to immediately tell each such individual that he or she must abide by the
confidentiality restrictions contained herein and keep such information
confidential as well.
  (ii)  Executive
agrees that during his employment with the Company and thereafter, Executive
will not, directly or indirectly (A) disclose any Confidential Information to
any Person (other than, only with respect to the period that Executive is
employed by the Company, to an employee or outside advisor of the Company who
requires such information to perform his or her duties for the Company), or (B)
use any Confidential Information for Executive’s own benefit or the benefit of
any third party.  “Confidential
Information” means confidential, proprietary or commercially sensitive
information relating to (i) the Company or members of its management or boards
or (ii) any third parties who do business with the
Company.  Confidential Information includes, without limitation,
marketing plans, business plans, financial information and records, operation
methods, personnel information, drawings, designs, information regarding product
development, customer lists, or other commercial or business information and any
other information not available to the public generally.  The
foregoing obligation shall not apply to any Confidential Information that has
been previously disclosed to the public or is in the public domain (other than
by reason of a breach of Executive’s obligations to hold such Confidential
Information confidential).  If Executive is required or requested by a
court or governmental agency to disclose Confidential Information, Executive
must notify the Chief Operating Officer of the Company of such disclosure
obligation or request no later than three (3) business days after Executive
learns of such obligation or request, and permit the Company to take all lawful
steps it deems appropriate to prevent or limit the required
disclosure.
  (b)  Non-Competition
Covenant.  Executive agrees that during his employment with the
Company, Executive shall devote as much of his skill, knowledge, commercial
efforts and business time as the Board shall reasonably require to
   
  (c)  the
conscientious and good faith performance of his duties and responsibilities to
the Company to the best of his ability.  The Company acknowledges that
Executive is the managing general partner of Talkot Capital LLC and shall
continue to function in that regard during his employment with the
Company.  Except for Talkot Capital, Executive shall not, directly or
indirectly, be employed by, render services for, engage in business with or
serve as an agent or consultant to any Person other than the
Company.  Executive further agrees that during his employment with the
Company and for the period of one (1) year following any termination of his
employment with the Company, Executive shall not, directly or indirectly, become
employed by, render services for, engage in business with, serve as an agent or
consultant to, or become a partner, member, principal, stockholder or other
owner, or Board member of, any Person or entity that engages in the Business of
the Company, provided that
Executive shall be permitted to hold a ten percent (10%) or less interest in the
equity or debt securities of any publicly traded company.
  (d)  Non-Solicitation of
Employees.  During the period of Executive’s employment with
the Company and for the one (1)-year period following the termination of his
employment, Executive shall not, directly or indirectly, by himself or through
any third party, whether on Executive’s own behalf or on behalf of any other
Person or entity, (i) solicit or induce or endeavor to solicit or induce,
divert, employ or retain, (ii) interfere with the relationship of the Company
with, or (iii) attempt to establish a business relationship of a nature that is
competitive with the business of the Company with, any Person that is or was
(during the last twelve (12) months of Executive’s employment with the Company)
an employee of the Company or engaged to provide services to it.
  11.  Work
Product.  Executive agrees that all of Executive’s work product
(created solely or jointly with others, and including any intellectual property
or moral rights in such work product), given, disclosed, created, developed or
prepared in connection with Executive’s employment with the Company, whether
ensuing during or after Executive’s employment with the Company (“Work Product”) shall
exclusively vest in and be the sole and exclusive property of the Company and
shall constitute “work made for hire” (as that term is defined under Section 101
of the U.S. Copyright Act, 17 U.S.C. § 101) with the Company being the person
for whom the work was prepared.  In the event that any such Work
Product is deemed not to be a “work made for hire” or does not vest by operation
of law in the Company, Executive hereby irrevocably assigns, transfers and
conveys to the Company, exclusively and perpetually, all right, title and
interest which Executive may have or acquire in and to such Work Product
throughout the world, including without limitation any copyrights and patents,
and the right to secure registrations, renewals, reissues, and extensions
thereof.  The Company or its designees shall have the exclusive right
to make full and complete use of, and make changes to all Work Product without
restrictions or liabilities of any kind, and Executive shall not have the right
to use any such materials, other than within the legitimate scope and purpose of
Executive’s employment with the Company.  Executive shall promptly
disclose to the Company the creation or existence of any Work Product and shall
take whatever additional lawful action may be necessary, and sign whatever
documents the Company may require, in order to secure and vest in the Company or
its designee all right, title and
   
  12.  interest
in and to all Work Product and any intellectual property rights therein
(including full cooperation in support of any Company applications for patents
and copyright or trademark registrations).
  13.  Return of Company
Property.  In the event of termination of Executive’s
employment for any reason, Executive shall return to the Company all of the
property of the Company and its Affiliates, including without limitation all
materials or documents containing or pertaining to Confidential Information, and
including without limitation, all computers (including laptops), cell phones,
keys, PDAs, Blackberries, credit cards, facsimile machines, televisions, card
access to any Company building, customer lists, computer disks, reports, files,
e-mails, work papers, Work Product, documents, memoranda, records and software,
computer access codes or disks and instructional manuals, internal policies, and
other similar materials or documents which Executive used, received or prepared,
helped prepare or supervised the preparation of in connection with Executive’s
employment with the Company.  Executive agrees not to retain any
copies, duplicates, reproductions or excerpts of such material or
documents.
  14.  Compliance With Company
Policies.  During Executive’s employment with the Company,
Executive shall be governed by and be subject to, and Executive hereby agrees to
comply with, all Company policies, procedures, codes, rules and regulations
applicable to all employees and to executive officers of the Company, as they
may be amended from time to time in the Company’s sole discretion (collectively,
the “Policies”).
  15.  Injunctive Relief with
Respect to Covenants: Forum, Venue and Jurisdiction.  Executive
acknowledges and agrees that a breach by Executive of any of Section of the
Agreement is a material breach of this Agreement and that remedies at law may be
inadequate to protect the Company in the event of such breach, and, without prejudice to any
other legal or equitable rights and remedies otherwise available to the
Company, Executive agrees to the granting of injunctive relief in the
Company’s favor in connection with any such breach or violation without proof of
irreparable harm.  Executive further agrees that if the Company is
entitled to receive from Executive its attorneys’ fees and costs to enforce the
provisions of this Agreement.  Executive further acknowledges and
agrees that the Company’s obligations to pay Executive any amount or provide
Executive with any benefit or right pursuant to Section 7 is subject to
Executive’s compliance with Executive’s obligations under Sections 8 through 10
inclusive, and that in the event of a breach by Executive of any of Section 8
through 10, the Company shall immediately cease paying such benefits and
Executive shall be obligated to immediately repay to the Company all amounts
theretofore paid to Executive pursuant to Section 7.  In addition, if
not repaid, the Company shall have the right to set off from any amounts
otherwise due to Executive any amounts previously paid pursuant to Section 7(c)
(other than the Accrued Obligations).  Executive further agrees that
the foregoing is appropriate for any such breach inasmuch as actual damages
cannot be readily calculated, the amount is fair and reasonable under the
circumstances, and the Company would suffer irreparable harm if any of these
Sections were breached.
   
  16.  Assumption of
Agreement.  The Company shall require any Successor thereto, by
agreement in form and substance reasonably satisfactory to Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place.  Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle Executive to compensation from the Company in
the same amount and on the same terms as Executive would be entitled hereunder
if the Company had terminated Executive’s employment Without Cause as described
in Section 7, except that for purposes of implementing the foregoing, the date
on which any such succession becomes effective shall be deemed the Date of
Termination.
  17.  Indemnification.  The
Company agrees both during and after the Employment Period to indemnify
Executive to the fullest extent permitted by its Certificate of Incorporation
(including payment of expenses in advance of final disposition of a proceeding)
against actions or inactions of Executive during the Employment Period as an
officer, director or employee of the Company or any of its Subsidiaries or
Affiliates or as a fiduciary of any benefit plan of any of the
foregoing.  The Company also agrees to provide Executive with
Directors and Officers insurance coverage both during and, with regard to
matters occurring during the Employment Period, after the Employment
Period.  Such coverage shall be at a level at least equal to the level
being maintained at such time for the then current officers and directors or, if
then being maintained at a higher level with regard to any prior period
activities for officers or directors during such prior period, such higher
amount with regard to Executive’s activities during such prior
period.
  18.  Entire
Agreement.  This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter
hereof.  All prior correspondence and proposals (including but not
limited to summaries of proposed terms) and all prior promises, representations,
understandings, arrangements and agreements relating to such subject matter
(including but not limited to those made to or with Executive by any other
Person and those contained in any prior employment, consulting or similar
agreement, including the Original Agreement, entered into by Executive and the
Company or any predecessor thereto or Affiliate thereof) are merged herein and
superseded hereby.
  19.  Survival.  The
following Sections shall survive the termination of Executive’s employment with
the Company and of this Agreement.
  20.  Miscellaneous.
  (a)  Binding Effect;
Assignment.  This Agreement shall be binding on and inure to
the benefit of the Company and its Successors and permitted
assigns.  This Agreement shall also be binding on and inure to the
benefit of Executive and his heirs, executors, administrators and legal
representatives.  This Agreement shall not be assignable by any party
hereto without the prior written consent of the other parties hereto, provided, however,
that the Company may effect such an assignment
   
  (b)  without
prior written approval of Executive upon the transfer of all or substantially
all of its business and/or assets (by whatever means), provided that the
Successor to the Company shall expressly assume and agree to perform this
Agreement in accordance with the provisions of Section 14.
  (c)  Choice of Forum and
Governing Law.  The parties agree that:  (i) any
litigation involving any noncompliance with or breach of the Agreement, or
regarding the interpretation, validity and/or enforceability of the Agreement,
shall be filed and conducted in the state or federal courts in Richmond,
Virginia; and (ii) the Agreement shall be interpreted in accordance with and
governed by the laws of the Commonwealth of Virginia, without regard for any
conflict of law principles.
  (d)  Taxes.  The
Company may withhold from any payments made under this Agreement all applicable
taxes, including but not limited to income, employment and social insurance
taxes, as shall be required by law.
  (e)  Amendments.  No
provision of this Agreement may be modified, waived or discharged unless such
modification, waiver or discharge is approved in writing by the Board or a
Person authorized thereby and is agreed to in writing by
Executive.  No waiver by any party hereto at any time of any breach by
any other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.  No waiver of any provision of this Agreement shall
be implied from any course of dealing between or among the parties hereto or
from any failure by any party hereto to assert its rights hereunder on any
occasion or series of occasions.
  (f)  Severability.  In
the event that any one or more of the provisions of this Agreement shall be or
become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.  In the event that one or more terms or provisions
of this Agreement are deemed invalid or unenforceable by the laws of Virginia or
any other state or jurisdiction in which it is to be enforced, by reason of
being vague or unreasonable as to duration or geographic scope of activities
restricted, or for any other reason, the provision in question shall be
immediately amended or reformed to the extent necessary to make it valid and
enforceable by the court of such jurisdiction charged with interpreting and/or
enforcing such provision.  Executive agrees and acknowledges that the
provision in question, as so amended or reformed, shall be valid and enforceable
as though the invalid or unenforceable portion had never been included
herein.
  (g)  Notices.  Any
notice or other communication required or permitted to be delivered under this
Agreement shall be (i) in writing, (ii) delivered personally, by courier service
or by certified or registered mail, first-class postage prepaid and return
receipt requested, (iii) deemed to have been received on the date of delivery
or, if mailed, on the third business day after the mailing thereof, and (iv)
addressed as follows (or to such other address as the party entitled to notice
shall hereafter designate in accordance with the terms hereof):
   
  (h)  If to the
Company, to it at:
  Chief
Operating Officer
 Dynex
Capital, Inc.
 4991 Lake
Brook Drive, Suite 100
 Glen
Allen, VA 23060
  (A)  If to
Executive, to his residential address as currently on file with the
Company.
  (i)  Voluntary Agreement; No
Conflicts.  Executive represents that he is entering into this
Agreement voluntarily and that Executive’s employment hereunder and compliance
with the terms and conditions of this Agreement will not conflict with or result
in the breach by Executive of any agreement to which he is a party or by which
he or his properties or assets may be bound.
  (j)  Counterparts/Facsimile.  This
Agreement may be executed in counterparts (including by facsimile), each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument.
  (k)  Headings.  The
section and other headings contained in this Agreement are for the convenience
of the parties only and are not intended to be a part hereof or to affect the
meaning or interpretation hereof.
  (l)  Certain
other Definitions.
  “Affiliate”: with
respect to any Person, means any other Person that, directly or indirectly
through one or more intermediaries, Controls, is Controlled by, or is under
common Control with the first Person, including but not limited to a Subsidiary
of any such Person.
   “Control” (including,
with correlative meanings, the terms “Controlling”, “Controlled by” and “under
common Control with”): with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
  “Person”: any natural
person, firm, partnership, limited liability company, association, corporation,
company, trust, business trust, governmental authority or other
entity.
  “Subsidiary”: with
respect to any Person, each corporation or other Person in which the first
Person owns or Controls, directly or indirectly, capital stock or other
ownershipinterests
representing fifty percent (50%) or more of the combined voting power of the
outstanding voting stock or other ownership interests of such corporation or
other Person.
   
  “Successor”: of a
Person means a Person that succeeds to the first Person’s assets and liabilities
by merger, liquidation, dissolution or otherwise by operation of law, or a
Person to which all or substantially all the assets and/or business of the first
Person are transferred.
  
  IN
WITNESS WHEREOF, the Company has duly executed this Agreement by its authorized
representatives, and Executive has hereunto set his hand, in each case effective
as of the date first above written.
  DYNEX
CAPITAL, INC.
 
 By:          /s/ Barry Igdaloff
 
 Its:           Chairman of the Compensation Committee
 
 
 Thomas B.
Akin:
 
 /s/ Thomas B. Akin
 SIGNATURE