Document:

ex10-5.htm

    
      
        Exhibit
10.5.1

      

    

    Amendment
to Severance Agreement

    

    

    The
Severance Agreement (the “Severance Agreement”) dated June 11, 2004 between
Dynex Capital, Inc. (the “Company”) and Stephen J. Benedetti (the “Executive”)
is hereby amended in the following respects in order to comply with Section 409A
of the Internal Revenue Code, as amended, and applicable guidance issued
thereunder (collectively, “Code Section 409A”):

     

    1.           Section
5(a)(iii) of the Severance Agreement shall be replaced in its entirety with the
following:

     

    (iii)           to
the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Executive any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under any plan, program,
policy or practice or contract or agreement of the Company and its affiliated
companies in accordance with the terms of such plan, program, policy or
practice, or contract or agreement (including time and form of payment if
payable in a different form or time than provided in this Section 5(a)) (such
other amounts and benefits shall be hereinafter referred to as the “Other
Benefits”).

     

    2.           Section
5(c) of the Severance Agreement shall be amended by adding the following to the
end:

     

    The Other
Benefits and any payments that may be due Executive under the 2004 Stock
Incentive Plan shall be paid in accordance with the timing of the applicable
governing documents.

     

    3.           Section
5(d)(i) of the Severance Agreement shall be amended by adding the following to
the end:

     

    Any such
accrued salary and bonus shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination.  Any deferred compensation
or Other Benefits shall be paid in accordance with the terms of the applicable
governing documents.

     

    4.           Section
8 of the Severance Agreement shall be amended by adding the following to the
end:

     

    In the
event any payments or benefits are to be reduced, the Company shall reduce or
eliminate the payments to the Executive by first reducing or eliminating those
payments or benefits which are payable in cash and then by reducing or
eliminating those payments which are not payable in cash, in each case in
reverse order beginning with payments or benefits which are to be paid or
provided the farthest in time from the date of determination.  Any
reduction pursuant to the preceding sentence shall take precedence over the
provisions of any other plan, arrangement or agreement governing the Executive’s
rights and entitlements to any benefits or compensation.

     

    
      
        
           

        

         

      

      
        
        

        
          

        

      

      
         

      

    

    5.           The
Severance Agreement shall be amended by adding the following new Section 11 to
the end:

     

    11.           Code Section 409A
Compliance.

     

    (a)                      The
intent of the parties is that payments and benefits under this Agreement comply
with Code Section 409A 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 (including any transition or
grandfather rules thereunder).

     

    (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
11(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

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
      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.

     

    IN
WITNESS WHEREOF, the parties hereto have duly executed this Amendment to the
Employment Agreement on this 31st day of December, 2008 to be effective on
January 1, 2009.

     

    /s/ Stephen J.
Benedetti

    Stephen
J. Benedetti

    

    DYNEX
CAPITAL, INC.

    

    By: /s/ Thomas B.
Akin

    Name:   Thomas B.
Akin

    Title:     Chairman and Chief Executive
Officer

    
      
         

      

      
        3ex10-8.htm

    

      
         

         

        
          
            Exhibit
10.8

          

        

      

      DYNEX
CAPITAL, INC.

       

      3,000,000
SHARES

       

      

       

      CONTROLLED EQUITY
OFFERINGSM

       

      

       

      SALES
AGREEMENT

       

      

       

      March 16,
2009

       

      

       

      CANTOR
FITZGERALD & CO.

      499 Park
Avenue

      New York,
NY  10022

       

      

      Ladies
and Gentlemen:

      

      DYNEX
CAPITAL, INC., a Virginia corporation (the “Company”), confirms its agreement
(this “Agreement”) with Cantor Fitzgerald
& Co. (“CF&Co”), as follows:

       

      1.   Issuance and Sale of
Shares.  The Company agrees that, from time to time during the
term of this Agreement, on the terms and subject to the conditions set forth
herein, it may issue and sell through CF&Co, acting as agent and/or
principal, up to 3,000,000 shares (the “Shares”) of the Company’s common
stock, par value $0.01 per share (the “Common
Stock”).
Notwithstanding anything to the contrary contained herein, the parties hereto
agree that compliance with the limitations set forth in this Section 1 on the
number of Shares issued and sold under this Agreement shall be the sole
responsibility of the Company, and CF&Co shall have no obligation in
connection with such compliance.  The issuance and sale of Shares
through CF&Co will be effected pursuant to the Registration Statement (as
defined below) filed by the Company and declared effective by the Securities and
Exchange Commission (the “Commission”), although nothing in this
Agreement shall be construed as requiring the Company to use the Registration
Statement to issue Shares.

       

      The
Company has filed, in accordance with the provisions of the Securities Act of
1933, as amended, and the rules and regulations thereunder (collectively, the
“Securities
Act”), with the Commission a registration statement on Form S-3 (File No.
333-149475), and two pre-effective amendments thereto, including a base
prospectus, with respect to the Shares, which registration statement, as amended
by such pre-effective amendments, incorporates by reference documents which the
Company has filed or will file in accordance with the provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (collectively, the “Exchange
Act”).   Such registration statement, as amended by such
pre-effective amendments, has become effective under the Securities
Act.  The Company may file one or more additional registration
statements from time to time that will contain a base prospectus with respect to
the Shares. The Company shall prepare one or more prospectus supplements
(collectively, the “Prospectus
Supplement”) to the base prospectus included as part of each registration
statement containing a base prospectus relating to certain securities
of

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      the
Company, including the Shares to be issued from time to time by the Company. The
Company shall furnish to CF&Co, for use by CF&Co, copies of the
prospectus included as part of each such registration statement, as supplemented
by the Prospectus Supplement, relating to the Shares.  Except where
the context otherwise requires, each such registration statement, as amended
(including by such pre-effective amendments) when it became effective, including
all documents filed as part thereof or incorporated by reference therein, and
including any information contained in a Prospectus (as defined below)
subsequently filed with the Commission pursuant to Rule 424(b) under the
Securities Act and or deemed to be part of each such registration statement
filed pursuant to Rule 430B of the Securities Act, is herein called the “Registration
Statement.” Each base prospectus, including all documents incorporated
therein by reference, included in the Registration Statement, as it may be
supplemented by the Prospectus Supplement, in the form in which such base
prospectus and/or Prospectus Supplement have most recently been filed by the
Company with the Commission pursuant to Rule 424(b) under the Securities Act,
together with any “issuer free writing prospectus,” as defined in Rule 433 under
the Securities Act (“Rule
433”), if any, relating to the offering of the Shares, which (i) is
required to be filed with the Commission by the Company or (ii) is exempt from
filing pursuant to Rule 433(d)(5)(i), in each case in the form filed or required
to be filed with the Commission or, if not required to be filed, in the form
retained in the Company’s records pursuant to Rule 433(g), is herein called the
“Prospectus”.
Any reference herein to the Registration Statement, the Prospectus or any
amendment or supplement thereto shall be deemed to refer to and include the
documents incorporated by reference therein, and any reference herein to the
terms “amend”, “amendment” or “supplement” with respect to the Registration
Statement or the Prospectus shall be deemed to refer to and include the filing
after the execution hereof of any document with the Commission deemed to be
incorporated by reference therein. For purposes of this Agreement, all
references to the Registration Statement, the Prospectus, or to any amendment or
supplement thereto shall be deemed to include any copy filed with the Commission
pursuant to either the Electronic Data Gathering Analysis and Retrieval System
or Interactive Data Electronic Applications (collectively, “IDEA”).

       

      2.   Placements.  Each
time that the Company wishes to issue and sell Shares hereunder (each, a “Placement”), it will notify CF&Co
by email notice (or other method mutually agreed to in writing by the parties)
(a “Placement
Notice”)
containing the parameters in accordance with which it desires the Shares to be
sold, which shall, at a minimum, include the number of Shares to be issued (the
“Placement
Shares”), the time period during which sales are requested to be made,
any limitation on the number of Shares that may be sold in any one Trading Day
(as defined in Section
3 below) and any minimum price below which sales may not be made, a form
of which containing such minimum sales parameters necessary is attached hereto
as Schedule 1.
The Placement Notice shall originate from any of the individuals from the
Company set forth on Schedule 3 (with a
copy to each of the other individuals from the Company listed on such schedule),
and shall be addressed to each of the individuals from CF&Co set forth on
Schedule 3, as
such Schedule 3
may be amended from time to time by notice given in accordance with Section 12 hereto.
The Placement Notice shall be effective upon receipt by CF&Co unless and
until (i) in accordance with the notice requirement set forth in Section 4, CF&Co
declines to accept the terms contained therein for any reason, in its sole
discretion, (ii) the entire amount of the Placement Shares have been sold, (iii)
in accordance with the notice requirements set forth in Section 4, the
Company suspends or terminates the Placement Notice, (iv) the Company issues a
subsequent Placement Notice with parameters superseding those on the earlier
dated Placement

       

      3.   Notice,
or (v) the Agreement has been terminated under the provisions of Section 11. The
amount of any discount, commission or other compensation to be paid by the
Company to CF&Co in connection with the sale of the Placement Shares shall
be calculated in accordance with the terms set forth in Schedule 2. It is
expressly acknowledged and agreed that neither the Company nor CF&Co will
have any obligation whatsoever with respect to a Placement or any Placement
Shares unless and until the Company delivers a Placement Notice to CF&Co and
CF&Co does not decline such Placement Notice pursuant to the terms set forth
above, and then only upon the terms specified therein and herein.  In
the event of a conflict between the terms of this Agreement and the terms of a
Placement Notice, the terms of the Placement Notice will control.

       

      4.   Sale of Placement Shares by
CF&Co.  Subject to the terms and conditions herein set
forth, upon the Company’s issuance of a Placement Notice, and unless the sale of
the Placement Shares described therein has been declined, suspended or otherwise
terminated in accordance with the terms of this Agreement, CF&Co, for the
period specified in the Placement Notice, will use its commercially reasonable
efforts consistent with its normal trading and sales practices and applicable
state and federal laws, rules and regulations and the rules of the New York
Stock Exchange (the “Exchange”)
to sell such Placement Shares up to the amount specified, and otherwise in
accordance with the terms of such Placement Notice.  CF&Co will
provide written confirmation to the Company (including by email correspondence
to each of the individuals of the Company set forth on Schedule 3, if
receipt of such correspondence is actually acknowledged by any of the
individuals to whom the notice is sent, other than via auto-reply) no later than
the opening of the Trading Day (as defined below) immediately following the
Trading Day on which it has made sales of Placement Shares hereunder, setting
forth the number of Placement Shares sold on such day, the prices at which such
Placement Shares were sold, the gross proceeds from such sales, the compensation
payable by the Company to CF&Co pursuant to Section 2 with
respect to such sales, with an itemization of deductions made by CF&Co (as
set forth in Section
5(a)) from the gross proceeds that it receives from such sales and the
Net Proceeds (as defined below) payable to the Company. Subject to the terms of
the Placement Notice, CF&Co may sell Placement Shares by any method
permitted by law deemed to be an “at the market” offering as defined in Rule 415
of the Securities Act, including, without limitation, sales made directly on the
Exchange, on any other existing trading market for the Common Stock or to or
through a market maker.  After consultation with the Company and
subject to the terms of the Placement Notice, CF&Co may also sell Placement
Shares in privately negotiated transactions.  The Company acknowledges
and agrees that (i) there can be no assurance that CF&Co will be successful
in selling Placement Shares, and (ii) CF&Co will incur no liability or
obligation to the Company or any other person or entity if it does not sell
Placement Shares for any reason other than a failure by CF&Co to use its
commercially reasonable efforts consistent with its normal trading and sales
practices and applicable state and federal laws, rules and regulations and the
rules of the Exchange to sell such Placement Shares as required under this Section
3.  For the purposes hereof, “Trading
Day” means any
day on which Common Stock is purchased and sold on the principal market on which
the Common Stock is listed or quoted.

       

      5.   Suspension of
Sales.  The Company or CF&Co may, upon notice to the other
party in writing (including by email correspondence to each of the individuals
of the other party set forth on Schedule 3, if
receipt of such correspondence is actually acknowledged by any of the
individuals to whom the notice is sent, other than via auto-reply) or by
telephone (confirmed

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      6.   immediately
by verifiable facsimile transmission or email correspondence to each of the
individuals of the other party set forth on Schedule 3), suspend
any sale of Placement Shares; provided, however, that such suspension shall not
affect or impair either party’s obligations with respect to any Placement Shares
sold hereunder prior to the receipt of such notice or sold at any point
thereafter once such suspension has been lifted by the subsequent issuance of an
additional Placement Notice.  Each of the Parties agrees that no such
notice of suspension shall be effective against the other unless it is made to
one of the individuals named on Schedule 3 hereto, as
such Schedule may be amended from time to time.

       

      7.   Settlement.

       

      (a)  Settlement of Placement
Shares.  Unless otherwise specified in the applicable Placement
Notice, settlement for sales of Placement Shares will occur on the third (3rd)
Business Day (as defined in Section 12 below) (or
such earlier day as is industry practice for regular-way trading) following the
date on which such sales are made (each, a “Settlement
Date”).  The amount of
proceeds to be delivered to the Company on a Settlement Date against the receipt
of the Placement Shares sold (the “Net
Proceeds”) will
be equal to the aggregate sales price at which such Placement Shares were sold,
after deduction for (i) CF&Co’s commission, discount or other
compensation for such sales payable by the Company pursuant to Section 2 hereof,
(ii) any other amounts due and payable by the Company to CF&Co hereunder
pursuant to Section
7(g) hereof, and (iii) any transaction fees imposed by any governmental
or self-regulatory organization in respect of such sales.

       

      (b)  Delivery of Placement
Shares.  On or before each Settlement Date, the Company will,
or will cause its transfer agent to, electronically transfer the Placement
Shares being sold by crediting CF&Co’s or its designee’s account (provided
CF&Co shall have given the Company written notice of such designee prior to
the Settlement Date) at The Depository Trust Company through its Deposit and
Withdrawal at Custodian System or by such other means of delivery as may be
mutually agreed upon by the parties hereto and, upon receipt of such Placement
Shares, which in all cases shall be freely tradable, transferable, registered
shares in good deliverable form, CF&Co will deliver the related Net Proceeds
in same day funds delivered to an account designated by the Company prior to the
Settlement Date. The Company agrees that if the Company defaults on its
obligation to deliver Placement Shares on a Settlement Date, in addition to and
in no way limiting the rights and obligations set forth in Section 9(a) hereto,
it will (i) hold CF&Co harmless against any loss, claim, damage, or expense
(including reasonable legal fees and expenses), as incurred, arising out of or
in connection with such default by the Company and (ii) pay to CF&Co any
commission, discount, or other compensation to which it would otherwise have
been entitled absent such default; provided, however, that the
Company shall not be obligated to so indemnify and reimburse CF&Co if the
Placement Shares are not delivered due to (1) a suspension or material
limitation in trading in securities generally on the Exchange or the NASDAQ; (2)
a general moratorium on commercial banking activities declared by either federal
or New York State authorities or a material disruption in commercial banking or
securities settlement or clearance services in the United States; (3) an
outbreak or escalation of hostilities or acts of terrorism involving the United
States or a declaration by the United States of a national emergency or war; or
(4) any other calamity or crisis or any change in financial, political or
economic conditions in the United States or elsewhere.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (c)  Representations and
Warranties of the Company.  The Company represents and warrants
to, and agrees with, CF&Co that as of each Applicable Time (as defined in
Section
20):

       

      (d)    The
Company meets the requirements for use of Form S-3 under the Securities Act. The
Registration Statement has been filed with the Commission and has been declared
effective under the Securities Act. The Company has prepared or will prepare the
Prospectus Supplement that names CF&Co as an underwriter, acting as
principal and/or agent, in the section entitled “Plan of
Distribution.”  The Company has not received, and has no written
notice of, any order of the Commission preventing or suspending the use of the
Registration Statement, or threatening or instituting proceedings for that
purpose. Any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement have been so described or
filed. The Prospectus Supplement has been or will be prepared and will be filed
pursuant to Rule 424(b) of the Securities Act.  Copies of the
Registration Statement, the Prospectus, and any such amendments or supplements
and all documents incorporated by reference therein that were filed with the
Commission on or prior to the date of this Agreement and requested by CF&Co
or its counsel have been delivered, or made available, to CF&Co and its
counsel. The Company has not distributed and will not distribute any offering
material in connection with the offering or sale of the Placement Shares other
than the Registration Statement and the Prospectus. The
Common Stock is currently listed on the Exchange under the trading symbol
“DX.”

       

      (e)    Each
part of the Registration Statement, when such part became or becomes effective
or was or is filed with the Commission, and the Prospectus, and any amendment or
supplement thereto, on the date of filing thereof with the Commission and at
each Settlement Date, conformed or will conform in all material respects with
the requirements of the Securities Act. Each part of the Registration Statement,
when such part became or becomes effective or was or is filed with the
Commission, did not, or will not, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus and any amendment or
supplement thereto, on the date of filing thereof with the Commission and at
each Settlement Date, did not or will not include an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the foregoing shall not apply to statements in, or
omissions from, any such document made in reliance upon, and in conformity with,
written information concerning CF&Co that was furnished in writing to the
Company by CF&Co, specifically for use in the preparation
thereof.

       

      (f)    The
documents incorporated by reference in the Registration Statement, the
Prospectus or any amendment or supplement thereto, when they became or become
effective under the Securities Act or were or are filed with the Commission
under the Securities Act or the Exchange Act, as the case may be, conformed or
will conform in all material respects with the requirements of the Securities
Act and the Exchange Act, as applicable, as such requirements existed at the
time such incorporated documents were initially filed with the
Commission.

       

      (g)   The
consolidated financial statements of the Company, together with the related
schedules and notes thereto, set forth or included or incorporated by reference
in the Registration Statement and the Prospectus are accurate in all material
respects and fairly present the financial condition of the Company as of the
dates indicated and the results of operations, changes in

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (h)  financial
position, stockholders’ equity and cash flows for the periods therein specified
are in conformity with accounting principles generally accepted in the United
States consistently applied throughout the periods involved (except as otherwise
stated therein). The selected financial and statistical data included or
incorporated by reference in the Registration Statement and the Prospectus
present fairly the information shown therein and, to the extent based upon or
derived from the financial statements, have been compiled on a basis consistent
with the financial statements presented therein. Any pro forma financial
statements of the Company, and the related notes thereto, included or
incorporated by reference in the Registration Statement and the Prospectus
present fairly the information shown therein, have been prepared in accordance
with the Commission’s rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the basis described therein, and
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and
circumstances referred to therein. The Company and, to the Company’s knowledge,
the Subsidiaries (as defined in Section 6(g) below)
do not have any material liabilities or obligations, direct or contingent
(including any off-balance sheet obligations), not disclosed in the Registration
Statement and the Prospectus. No other financial statements are required to be
set forth or to be incorporated by reference in the Registration Statement or
the Prospectus under the Securities Act.

       

      (i)    The
Prospectus delivered to CF&Co for use in connection with the sale of
Placement Shares pursuant to this Agreement will be identical to the versions of
the Prospectus created to be transmitted to the Commission for filing via IDEA,
except to the extent permitted by Regulation S-T.

       

      (j)    The
Company has been duly formed and incorporated and is validly existing as a
corporation in good standing under the laws of the Commonwealth of Virginia and
is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of property or
assets or the conduct of its business requires such qualification, except where
the failure to so qualify would not have a material adverse effect on the
business, assets, properties, prospects, financial condition, or results of
operations of the Company and the Subsidiaries taken as a whole (a “Material
Adverse Effect”) and has full corporate power and authority necessary to
own, hold, lease and/or operate its assets and properties, to conduct the
business in which it is engaged and as described in the Registration Statement
and the Prospectus and to enter into and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby, and the
Company is in compliance in all material respects with the laws, orders, rules,
regulations and directives issued or administered by any jurisdictions in which
it owns or leases property or conducts business.

       

      (k)    Each
“significant subsidiary” (as such term is defined in Rule 1-02 of Regulation S-X
promulgated under the Securities Act) (the “Subsidiaries”)
of the Company is set forth on Schedule
4.  The Company does not own, directly or indirectly, any
shares of stock or any other equity or long-term debt securities of any
corporation or have any equity interest in any firm, partnership, joint venture,
association or other entity, except (i) the subsidiaries and the ownership
interests set forth in Schedule 4; (ii) the
securities comprising the investment portfolio of the Company; and (iii) as
otherwise disclosed in the Registration Statement and/or Prospectus. Complete
and correct copies of the articles of incorporation and of the bylaws or other
formation documents of the Company and each of the Subsidiaries, as applicable,
and all amendments thereto have been made available to CF&Co and/or its
counsel upon request.  To the Company’s

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (l)  knowledge,
each Subsidiary has been duly formed and incorporated or organized and is
validly existing as a corporation, partnership or limited liability company in
good standing under the laws of the jurisdiction of its incorporation or
formation or organization and is duly qualified to do business and is in good
standing as a foreign corporation, partnership or limited liability company in
each jurisdiction where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the failure to
be in good standing or to be so qualified would not have a Material Adverse
Effect and, to the Company’s knowledge, each Subsidiary has full corporate,
partnership or limited liability power and authority, as applicable, necessary
to own, hold, lease and/or operate its assets and properties and to conduct its
business in which it is engaged and as described in the Registration Statement
and the Prospectus, and, to the Company’s knowledge, each Subsidiary is in
compliance in all material respects with the laws, orders, rules, regulations
and directives issued or administered by jurisdictions in which it owns or
leases property or conducts business; to the Company’s knowledge, all of the
outstanding shares of capital stock or other equity interests, as the case may
be, of each of the Subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable with respect to the corporate Subsidiaries, and
have been issued in compliance with all federal and state securities laws and
were not issued in violation of any preemptive right, resale right, right of
first refusal or similar right and are not subject to any security interest,
other encumbrance or adverse claims; and to the Company’s knowledge, no options,
warrants or other rights to purchase, agreements or other obligations to issue
or other rights to convert any obligation into shares of capital stock or
ownership interests in the Subsidiaries are outstanding.

       

      (m)  Neither
the Company nor, to the Company’s knowledge, any of the Subsidiaries is in
breach or violation of or in default under (nor has any event occurred which
with notice, lapse of time or both would result in any breach or violation of or
constitute a default under or give the holder of any indebtedness (or a person
acting on such holder’s behalf) the right to require the repurchase, redemption
or repayment of all or a part of such indebtedness under) (i) its respective
charter, bylaws, certificate of formation, partnership agreement or limited
liability company agreement, as the case may be, or (ii) any indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any license, lease, contract or other agreement or instrument
to which the Company or any of the Subsidiaries is a party or by which any of
them or any of their respective properties may be bound or affected the effect
of which breach, violation or default under clause (ii) could reasonably be
expected to result in a Material Adverse Effect, and the execution, delivery and
performance of this Agreement, the issuance and sale of the Placement Shares and
the consummation of the transactions contemplated hereby will not conflict with,
result in any breach or violation of or constitute a default under (nor
constitute any event which, with notice, lapse of time or both, would result in
any breach or violation of or constitute a default under) (1) the charter,
bylaws, certificate of formation, partnership agreement or limited liability
company agreement, as the case may be, of the Company or, to the Company’s
knowledge, any of the Subsidiaries, or (2) any indenture, mortgage, deed of
trust, bank loan or credit agreement or other evidence of indebtedness, or any
license, lease, contract or other agreement or instrument to which the Company
or, to the Company’s knowledge, any of the Subsidiaries is a party or by which
any of them or any of their respective properties may be bound or affected, the
effect of which breach, violation or default under clause (2) could reasonably
be expected to result in a Material Adverse Effect or (3) any federal, state,
local or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company or, to the Company’s knowledge, any of the
Subsidiaries.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (n)    As
of December 31, 2008, the Company had an authorized, issued and outstanding
capitalization as set forth in its consolidated statements of financial
condition included in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2008.  All of the issued and outstanding shares of
capital stock of the Company have been duly and validly authorized and issued
and are fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws and were not issued in violation of any
preemptive right, resale right, right of first refusal or similar
right.

       

      (o)    This
Agreement has been duly authorized, executed and delivered by the Company and is
a legal, valid and binding agreement of the Company enforceable in accordance
with its terms, except to the extent that (i) enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable principles and (ii) the
indemnification and contribution provisions of Section 9 hereof may
be limited by federal or state securities laws and public policy considerations
in respect thereof.

       

      (p)     The
Common Stock, including the Placement Shares, conforms in all material respects
to the description thereof contained in the Registration Statement and the
Prospectus.

       

      (q)    The
Placement Shares have been duly and validly authorized by the Company for
issuance and sale pursuant to this Agreement and, when issued and delivered
against payment therefor as provided herein, will be duly and validly issued and
fully paid and nonassessable, free and clear of any pledge, lien, encumbrance,
security interest or other claim, including any statutory or contractual
preemptive rights, resale rights, rights of first refusal or other similar
rights, and will be registered pursuant to Section 12 of the Exchange
Act.

       

      (r)    No
approval, authorization, consent or order of or filing with any national, state
or local governmental or regulatory commission, board, body, authority or agency
is required in connection with the issuance and sale of the Placement Shares or
the consummation by the Company of the transactions contemplated hereby other
than (i) registration of the Placement Shares under the Securities Act, (ii) any
necessary qualification under the securities or blue sky laws of the various
jurisdictions in which the Placement Shares are being offered by CF&Co,
(iii) such approvals obtained in connection with the approval of the listing of
the Placement Shares on the Exchange or (iv) any approvals, authorizations,
consents or orders of or filings with the Financial Industry Regulatory
Authority (“FINRA”).

       

      (s)    Except
(i) as set forth in the Registration Statement and the Prospectus or in filings
with the Commission via IDEA pursuant to Section 16 of the Exchange Act and (ii)
for holders of shares of the Company’s Series D 9.50% Cumulative Convertible
Preferred Stock, $.01 par value, (1) no person, as such term is defined in Rule
1-02 of Regulation S-X promulgated under the Securities Act (each, a “Person”),
has the right, contractual or otherwise, to cause the Company to issue or sell
to such Person any shares of Common Stock or shares of any other capital stock
or other securities of the Company, (2) no Person has any preemptive rights,
resale rights, rights of first refusal, or any other rights (whether pursuant to
a “poison pill” provision or otherwise) to purchase any shares of Common Stock
or shares of any other capital stock or other securities of the Company, and (3)
no Person other than CF&Co has the right to act as an underwriter or as a
financial advisor to the Company in connection with the offer and sale of the
Shares, in the case of each of the foregoing clauses (1), (2) and (3), whether
as a result of the

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (t)  filing or
effectiveness of the Registration Statement or the sale of the Placement Shares
as contemplated hereby or otherwise; no Person has the right, contractual or
otherwise, to require the Company to register under the Securities Act any
shares of Common Stock or shares of any other capital stock or other securities
of the Company, or to include any such shares or other securities in the
Registration Statement or the offering contemplated thereby, whether as a result
of the filing or effectiveness of the Registration Statement or the sale of the
Placement Shares as contemplated thereby or otherwise.

       

      (u)    BDO
Seidman LLP, whose report on the consolidated financial statements of the
Company is filed with the Commission as part of the Registration Statement and
the Prospectus, was, during the periods covered by its report, an independent
registered public accounting firm as required by the Securities
Act.

       

      (v)    The
descriptions in the Registration Statement and the Prospectus of the legal or
governmental proceedings, affiliate transactions, off-balance sheet
transactions, contracts, leases and other legal documents therein described
present fairly the information required to be shown, and there are no legal or
governmental proceedings, affiliate transactions, off-balance sheet
transactions, contracts, leases, or other legal documents of a character
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement which are not described or
filed as required. All agreements between the Company and third parties
expressly referenced in the Registration Statement and the Prospectus are legal,
valid and binding obligations of the Company enforceable in accordance with
their respective terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable principles.

       

      (w)    Except
as set forth in the Registration Statement and the Prospectus, there are no
actions, suits, claims, investigations, inquiries or proceedings pending or, to
the best of the Company’s knowledge, threatened to which either the Company or,
to the Company’s knowledge, any Subsidiaries or any of their respective officers
or directors is a party or of which any of their respective properties or other
assets is subject at law or in equity, or before or by any federal, state, local
or foreign governmental or regulatory commission, board, body, authority or
agency which could result in a judgment, decree or order having individually or
in the aggregate a Material Adverse Effect or prevent or interfere in any
material respect with the consummation of the transactions contemplated
hereby.

       

      (x)    During
the twelve (12) calendar months prior to the date of this Agreement, the Company
has timely filed with the Commission all documents and other material required
to be filed pursuant to Sections 13, 14 and 15(d) under the Exchange Act. During
the twelve (12) calendar months preceding the filing of the Registration
Statement, the Company filed all reports required to be filed pursuant to
Sections 13, 14 and 15(d) under the Exchange Act.  The Company is not
an “ineligible issuer” as defined in Rule 405 of the Securities
Act.

       

      (y)    Subsequent
to the respective dates as of which information is given in, or incorporated by
reference into, the Registration Statement and the Prospectus, there has not
been (i) any material adverse change, or any development which is likely to
cause a material adverse change, in the business, properties, management or
assets described or referred to in the Registration Statement or the Prospectus,
or the results of operations, condition (financial or

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (z)  otherwise),
net worth, business or operations of the Company and the Subsidiaries taken as a
whole, (ii) any transaction which is material to the Company and the
Subsidiaries taken as a whole, except transactions in the ordinary course of
business consistent with past practices, (iii) any obligation, direct or
contingent (including off-balance sheet obligations), which is material to the
Company and the Subsidiaries taken as a whole, except transactions in the
ordinary course of business consistent with past practices or (iv) any change in
the number of authorized shares of capital stock or, except obligations incurred
in the ordinary course of business, outstanding indebtedness of the
Company.  The Company has no material contingent obligation (including
off-balance sheet obligations) which is not disclosed in the Registration
Statement or the Prospectus.

       

      (aa)    The
Company has not defaulted on any installment on indebtedness for borrowed money
or on any rental on one or more long-term leases, which defaults would have a
Material Adverse Effect. The Company has not filed a report pursuant to Section
13(a) or 15(d) of the Exchange Act since the filing of its last Annual Report on
Form 10-K, indicating that it (i) has failed to pay any dividend or sinking fund
installment on preferred stock or (ii) has defaulted on any installment on
indebtedness for borrowed money or on any rental on one or more long-term
leases, which defaults would have a Material Adverse Effect.

       

      (bb)    Neither
the Company nor, to the Company’s knowledge, any of the Subsidiaries nor any of
their respective directors, officers or controlling persons has taken, directly
or indirectly, any action designed to result in, or which has constituted or
might reasonably be expected to cause or result in, under the Exchange Act or
otherwise, the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Placement Shares.

       

      (cc)    At
the time of purchase, the Placement Shares will be approved for listing on the
Exchange, subject to official notice of issuance, or the Company will have filed
an application for listing of the Shares on the Exchange.

       

      (dd)    Neither
the Company nor any of its affiliates (i) is required to register as a “broker”
or “dealer” in accordance with the provisions of the Exchange Act or (ii)
directly or indirectly through one or more intermediaries, controls or has any
other association with (within the meaning of Article I of the Bylaws of the
National Association of Securities Dealers, Inc.) any member of the
FINRA.

       

      (ee)  The
Company has not relied upon CF&Co or legal counsel for CF&Co for any
legal, tax or accounting advice in connection with the offering and sale of the
Placement Shares.

       

      (ff)    On
each Representation Date (as defined in Section 7(m) below),
the Company shall be deemed to have confirmed (i) the accuracy and completeness,
as of such date, of each representation and warranty made by it in this
Agreement; and (ii) that the Company has complied with all of the agreements to
be performed by it hereunder at or prior to such date.

       

      (gg)    Any
certificate signed by any officer of the Company delivered to CF&Co pursuant
to or in connection with this Agreement shall be deemed a representation and
warranty by the Company to CF&Co as to the matters covered
thereby.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (hh)    As
of the date of this Agreement and except as otherwise disclosed in the
Prospectus, (i) the Company has no current plan or intention to materially alter
its stated investment policies and operating policies and strategies, as such
are described in the Registration Statement and the Prospectus, if any; (ii) the
Company and, to the Company’s knowledge, the Subsidiaries have good and
marketable title to all properties and assets owned directly by them, in each
case free and clear of all liens, security interests, pledges, charges,
encumbrances, mortgages and defects (except for any security interest, lien
encumbrance or claim that may otherwise exist under any applicable repurchase
agreement or as otherwise disclosed in the Registration Statement and the
Prospectus), except such as do not interfere with the use made or proposed to be
made of such asset or property by the Company or any Subsidiary, as the case may
be; (iii) other than real estate acquired in the ordinary course of business
through, or in lieu of, foreclosure, the Company does not directly own any real
property; and (iv) any real property and buildings held under lease directly by
the Company are held under valid, existing and enforceable leases, with such
exceptions, liens, security interests, pledges, charges, encumbrances, mortgages
and defects, as are not material and do not interfere with the use made or
proposed to be made of such property and buildings by the Company.

       

      (ii)    The
Company and, to the Company’s knowledge, each of the Subsidiaries has filed on a
timely basis (taking into account all applicable extensions) all necessary
federal, state, local and foreign income and franchise tax returns, if any such
returns were required to be filed, through the date hereof and have paid all
taxes shown as due thereon; and no tax deficiency has been asserted against the
Company or, to the Company’s knowledge, any of the Subsidiaries, nor does the
Company know of any tax deficiency which is likely to be asserted against any
such entity which, if determined adversely to any such entity, could have a
Material Adverse Effect.  All tax liabilities, if any, are adequately
provided for on the books of the Company and, to the Company’s knowledge, the
Subsidiaries.

       

      (jj)    The
Company and, to the Company’s knowledge, each Subsidiary owns or possesses
adequate license or other rights to use all patents, trademarks, service marks,
trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intangible property rights and know-how, if any
(collectively, “Intangibles”),
necessary to entitle the Company and, to the Company’s knowledge, each
Subsidiary to conduct its business as described in the Prospectus, and neither
the Company nor, to the Company’s knowledge, any Subsidiary has received written
notice of infringement of or conflict with (and knows of no such infringement of
or conflict with) asserted rights of others with respect to any Intangibles
which could have a Material Adverse Effect.

       

      (kk)    The
Company has established and maintains and evaluates “disclosure controls and
procedures” (as such term is defined in Rules 13a-15 and 15d-15 under the
Exchange Act) and “internal control over financial reporting” (as such term is
defined in Rules 13a-15 and 15d-15 under the Exchange Act); the principal
executive officers (or their equivalents) and principal financial officers (or
their equivalents) of the Company have made all certifications required by the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
Act”) and any
related rules and regulations promulgated by the Commission, and the statements
contained in each such certification are complete and correct; and the Company,
the Subsidiaries and the Company’s directors and officers are each in compliance
in all material respects with all applicable effective provisions of the
Sarbanes-Oxley Act and the rules and regulations of the Commission and the
Exchange promulgated thereunder.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (ll)    The
Company and, to the Company’s knowledge, each of the Subsidiaries maintains
insurance (issued by insurers of recognized financial responsibility) of the
types and in the amounts generally deemed adequate by the Company, if any, for
their respective businesses and consistent with insurance coverage maintained by
similar companies in similar businesses, including, but not limited to,
insurance covering real and personal property owned or leased by the Company and
the Subsidiaries against theft, damage, destruction, acts of vandalism and all
other risks customarily insured against, all of which insurance is in full force
and effect.

       

      (mm)    Neither
the Company nor, to the Company’s knowledge, any Subsidiary is in violation of,
and none of them has received notice of any violation with respect to, any
applicable environmental, safety or similar law applicable to its business which
could reasonably be expected to result in a Material Adverse Effect. The Company
and, to the Company’s knowledge, each Subsidiary have received all permits,
licenses or other approvals required of them under applicable federal and state
occupational safety and health and environmental laws and regulations to conduct
their businesses, and the Company and, to the Company’s knowledge, each
Subsidiary is in compliance with all terms and conditions of any such permit,
license or approval, except any such violation of law or regulation, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals which could not,
singly or in the aggregate, have a Material Adverse Effect.

       

      (nn)   The
Company has not incurred any liability for any finder’s fees or similar payments
in connection with the transactions herein contemplated, except as may otherwise
exist with respect to CF&Co pursuant to this Agreement.

       

      (oo)    There
are no existing or threatened labor disputes with the employees of the Company
or, to the Company’s knowledge, any Subsidiary which are likely to have
individually or in the aggregate a Material Adverse Effect.

       

      (pp)    None
of the Company or, to the Company’s knowledge, any Subsidiary or any employee or
agent of the Company or any Subsidiary, has made any payment of funds or
received or retained any funds in violation of any law, rule or regulation or of
a character required to be disclosed in the Registration Statement or the
Prospectus. No relationship, direct or indirect, exists between or among the
Company or, to the Company’s knowledge, any Subsidiary or any affiliate of any
of them, on the one hand, and the directors, officers and stockholders of the
Company or, to the Company’s knowledge, any Subsidiary, on the other hand, which
is required by the Securities Act to be described in the Registration Statement
or the Prospectus that is not so described.

       

      (qq)    The
Company has been, and upon the sale of the Placement Shares will continue to be,
organized and operated in conformity with the requirements for qualification and
taxation as a “real estate investment trust” (a “REIT”)
under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended
(the “Code”),
for all taxable years commencing with its taxable year ended December 31, 2004.
The proposed method of operation of the Company as described in 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 intends to continue to operate in a manner which
would permit it to qualify as a REIT under the Code. The Company has no
intention of changing its operations or engaging in

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (rr)  activities
which would cause it to fail to qualify, or make economically undesirable its
continued qualification, as a REIT.

       

      (ss)    Neither
the Company nor, to the knowledge of the Company, the Subsidiaries, after giving
effect to the offering and sale of the Placement Shares, will be an “investment
company” or an entity “controlled” by an “investment company,” as such terms are
defined in the Investment Company Act of 1940, as amended (the “Investment
Company Act”).

       

      (tt)  No
relationship, direct or indirect, exists between or among the Company or any
Subsidiary or any affiliate of them, on the one hand, and the directors,
officers, stockholders or directors of the Company or any Subsidiary, on the
other hand, which is required by the rules of the FINRA to be described in the
Registration Statement or the Prospectus which is not so described. Except as
otherwise disclosed in the Registration Statement or the Prospectus, there are
no material outstanding loans or advances or material guarantees of indebtedness
by the Company or, to the Company’s knowledge, any Subsidiary or any affiliate
of any of them to or for the benefit of any of the officers or directors of the
Company or any Subsidiary or any of the members of the families of any of
them.

       

      (uu)    Neither
the Company nor, to the Company’s knowledge, any of the Subsidiaries has
sustained since the date of the last audited financial statements included in
the Registration Statement and the Prospectus any loss or interference with its
respective 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, in each case which is likely either individually or in
the aggregate to have a Material Adverse Effect.

       

      (vv)    The
Company is not a party to any agreement with an agent or underwriter for any
“at-the-market” or continuous equity transaction other than this
Agreement.

       

      (ww)    The
Company acknowledges and agrees that CF&Co has informed the Company that
CF&Co may, to the extent permitted under the Securities Act and the Exchange
Act, purchase and sell shares of Common Stock for its own account while this
Agreement is in effect provided that (i) no
such purchase or sales shall take place while a Placement Notice is in effect
(except to the extent CF&Co may engage in sales of Placement Shares
purchased or deemed purchased from the Company as a “riskless principal” or in a
similar capacity) and (ii) the Company shall not be deemed to have authorized or
consented to any such purchases or sales by CF&Co.

       

      8.   Covenants of the
Company.  The Company covenants and agrees with CF&Co
that:

       

      (a)  After the
date of this Agreement and during any period in which a Prospectus relating to
the Placement Shares is required to be delivered by CF&Co under the
Securities Act, (including in circumstances where such requirement may be
satisfied pursuant to Rule 172 under the Securities Act), (i) the Company will
notify CF&Co promptly of the time when any subsequent amendment to the
Registration Statement, other than documents incorporated by reference, has been
filed with the Commission and/or has become effective or any subsequent
supplement to the Prospectus has been filed and of any request by the Commission
for any amendment or supplement to the Registration Statement or Prospectus or
for additional information, (ii) the Company will prepare and file with the
Commission, promptly upon

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (b)  CF&Co’s
request, any amendments or supplements to the Registration Statement or
Prospectus that, in CF&Co’s reasonable judgment, may be necessary or
advisable in connection with the distribution of the Placement Shares by
CF&Co (provided, however, that the
failure of CF&Co to make such request shall not relieve the Company of any
obligation or liability hereunder, or affect CF&Co’s right to rely on the
representations and warranties made by the Company in this Agreement other than
to the extent any such amendment or supplement is necessary or advisable due to
information that must be disclosed strictly with regard as to CF&Co), (iii)
the Company will not file any amendment or supplement to the Registration
Statement or Prospectus relating to the Placement Shares, other than documents
incorporated by reference, unless a copy thereof has been submitted to CF&Co
a reasonable period of time before the filing and CF&Co has not reasonably
objected thereto (provided, however, (A) that the
failure of CF&Co to make such objection shall not relieve the Company of any
obligation or liability hereunder, or affect CF&Co’s right to rely on the
representations and warranties made by the Company in this Agreement except to
the extent such objection would have been necessary or advisable due to
information that must be disclosed strictly with regard as to CF&Co, and (B)
that the Company has no obligation to provide CF&Co any advance copy of such
filing or to provide CF&Co an opportunity to object to such filing if such
filing does not name CF&Co or does not relate to the transactions
contemplated hereunder); (iv) the Company will furnish to CF&Co at the time
of filing thereof a copy of any document that upon filing is deemed to be
incorporated by reference into the Registration Statement or Prospectus, except
for those documents available via IDEA; and (v) the Company will cause each
amendment or supplement to the Prospectus to be filed with the Commission as
required pursuant to the applicable paragraph of Rule 424(b) of the Securities
Act or, in the case of any document to be incorporated therein by reference, to
be filed with the Commission as required pursuant to the Exchange Act, within
the time period prescribed (the determination to file or not file any amendment
or supplement with the Commission under this Section 7(a), based
on the Company’s reasonable opinion or reasonable objections, shall be made
exclusively by the Company).

       

      (c)  The
Company will advise CF&Co, promptly after it receives notice or obtains
knowledge thereof, of the issuance or threatened issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement, of
the suspension of the qualification of the Placement Shares for offering or sale
in any jurisdiction, or of the initiation or threatening of any proceeding for
any such purpose; and it will promptly use its reasonable efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such a stop order
should be issued.

       

      (d)  During
any period in which a Prospectus relating to the Placement Shares is required to
be delivered by CF&Co under the Securities Act (including in circumstances
where such requirement may be satisfied pursuant to Rule 172 under the
Securities Act), the Company will use its commercially reasonable efforts to
comply in all material respects with all requirements imposed upon it by the
Securities Act, as from time to time in force, so far as necessary to permit the
continuance of sales of the Placement Shares during such period in accordance
with the provisions hereof and the Prospectus, and will file on or before their
respective due dates all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14, 15(d) or any other provision of or under the Exchange
Act.  If during such period any event occurs as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of
a material

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (e)  fact or
omit to state a material fact necessary to make the statements therein, in the
light of the circumstances then existing, not misleading, or if during such
period it is necessary to amend or supplement the Registration Statement or
Prospectus to comply with the Securities Act, the Company will promptly notify
CF&Co to suspend the offering of Placement Shares during such period and the
Company will promptly amend or supplement the Registration Statement or
Prospectus (at the expense of the Company) so as to correct such statement or
omission or effect such compliance.

       

      (f)  During
any period in which the Prospectus relating to the Placement Shares is required
to be delivered by CF&Co under the Securities Act (including in
circumstances where such requirement may be satisfied pursuant to Rule 172 under
the Securities Act), the Company will use its commercially reasonable efforts to
cause the Placement Shares to be listed on the Exchange and to qualify the
Placement Shares for sale under the securities laws of such jurisdictions as
CF&Co reasonably designates and to continue such qualifications in effect so
long as required for the distribution of the Placement Shares; provided, however, that the
Company shall not be required in connection therewith to qualify as a foreign
corporation or dealer in securities, file a general consent to service of
process in any jurisdiction, or meet any other requirement in connection with
this Section
7(d) deemed by the Company to be unduly burdensome.

       

      (g)  The
Company will furnish to CF&Co and its counsel (at the expense of the
Company) copies of the Registration Statement, the Prospectus (including all
documents incorporated by reference therein) and all amendments and supplements
to the Registration Statement or Prospectus that are filed with the Commission
during any period in which a Prospectus relating to the Placement Shares is
required to be delivered under the Securities Act (including all documents filed
with the Commission during such period that are deemed to be incorporated by
reference therein), in each case as soon as reasonably practicable and in such
quantities as CF&Co may from time to time reasonably request and, at
CF&Co’s request, will also furnish copies of the Prospectus to each exchange
or market on which sales of Shares may be made; provided, however, that the
Company shall not be required to furnish any document (other than the
Prospectus) to CF&Co to the extent such document is available on
IDEA.

       

      (h)  The
Company will make generally available to its security holders as soon as
practicable, but in any event not later than 15 months after the end of the
Company’s current fiscal quarter, an earnings statement covering a 12-month
period that satisfies the provisions of Section 11(a) and Rule 158 of the
Securities Act.

       

      (i)  The
Company, whether or not the transactions contemplated hereunder are consummated
or this Agreement is terminated, in accordance with the provisions of Section 11 hereunder,
will pay all expenses incident to the performance of its obligations hereunder,
including, but not limited to, expenses relating to (i) the preparation,
printing and filing of the Registration Statement and each amendment and
supplement thereto, of each Prospectus and of each amendment and supplement
thereto, (ii) the preparation, issuance and delivery of the Placement Shares,
(iii) the qualification of the Placement Shares under securities laws in
accordance with the provisions of Section 7(d) of this
Agreement, including filing fees and any reasonable fees or disbursements of
counsel for CF&Co in connection therewith, (iv) the printing and delivery to
CF&Co of copies of the Prospectus and any amendments or supplements thereto,
and of this Agreement, (v) the fees and expenses incurred in connection with the
listing or

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (j)  qualification
of the Placement Shares for trading on the Exchange, or (vi) the filing fees and
charges, if any, of the Commission and the FINRA Corporate Finance
Department.

       

      (k)  The
Company will use the Net Proceeds as described in the Prospectus in the section
entitled “Use of Proceeds”.

       

      (l)  During
either the pendency of any Placement Notice given hereunder, or any period in
which the Prospectus relating to the Placement Shares is required to be
delivered by CF&Co, the Company shall provide CF&Co notice as promptly
as reasonably practicable before it offers to sell, contracts to sell, sells,
grants any option to sell or otherwise disposes of any shares of Common Stock
(other than Placement Shares offered pursuant to the provisions of this
Agreement) or securities convertible into or exchangeable for shares of Common
Stock, warrants or any rights to purchase or acquire shares of Common Stock;
provided, however, that such
notice shall not be required in connection with the (i) issuance, grant or sale
of shares of Common Stock, options to purchase shares of Common Stock or shares
of Common Stock issuable upon the exercise of options, or
other equity awards pursuant to the any stock option, stock bonus or other stock
plan or arrangement then in effect or which the Company may from time to time
adopt provided the implementation of such is disclosed to CF&Co in
advance, (ii) the
issuance of shares of Common Stock in connection with an acquisition, merger or
sale or purchase of assets described in the Prospectus, (iii) any shares of
Common Stock issuable upon conversion or exchange of securities or the exercise
of warrants, options or other rights in effect or outstanding or (iv) the
issuance or sale of shares of Common Shares pursuant to any dividend
reinvestment plan that the Company may adopt from time to time provided the
implementation of such is disclosed to CF&Co in advance.

       

      (m)  The
Company will, at any time during the term of this Agreement, as supplemented
from time to time, advise CF&Co promptly after it shall have received notice
or obtained knowledge thereof, of any information or fact that would alter or
affect in any material respect any opinion, certificate, letter or other
document required to be provided to CF&Co pursuant to this
Agreement.

       

      (n)  The
Company will cooperate with any reasonable due diligence review conducted by
CF&Co or its agents in connection with the transactions contemplated hereby,
including, without limitation, providing information and making available
documents and senior corporate officers, as CF&Co may reasonably request;
provided, however, that the
Company shall be required to make available documents and senior corporate
officers only (i) at the Company’s principal offices and (ii) during the
Company’s ordinary business hours.

       

      (o)  The
Company shall disclose in its quarterly reports on Form 10-Q and in its annual
report on Form 10-K the number of Placement Shares sold through CF&Co under
this Agreement, the Net Proceeds to the Company and the compensation payable by
the Company to CF&Co with respect to such Placement Shares pursuant to this
Agreement during the relevant quarter.

       

      

      (p)  During
the term of this Agreement, on a date prior to or concurrent with the giving of
the first Placement Notice (such date, the “Initial
Representation Date”), and thereafter each time the Company (i) files the
Prospectus relating to the Placement Shares or amends or

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (q)  supplements
the Registration Statement or the Prospectus relating to the Placement Shares by
means of a post-effective amendment, sticker, or supplement but not by means of
incorporation of document(s) by reference to the Registration Statement or the
Prospectus relating to the Placement Shares; (ii) files an annual report on Form
10-K under the Exchange Act; (iii) files its quarterly reports on Form 10-Q
under the Exchange Act; (iv) files a 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) under the Exchange Act; or (v) files a Form 8-K under the
Exchange Act for any other purpose (other than to “furnish” information) (each
date of filing of one or more of the documents referred to in clauses (i)
through (v) shall be a “Representation
Date”), the Company shall furnish CF&Co (but in the case of clause
(v) above only if CF&Co reasonably determines that the information contained
in such Form 8-K is material) with a certificate, in the form attached hereto as
Exhibit 7(m)
within three (3) Trading Days of the applicable Representation
Date.  The requirement to provide a certificate under this Section 7(m) shall be
waived for any Representation Date occurring during a fiscal quarter during
which the Company does not intend to sell Placement Shares prior to the next
occurring Representation Date; provided, however, that such
waiver shall not apply for any Representation Date on which the Company files
its annual report on Form 10-K. Notwithstanding the foregoing, if the Company
subsequently decides to sell Placement Shares following a Representation Date
when the Company relied on such waiver and did not provide CF&Co with a
certificate under this Section 7(m), then
before CF&Co either delivers the Placement Notice or sells any Placement
Shares, the Company shall provide CF&Co with a certificate, in the form
attached hereto as Exhibit 7(m), dated
the date of the Placement Notice.

       

      (r)  On the
Initial Representation Date and thereafter within three (3) Trading Days of each
Representation Date, the Company shall cause to be furnished to CF&Co (but
in the case of Section
7(m)(v) only if requested by CF&Co in accordance with the provisions
of Section
7(m)) with a written opinion of Troutman Sanders LLP (the “Company
Counsel”), dated the Representation
Date, in substantially the form attached hereto as Exhibit 7(n)(1) (for
the filing of the Prospectus relating to the Placement Shares), and Exhibit 7(n)(2) (for
subsequent Representation Dates), but modified, as necessary, to relate to the
Registration Statement and the Prospectus as then amended or supplemented; provided, however, that in lieu
of such opinion, the Company Counsel may furnish CF&Co with a letter to the
effect that CF&Co may rely on a prior opinion delivered under this Section 7(n) to the
same extent as if it were dated the date of such letter (except that statements
in such prior opinion shall be deemed to relate to the Registration Statement
and the Prospectus as amended or supplemented at such Representation
Date).  The requirement to provide such opinion shall be waived for
any Representation Date occurring during a fiscal quarter during which the
Company does not intend to sell Placement Shares prior to the next occurring
Representation Date; provided further,
however, that
such waiver shall not apply for any Representation Date on which the Company
files its annual report on Form 10-K. Notwithstanding the foregoing, if the
Company subsequently decides to sell Placement Shares following a Representation
Date when the Company relied on such waiver and did not provide CF&Co with
an opinion from Company Counsel, then before CF&Co either delivers the
Placement Notice or sells any Placement Shares, the Company shall provide
CF&Co with an opinion from Company Counsel dated the date of the Placement
Notice.

       

      (s)  On the
Initial Representation Date and thereafter within three (3) Trading Days of each
Representation Date on which the Registration Statement is amended or the
Prospectus

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (t)  supplemented
to include additional amended financial information or there is filed with the
Commission any document incorporated by reference into the Prospectus which
contains additional amended financial information, the Company shall cause BDO
Seidman LLP to furnish CF&Co a letter (a “Comfort
Letter”), dated the date of such Representation Date, in form and
substance satisfactory to CF&Co, (i) confirming that it is an independent
registered public accounting firm within the meaning of the Securities Act and
is in compliance with the applicable requirements relating to the qualification
of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii)
stating, as of such date, the conclusions and findings of such firm with respect
to the financial information and other matters ordinarily covered by
accountants’ “comfort letters” to underwriters in connection with registered
public offerings (the first such letter, the “Initial
Comfort Letter”) and (iii) updating the Initial Comfort Letter with any
information which would have been included in the Initial Comfort Letter had it
been given on such date and modified as necessary to relate to the Registration
Statement and the Prospectus, as amended and supplemented to the date of such
Comfort Letter.  The requirement to provide a Comfort Letter under
this Section
7(o) shall be waived for any Representation Date occurring during a
fiscal quarter during which the Company does not intend to sell Placement Shares
prior to the next occurring Representation Date; provided, however, that such
waiver shall not apply for any Representation Date on which the Company files
its annual report on Form 10-K. Notwithstanding the foregoing, if the Company
subsequently decides to sell Placement Shares following a Representation Date
when the Company relied on such waiver and did not provide CF&Co with a
Comfort Letter under this Section 7(o), then
before CF&Co either delivers the Placement Notice or sells any Placement
Shares, the Company shall provide CF&Co with a Comfort Letter dated the date
of the Placement Notice.

       

      (u)  The
Company will not, directly or indirectly take any action designed to cause or
result in, or that constitutes or might reasonably be expected to constitute,
the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Placement Shares.

       

      (v)  The
Company acknowledges and agrees that CF&Co has informed the Company that
CF&Co may, to the extent permitted under the Securities Act and the Exchange
Act, purchase and sell Placement Shares for its own account at the same time as
Placement Shares are being sold by the Company pursuant to this Agreement, provided that the
Company shall not be deemed to have authorized or consented to any such
purchases or sales by CF&Co.

       

      (w)  Each
Placement Notice issued by the Company to CF&Co to solicit offers to
purchase Placement Shares shall be deemed to be an affirmation that the
representations and warranties made by it in this Agreement are true and correct
in all material respects at the time such Placement Notice is issued, and that
the Company has complied in all material respects with all of the agreements to
be performed by it hereunder at or prior to such time.

       

      (x)    The
Company has been organized and operated in conformity with the requirements for
qualification and taxation of the Company as a REIT under the Code, and the
Company’s proposed methods of operation will enable the Company to continue to
meet the requirements for qualification and taxation as a REIT under the Code
for subsequent taxable years.

       

      (y)   Other
than a “free writing prospectus” (as defined in Rule 405 under the Securities
Act) approved in advance by the Company and CF&Co in its capacity as
principal or agent

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (z)  hereunder,
neither CF&Co nor the Company (including its agents and representatives,
other than CF&Co in its capacity as such) will make, use, prepare,
authorize, approve or refer to any “written communication” (as defined in Rule
405 under the Securities Act), required to be filed with the Commission, that
constitutes an offer to sell or solicitation of an offer to buy Shares
hereunder.

       

      (aa)   The
Company will not be or become, at any time prior to the termination of this
Agreement, an “investment company,” as such term is defined in the Investment
Company Act, assuming no change in the Commission’s current interpretation as to
entities that are not considered an “investment company”.

       

      (bb)    The
Company will substantially comply with all material requirements imposed upon it
by the Securities Act and the Exchange Act as from time to time in force, so far
as necessary to permit the continuance of sales of, or dealings in, the
Placement Shares as contemplated by the provisions hereof and the
Prospectus.

       

      (cc)    The
Company will maintain such controls and other procedures, including, without
limitation, those required by Sections 302 and 906 of the Sarbanes-Oxley Act and
the applicable regulations thereunder, that are designed to ensure that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Commission’s rules and forms,
including, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is accumulated and communicated to the
Company’s management, including its chief executive officer and chief financial
officer, or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure and to ensure that material information
relating to the Company is made known.

       

      9.   Conditions to CF&Co’s
Obligations. The obligations of CF&Co hereunder with respect to a
Placement will be subject to the continuing accuracy and completeness of the
representations and warranties made by the Company herein, to the due
performance by the Company of its obligations hereunder, to the completion by
CF&Co of a due diligence review satisfactory to CF&Co in its reasonable
judgment, and to the continuing satisfaction (or waiver by CF&Co in its sole
discretion) of the following additional conditions:

       

      (a)    The
Registration Statement shall have become effective and shall be available for
the sale of (i) all Placement Shares covered by prior Placement Notices and not
yet sold by CF&Co and (ii) all Placement Shares contemplated to be issued by
the Placement Notice relating to such Placement.

       

      (b)    None
of the following events shall have occurred and be continuing:  (i)
receipt by the Company of any request for additional information from the
Commission or any other federal or state governmental authority during the
period of effectiveness of the Registration Statement, the response to which
would require any amendments or supplements to the Registration Statement or the
Prospectus; (ii) the issuance by the Commission or any other federal or state
governmental authority of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose;
(iii) receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (c)  qualification
of any of the Placement Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the occurrence of any event
that makes any material statement made in the Registration Statement or the
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, the Prospectus or documents incorporated
therein by reference so that, in the case of the Registration Statement, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading and, that in the case of the Prospectus, it will not
contain any untrue statement of a material fact or omit to state any 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 (v) the Company’s reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate.

       

      (d)    CF&Co
shall not have advised the Company that the Registration Statement or
Prospectus, or any amendment or supplement thereto, contains an untrue statement
of fact that in CF&Co’s opinion is material, or omits to state a fact that
in CF&Co’s opinion is material and is required to be stated therein or is
necessary to make the statements therein not misleading.

       

      (e)    Except
as contemplated in the Prospectus, or disclosed in the Company’s reports filed
with the Commission, there shall not have been any material adverse change, on a
consolidated basis, in the authorized capital stock of the Company or any
Material Adverse Effect, or any development that may reasonably be expected to
cause a Material Adverse Effect, or a downgrading in or withdrawal of the rating
assigned to any of the Company’s securities by any rating organization or a
public announcement by any rating organization that it has under surveillance or
review its rating of any of the Company’s securities, the effect of which, in
the case of any such action by a rating organization described above, in the
reasonable judgment of CF&Co (without relieving the Company of any
obligation or liability it may otherwise have), is so material as to make it
impracticable or inadvisable to proceed with the offering of the Placement
Shares on the terms and in the manner contemplated in the
Prospectus.

       

      (f)    CF&Co
shall have received the opinion of Company Counsel required to be delivered
pursuant Section
7(n) on or before the date on which such delivery of such opinion is
required pursuant to Section
7(n).

       

      (g)    CF&Co
shall have received the Comfort Letter required to be delivered pursuant Section 7(o) on or
before the date on which such delivery of such letter is required pursuant to
Section
7(o).

       

      (h)    CF&Co
shall have received the certificate required to be delivered pursuant to Section 7(m) on
or before the date on which delivery of such certificate is required pursuant to
Section
7(m).

       

      (i)    Trading
in the Common Stock shall not have been suspended on the Exchange.

       

      (j)    On
each date on which the Company is required to deliver a certificate pursuant to
Section 7(m),
the Company shall have furnished to CF&Co such appropriate further
information, certificates and documents as CF&Co may reasonably request. All
such certificates and other

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (k)  documents
will be in compliance with the provisions hereof. The Company will furnish
CF&Co with such conformed copies of such certificates and other documents as
CF&Co shall reasonably request.

       

      (l)   Prior
to the giving of any Placement Notice, (i) no stop order with respect to the
effectiveness of the Registration Statement shall have been issued under the
Securities Act or proceedings initiated under Section 8(d) or 8(e) of the
Securities Act; (ii) the Registration Statement and all amendments thereto, or
modifications thereof, if any, shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and (iii) the
Prospectus and all amendments or supplements thereto, or modifications thereof,
if any, shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are made,
not misleading.

       

      (m)    All
filings with the Commission required by Rule 424 under the Securities Act to
have been filed prior to the giving of any Placement Notice hereunder shall have
been made within the applicable time period prescribed for such filing by Rule
424.

       

      (n)    Either
(i) the Placement Shares shall have been approved for listing on the Exchange,
subject only to notice of issuance, or (ii) the Company shall have filed an
application for listing of the Placement Shares on the Exchange, in either case
at, or prior to, the giving of any Placement Notice.

       

      (o)    There
shall not have occurred any event that would permit CF&Co to terminate this
Agreement pursuant to Section
11(a).

       

      10.   Indemnification and
Contribution.

       

      (a)  The
Company agrees to indemnify and hold harmless CF&Co, the directors,
officers, partners, employees and agents of CF&Co and each person, if any,
who (i) controls CF&Co within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, or (ii) is controlled by or is under
common control with CF&Co (a “CF&Co
Affiliate”) from and against any and all losses, claims, liabilities,
expenses and damages (including, but not limited to, any and all investigative,
legal and other expenses reasonably incurred in connection with, and any and all
amounts paid in settlement of, any action, suit or proceeding between any of the
indemnified parties and any indemnifying parties or between any indemnified
party and any third party, or otherwise, or any claim asserted), as and when
incurred, to which CF&Co, or any such person, may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based, directly or
indirectly, on (1) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus, or in
any application or other document executed by or on behalf of the Company or
based on written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Placement Shares under the securities
laws thereof or filed with the Commission, (2) the omission or alleged omission
to state in such document a material fact required to be stated in it or
necessary to make the statements in it not misleading or (3) any

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (b)  breach by
any of the indemnifying parties of any of their respective representations,
warranties and agreements contained in this Agreement; provided, however, that this
indemnity agreement shall not apply to the extent that such loss, claim,
liability, expense or damage arises from the sale of the Placement Shares
pursuant to this Agreement and is caused directly or indirectly by an untrue
statement or omission, or alleged untrue statement or omission, made in reliance
on and in conformity with information relating to CF&Co and furnished in
writing to the Company by CF&Co expressly stating that such information is
intended for inclusion in any document described in clause (a)(1) above. This
indemnity agreement will be in addition to any liability that the Company might
otherwise have.

       

      (c)  CF&Co
agrees to indemnify and hold harmless the Company and its directors and each
officer of the Company who signed the Registration Statement, and each person,
if any, who (i) controls the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act or (ii) is controlled by or
is under common control with the Company (a “Company
Affiliate”) against any and all losses, claims, liabilities, expenses and
damages described in the indemnity contained in Section 9(a), as and
when incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement (or
any amendments thereto) or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with information relating to
CF&Co and furnished in writing to the Company by CF&Co expressly stating
that such information is intended for inclusion in any document described in
clause (1) of Section
9(a) above.

       

      (d)  Any party
that proposes to assert the right to be indemnified under this Section 9 will,
promptly after receipt of notice of commencement of any action against such
party in respect of which a claim is to be made against an indemnifying party or
parties under this Section 9, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying party
will not relieve the indemnifying party from (i) any liability that it might
have to any indemnified party otherwise than under this Section 9 and (ii)
any liability that it may have to any indemnified party under the foregoing
provision of this Section 9 unless, and
only to the extent that, such omission results in the forfeiture of substantive
rights or defenses by the indemnifying party. If any such action is brought
against any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and, to
the extent that it elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly notified,
to assume the defense of the action, with counsel reasonably satisfactory to the
indemnified party, and after notice from the indemnifying party to the
indemnified party of its election to assume the defense, the indemnifying party
will not be liable to the indemnified party for any legal or other expenses
except as provided below and except for the reasonable costs of investigation
subsequently incurred by the indemnified party in connection with the defense.
The indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (2)
the indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(3) a conflict or potential conflict exists (based on advice of counsel to the
indemnified

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (e)  party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (4) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred. An indemnifying party will
not, in any event, be liable for any settlement of any action or claim effected
without its written consent.  No indemnifying party shall, without the
prior written consent of each indemnified party, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action or
proceeding relating to the matters contemplated by this Section 9 (whether or
not any indemnified party is a party thereto), unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising or that may arise out of such claim, action or
proceeding.  Notwithstanding any other provision of this Section 9(c), if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel for which it is
entitled to reimbursement pursuant to this Section 9(c), such
indemnifying party agrees that it shall be liable for any settlement effected
without its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into, and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement; provided,
however, that an indemnifying party shall not be liable for any such settlement
effected without its consent if such indemnifying party, at least five days
prior to the date of such settlement, (1) reimburses such indemnified party in
accordance with such request for the amount of such fees and expenses of counsel
as the indemnifying party believes in good faith to be reasonable and (2)
provides written notice to the indemnified party that the indemnifying party
disputes in good faith the reasonableness of the unpaid balance of such fees and
expenses.

       

      (f)  In order
to provide for just and equitable contribution in circumstances in which the
indemnification provided for in the foregoing paragraphs of this Section 9 is
applicable in accordance with its terms but for any reason is held to be
unavailable from the Company or CF&Co, the Company and CF&Co will
contribute to the total losses, claims, liabilities, expenses and damages
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted, but after deducting any contribution received
by the Company from persons other than CF&Co, such as persons who control
the Company within the meaning of the Securities Act, officers of the Company
who signed the Registration Statement and directors of the Company, who also may
be liable for contribution) to which the Company and CF&Co may be subject in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and CF&Co on the other. The relative
benefits received by the Company on the one hand and CF&Co 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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (g)  the
Company bear to the total compensation (before deducting expenses) received by
CF&Co from the sale of Placement Shares on behalf of the
Company.  If, but only if, the allocation provided by the foregoing
sentence is not permitted by applicable law, the allocation of contribution
shall be made in such proportion as is appropriate to reflect not only the
relative benefits referred to in the foregoing sentence but also the relative
fault of the Company, on the one hand, and CF&Co, on the other, with respect
to the statements or omission which resulted in such loss, claim, liability,
expense or damage, or action in respect thereof, as well as any other relevant
equitable considerations with respect to such offering. Such relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or
CF&Co, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and CF&Co agree that it would not be just and equitable if
contributions pursuant to this Section 9(d) were to
be determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
liability, expense, or damage, or action in respect thereof, referred to above
in this Section 9(d)
shall be deemed to include, for the purpose of this Section 9(d), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim to the
extent consistent with Section 9(c)
hereof.  Notwithstanding the foregoing provisions of this Section 9(d),
CF&Co shall not be required to contribute any amount in excess of the
commissions received by it under this Agreement and no person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 9(d), any
person who controls a party to this Agreement within the meaning of the
Securities Act, and any officers, directors, partners, employees or agents of
CF&Co, will have the same rights to contribution as that party, and each
officer of the Company who signed the Registration Statement will have the same
rights to contribution as the Company, subject in each case to the provisions
hereof. Any party entitled to contribution, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim for
contribution may be made under this Section 9(d), will
notify any such party or parties from whom contribution may be sought, but the
omission to so notify will not relieve that party or parties from whom
contribution may be sought from any other obligation it or they may have under
this Section
9(d) except to the extent that the failure to so notify such other party
materially prejudiced the defenses of the party from whom contribution is
sought. Except for a settlement entered into pursuant to the last sentence of
Section 9(c)
hereof, no party will be liable for contribution with respect to any action or
claim settled without its written consent if such consent is required pursuant
to Section 9(c)
hereof.

       

      11.   Representations and
Agreements to Survive Delivery.  All representations and
warranties of the Company herein or in certificates delivered pursuant hereto
shall survive, as of their respective dates, regardless of (i) any investigation
made by or on behalf of CF&Co, any controlling persons, or the Company (or
any of their respective officers, directors or controlling persons), (ii)
delivery and acceptance of the Placement Shares and payment therefor or (iii)
any termination of this Agreement.

       

      12.   Termination.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      13.   CF&Co
shall have the right by giving notice as hereinafter specified at any time to
terminate this Agreement if (i) any Material Adverse Effect, or any development
that has actually occurred and that is reasonably expected to cause a Material
Adverse Effect has occurred which, in the reasonable judgment of CF&Co, may
materially impair the ability of CF&Co to sell the Placement Shares
hereunder, (ii) the Company shall have failed, refused or been unable to perform
any agreement on its part to be performed hereunder; provided, however, in the case
of any failure of the Company to deliver (or cause another person to deliver)
any certification, opinion, or letter required under Sections 7(m), 7(n), or 7(o), CF&Co’s
right to terminate shall not arise unless such failure to deliver (or cause to
be delivered) continues for more than thirty (30) days from the date of the
Representation Date pursuant to which such delivery was required; provided, further, that, CF&Co shall
have the right to suspend its obligations hereunder, regardless of whether a
Placement Notice is pending, beginning on the sixth (6th)
Trading Day after the date of any Representation Date if any certification,
opinion, or letter referenced in the foregoing proviso has not yet been (or
caused to be) delivered; (iii) any other condition of CF&Co’s obligations
hereunder is not fulfilled, or (iv) any suspension or limitation of trading in
the Placement Shares or in securities generally on the Exchange shall have
occurred.  Any such termination shall be without liability of any
party to any other party except that the provisions of Section 7(g), Section 7(v), Section 9, Section 10, Section 16 and Section 17 hereof
shall remain in full force and effect notwithstanding such
termination.  If CF&Co elects to terminate this Agreement as
provided in this Section 11, CF&Co
shall provide the required notice as specified herein.

       

      (a)  The
Company shall have the right, by giving ten (10) days notice as hereinafter
specified to terminate this Agreement in its sole discretion at any time
following the period of three (3) months after the date of this
Agreement.  Any such termination shall be without liability of any
party to any other party except that the provisions of Section 7(g), Section 7(v), Section 9, Section 10, Section 16 and Section 17 hereof
shall remain in full force and effect notwithstanding such
termination.

       

      (b)  CF&Co
shall have the right, by giving ten (10) days notice as hereinafter specified to
terminate this Agreement in its sole discretion at any time following the period
of three (3) months after the date of this Agreement.  Any such
termination shall be without liability of any party to any other party except
that the provisions of Section 7(g), Section 7(v), Section 9, Section 10, Section 16 and Section 17 hereof
shall remain in full force and effect notwithstanding such
termination.

       

      (c)  This
Agreement shall remain in full force and effect unless terminated pursuant to
Sections 11(a),
11(b), or 11(c) above or
otherwise by mutual agreement of the parties or until automatic termination upon
the issuance and sale of all of the Shares through CF&Co on the terms and
subject to the conditions set forth herein; provided, however, that any
such termination by mutual agreement shall in all cases be deemed to provide
that Section
7(g), Section
7(v), Section
9, Section
10, Section
16 and Section
17 shall remain in full force and effect.

       

      (d)  Any
termination of this Agreement shall be effective on the date specified in such
notice of termination; provided, however, that such
termination shall not be effective until the close of business on the date of
receipt of such notice by CF&Co or the Company, as the case may be. If such
termination shall occur prior to the Settlement Date for any sale of Placement
Shares, such Placement Shares shall settle in accordance with the provisions of
this Agreement.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (e)  Notices.

       

      All
notices or other communications required or permitted to be given by any party
to any other party pursuant to the terms of this Agreement shall be in writing
and if sent to CF&Co, shall be delivered to CF&Co at Cantor Fitzgerald
& Co., 499 Park Avenue, New York, New York 10022, fax no.: (212) 308-3730,
Attention: Capital Markets/Jeff Lumby, with copies to Stephen Merkel, General
Counsel, at the same address, and DLA Piper US LLP, 1251 Avenue of the Americas,
New York, NY 10020, fax no.: (212) 884-8494, Attention: Dean M. Colucci; or if
sent to the Company, shall be delivered to Dynex Capital, Inc., 4551 Cox Road,
Suite 300, Glen Allen, VA  23060, phone: (804)
217-5800,  fax no.: (804) 217-5860, Attention: Stephen J. Benedetti,
with a copy to Troutman Sanders LLP, 222 Central Park Avenue, Suite 2000,
Virginia Beach, VA  23462, phone: (757) 687-7719, fax no.: (757)
687-1501, Attention: James J. Wheaton.  Each party to this Agreement
may change such address for notices by sending to the parties to this Agreement
written notice of a new address for such purpose.  Each such notice or
other communication shall be deemed given (i) when delivered personally or by
verifiable facsimile transmission (with an original to follow) on or before 4:30
p.m., New York City time, on a Business Day or, if such day is not a Business
Day, on the next succeeding Business Day, (ii) on the next Business Day after
timely delivery to a nationally-recognized overnight courier and (iii) on the
Business Day
actually received if deposited in the U.S. mail (certified or registered mail,
return receipt requested, postage prepaid). For purposes of this Agreement,
“Business
Day” shall mean any day on which the Exchange and commercial banks in the
City of New York are open for business.

      

      14.   Successors and
Assigns.  This Agreement shall inure to the benefit of and be
binding upon the Company and CF&Co and their respective successors and the
affiliates, controlling persons, officers and directors referred to in Section 9 hereof.
References to any of the parties contained in this Agreement shall be deemed to
include the successors and permitted assigns of such party. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. Neither party may
assign its rights or obligations under this Agreement without the prior written
consent of the other party.

       

      15.    Adjustments for Stock
Splits.  The parties acknowledge and agree that all share
related numbers contained in this Agreement shall be adjusted to take into
account any stock split, stock dividend or similar event effected with respect
to the Common Stock.

       

      16.   Entire Agreement; Amendment;
Severability.  This Agreement (including all schedules and
exhibits attached hereto and placement notices issued pursuant hereto)
constitutes the entire agreement and supersedes all other prior and
contemporaneous agreements and undertakings, both written and oral, among the
parties hereto with regard to the subject matter hereof. Neither this Agreement
nor any term hereof may be amended except pursuant to a written instrument
executed by the Company and CF&Co.  In the event that any one or
more of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      17.   Applicable Law; Consent to
Jurisdiction. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York without regard to
the principles of conflicts of laws. 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.

       

      18.   Waiver of Jury
Trial.  The Company and CF&Co each hereby irrevocably
waives any right it may have to a trial by jury in respect of any claim based
upon or arising out of this agreement or any transaction contemplated
hereby.

       

      19.   Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. Delivery of an executed Agreement by one party to the other may be
made by facsimile transmission.

       

      20.   Absence of Fiduciary
Relationship.  The Company acknowledges and agrees
that:

       

      (a)  CF&Co
has been retained solely to act as underwriter and agent in connection with the
sale of the Shares and that no fiduciary or advisory relationship between the
Company and CF&Co has been created in respect of any of the transactions
contemplated by this Agreement, irrespective of whether CF&Co has advised or
is advising the Company on other matters;

       

      (b)  the
Company is capable of evaluating and understanding and understands and accepts
the terms, risks and conditions of the transactions contemplated by this
Agreement; and

       

      (c)  the
Company has been advised that CF&Co and its affiliates are engaged in a
broad range of transactions which may involve interests that differ from those
of the Company and that CF&Co has no obligation to disclose such interests
and transactions to the Company by virtue of any fiduciary, advisory or agency
relationship.

       

      21.   Defined
Terms.  As used in this Agreement, the term “Applicable
Time” means the date of this Agreement, each Representation Date, the
date on which a Placement Notice is given or any date on which Placement Shares
are sold hereunder.

       

      

      [Remainder
of Page Intentionally Blank]

      

      

      
        
           

        

        
           

          
            

          

        

        
           

          
             

          

        

      

      If the
foregoing correctly sets forth the understanding between the Company and
CF&Co, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company
and CF&Co.

       

       

      Very
truly yours,

      

      DYNEX
CAPITAL, INC.

      

      

      

      By:    /s/ Stephen J.
Benedetti                                

      Name: 
Stephen J. Benedetti

      Title:    Executive Vice Presient, Chief Operating
Officer and Chief Financial Officer

      
      

      

      

      

      ACCEPTED
as of the date

      first-above
written:

      

      CANTOR
FITZGERALD & CO.

      

      

      By:    /s/ Jeffrey
Lumby                                         

      Jeffrey
Lumby

      Managing
Director

      

      

      
        
          
            EAST\42275790. 7
                                                                

            

          

           

        

        
           

          
            

          

        

        
           

          
             

          

        

      

      SCHEDULE
1

       

      

       

      FORM OF PLACEMENT
NOTICE

       

      

       

      
        	
                From:

              	
                [                              

              	
                ]

              

      

      
        	
                Cc:

              	
                [                              

              	
                ]

              

      

      
        	
                To:

              	
                [

              	
                ]

              

      

      Subject:                      Controlled
Equity Offering—Placement Notice

       

      Gentlemen:

       

      Pursuant
to the terms and subject to the conditions contained in the Controlled Equity
OfferingSM Sales Agreement between
DYNEX CAPITAL, INC., (the “Company”) and Cantor
Fitzgerald & Co. (“CF&Co”) dated
March 16, 2009 (the “Agreement”), I hereby
request on behalf of the Company that CF&Co sell up to [ ] shares (the
“Placement
Shares”) of the Company’s common stock, par value $0.01 per share, at a
minimum market price of $_______ per Placement Share between [__], 2009 and
[__], 20[__].  [There shall be no limitation on the number of
Placement Shares that may be sold on any one (1) day.][No more than [__]
Placement Shares may be sold on any one (1) day.]

       

      Very
truly yours,

      

      

      

      By:  __________________________

      Name:
[_______________]

      Title:   [_______________]

      

      

      

      

      

      

      

      

      

      

      

      ADDITIONAL
SALES PARAMETERS MAY BE ADDED, SUCH AS THE SPECIFIC DATES THE SHARES MAY NOT BE
SOLD ON, THE MANNER IN WHICH SALES ARE TO BE MADE BY CF&CO, AND/OR THE
CAPACITY IN WHICH CF&CO MAY ACT IN SELLING SHARES (AS PRINCIPAL, AGENT, OR
BOTH).

      
        
          
            EAST\42275790.7

          

           

        

        
           

          
            

          

        

        
           

        

      

      SCHEDULE
2

       

      

       

      Compensation

       

      The
amount of any discount, commission or other compensation to be paid by the
Company to CF&Co shall be up to three percent (3.0%) of the gross proceeds
from the sales of the Placement Shares.

       

      
        
          
            EAST\42275790.7

          

           

        

        
           

          
            

          

        

        
           

        

      

      SCHEDULE
3

       

      

       

      CANTOR FITZGERALD &
CO.

       

      Peter
Dippolito                                pdippolito@cantor.com

       

      Joshua
Feldman                                           jfeldman@cantor.com

       

      Jeff
Lumby                                jlumby@cantor.com

       

      

      DYNEX CAPITAL,
INC.

      

      Tom
Akin                                tom.akin@dynexcapital.com

       

      Steve
Benedetti                                           stephen.benedetti@dynexcapital.com

       

      Leon
Felman                                lafelman@msn.com

       

      (Lead
Independent

       

       Director)

       

      

      

      
        
          
            EAST\42275790.7

          

           

        

        
           

          
            

          

        

        
           

        

      

      SCHEDULE
4

       

      Subsidiaries

       

      Mortgage
Investment Corporation*

      MSC I
L.P.

      Investment
Capital Access, Inc.*

      Commercial Capital Access One,
Inc.*

      MERIT Securities
Corporation*

      Financial Asset Securitization,
Inc.*

      Issued
Holdings Capital Corporation*

      Resource Finance Co. One

      Resource Finance Co. Two

      ND Holding Co.

      GLS Capital, Inc.

      GLS Properties, LLC

      Allegheny Commercial Properties I,
LLC

      Allegheny Income Properties I,
LLC

      Allegheny Special Properties,
LLC

      
        Dynex
Commercial Services, Inc.

        Dynex
Securities Corporation

        GLS
Capital Services, Inc.

        GLS Development, Inc.

        SMFC
Funding Corporation

      

      GLS
Capital - Cuyahoga, Inc.

      GGLS - Cuyahoga Lien Pool One,
Inc.

      GLS
Capital Services - Marlborough, Inc.

      Samma
Properties Limited Partnership

      SHF
Corp.

      St. Paul
Acquisition Limited Partnership

      

      *           Denotes
a “significant subsidiary”, as such term is defined in Rule 1-02 of Regulation
S-Xpromulgated under the Securities Act.

      

      
        	
                NOTE:

              	
                All
      companies were incorporated in Virginia except for GLS Properties, LLC,
      Allegheny Commercial Properties I, LLC, Allegheny Income Properties I,
      LLC, and Allegheny Special Properties, LLC
  (Pennsylvania).

              

      

      

       

      Joint
Ventures

       

      Copperhead
Ventures LLC

       

      

       

      

       

      
        
          
            EAST\42275790.7

          

           

        

        
           

          
            

          

        

        
           

        

      

      Exhibit
7(m)

      

      

      

      OFFICER
CERTIFICATE

      

      

      The
undersigned, the duly qualified and elected Executive Vice President, Treasurer
and Secretary of DYNEX CAPITAL,
INC. (“Company”), a Virginia
corporation, does hereby certify in such capacity and on behalf of the Company,
pursuant to Section
7(m) of the Sales Agreement dated March 16, 2009 (the “Sales Agreement”)
between the Company and Cantor Fitzgerald & Co. (“CF&Co”), that to
the best of the knowledge of the undersigned:

       

      (i)           Except
for non-material exceptions, the representations and warranties of the Company
in Section 6 of
the Sales Agreement are true and correct on and as of the date hereof, with the
same force and effect as if expressly made on and as of the date hereof;
and

       

      (ii)           The
Company has complied in all material respects with all material agreements and
satisfied all conditions to be performed or satisfied on its part pursuant to
the Sales Agreement at or prior to the date hereof to the extent not waived by
CF&Co.

       

      

       

      

      

      

      By:                                                                

      Name:  Stephen
Benedetti

      Title:    Executive
Vice President,

             Treasurer
and Secretary

      

      

      Date:                                                      

      

      
        
          
            EAST\42275790.7

          

           

        

        
           

          
            

          

        

        
           

        

      

      

      Exhibit
7(n)(1)

       

      MATTERS
TO BE COVERED BY INITIAL OPINION
OF

       

      TROUTMAN
SANDERS LLP

       

      1.           As
of December 31, 2008, the Company had an authorized capitalization as set forth
in its consolidated statements of financial condition included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2008.

       

      2.           The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the Commonwealth of Virginia.  The
Company has full corporate power and authority to own its assets and to conduct
its business as described in the Prospectus.

       

      3.           The
execution, delivery and performance of the Agreement by the Company and the
consummation by the Company of the transactions contemplated thereby do not
conflict with, or result in any breach of, or constitute a default under (nor
constitute any event that with notice, lapse of time or both would constitute a
breach of or default under), (i) the articles of incorporation or bylaws of the
Company, (ii) to our knowledge, violate any U.S. federal or Virginia state law
or regulation binding upon or applicable to the Company or any of its properties
or assets, or (iii) violate any decree, judgment or order known to us to be
applicable to the Company, except in the case of clause (ii) for such
violations, conflicts, breaches or defaults that individually or in the
aggregate would not be reasonably expected to have a Material Adverse Effect;
provided, however, that we
express no opinion regarding any state securities, blue sky or real estate
syndication laws or Section 9 of the
Agreement.

       

      5.           The
Company has full corporate power and authority to enter into, and to perform its
obligations under, the Agreement and to consummate the transactions contemplated
therein. The execution and delivery of the Agreement has been duly authorized by
all necessary corporate action of the Company and the Agreement has been duly
executed and delivered by the Company.

       

      6.           No
approval, authorization, consent or order of, or filing with, any U.S. federal
or Virginia governmental or regulatory commission, board, body, authority or
agency is required in connection with the execution, delivery and performance of
the Agreement and the consummation of the transactions contemplated therein,
including the sale and delivery of the Placement Shares by the Company as
contemplated therein, other than such as have been obtained or made under the
Securities Act or the Exchange Act of 1934 (except that we express no opinion as
to any necessary qualification under the state securities, blue sky or real
estate syndication laws of the various jurisdictions in which the Placement
Shares are being offered by CF&Co or under the rules and regulations of the
FINRA).

      

      7.           The
Placement Shares have been duly authorized by the Company for issuance and sale
pursuant to the Agreement. The Placement Shares, when issued and delivered by
the Company in accordance with such authorization and pursuant to the Agreement
against payment of the consideration specified in the Agreement, will be validly
issued, fully paid and

      
        
          
            EAST\42275790.7

          

           

        

        
           

          
            

          

        

        
           

        

      

      nonassessable
and free of any preemptive right under the Company’s articles of incorporation
and bylaws and the laws of the Commonwealth of Virginia.

       

      8.           The
Registration Statement, at the last deemed effective date of the Registration
Statement with respect to CF&Co pursuant to Rule 430B(f)(2) of the
Securities Act, and Prospectus, as of the date of this letter, complied as to
form in all material respects with the requirements of the Securities Act (it
being understood that we express no belief with respect to the financial
statements, related schedules and other data derived from such financial
statements, schedules and other financial information and other data derived
from such financial information included or incorporated by reference therein or
excluded therefrom).

       

      9.           The
statements under the captions “DESCRIPTION OF OUR CAPITAL STOCK” and
“DESCRIPTION OF OUR COMMON STOCK” in the Prospectus, insofar as such statements
purport to summarize or describe matters of law and legal conclusions,
constitute accurate summaries thereof in all material respects.

      

      *           *           *           *

      

      In addition, we have participated in
the preparation of the Registration Statement and the Prospectus and in
discussions with officers, directors, employees and other representatives of the
Company, with representatives of its independent public accountants, and with
you and your representatives, at which time the contents of the Registration
Statement and the Prospectus and related matters were discussed, and we have
reviewed certain company records, documents and proceedings. On the basis of the
foregoing, nothing has come to our attention that leads us to believe that (1)
each part of the Registration Statement, at the last deemed effective date of
the Registration Statement with respect to CF&Co. pursuant to Rule
430(B)(f)(2) of the Securities Act, contained an untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or (2) the Prospectus,
as of date of this letter, included or includes 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 light of the circumstances under which they were
made, not misleading (it being understood that we express no belief with respect
to the financial statements, related schedules and other data derived from such
financial statements, schedules and other financial information included or
incorporated by reference therein or excluded therefrom).

       

      The limitations inherent in the
independent verification of factual matters and the character of determinations
involved in the preparation of a disclosure document are such, however, that
(other than with respect to paragraph 9 above) we do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus or any amendments or
supplements to them (including any of the documents incorporated by reference in
them).

       

      We have been informed by the Commission
that the Registration Statement is effective under the Securities Act and, to
our knowledge, (i) no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act and (ii) no
proceedings seeking the issuance of such a stop order have been initiated or
threatened by the Commission.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      As used herein, the phrase “to our
knowledge” means knowledge based upon and limited to the representations and
warranties of the Company contained in the Agreement and in the documents
delivered by the Company pursuant to the Agreement, inquiries of an appropriate
officer of the Company whom we have determined is likely to have personal
knowledge of the matters covered by the opinion, and the current conscious
awareness of facts of the attorneys currently practicing law with our firm who
had involvement in the transaction contemplated by the Agreement.

      

      In
rendering the opinions set forth in paragraphs 1 through 9 above, we do not
purport to express an opinion on any laws other than those of the Commonwealth
of Virginia and the United States of America.  This opinion may not be
relied upon by, nor may copies be delivered to, any person without our prior
written consent.

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Exhibit
7(n)(2)

       

      

      

      Matters to be covered by
subsequent Company Counsel Opinions

       

      We have participated in the preparation
of the Registration Statement and the Prospectus and in discussions with
officers, directors, employees and other representatives of the Company, with
representatives of its independent public accountants, and with you and your
representatives, at which time the contents of the Registration Statement and
the Prospectus and related matters were discussed, and we have reviewed certain
company records, documents and proceedings. On the basis of the foregoing,
nothing has come to our attention that leads us to believe that (1) each part of
the Registration Statement, at the last deemed effective date of the
Registration Statement with respect to CF&Co. pursuant to Rule 430(B)(f)(2)
of the Securities Act, contained an untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or (2) the Prospectus, as of date of
this letter, included or includes 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 light of the circumstances under which they were made,
not misleading (it being understood that we express no belief with respect to
the financial statements, related schedules and other data derived from such
financial statements, schedules and other financial information included or
incorporated by reference therein or excluded therefrom).

       

      The limitations inherent in the
independent verification of factual matters and the character of determinations
involved in the preparation of a disclosure document are such, however, that we
do not assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement or the Prospectus or any
amendments or supplements to them (including any of the documents incorporated
by reference in them).

       

      We have been informed by the Commission
that the Registration Statement is effective under the Securities Act and, to
our knowledge, (i) no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act and (ii) no
proceedings seeking the issuance of such a stop order have been initiated or
threatened by the Commission.

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