Document:

Management Agreement

 Exhibit 10.3 
 MANAGEMENT AGREEMENT 
 THIS MANAGEMENT AGREEMENT (this “Agreement”) is made as of
the 5th day of November, 2007 (the “Effective Date”), by and between HATTERAS FINANCIAL CORP., a Maryland corporation (the “Company”) and ATLANTIC CAPITAL ADVISORS LLC, a North Carolina limited liability company
(the “Manager”). 
 STATEMENT OF PURPOSE 
 The Company intends to qualify as a “real estate investment trust” under the Internal Revenue Code of 1986, as amended (the “Code”). The affairs of the Company are overseen by its board of
directors (the “Board of Directors”), which has determined that the best interests of the Company will be served by engaging an external manager to manage the Company’s day-to-day operations. The engagement of an external
manager is intended to allow greater objectivity and transparency in the management of the assets and affairs of the Company by formalizing the duties and compensation of the Company’s management, promoting accountability and internal control,
and increasing the flexibility of the Board of Directors to establish management performance standards. This Agreement sets forth the terms governing the Manager’s duties, responsibilities and compensation in connection with its engagement as
the Company’s external manager. 
 NOW, THEREFORE, IN CONSIDERATION of the mutual agreements set forth in this Agreement and other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Manager agree as follows: 
 1.
Definitions. Capitalized terms used in this Agreement, and not otherwise defined, shall have the respective meanings assigned to them below: 
 1.1 “ACM” means ACM Financial Trust, Inc. 
 1.2 “Affiliate” means, when used with reference to a
specified Person, any Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by, or is under common Control with the specified Person. 
 1.3 “Atlantic Capital Internalization” means the closing of a transaction, or of the last transaction in a related series of
transactions, that results in (i) this Agreement being effectively terminated, and (ii) the Company becoming self-managed by (A) acquiring, or otherwise assuming Control of, the Manager, or (B) hiring two or more members of the
Key Principals, with at least one of those hired being Michael R. Hough or Benjamin M. Hough. 
 1.4 “Change of Control”
means the occurrence of any of the following: 
 (i) the sale, lease or transfer, in one or a series of related transactions, of all or
substantially all of the assets of the Manager, taken as a whole, to any Person other than one of its Affiliates; or 

 (ii) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than one of
the Manager’s Affiliates, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
Act, or any successor provision) of 50% or more of the total voting power of the voting capital interests of the Manager. 
 1.5
“Control” (including the correlative meanings of the terms “Controls,” “Controlled by” and “under common Control with”), as used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of such Person, through the ownership of voting securities, partnership interests or other equity interests. 
 1.6 “Equity” means, for purposes of calculating the Management Fee, the Company’s stockholders’ equity, calculated in
accordance with GAAP, adjusted to exclude the effect of any unrealized gains and losses. 
 1.7 “Exchange Act” means the
Securities Exchange Act of 1934, as amended. 
 1.8 “GAAP” means United States generally accepted accounting principles.

 1.9 “Governing Instruments” means, with regard to any entity, the articles of incorporation and bylaws in the case of a
corporation, certificate of limited partnership (if applicable) and the partnership agreement in the case of a general or limited partnership, the articles of formation and the operating agreement in the case of a limited liability company, the
trust instrument in the case of a trust, or similar governing documents, in each case as amended from time to time. 
 1.10
“Independent Directors” means a director who is not affiliated, directly or indirectly, with the Manager or the Company, whether by ownership of, ownership interest in, employment by, or any material business or professional
relationship with the Manager or the Company (other than solely in the capacity of a director for the Company). 
 1.11 “Initial
Private Offering” means the sale of the Company through Keefe, Bruyette & Woods, as the initial purchasers/placement agent, on November 5, 2007, of up to 10,000,000 shares of the Company’s common stock in transactions
exempt from registration under the Securities Act of 1933, as amended. 
 1.12 “Investment Advisers Act” means the
Investment Advisers Act of 1940, as amended from time to time. 
 1.13 “Investments” means the investments of the Company.

  

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 1.14 “Key Principals” means Michael R. Hough, Benjamin M. Hough, Kenneth A. Steele,
William H. Gibbs, Jr. and Frederick J. Boos, II. 
 1.15 “Person” means any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing. 
 1.16 “Registration Rights Agreement” means that certain registration rights agreement entered into as of
November 5, 2007, by and among the Company, the Manager and Keefe, Bruyette & Woods, Inc. as attorney-in-fact for purchasers of common stock in the Initial Private Offering. 
 1.17 “REIT” means real estate investment trust as defined under Section 856 of the Code. 
 1.18 “REIT Provisions of the Code” means Sections 856 through 860 of the Code. 
 2. General Duties of the Manager. 
 2.1 Services to be Provided by the Manager. The Manager, in its capacity as manager of the day-to-day operations of the Company, at all times will be subject to the supervision of the Company’s Board of Directors and will have
only such functions and authority as the Company may delegate to it including, without limitation, the functions and authority identified herein and delegated to the Manager hereby. To the extent directed by the Board of Directors, the Manager shall
provide similar services to any subsidiary of the Company. The Manager will be responsible for the day-to-day operations of the Company and will perform (or cause to be performed) such services and activities relating to the assets and operations of
the Company as may be appropriate, including, without limitation: 
 2.1.1 serving as the Company’s consultant with respect to the
formulation of investment criteria and the preparation of policy guidelines by the Company, any modifications to which shall be approved by a majority of the Independent Directors (such initial guidelines as are attached hereto as Exhibit A,
as they may be modified from time to time with such approval, (the “Guidelines”)) and other policies for approval by the Board of Directors; 
 2.1.2 investigating, analyzing and selecting possible investment opportunities; 
 2.1.3 representing the
Company in connection with the purchase, sale and commitment to purchase or sell mortgage-related assets that meet in all material respects the Company’s investment criteria, and managing the Company’s portfolio of mortgage-related assets;

 2.1.4 advising the Company and negotiating the Company’s agreements with third-party lenders for borrowings by the Company;

 2.1.5 making available to the Company price information, statistical and economic research and analysis regarding the Company’s
activities and the services performed for the Company by the Manager; 
  

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 2.1.6 investing or reinvesting any of the Company’s money in accordance with the Company’s
policies and procedures; 
 2.1.7 providing the executive and administrative personnel, office space and services required in rendering
services to the Company, in accordance with and subject to the terms of this Agreement; 
 2.1.8 administering the Company’s day-to-day
operations and performing and supervising the performance of such other administrative functions necessary to the Company’s management as may be agreed upon by the Manager and the Company, including the collection of the Company’s revenues
and the payment of the Company’s debts and obligations from the Company’s accounts, and the maintenance of appropriate computer systems to perform such administrative functions; 
 2.1.9 advising the Company in connection with policy decisions to be made by the Board of Directors; 
 2.1.10 supervising the Company’s compliance with the REIT Provisions of the Code and the Company’s maintenance of its status as a REIT;

 2.1.11 qualifying and causing the Company to qualify to do business in all applicable jurisdictions and obtaining and maintaining all
appropriate licenses; 
 2.1.12 assisting the Company to retain qualified accountants and tax experts to assist in developing and monitoring
appropriate accounting procedures and testing systems; 
 2.1.13 assisting the Company in its compliance with all federal, state and local
regulatory requirements applicable to the Company in respect of its business activities, including preparing or causing to be prepared all financial statements required under applicable regulations and contractual undertakings and all reports,
documents and filings, if any, required under the Securities Exchange Act of 1934 and other federal and state laws and the regulations thereunder; 
 2.1.14 assisting the Company in its compliance with federal, state and local tax filings and reports and generally enabling the Company to maintain its status as a REIT, including (i) assembling, maintaining and providing to the firm
designated by the Company to prepare tax returns on behalf of the Company and its subsidiaries (the “Tax Preparer”) information and data required for the preparation of federal, state, local and foreign tax returns, any audits,
examinations or administrative or legal proceedings related thereto or any contractual tax indemnity rights or obligations of the Company and its subsidiaries and supervising the preparation and filing of such tax returns, the conduct of such
audits, examinations or proceedings and the prosecution or defense of such rights, (ii) providing factual data reasonably requested by the Tax Preparer or the Company with respect to tax matters, (iii) assembling, recording, organizing and
reporting to the Company data and information with respect to the 

  

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Investments relative to taxes and tax returns in such form as may be reasonably requested by the Company, (iv) supervising the Tax Preparer in
connection with the preparation, filing or delivery to appropriate persons, of applicable tax information reporting forms with respect to the Investments and transactions involving the real estate (including, without limitation, information
reporting forms, whether on Form 1099 or otherwise with respect to sales, interest received, interest paid, partnership reports and other relevant transactions); it being understood that, in the context of the foregoing, the Company shall rely on
its own tax advisers in the preparation of its tax returns and the conduct of any audits, examinations or administrative or legal proceedings related thereto and that, without limiting the Manager’s obligation to provide the information, data,
reports and other supervision and assistance provided herein, the Manager will not be responsible for the preparation of such returns or the conduct of such audits, examinations or other proceedings; 
 2.1.15 assisting the Company in the maintenance of an exemption from the Investment Company Act and monitoring the Company’s compliance with the
requirements for maintaining an exemption from the Investment Company Act; 
 2.1.16 coordinating and managing the operations of any joint
venture or co-investment interests held by the Company and conducting all matters with the joint venture or co-investment collaborators; 
 2.1.17 advising the Company as to its capital structure and capital raising activities; 
 2.1.18 evaluating and recommending to the
Board of Directors hedging strategies and engaging in hedging activities on behalf of the Company, consistent with such strategies, as so modified from time to time, with the Company’s status as a REIT, and with the policies established by the
Board of Directors; 
 2.1.19 monitoring the operating performance of the Investments and providing periodic reports with respect thereto to
the Board of Directors, including comparative information with respect to such operating performance and budgeted or projected operating results; 
 2.1.20 handling and resolving all claims, disputes or controversies (including all litigation, arbitration, settlement or other proceedings or negotiations) in which the Company may be involved or to which the Company may be subject arising
out of the Company’s day-to-day operations, subject to the approval of the Company; 
 2.1.21 engaging and supervising, on behalf of the
Company and at the Company’s expense, the following, without limitation: independent contractors to provide investment banking services, leasing services, mortgage brokerage services, securities brokerage services, other financial services, and
such other services as may be deemed by the Manager or the Company to be necessary or advisable from time to time; 
 2.1.22 using
commercially reasonable efforts to cause expenses incurred by or on behalf of the Company to be commercially reasonable or commercially customary and within any budgeted parameters or expense guidelines set by the Board of Directors from time to
time; 
  

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 2.1.23 performing such other services as may be required from time to time for management of the Company
and other activities relating to the assets of the Company as the Company shall reasonably request or the Manager shall deem appropriate under the particular circumstances consistent with the terms of this Agreement; 
 2.1.24 using commercially reasonable efforts to cause the Company to comply with all applicable laws. 
 2.2 Obligations of the Manager; Restrictions. 
 2.2.1 Verify Conformity with Acquisition Criteria. The Manager shall refrain from any action that does not comply with the Guidelines adopted by the Board of Directors as in effect from time to time during the
term hereof. The Manager shall at such times and to such extent it deems reasonable require each seller or transferor of Investments to the Company to make such representations and warranties regarding such Investments as may, in the judgment of the
Manager, be necessary and appropriate consistent with the Guidelines. The Board of Directors will periodically review the Guidelines and the Company’s portfolio of Investments but will not review each proposed investment. If a majority of the
Independent Directors determine in their periodic review of transactions that a particular transaction does not comply with the Guidelines, then a majority of the Independent Directors will consider what corrective action, if any, can be taken and
the Manager will undertake such corrective action as directed by the Independent Directors. 
 2.2.2 Restrictions. The Manager
acknowledges that the Company intends to conduct its operations so as (i) to qualify as a REIT, and (ii) not to become regulated as an investment company under the Investment Company Act. The Manager agrees to use commercially reasonable
efforts to cooperate with the Company’s efforts to conduct its operations so as to qualify as a REIT and not to become regulated as an investment company under the Investment Company Act. The Manager shall refrain from any action which, in its
sole judgment made in good faith in consultation with legal counsel, (A) would adversely affect the status of the Company or, if applicable, any subsidiary of the Company as a REIT, (B) would adversely affect the Company’s exclusion
from status as an investment company under the Investment Company Act, (C) is not in compliance with the Guidelines or (D) would violate any material law, rule or regulation of any governmental body or agency having jurisdiction over the
Company or any such subsidiary or which would otherwise not be permitted by the Company’s or such subsidiary’s Governing Instruments or any agreements provided to the Manager. If the Manager is directed to take any such action by the Board
of Directors (including, without limitation, any corrective action directed to be taken by the Independent Directors pursuant to Section 2.2.1), the Manager shall promptly notify the Company of the Manager’s judgment that such action would
adversely affect such status or violate any such law, rule or regulation or the Governing Instruments; operating policies adopted by the Company; or any agreements provided to the Manager. Notwithstanding the foregoing, the Manager, its managers,
officers, members and employees shall not be liable to the Company, any subsidiary of the Company, the Independent Directors or any stockholders of the Company or any of its subsidiaries for any act or omission by the Manager, its managers,
officers, members or employees except as provided in Section 8 of this Agreement. 
  

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 2.2.3 Interested Transactions. The Manager shall not (i) consummate any transaction which
would involve the acquisition by the Company of an asset in which the Manager or any Affiliate thereof (including ACM) has an ownership interest or the sale by the Company of an asset to the Manager or any Affiliate thereof (including ACM),
(ii) cause the Company to pay, or become liable to the Manager for, any amounts not specifically provided for herein, or (iii) under circumstances where the Manager is subject to an actual or potential conflict of interest, in the
reasonable judgment of the Manager, because it manages both the Company and another Person (not an Affiliate of the Company) with which the Company has a contractual relationship, take any action constituting the granting to such Person of a waiver,
forbearance or other relief, or the enforcement against such Person of remedies, under or with respect to the applicable contract, unless such transaction or action, as the case may be and in each case, is approved by a majority of the Independent
Directors. 
 2.2.4 Portfolio Transactions. In placing portfolio transactions and selecting brokers or dealers, the Manager shall
endeavor to obtain on behalf of the Company commercially reasonable terms. In assessing commercially reasonable terms for any transaction, the Manager shall consider all factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of the broker or dealer, and the reasonableness of the commission, if any, both for the specific transaction and on a continuing basis. 
 2.2.5 Reports. As frequently as the Manager may deem necessary or advisable, or at the direction of the Board of Directors, the Manager shall, at
the sole cost and expense of the Company, prepare, or cause to be prepared, with respect to any Investment, reports and other information with respect to such Investment as may be reasonably requested by the Board of Directors. The Manager shall
prepare, or cause to be prepared, at the sole cost and expense of the Company, all reports, financial or otherwise, with respect to the Company reasonably required by the Board of Directors in order for the Company to comply with its Governing
Instruments or any other materials required to be filed with any governmental body or agency, and shall prepare, or cause to be prepared, all materials and data necessary to complete such reports and other materials including, without limitation, an
annual audit of the Company’s books of account by a nationally recognized independent accounting firm. The Manager shall prepare regular reports for the Board of Directors to enable the Board of Directors to review the Company’s
acquisitions, portfolio composition and characteristics, credit quality, performance and compliance with the investment criteria and policies approved by the Board of Directors. 
 2.2.6 Fidelity Bond. During the term of this Agreement the Manager shall obtain and maintain a fidelity bond in such amount and with an issuer as
the Manager shall determine, which shall cover, among other things, losses resulting directly from dishonest or fraudulent acts committed by an employee of the Manager and certain other losses. The premium for such bond shall be paid by the Manager
or its Affiliates. 
  

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 2.2.7 Insurance Coverage. The Manager shall at all times during the term of this Agreement
maintain “errors and omissions” insurance coverage and other insurance coverage which is customarily carried by property, asset and investment managers performing functions similar to those of the Manager under this Agreement with respect
to assets similar to the assets of the Company, in an amount which is comparable to that customarily maintained by other managers or servicers of similar assets. The premium for such insurance shall be paid by the Manager or its Affiliates.

 2.2.8 Internal Controls. The Manager shall (i) establish and maintain a system of internal accounting and financial controls
designed to provide reasonable assurance of the reliability of financial reporting, the effectiveness and efficiency of operations and compliance with applicable laws, (ii) maintain records for each Investment on a GAAP basis,
(iii) develop accounting entries and reports required by the Company to meet its reporting requirements under applicable laws, (iv) consult with the Company with respect to proposed or new accounting/reporting rules identified by the
Manager or the Company and (v) prepare quarterly and annual financial statements as soon after the end of each such period as may be reasonably requested and general ledger journal entries and other information necessary for the Company’s
compliance with applicable laws and in accordance with GAAP and cooperate with the Company’s independent accounting firm in connection with the auditing or review of such financial statements, the cost of any such audit or review to be paid by
the Company. 
 2.2.9 Management Letters. The Manager shall provide to the Company as soon after the end of each quarter or year as
may be reasonably requested (within deadlines required for the Company to comply with applicable legal requirements) by the Company, a completed management questionnaire letter to the Board of Directors, in such form as the Company may reasonably
request on accounting, reporting, internal controls and disclosure issues in support of any management representation letter to be issued by the Company to its independent accounting firm. 
 2.3 Cooperation of the Company. The Company agrees to take all actions reasonably required to permit the Manager to carry out its duties and
obligations under this Agreement. The Company further agrees to make available to the Manager all materials reasonably requested by Manager to enable the Manager to satisfy its obligations to deliver financial statements and any other information or
reports with respect to the Company. 
 3. Devotion of Time; Additional Activities of the Manager and its Affiliates. 
 3.1 Devotion of Time. The Manager will provide the Company with a management team, which may include a Chief Executive Officer, President, and
Chief Financial Officer, and other support personnel, to provide the management services to be provided by the Manager to the Company hereunder, the members of which team shall devote such of their time to the management of the Company as the Board
of Directors reasonably deems necessary and appropriate, commensurate with the level of activity of the Company from time to time. 
 3.2
Other Activities. The Manager, or any Affiliate of the Manager, may act as manager for any other persons, firms or corporations other than the Company (including ACM or any investment company) (hereinafter collectively referred to as
“Third Parties”), the investment objectives or policies of which are similar to those of the Company and the Manager or any such Affiliate may buy, sell or trade any securities or commodities or real estate for their 

  

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own accounts or for the account of others for whom the Manager or any such Affiliate may be acting. Notwithstanding the foregoing, the Company shall have the
benefit of the Manager’s best judgment and effort in rendering services and, in furtherance of the foregoing, the Manager shall not undertake activities which, in its good faith judgment, will substantially and adversely affect the performance
of its obligations under this Agreement. 
 3.3. Allocation of Investment Opportunities. The Company and the Manager agree that to the
extent the Company provides management services to Third Parties with investment objectives similar to the Company, and the Manager identifies an investment opportunity or opportunities suitable for the Company and one or more Third Parties, and
such investment is of a size that requires an allocation of such investment between the Company and one or more Third Parties, the Manager will allocate such investment in a fair and equitable manner and will take into account the following
considerations: (i) the primary investment strategy and the particular stage in portfolio development within each company managed by the Manager; (ii) the effect of the potential acquisition on the diversification of each company’s
portfolio’s investments by coupon, purchase price, size, prepayment characteristics, and leverage; (iii) the cash requirements of each company’s portfolio; (iv) the anticipated cash flow of each company’s portfolio; and
(iv) the amount of funds available to each company’s portfolio and the length of time such funds have been available for investment. The parties hereto acknowledge that information and recommendations provided by the Manager to the Company
may be different from the information and recommendations supplied by the Manager or its Affiliates to Third Parties. The Company shall be entitled to equitable treatment under the circumstances in receiving information, recommendations and any
other services, but the Company recognizes that it is not entitled to receive preferential treatment as compared with the treatment given by the Manager to any Third Parties. On a quarterly basis, subject to preexisting contractual confidentiality
obligations owed by the Manager to Third Parties, the Manager will provide to the Independent Directors all information available or reasonably requested by the Independent Directors with respect to allocation decisions the Manager has made to
allocate investment opportunities between the Company and Third Parties, if any, and discuss with the Independent Directors the portfolio needs of each managed company for the next quarter to determine prospectively whether any asset allocation
conflict is likely to occur and the proposed resolution of any such conflict. 
 4. Bank Accounts. At the direction of the Company,
the Manager may establish and maintain one or more bank accounts in the name of the Company or any subsidiary of the Company, and may collect and deposit into any such account or accounts, and disburse funds from any such account or accounts, under
such terms and conditions as the Company may approve. The Manager shall from time to time render appropriate accountings of such collections and payments to the Company and, upon request, to the auditors of the Company or any subsidiary of the
Company. 
 5. Records; Confidentiality. The Manager shall maintain appropriate books of account and records relating to services
performed under this Agreement, and such books of account and records shall be accessible for inspection by representatives of the Company or any subsidiary of the Company at any time during normal business hours. Except in the ordinary course of
business of the Company, the Manager shall keep confidential any and all information it obtains 

  

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from time to time in connection with the services it renders under this Agreement and shall not disclose any portion thereof to non-affiliated third parties
except with the prior written consent of the Company, which shall not be unreasonably withheld or delayed. 
 6. Compensation of the
Manager. 
 6.1 Management Fee. For the Manager’s services rendered under this Agreement, the Company shall pay the Manager a
management fee (the “Management Fee”), to be calculated and paid monthly in arrears, equal to 1/12th of an amount determined as follows: 
  

	 	(A)	for Equity up to $250 million, 1.50% (per annum) of Equity; PLUS 

  

	 	(B)	for Equity in excess of $250 million and up to $500 million, 1.10% (per annum) of Equity; PLUS; 

  

	 	(C)	for Equity in excess of $500 million and up to $750 million, 0.80% (per annum) of Equity; PLUS; 

  

	 	(D)	for Equity in excess of $750 million, 0.50% (per annum) of Equity. 

 For purposes of calculating the Management Fee, Equity shall be determined as of the last day of the prior month. The Manager shall use the proceeds from the Management Fee in part to pay the compensation of its
officers and employees who, notwithstanding that certain of them also are Company officers, receive no cash compensation directly from the Company. 
 The
Manager shall compute the Management Fee within (15) fifteen business days after the end of each month and shall promptly deliver such calculation to the Board of Directors for review. The Company is obligated to pay the Management Fee within
five (5) business following the delivery to the Company of the Manager’s written statement setting forth the computation of the Management Fee for such month. 
 6.2 Forfeiture of Restricted Stock and Options. If the Company does not file the “Shelf Registration Statement” (as such term is defined in the Registration Rights Agreement) on or before
June 30, 2008, each executive officer of the Manager will forfeit (i) 2% of the restricted shares of the Company’s common stock, and (ii) 2% of the options to purchase shares of the Company’s common stock, issued to such
executive officer in connection with the Initial Private Offering for each week ending after June 30, 2008 through and including the week in which the Shelf Registration Statement is actually filed. 
 7. Expenses of the Manager and the Company. 
 7.1 Expenses of the Manager. Without regard to the compensation received under this Agreement by the Manager, the Manager shall bear the following expenses: 
 7.1.1 employment expenses of the personnel employed by the Manager and/or its Affiliates (including, but not limited to, officers of the Company employed
by the Manager and/or its Affiliates), including, but not limited to, salaries, wages, payroll taxes and the cost of employee benefit plans of such personnel; 
  

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 7.1.2 rent, telephone, utilities, office furniture, equipment, machinery, and other office expenses of
the Manager and/or its Affiliates required for the Company’s day-to-day operations, including bookkeeping, clerical and back-office services provided by the Manager or its Affiliates; 
 7.2 Expenses of the Company. The Company or any subsidiary of the Company shall pay all of its expenses except those that are the responsibility
of the Manager pursuant to Section 7.1 of this Agreement, and without limiting the generality of the foregoing, it is specifically agreed that the following expenses of the Company or any subsidiary of the Company shall be paid by the Company
and shall not be paid by the Manager or Affiliates of the Manager: 
 7.2.1 the cost of money borrowed by the Company, including interest;

 7.2.2 all taxes and license fees applicable to the Company or any subsidiary of the Company, including interest and penalties thereon;

 7.2.3 legal, audit, accounting, underwriting, brokerage, listing, filing, rating agency, registration and other fees, printing, engraving,
clerical, travel, personnel and other expenses and taxes incurred in connection with the raising, issuance, distribution, transfer, and registration of the Company’s or any subsidiary’s equity securities or debt securities ; 
 7.2.4 fees and expenses paid to advisors and independent contractors, consultants, managers, and other agents engaged directly by the Company or any
subsidiary of the Company or by the Manager at the Company’s or such subsidiary’s request for the account of the Company or any subsidiary of the Company (other than the Manager or its Affiliates); 
 7.2.5 expenses connected with the acquisition, disposition, financing and ownership of the Company’s or any subsidiary’s investment assets;

 7.2.6 costs related to hedging transactions; 
 7.2.7 the expenses of organizing, modifying or dissolving the Company or any subsidiary of the Company; 
 7.2.8 all insurance costs incurred by the Company or any subsidiary of the Company, including any costs to obtain liability or other insurance to indemnify the Manager and underwriters of any securities of the Company; 
 7.2.9 expenses connected with payments of dividends or interest or distributions in any other form made or caused to be made by the Company to holders of
the securities of the Company or any subsidiary of the Company; 
  

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 7.2.10 all expenses of third parties connected with communications to holders of equity securities or
debt securities issued by the Company or any subsidiary of the Company and the other bookkeeping and clerical work necessary in maintaining relations with holders of such securities and in complying with the continuous reporting and other
requirements of governmental bodies or agencies, including any costs of computer services in connection with this function, the cost of printing and mailing certificates for such securities and proxy solicitation materials and reports to holders of
the Company’s or any subsidiary’s securities and reports to third parties required under any indenture to which the Company or any subsidiary of the Company is a party; 
 7.2.11 custodian’s, transfer agent’s and registrar’s fees and charges; 
 7.2.12 compensation, fees and expenses paid to trustees or Independent Directors of the Company or any subsidiary of the Company, the cost of director
and officer liability insurance and premiums for errors and omissions insurance; 
 7.2.13 legal, accounting and auditing fees and expenses
relating to the Company’s or any subsidiary’s operations (excluding litigation- related fees and expenses described in Section 7.2.14); 
 7.2.14 legal, expert and other fees and expenses relating to any actions, proceedings, lawsuits, demands, causes of action and claims, whether actual or threatened, made by or against the Company, or which the Company
is authorized or obligated to pay under applicable law or its Governing Instruments or by the Company; 
 7.2.15 any judgment rendered
against the Company or any subsidiary of the Company, or against any trustee, director or officer of the Company or any subsidiary of the Company in his capacity as such for which the Company or any subsidiary of the Company is required to indemnify
such trustee, director, or officer by any court or governmental agency, or settlement of pending or threatened litigation; 
 7.2.16 expenses
relating to any office or office facilities maintained by the Company or any subsidiary of the Company exclusive of the office of the Manager and/or its Affiliates; 
 7.2.17 travel and related expenses of directors, officers and employees of the Manager and, in addition, the travel and related expenses of directors, officers and employees of the Company or any subsidiary of the
Company who are also directors, officers or employees of the Manager, incurred in connection with attending meetings on behalf of the Company or performing other business activities that relate to the Company or any subsidiary of the Company,
including, where applicable, a proportionate share of such expenses as reasonably determined by the Manager where such expenses were not incurred solely for the benefit of the Company; 
 7.2.18 costs associated with computer hardware and software that relate solely to the business activities of the Company; 
 7.2.19 any extraordinary or non-recurring costs or charges incurred by the Company; and 
  

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 7.2.20 other expenses of the Company or any subsidiary of the Company that are not expenses of the
Manager under Section 7.1 of this Agreement. 
 7.3 Expense Reports; Reimbursement to the Manager. The Manager shall prepare a
report documenting the expenses of the Company and those incurred by the Manager on behalf of the Company during each month, and shall deliver such statement to the Board of Directors within fifteen (15) business days after the end of each
calendar month. Expenses incurred by the Manager on behalf of the Company shall be reimbursed monthly to the Manager within five (5) business days following the delivery to the Company of the Manager’s report of expenses for such month.
Expense reimbursement to the Manager shall be subject to Section 7.3 hereof and adjustment at the end of each fiscal year in connection with the annual audit of the Company. 
 8. Limits of Manager Responsibility. The Manager assumes no responsibility under this Agreement other than to render the services specifically
called for under this Agreement and shall not be responsible for any action of the Company in following or declining to follow any advice or recommendations of the Manager, including as set forth in Section 2.2.2 of this Agreement. The Manager,
its managers, officers, members and employees will not be liable to the Company, any issuer of Investments, any subsidiary of the Company, its stockholders or any of its subsidiary’s stockholders or the Independent Directors for any acts or
omissions, errors of judgment or mistakes of law by the Manager, its managers, officers, members or employees under or in connection with this Agreement, except by reason of acts or omissions, errors of judgment or mistakes of law constituting bad
faith, willful misconduct, gross negligence or reckless disregard of their duties under this Agreement. The Company and its subsidiaries shall reimburse, indemnify and hold harmless the Manager, its managers, officers, members and employees of and
from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including, without limitation, attorneys’ fees) in respect of or arising from any acts or omissions, errors of judgment or mistakes
of law of the Manager, its managers, officers, members and employees made in good faith in the performance of the Manager’s duties under this Agreement or pursuant to any underwriting agreement or similar agreement to which Manager is a party
in connection with any debt or equity sales of the Company’s securities and not constituting bad faith, willful misconduct, gross negligence or reckless disregard of the Manager’s duties under this Agreement or any such underwriting
agreement. The Manager shall be indemnified by the Company as an agent of the Company in accordance with the terms of the Company’s Governing Instruments. 
 The Manager shall reimburse, indemnify and hold harmless the Company, its directors, officers, stockholders and employees of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of
any nature whatsoever (including, without limitation, attorneys’ fees) in respect of or arising from the Manager’s bad faith, willful misconduct, gross negligence or reckless disregard of its duties under this Agreement. 
 9. No Joint Venture. The Company and the Manager are not partners or joint venturers with each other, and nothing in this Agreement shall be
construed to make them such partners or joint venturers or impose any liability as such on any of them. The Manager is an independent contractor and, except as expressly provided or authorized in this Agreement, shall have no authority to act for or
represent the Company. 
  

 13 

 10. Term; Renewal; Termination Fee. 
 10.1 Term. This Agreement shall commence on the Effective Date and shall continue in force until November __, 2010 (the “Initial
Term”) and thereafter shall be automatically extended for additional one (1) year terms without further action unless terminated in accordance with the provisions of this agreement. 
 10.2 Periodic Review by Independent Directors. The Independent Directors shall review the Manager’s performance periodically and, following
the Initial Term, the Agreement may be terminated upon the affirmative vote of at least two-thirds of the Independent Directors, or by a vote of the holders of a majority of the Company’s outstanding common stock, based upon
(i) unsatisfactory performance that is materially detrimental to the Company or (ii) a determination that the management fees payable to the Manager are not fair; provided however, that the Manager shall have the right to prevent such a
termination pursuant to clause (ii) by accepting a reduction of management fees agreed to by at least two-thirds of the Independent Directors and the Manager. If the Company elects to terminate the Agreement in accordance with this
Section 10.2, it must provide not less than 180 days prior written notice to the Manager. 
 10.3 Termination Fee. If this
Agreement is terminated (i) by the Company for any reason other than (A) for Cause (as defined in Section 12 of this Agreement), or (B) pursuant to an Atlantic Capital Internalization, or (ii) by the Manager in accordance
with Section 11.2, then the Company, in addition to its obligations under Section 15, shall pay the Manager a termination fee in an amount equal to three times the average annual Management Fee earned by the Manager during the 24-month
period immediately preceding the date of such termination, calculated as of the end of the most recently completed fiscal quarter prior to the date of termination (the “Termination Fee”). The obligation of the Company to pay the
Termination Fee shall survive the termination of this Agreement. In the event of a termination that triggers the Company’s obligation to pay the Termination Fee to the Manager, such Termination Fee shall be paid within thirty (30) days
following the effective date of the termination. 
 11. Termination by the Manager. 
 11.1 The Manager may terminate the Agreement, without triggering payment of the Termination Fee, if any of the following events should occur: 

11.1.1 the Company becomes an investment company under the Investment Company Act. Furthermore, 
 11.1.2 following the Initial Term, the Manager declines to renew the Agreement by providing the Company with 180 days’ prior written notice.

 11.2 The Manager may terminate the Agreement upon 60 days’ written notice if the Company has breached this Agreement in any material
respect and, after written notice of such violation, the Company has failed to cure such breach within thirty (30) days. Termination in accordance with this section 11.2 will trigger the Company’s obligation to pay the Termination Fee.

  

 14 

 12. Termination by Company for Cause. At the option of the Company, this Agreement shall be
and become terminated upon thirty (30) days’ written notice of termination from the Company to the Manager if any of the following events shall occur (termination for any of such events shall constitute termination for
“Cause”): 
 12.1 if a majority of the Independent Directors determines that the Manager has breached this Agreement
in any material respect and, after written notice of such violation, the Manager has failed to cure such breach within thirty (30) days; 
 12.2 the Manager engages in any act of fraud, misappropriation of funds, or embezzlement against the Company, 
 12.3 there is an
event of any gross negligence, bad faith, willful misconduct or reckless disregard on the part of the Manager in the performance of its duties under this Agreement; 
 12.4 the Manager dissolves (unless the Independent Directors have previously approved a successor); 
 12.5
the Manager undergoes a Change of Control; 
 12.6 if fewer than two of the Key Principals are full-time employees of the Manager, one of
whom must be Michael R. Hough or Benjamin M. Hough; or 
 12.7 there is entered an order for relief or similar decree or order with respect
to the Manager by a court having competent jurisdiction in an involuntary case under the federal bankruptcy laws as now or hereafter constituted or under any applicable federal or state bankruptcy, insolvency or other similar laws; or the Manager
(i) ceases, or admits in writing its inability, to pay its debts as they become due and payable, or makes a general assignment for the benefit of, or enters into any composition or arrangement with, creditors; (ii) applies for, or consents
(by admission of material allegations of a petition or otherwise) to the appointment of a receiver, trustee, assignee, custodian, liquidator or sequestrator (or other similar official) of the Manager or of any substantial part of its properties or
assets, or authorizes such an application or consent, or proceedings seeking such appointment are commenced without such authorization, consent or application against the Manager and continue undismissed for thirty (30) days;
(iii) authorizes or files a voluntary petition in bankruptcy, or applies for or consents (by admission of material allegations of a petition or otherwise) to the application of any bankruptcy, reorganization, arrangement, readjustment of debt,
insolvency, dissolution, liquidation or other similar law of any jurisdiction, or authorizes such application or consent, or proceedings to such end are instituted against the Manager without such authorization, application or consent and are
approved as properly instituted and remain undismissed for thirty (30) days or result in adjudication of bankruptcy or insolvency; or (iv) permits or suffers all or any substantial part of its properties or assets to be sequestered or
attached by court order and the order remains undismissed for thirty (30) days; provided, however, that in the event the Manager becomes the 

  

 15 

 
subject of a case under federal bankruptcy or similar federal or state laws and remains in possession of its property and continues to operate its business
(as a debtor in possession or otherwise), the Company shall not have the option to terminate this Agreement unless the Independent Directors determine in good faith that as a result of such proceeding the Manager cannot reasonably be expected to
fulfill its obligations under this Agreement. If any of the events specified in Section 12.7 of this Agreement shall occur, the Manager shall give prompt written notice thereof to the Company upon the happening of such event. 
 13. Termination due to an Atlantic Capital Internalization. If the Agreement is terminated pursuant to an Atlantic Capital Internalization that
occurs within a period ending 36 months following the completion of the Initial Private Offering, the Company’s obligations under Section 15 shall survive such termination, but no Termination Fee or other consideration shall be payable to
the Manager in connection with terminating this Agreement or otherwise in connection with the Atlantic Capital Internalization, other than assuming the liabilities of the Manager related to the management of the Company and other than any
consideration to compensate the Manager for terminating, or for the Company’s acquisition of, any business of the Manager other than its management of the Company. If the Agreement is terminated pursuant to an Atlantic Capital Internalization
that occurs more than 36 months following the completion of the Initial Private Offering, then the compensation to be paid to the Manager shall be negotiated in good faith between the Manager and the Company, but in any case, such compensation shall
not exceed two times the average annual Management Fee earned by the Manager during the 24-month period immediately preceding the date of such termination, calculated as of the end of the most recently completed fiscal quarter prior to the date of
termination, other than assuming the liabilities of the Manager related to the management of the Company and other than any consideration to compensate the Manager for terminating, or for the Company’s acquisition of, any business of the
Manager other than its management of the Company. 
 14. Assignments. This Agreement shall terminate automatically in the event of its
assignment, by operation of law or otherwise, in whole or in part, by the Manager, unless such assignment is consented to in writing by the Company with the consent of a majority of the Independent Directors; provided, however, that no such consent
shall be required in the case of an assignment by the Manager to an entity whose day-to-day operations are managed and supervised by two or more of the Key Principals, one of whom must be Michael R. Hough or Benjamin M. Hough. Any such permitted
assignment shall bind the assignee under this Agreement in the same manner as the Manager is bound, and the Manager shall be liable to the Company for errors or omissions of the assignee under any such assignment. In addition, the assignee shall
execute and deliver to the Company a counterpart of this Agreement naming such assignee as Manager. This Agreement shall not be assigned by the Company without the prior written consent of the Manager, except in the case of assignment by the Company
to an entity which is a successor (by merger, consolidation or purchase of assets) to the Company, in which case such successor organization shall be bound under this Agreement and by the terms of such assignment in the same manner as the Company is
bound under this Agreement. 
  

 16 

 15. Action Upon Termination. From and after the effective date of termination of this Agreement,
pursuant to Sections 10, 11, 12, 13 or 14 of this Agreement, except as otherwise specified in Section 10.3 of this Agreement, the Manager shall not be entitled to compensation for further services under this Agreement, but shall be paid
management fees under Section 6 accruing to the date of termination and due but unpaid expense reimbursements under Section 7 hereof. Upon such termination, the Manager shall forthwith: 
 15.1 after deducting any accrued Management Fees and reimbursement for its expenses to which it is then entitled, pay over to the Company or any
subsidiary of the Company all money collected and held for the account of the Company or any subsidiary of the Company pursuant to this Agreement; 
 15.2 deliver to the Company a full accounting, including a statement showing all payments collected by it and a statement of all money held by it, covering the period following the date of the last accounting furnished to the Company or any
subsidiary of the Company; and 
 15.3 deliver to the Company all property and documents of the Company or any subsidiary of the Company then
in the custody of the Manager. 
 16. Release of Money or Other Property Upon Written Request. The Manager agrees that any money or
other property of the Company or any subsidiary of the Company held by the Manager under this Agreement shall be held by the Manager as custodian for the Company or such subsidiary, and the Manager’s records shall be appropriately marked
clearly to reflect the ownership of such money or other property by the Company or such subsidiary. Upon the receipt by the Manager of a written request signed by a duly authorized officer of the Company requesting the Manager to release to the
Company or any subsidiary of the Company any money or other property then held by the Manager for the account of the Company or any subsidiary of the Company under this Agreement, the Manager shall release such money or other property to the Company
or such subsidiary of the Company within a reasonable period of time, but in no event later than the later to occur of (i) three (3) business days following such request and (ii) the earliest time following such request that
remittance will not cause the Manager to violate any law or breach any agreement to which it or the Company is a party. The Manager shall not be liable to the Company, any subsidiaries of the Company, the Independent Directors, or the Company’s
or its subsidiaries’ stockholders for any acts performed or omissions to act by the Company or any subsidiary of the Company in connection with the money or other property released to the Company or any subsidiary of the Company in accordance
with this Section 16 and not constituting bad faith, willful misconduct, gross negligence or reckless disregard of its duties under this Agreement. The Company and any subsidiary of the Company shall indemnify the Manager, its managers,
officers, members and employees against any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including, without limitation, attorneys’ fees), which arise in connection with the Manager’s
release of such money or other property to the Company or any subsidiary of the Company in accordance with the terms of this Section 16 unless such expenses, losses, damages, liabilities, demands, charges and claims arise in connection with
acts or omissions which constitute bad faith, willful misconduct, gross negligence or reckless disregard of its duties under this Agreement. Indemnification pursuant to this provision shall be in addition to any right of the Manager to
indemnification under Section 8 of this Agreement. 
  

 17 

 17. Representations and Warranties. 
 17.1 Company in Favor of the Manager. The Company hereby represents and warrants to the Manager as follows: 
 17.1.1 Due Formation. The Company is duly organized, validly existing and in good standing under the laws of Maryland, has the power to own its
assets and to transact the business in which it is now engaged. The Company does not do business under any fictitious business name. 
 17.1.2 Power and Authority. The Company has the power and authority to execute, deliver and perform this Agreement and all obligations required under this Agreement and has taken all necessary action to authorize this Agreement on
the terms and conditions hereof and the execution, delivery and performance of this Agreement and all obligations required under this Agreement. Except as shall have been obtained, no consent of any other person, including, without limitation,
stockholders, partners and creditors, as applicable, of Company, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required by the
Company in connection with this Agreement or the execution, delivery, performance, validity or enforceability of this Agreement and all obligations required under this Agreement. This Agreement has been, and each instrument or document required
under this Agreement will be, executed and delivered by a duly authorized officer of the Company, and this Agreement constitutes, and each instrument or document required under this Agreement when executed and delivered under this Agreement will
constitute, the legally valid and binding obligation of the Company enforceable against the Company in accordance with its terms. 
 17.1.3
Execution, Delivery and Performance. The execution, delivery and performance of this Agreement and the documents or instruments required under this Agreement will not violate any provision of any existing law or regulation binding on the
Company, or any order, judgment, award or decree of any court, arbitrator or governmental authority binding on the Company, or the Governing Instruments of, or any securities issued by, the Company or of any mortgage, indenture, lease, contract or
other agreement, instrument or undertaking to which the Company is a party or by which the Company or any of its assets may be bound, and will not result in, or require, the creation or imposition of any lien on any of its property, assets or
revenues pursuant to the provisions of any such mortgage, indenture, lease, contract or other agreement, instrument or undertaking. 
 17.2
Manager In Favor of Company. The Manager hereby represents and warrants to the Company as follows: 
 17.2.1 Due Formation. The
Manager is duly organized, validly existing and in good standing under the laws of North Carolina, has the limited liability company power to own its assets and to transact the business in which it is now engaged. The Manager does not do business
under any fictitious business name. 
  

 18 

 17.2.2 Power and Authority. The Manager has the corporate power and authority to execute, deliver
and perform this Agreement and all obligations required under this Agreement and has taken all necessary limited liability company action to authorize this Agreement on the terms and conditions hereof and the execution, delivery and performance of
this Agreement and all obligations required under this Agreement. No consent of any other person including, without limitation, members and creditors of the Manager, and no license, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any governmental authority is required by the Manager in connection with this Agreement or the execution, delivery, performance, validity or enforceability of this Agreement and all obligations
required under this Agreement. This Agreement has been and each instrument or document required under this Agreement will be executed and delivered by a duly authorized officer of the Manager, and this Agreement constitutes, and each instrument or
document required under this Agreement when executed and delivered under this Agreement will constitute, the legally valid and binding obligation of the Manager enforceable against the Manager in accordance with its terms. 
 17.2.3 Execution, Delivery and Performance. The execution, delivery and performance of this Agreement and the documents or instruments required
under this Agreement will not violate any provision of any existing law or regulation binding on the Manager, or any order, judgment, award or decree of any court, arbitrator or governmental authority binding on the Manager, or the governing
instruments of, or any securities issued by, the Manager or of any mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which the Manager is a party or by which the Manager or any of its assets may be bound, and will
not result in, or require, the creation or imposition of any lien on any of its property, assets or revenues pursuant to the provisions of any such mortgage indenture, lease, contract or other agreement, instrument or undertaking. 
 18. Notices. Unless expressly provided otherwise in this Agreement, all notices, requests, demands and other communications required or permitted
under this Agreement shall be in writing and shall be deemed to have been duly given, made and received when (1) delivered by hand, (2) otherwise delivered against receipt therefor, or (3) upon actual receipt of registered or
certified mail, postage prepaid, return receipt requested. The parties may deliver to each other notice by electronically transmitted facsimile copies, provided that such facsimile notice is followed within twenty-four (24) hours by any type of
notice otherwise provided for in this Section 18. Any notice shall be duly addressed to the parties as follows: 
 (a) If to the
Company: 
 Hatteras Financial Corp. 
 3288 Robinhood Road, Suite 100 
 Winston-Salem, NC 27106 
 Attention: President 
 Telecopy: 336-760-9391

 (b) If to the Manager: 
 Atlantic Capital Advisors LLC 
 3288 Robinhood Road, Suite 100 
 Winston-Salem, NC 27106 
 Attention: President

 Telecopy: 336-760-9391 
  

 19 

 Any party may alter the address to which communications or copies are to be sent by giving notice of such
change of address in conformity with the provisions of this Section 18 for the giving of notice. 
 19. Binding Nature of Agreement;
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns as provided in this Agreement. 
 20. Entire Agreement. This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control
and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing. 
 21. Controlling Law. This Agreement and all questions relating to its validity, interpretation, performance and enforcement shall be governed by
and construed, interpreted and enforced in accordance with the laws of the State of North Carolina, notwithstanding any North Carolina or other jurisdiction’s conflict of law provisions to the contrary. 
 22. Indulgences, Not Waivers. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any right, remedy, power or privilege, nor shall any waiver
of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by
the party asserted to have granted such waiver. 
 23. Titles Not to Affect Interpretation. The titles of paragraphs and subparagraphs
contained in this Agreement are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof. 
 24. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of
which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the
signatories. 
 25. Gender. Words used herein regardless of the number and gender specifically used shall be deemed and construed to
include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires. 
  

 20 

 26. Attorneys’ Fees. Should any action or other proceeding be necessary to enforce any of the
provisions of this Agreement or the various transactions contemplated hereby, the prevailing party will be entitled to recover its actual reasonable attorneys’ fees and expenses from the non- prevailing party. 
 27. Amendments. This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement
expressly referring to this Agreement, which agreement is executed by all of the parties. The parties hereto expressly acknowledge that no consent or approval of the Company’ s stockholders is required in connection with any amendment,
modification or change to this Agreement. 
 28. Authority. Each signatory to this Agreement warrants and represents that he is
authorized to sign on behalf of and to bind the party on whose behalf he, she or it is signing. 
  

 21 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. 

 

			
	 “COMPANY”

	
	 HATTERAS FINANCIAL CORP.

		
	By:	 	/s/ Kenneth A. Steele
		
		 	Kenneth A Steele Its Chief Financial Officer

  

			
	 “MANAGER”

	
	 ATLANTIC CAPITAL ADVISORS LLC

		
	By:	 	/s/ Michael R. Hough
		
		 	Michael R. Hough Its Chief Executive Officer

  

 222007 Equity Incentive Plan

 Exhibit 10.4 
 HATTERAS FINANCIAL CORP. 
 2007 EQUITY INCENTIVE PLAN 
  

	1.	Establishment, Purpose and Types of Awards 

 Hatteras Financial Corp. (the “Company”), hereby establishes the HATTERAS FINANCIAL CORP. 2007 EQUITY INCENTIVE PLAN (the “Plan”). The purpose of the Plan is to promote the long-term growth and
profitability of the Company by (i) providing key people with incentives to improve stockholder value and to contribute to the growth and financial success of the Company through their future services, and (ii) enabling the Company to
attract, retain and reward the best-available persons and service providers. 
 The Plan permits the granting of stock options (including
incentive stock options qualifying under Code section 422 and nonstatutory stock options), stock appreciation rights, restricted or unrestricted stock awards, phantom stock, performance awards, other stock-based awards, or any combination of the
foregoing. 
  

	2.	Definitions 

 Under this Plan, except where the
context otherwise indicates, the following definitions apply: 
 (a) “Administrator” means the Board or the
committee(s) or officer(s) appointed by the Board that have authority to administer the Plan as provided in Section 3 hereof. 
 (b) “Affiliate” means any entity, whether now or hereafter existing, which controls, is controlled by, or is under common control with, the Company (including, but not limited to, joint ventures, limited liability
companies, and partnerships). For this purpose, “control” shall mean ownership of 50% or more of the total combined voting power or value of all classes of stock or interests of the entity, or the power to direct the management and
policies of the entity, by contract or otherwise. 
 (c) “Award” means any stock option, stock appreciation
right, stock award, phantom stock award, performance award, or other stock-based award. 
 (d) “Board” means
the Board of Directors of the Company. 
 (e) “Change in Control” means: (i) the acquisition (other than
from the Company) in one or more transactions by any Person, as defined in this Section 2(e), of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of 50% or more of
(A) the then outstanding shares of the securities of the Company, or (B) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “ Company Voting
Stock “); (ii) the closing of a sale or other conveyance of all or substantially all of the assets of the Company; or (iii) the effective time of any merger, share exchange, consolidation, or other business combination involving
the Company if immediately after such transaction persons who hold a majority of the outstanding voting securities entitled to vote generally in the election of directors of the surviving entity (or the entity owning 100% of such surviving entity)
are not persons who, immediately prior to such transaction, held the Company Voting Stock; provided ,however, that for purposes of any Award or subplan that constitutes a “nonqualified deferred compensation plan,” within the
meaning of Code section 409A, the Administrator, in its discretion, may specify a different definition of Change in Control in order to comply with the provisions of Code section 409A. 
 (f) “Code” means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder. 

(g) “Common Stock” means shares of common stock of the Company, par value of $0.001 per share. 
 (h) “Fair Market Value” means, with respect to a share of the Company’s Common Stock for any purpose on a particular
date, the value determined by the Administrator in good faith. However, if the Common Stock is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, 

 
as amended, and listed for trading on a national exchange or market, “Fair Market Value” means, as applicable, (i) either the closing
price or the average of the high and low sale price on the relevant date, as determined in the Administrator’s discretion, quoted on the New York Stock Exchange, the American Stock Exchange, the Nasdaq Global Select Market, or the Nasdaq Global
Market; (ii) the last sale price on the relevant date quoted on the Nasdaq Capital Market; (iii) the average of the high bid and low asked prices on the relevant date quoted on the Nasdaq OTC Bulletin Board Service or by the National
Quotation Bureau, Inc. or a comparable service as determined in the Administrator’s discretion; or (iv) if the Common Stock is not quoted by any of the above, the average of the closing bid and asked prices on the relevant date furnished
by a professional market maker for the Common Stock, or by such other source, selected by the Administrator. If no public trading of the Common Stock occurs on the relevant date but the shares are so listed, then Fair Market Value shall be
determined as of the next preceding date on which trading of the Common Stock does occur. For all purposes under this Plan, the term “relevant date” as used in this Section 2(h) means either the date as of which Fair Market
Value is to be determined or the next preceding date on which public trading of the Common Stock occurs, as determined in the Administrator’s discretion. 
 (i) “Grant Agreement” means a written document memorializing the terms and conditions of an Award granted pursuant to the
Plan and which shall incorporate the terms of the Plan. 
 (j) “Manager” means the person or persons, if any,
appointed, employed or contracted with by the Company from time to time and responsible for directing or performing day-to-day business affairs or operations of the Company, including any person or persons to whom the Manager subcontracts any of
such functions. The initial Manager is Atlantic Capital Advisors LLC. 
 (k) “Rule 144A Offering” means the
Company’s offering of Common Stock to qualified institutional buyers under Rule 144A under the 1933 Act, including shares of Common Stock that may be issued pursuant to the exercise of the underwriters’ over-allotment option as described
in the offering memorandum dated October 30, 2007. 
  

	3.	Administration 

 (a)
Administration of the Plan. The Plan shall be administered by the Board or by such committee or committees as may be appointed by the Board from time to time. To the extent allowed by applicable state law, the Board by resolution may
authorize an officer or officers to grant Awards (other than Stock Awards) to other officers and employees of the Company and its Affiliates, and, to the extent of such authorization, such officer or officers shall be the Administrator. 

(b) Powers of the Administrator. The Administrator shall have all the powers vested in it by the terms of the Plan, such powers
to include authority, in its sole and absolute discretion, to grant Awards under the Plan, prescribe Grant Agreements evidencing such Awards and establish programs for granting Awards. 
 The Administrator shall have full power and authority to take all other actions necessary to carry out the purpose and intent of the Plan,
including, but not limited to, the authority to: (i) determine the eligible persons to whom, and the time or times at which Awards shall be granted; (ii) determine the types of Awards to be granted; (iii) determine the number of
shares to be covered by or used for reference purposes for each Award; (iv) impose such terms, limitations, restrictions and conditions upon any such Award as the Administrator shall deem appropriate; (v) modify, amend, extend or renew
outstanding Awards, or accept the surrender of outstanding Awards and substitute new Awards (provided however, that, except as provided in Section 6 or 7(d) of the Plan, any modification that would materially adversely affect any outstanding
Award shall not be made without the consent of the holder); (vi) accelerate or otherwise change the time in which an Award may be exercised or becomes payable and to waive or accelerate the lapse, in whole or in part, of any restriction or
condition with respect to such Award, including, but not limited to, any restriction or condition with respect to the vesting or exercisability of an Award following termination of any grantee’s employment or other relationship with the
Company; (vii) establish objectives and conditions, if any, for earning Awards and determining whether Awards will be paid with respect to a performance period; and (viii) for any purpose, including 

  

 2 

 
but not limited to, qualifying for preferred tax treatment under foreign tax laws or otherwise complying with the regulatory requirements of local or foreign
jurisdictions, to establish, amend, modify, administer or terminate sub-plans, and prescribe, amend and rescind rules and regulations relating to such sub-plans. 
 The Administrator shall have full power and authority, in its sole and absolute discretion, to administer, construe and interpret the
Plan, Grant Agreements and all other documents relevant to the Plan and Awards issued thereunder, to establish, amend, rescind and interpret such rules, regulations, agreements, guidelines and instruments for the administration of the Plan and for
the conduct of its business as the Administrator deems necessary or advisable, and to correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award in the manner and to the extent the Administrator shall deem it
desirable to carry it into effect. 
 (c) Non-Uniform Determinations. The Administrator’s determinations under the
Plan (including without limitation, determinations of the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the Grant Agreements evidencing such Awards) need not be uniform and may be
made by the Administrator selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated. 
 (d) Limited Liability. To the maximum extent permitted by law, no member of the Administrator shall be liable for any action taken
or decision made in good faith relating to the Plan or any Award thereunder. 
 (e) Indemnification. To the maximum
extent permitted by law and by the Company’s charter and by-laws, the members of the Administrator shall be indemnified by the Company in respect of all their activities under the Plan. 
 (f) Effect of Administrator’s Decision. All actions taken and decisions and determinations made by the Administrator on all
matters relating to the Plan pursuant to the powers vested in it hereunder shall be in the Administrator’s sole and absolute discretion and shall be conclusive and binding on all parties concerned, including the Company, its stockholders, any
participants in the Plan and any other employee, consultant, or director of the Company, and their respective successors in interest. 
  

	4.	Shares Available for the Plan; Maximum Number of Awards 

 Subject to adjustments as provided in Section 7(d) of the Plan, the maximum number of shares of Common Stock that may be issued with respect to Awards granted under the Plan to (a) employees of the Company, any Affiliate of the
Company, or the Manager, or any entity that provides services to the Company, (b) managers or directors of the Manager or of entities that provide services to the Company or any Affiliate of the Company, (c) persons who perform bona fide
consulting or advisory services for the Company, the Manager, any Affiliate or the Company, and (d) the Company’s Independent Directors shall be equal to five percent (5%) of the number of shares sold pursuant to the Company’s
Rule 144A Offering, of which the maximum number of Common Stock that may be issued with respect to Awards of incentive stock options as that term is defined in Code section 422 shall be 1,000,000. 
 The Company shall reserve such number of shares for Awards under the Plan, subject to adjustments as provided in Section 7(d) of the Plan. If any
Award, or portion of an Award, under the Plan expires or terminates unexercised, becomes unexercisable, is settled in cash without delivery of shares of Common Stock, or is forfeited or otherwise terminated, surrendered or canceled as to any shares,
or if any shares of Common Stock are repurchased by or surrendered to the Company in connection with any Award (whether or not such surrendered shares were acquired pursuant to any Award), or if any shares are withheld by the Company, the shares
subject to such Award and the repurchased, surrendered and withheld shares shall thereafter be available for further Awards under the Plan; provided, however, that any such shares that are surrendered to or repurchased or withheld by the Company in
connection with any Award or that are otherwise forfeited after issuance shall not be available for purchase pursuant to incentive stock options intended to qualify under Code section 422. 
  

 3 

 The limits set forth in this paragraph shall apply to the grant of any award under the Plan if, at the
time of the grant, the Company is a “publicly held corporation” within the meaning of Section 162(m) of the Code. Subject to adjustments as provided in Section 7(d) of the Plan, the maximum number of shares of Common Stock
subject to Awards of any combination that may be granted during any one fiscal year of the Company to any one individual under this Plan shall be limited to 250,000 shares. Such per-individual limit shall not be adjusted to effect a restoration of
shares of Common Stock with respect to which the related Award is terminated, surrendered or canceled. 
  

	5.	Participation 

 The Administrator, in its sole
discretion, may grant Awards under the Plan to (a) employees of the Company, the Manager, any Affiliate of the Company or the Manager, or any entity that provides services to the Company, (b) managers or directors of the Manager or of
entities that provide services to the Company or any Affiliate of the Company, (c) persons who perform bona fide consulting or advisory services for the Company, the Manager, any Affiliate or the Company, and (d) the Company’s
Independent Directors (as defined in the Company’s charter). The Administrator may also grant Awards to a person in connection with hiring, retention or otherwise, prior to the date the person first becomes eligible to participate in the Plan,
provided that such Awards shall not become vested or exercisable, and no shares shall be issued to such person, prior to the date the person first becomes eligible to participate in the Plan. 
  

	6.	Awards 

 The Administrator, in its sole discretion,
establishes the terms of all Awards granted under the Plan. Awards may be granted individually or in tandem with other types of Awards, concurrently with or with respect to outstanding Awards. All Awards are subject to the terms and conditions
provided in the Grant Agreement. The Administrator may permit or require a recipient of an Award to defer such individual’s receipt of the payment of cash or the delivery of Common Stock that would otherwise be due to such individual by virtue
of the issuance of, exercise of, payment of, or lapse or waiver of restrictions respecting, any Award. If any such payment deferral is required or permitted, the Administrator shall, in its sole discretion, establish rules and procedures for such
payment deferrals. 
 (a) Stock Options. The Administrator may from time to time grant to eligible participants Awards
of incentive stock options as that term is defined in Code section 422 or nonstatutory stock options; provided, however, that Awards of incentive stock options shall be limited to employees of the Company or of any current or
hereafter existing “parent corporation” or “subsidiary corporation,” as defined in Code sections 424(e) and (f), respectively, of the Company and any other individuals who are eligible to receive incentive stock
options under the provisions of Code section 422. Options intended to qualify as incentive stock options under Code section 422 must have an exercise price at least equal to Fair Market Value as of the date of grant, but nonstatutory stock
options may be granted with an exercise price less than Fair Market Value. No stock option shall be an incentive stock option unless so designated by the Administrator at the time of grant or in the Grant Agreement evidencing such stock option.

 (b) Stock Appreciation Rights. The Administrator may from time to time grant to eligible participants Awards of
Stock Appreciation Rights (“SAR”). An SAR entitles the grantee to receive, subject to the provisions of the Plan and the Grant Agreement, a payment having an aggregate value equal to the product of (i) the excess of
(A) the Fair Market Value on the exercise date of one share of Common Stock over (B) the base price per share specified in the Grant Agreement, times (ii) the number of shares specified by the SAR, or portion thereof, which is
exercised. The base price per share specified in the Grant Agreement shall not be less than the lower of the Fair Market Value on the grant date or the exercise price of any tandem stock option Award to which the SAR is related. Payment by the
Company of the amount receivable upon any exercise of an SAR may be made by the delivery of Common Stock or cash, or any combination of Common Stock and cash, as determined in the sole discretion of the Administrator. If upon settlement of the
exercise of an SAR a grantee is to receive a portion of such payment in shares of Common Stock, the number of shares shall be determined by dividing such portion by the Fair Market Value of a share of Common Stock on the exercise date. No fractional
shares shall be used for such payment and the Administrator shall determine whether cash shall be given in lieu of such fractional shares or whether such fractional shares shall be eliminated. 
  

 4 

 (c) Stock Awards. The Administrator may from time to time grant restricted or
unrestricted stock Awards to eligible participants in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by law, as it shall determine. A stock Award
may be paid in Common Stock, in cash, or in a combination of Common Stock and cash, as determined in the sole discretion of the Administrator. 
 (d) Phantom Stock. The Administrator may from time to time grant Awards to eligible participants denominated in stock-equivalent units (“phantom stock”) in such amounts and on such terms and
conditions as it shall determine. Phantom stock units granted to a participant shall be credited to a bookkeeping reserve account solely for accounting purposes and shall not require a segregation of any of the Company’s assets. An Award of
phantom stock may be settled in Common Stock, in cash, or in a combination of Common Stock and cash, as determined in the sole discretion of the Administrator. Except as otherwise provided in the applicable Grant Agreement, the grantee shall not
have the rights of a stockholder with respect to any shares of Common Stock represented by a phantom stock unit solely as a result of the grant of a phantom stock unit to the grantee. 
 (e) Performance Awards. The Administrator may, in its discretion, grant performance awards which become payable on account of
attainment of one or more performance goals established by the Administrator. Performance awards may be paid by the delivery of Common Stock or cash, or any combination of Common Stock and cash, as determined in the sole discretion of the
Administrator. Performance goals established by the Administrator may be based on the Company’s or an Affiliate’s operating income or one or more other business criteria selected by the Administrator that apply to an individual or group of
individuals, a business unit, or the Company or an Affiliate as a whole, over such performance period as the Administrator may designate. 
 (f) Other Stock-Based Awards. The Administrator may from time to time grant other stock-based awards to eligible participants in such amounts, on such terms and conditions, and for such consideration, including
no consideration or such minimum consideration as may be required by law, as it shall determine. Other stock-based awards may be denominated in cash, in Common Stock or other securities, in stock-equivalent units, in stock appreciation units, in
securities or debentures convertible into Common Stock, or in any combination of the foregoing and may be paid in Common Stock or other securities, in cash, or in a combination of Common Stock or other securities and cash, all as determined in the
sole discretion of the Administrator. 
  

	7.	Miscellaneous 

 (a) Withholding
of Taxes. Grantees and holders of Awards shall pay to the Company or its Affiliate, or make provision satisfactory to the Administrator for payment of, any taxes required to be withheld in respect of Awards under the Plan no later than the date
of the event creating the tax liability. The Company or its Affiliate may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the grantee or holder of an Award. In the event that payment to
the Company or its Affiliate of such tax obligations is made in shares of Common Stock, such shares shall be valued at Fair Market Value on the applicable date for such purposes and shall not exceed in amount the minimum statutory tax withholding
obligation. 
 (b) Loans. To the extent otherwise permitted by law, the Company or its Affiliate may make or guarantee
loans to grantees to assist grantees in exercising Awards and satisfying any withholding tax obligations. 
 (c)
Transferability. Except as otherwise determined by the Administrator, and in any event in the case of an incentive stock option or a stock appreciation right granted with respect to an incentive stock option, no Award granted under the Plan
shall be transferable by a grantee otherwise than by will or the laws of descent and distribution except as set forth in the applicable Grant Agreement. Unless otherwise determined by the Administrator in accord with the provisions of the
immediately preceding sentence, an Award may be exercised during the lifetime of the grantee, only by the grantee or, during the period the grantee is under a legal disability, by the grantee’s guardian or legal representative. 
  

 5 

 (d) Adjustments for Corporate Transactions and Other Events. 
  

	 	(i)	Stock Dividend, Stock Split and Reverse Stock Split. In the event of a stock dividend of, or stock split or reverse stock split affecting, the Common Stock, (A) the
maximum number of shares of such Common Stock as to which Awards may be granted under this Plan and the maximum number of shares with respect to which Awards may be granted during any one fiscal year of the Company to any individual, as provided in
Section 4 of the Plan, and (B) the number of shares covered by and the exercise price and other terms of outstanding Awards, shall, without further action of the Board, be adjusted to reflect such event. The Administrator may make
adjustments, in its discretion, to address the treatment of fractional shares and fractional cents that arise with respect to outstanding Awards as a result of the stock dividend, stock split or reverse stock split. 

  

	 	(ii)	Non-Change in Control Transactions. Except with respect to the transactions set forth in Section 7(d)(i), in the event of any change affecting the Common Stock, the
Company or its capitalization, by reason of a spin-off, split-up, dividend, recapitalization, merger, consolidation or share exchange, other than any such change that is part of a transaction resulting in a Change in Control of the Company, the
Administrator, in its discretion and without the consent of the holders of the Awards, may make (A) appropriate adjustments to the maximum number and kind of shares reserved for issuance or with respect to which Awards may be granted under the
Plan, in the aggregate and with respect to any individual during any one fiscal year of the Company, as provided in Section 4 of the Plan; and (B) any adjustments in outstanding Awards, including but not limited to modifying the number,
kind and price of securities subject to Awards. 

  

	 	(iii)	Change in Control Transactions. In the event of any transaction resulting in a Change in Control of the Company, outstanding stock options and other Awards that are payable
in or convertible into Common Stock under this Plan will terminate upon the effective time of such Change in Control unless provision is made in connection with the transaction for the continuation or assumption of such Awards by, or for the
substitution of the equivalent awards of, the surviving or successor entity or a parent thereof. In the event of such termination, (A) the outstanding stock options and other Awards that will terminate upon the effective time of the Change in
Control shall become fully vested immediately before the effective time of the Change in Control unless expressly provided otherwise in the Grant Agreement, and (B) the holders of stock options and other Awards under the Plan will be
permitted, immediately before the Change in Control, to exercise or convert all portions of such stock options or other Awards under the Plan that are then exercisable or convertible or which become exercisable or convertible upon or prior to the
effective time of the Change in Control. If, immediately before the Change in Control, no stock of the Company is readily tradeable on an established securities market or otherwise, and the vesting of an Award or Awards pursuant to this
Section 7(d)(iii) would be treated as a “parachute payment” (as defined in section 280G of the Code), then such Award or Awards shall not vest unless the requirements of the shareholder approval exemption of
section 280G(b)(5) of the Code have been satisfied with respect to such Award or Awards. 

  

	 	(iv)	 Unusual or Nonrecurring Events. The Administrator is authorized to make, in its discretion and without the consent of holders of Awards, adjustments in the
terms and conditions of, and the criteria included in, Awards in recognition of 

  

 6 

	 	 
unusual or nonrecurring events affecting the Company, or the financial statements of the Company or any Affiliate, or of changes in applicable laws,
regulations, or accounting principles, whenever the Administrator determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

 (e) Substitution of Awards in Mergers and Acquisitions. Awards may be granted under the Plan from
time to time in substitution for awards held by employees, officers, consultants or directors of entities who become or are about to become employees, officers, consultants or directors of the Company or an Affiliate as the result of a merger or
consolidation of the employing entity with the Company or an Affiliate, or the acquisition by the Company or an Affiliate of the assets or stock of the employing entity. The terms and conditions of any substitute Awards so granted may vary from the
terms and conditions set forth herein to the extent that the Administrator deems appropriate at the time of grant to conform the substitute Awards to the provisions of the awards for which they are substituted. 
 (f) Closely Held Company Provision: Other Agreements. As a condition precedent to the grant of any Award under the Plan, the
exercise pursuant to such an Award, or to the delivery of certificates for shares issued pursuant to any Award, the Administrator may require the grantee or the grantee’s successor or permitted transferee, as the case may be, to become a party
to a stock restriction agreement, shareholders’ agreement, voting trust agreement or other agreements regarding the Common Stock of the Company in such form(s) as the Administrator may determine from time to time. 
 (f) Termination, Amendment and Modification of the Plan. The Board may terminate, amend or modify the Plan or any portion thereof
at any time. Except as otherwise determined by the Board, termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of
such termination. 
 (g) Non-Guarantee of Employment or Service. Nothing in the Plan or in any Grant Agreement
thereunder shall confer any right on an individual or entity to continue in the service of the Company or shall interfere in any way with the right of the Company to terminate such service at any time with or without cause or notice and whether or
not such termination results in (i) the failure of any Award to vest; (ii) the forfeiture of any unvested or vested portion of any Award; and/or (iii) any other adverse effect on the individual’s or the entity’s interests
under the Plan. 
 (h) Provision for Closely Held Company: Compliance with Securities Laws; Listing and Registration.
If at any time the Administrator determines that the delivery of Common Stock under the Plan is or may be unlawful under the laws of any applicable jurisdiction, or Federal, state or foreign securities laws, the right to exercise an Award or receive
shares of Common Stock pursuant to an Award shall be suspended until the Administrator determines that such delivery is lawful. The Company shall have no obligation to effect any registration or qualification of the Common Stock under Federal, state
or foreign laws. 
 The Company may require that a grantee, as a condition to exercise of an Award, and as a condition to the
delivery of any share certificate, make such written representations (including representations to the effect that such person will not dispose of the Common Stock so acquired in violation of Federal, state or foreign securities laws) and furnish
such information as may, in the opinion of counsel for the Company, be appropriate to permit the Company to issue the Common Stock in compliance with applicable Federal, state or foreign securities laws. The stock certificates for any shares of
Common Stock issued pursuant to this Plan may bear a legend restricting transferability of the shares of Common Stock unless such shares are registered or an exemption from registration is available under the Securities Act of 1933, as amended, and
applicable state or foreign securities laws. 
 (h) No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a grantee or any other person. To the extent that any grantee or other person acquires a right to receive payments from the
Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company. 
  

 7 

 (i) Governing Law. The validity, construction and effect of the Plan, of Grant
Agreements entered into pursuant to the Plan, and of any rules, regulations, determinations or decisions made by the Administrator relating to the Plan or such Grant Agreements, and the rights of any and all persons having or claiming to have any
interest therein or thereunder, shall be determined exclusively in accordance with applicable federal laws and the laws of the State of North Carolina without regard to its conflict of laws principles. 
 (j) Effective Date; Termination Date. The Plan is effective as of the date on which the Plan is adopted by the Board, subject to
approval of the stockholders within twelve months before or after such date. No Award shall be granted under the Plan after the close of business on the day immediately preceding the tenth anniversary of the effective date of the Plan, or if
earlier, the tenth anniversary of the date this Plan is approved by the stockholders. Subject to other applicable provisions of the Plan, all Awards made under the Plan prior to such termination of the Plan shall remain in effect until such Awards
have been satisfied or terminated in accordance with the Plan and the terms of such Awards. 
  

 8

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