Document:

Document

Exhibit 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”), dated as of November 9, 2020 is entered into by and between Serena Wolfe (the “Executive”) and Annaly Capital Management, Inc., a Maryland corporation (the “Company”).
    WHEREAS, the Company and Executive entered into an Employment Agreement dated February 12, 2020 (the “Original Agreement”) which became effective on June 30, 2020 upon the closing of the Company’s internalization transaction (the “Internalization”).
    WHEREAS, the Company and Executive desire to amend and restate the Original Agreement to (i) revise the provisions related to the 2020 and 2021 bonuses to remove any minimum guaranteed amount for those bonuses and (ii) update provisions related to the amount of severance benefits.
    WHEREAS, upon execution of this Agreement by the parties, this Agreement will amend, restate, replace, and supersede in its entirety the Original Agreement.
    NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the Company and the Executive hereby agree as follows:
1.    Employment.  
(a)The Company hereby employs and engages the Executive as Chief Financial Officer of Annaly Capital Management, Inc.  The Executive’s duties as Chief Financial Officer shall be such duties typically required of a Chief Financial Officer, and as shall from time to time be agreed upon by the Executive and the Company.  The Executive shall report to the Chief Executive Officer or the Company’s Board of Directors (the “Board”).  
(b)The term (“Term”) of this Agreement commenced as of the closing of the Internalization and shall continue through December 31, 2021, unless extended by each party hereto.  
(c)The Executive’s services shall be performed in New York, New York or such other location as the Company and Executive shall agree.  Except for periods of Disability (as defined below), during the Term, the Executive shall devote substantially all of her business time, attention and energies to the performance of her duties under this Agreement; provided, however, that the Executive shall be allowed, to the extent such activities do not substantially interfere with the performance by the Executive of her duties and responsibilities hereunder (i) to manage the Executive’s personal, financial and legal affairs, and (ii) with prior written consent from the Company, in its sole and absolute discretion, to serve on civic or charitable boards or committees, or on the boards or committees of any other entity, so long as 

 

such activities are permitted under the Company’s code of conduct and employment policies and do not violate the terms of this Agreement, including Sections 8 and 9 below, or any other written agreement between the Company and the Executive.  Exhibit A attached hereto identifies the boards and committees on which the Executive currently serves.  Furthermore, the Executive shall exercise due diligence and care in the performance of her duties to the Company under this Agreement.
2.    Compensation.
(a)Base Salary.  During the Term, the Company shall pay the Executive, and the Executive agrees to accept from the Company, in payment for her services to the Company, a base salary equal to a per annum amount of $750,000 (“Base Salary”), payable in accordance with the Company’s normal payroll practices.  The Base Salary can be increased (but not decreased) at any time by the Company.  The Executive’s salary as increased shall be deemed to be the Base Salary for all purposes under this Agreement.  
(b)Incentive Bonuses.  
(i)    For each of the 2020 and 2021 fiscal years, the Executive shall be eligible to receive an annual bonus, in the target amount of $3,000,000 for 2020 and $3,600,000 for 2021, which shall be paid to the Executive at such time as the Company pays its annual 2020 and 2021 bonuses, but no later than March 15, 2021 and March 15, 2022, respectively (each a “Bonus”).  The Bonus for each year actually earned shall be in such amount as determined by the Management Development and Compensation Committee of the Board (the “Compensation Committee”) based upon performance and other factors in accordance with the Company’s compensation policies and procedures.  The Compensation Committee may determine to have the Bonus for a year, to the extent earned, paid in cash, an award of restricted stock units (“RSUs”) under the Company’s 2020 Equity Incentive Plan (or any successor equity compensation plan, the “Equity Plan”), an award of performance stock units (“PSUs”) under the Equity Plan, or any combination of cash, RSUs, and PSUs.  For 2020, the $3,000,000 target Bonus will be comprised of $2,600,000 targeted as a cash Bonus and $400,000 targeted as a Bonus awarded in RSUs and/or PSUs.  For 2021, the $3,600,000 target Bonus will be comprised of $3,000,000 targeted as a cash Bonus and $600,000 targeted as a Bonus awarded in RSUs and/or PSUs.
(ii)     To the extent a portion of the Bonus for 2020 or 2021 is awarded as RSUs or PSUs, the number of RSUs and/or target number of PSUs shall be determined by dividing the applicable dollar amount by the Share Price (as defined below) as of the date of grant, rounded to the nearest whole number.  The RSUs and/or PSUs shall be granted under the Equity Plan and the Company’s standard form of RSU and/or PSU award agreement, reflecting such terms and conditions as approved by the Compensation Committee for such awards.  Any RSUs or PSUs granted as part of the 2020 Bonus shall be granted at the same time that the Company grants its annual equity 2020 awards, which shall be no later than March 15, 2021. Any RSUs or PSUs granted as part of the 2021 Bonus shall be granted at the same time that the Company grants its annual equity 2021 awards, which shall be no later than March 15, 
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2022.   To receive the grant of RSUs or PSUs as part of the Bonus for a year, the Executive must be employed on the date the RSUs and/or PSUs are granted. “Share Price” shall mean the closing price per Share at the close of regular hours trading on the New York Stock Exchange on the relevant date.
3.    Fringe Benefits.  During the Term, the Executive shall be entitled to participate in any employee benefit plans or programs adopted from time to time by the Company for the benefit of its senior executive employees, and the Executive shall be entitled to receive such other fringe benefits as may be granted to her from time to time by the Company. Nothing in this Agreement shall preclude the Company from terminating or amending any employee benefit plan or program from time to time after the Effective Date.
(a)Benefit Plans.  The Executive shall be entitled to participate in any benefit plans relating to stock options, stock purchases, awards, pension, thrift, profit sharing, life insurance, medical coverage, education, or other retirement or employee benefits available to other senior executive employees of the Company, subject to any restrictions (including waiting periods) specified in such plans.  
(b)Vacation.  The Executive shall be entitled to five weeks of paid vacation per calendar year, in accordance with the Company’s vacation policies. 
4.    Expenses.
(a)Business Expenses.  The Company shall reimburse the Executive for any and all necessary, customary and usual expenses, properly receipted in accordance with Company policies, incurred by Executive on behalf of the Company.
(b)Moving Expenses.  The Company shall reimburse the Executive for all usual relocation expenses incurred by the Executive and her household in moving to the New York, New York area in accordance with the Company’s relocation expense practices, including, without limitation, (i) all moving expenses (including vehicles), (ii) all realtor, broker, title and other fees and costs associated with the sale of Executive’s current home and purchase or a home in the New York area, (iii) storage costs; (iv) airfare for Executive and family, and (v) rental payments for temporary living quarters for Executive and family in the New York, New York area for a period not to exceed six months.  Reimbursement payments shall be grossed up to account for any tax obligations incurred by the Executive as part of this reimbursement obligation.   In the event that the Executive resigns without Good Reason (as defined below) or is terminated for Cause (as defined below) prior to December 8, 2021, she shall repay the relocation costs on a pro-rated basis, with 1/24th of the relocation costs being forgiven for each full month of her employment with the Company following December 9, 2019. 
5.    Termination of Executive’s Employment.
(a)Death.  In the event of the Executive’s death during her employment, the Company shall pay or provide the Executive’s executor, legal representative, administrator or designated beneficiary, as applicable, any Base Salary or Bonus earned, accrued 
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and owing but not yet paid under Section 2 above and any benefits accrued and due under any applicable benefit plans and programs of the Company (“Accrued Obligations”).  If the Executive’s death occurs on or before December 31, 2021, the Company will also pay or provide the Executive’s executor, legal representative, administrator or designated beneficiary, as applicable, the payments set forth in Section 6 below. 
(b)Disability.  If, as a result of the Executive’s incapacity due to physical or mental illness (“Disability”), the Executive shall have been absent from the full-time performance of her duties with the Company for six consecutive months, and, within 30 days after written notice is provided to her by the Company, the Executive shall not have returned to the full-time performance of her duties, the Executive’s employment under this Agreement may be terminated by the Company for Disability.  With respect to the period which begins when the Executive is first absent from the full-time performance of her duties with the Company due to Disability and ends upon the later of (i) the date she is terminated from employment in accordance with the foregoing sentence, or, (ii) the date she begins receiving long-term disability payments under the Company’s long-term disability plan for senior executives (“Salary Continuation Period”), the Company shall continue to pay the Executive her Base Salary at the rate in effect at the commencement of such period of Disability.  Upon the end of the Salary Continuation Period, the Company shall pay or provide the Executive the Accrued Obligations.  If the Executive’s termination on account of Disability occurs on or before December 31, 2021, the Company will also pay the Executive the payments set forth in Section 6 below.
(c)Termination by the Company for Cause.  The Company may terminate the Executive’s employment under this Agreement for “Cause,” at any time prior to expiration of the Term of the Agreement, only in the event of (i)  the Executive’s failure to substantially perform the duties described in this Agreement, (ii) acts or omissions constituting recklessness or willful misconduct on the part of the Executive in respect of her fiduciary obligations to the Company which is materially and demonstrably injurious to the Company, or (iii) the Executive’s conviction for fraud, misappropriation or embezzlement in connection with the assets of the Company or Annaly or its subsidiaries.  In the case of clause (i) only, it shall also be a condition precedent to the Company’s right to terminate the Executive’s employment for Cause that (1) the Company shall first have given the Executive written notice stating with specificity the reason for the termination (“breach”) at least 60 days before such determination and the Executive and her counsel are given the opportunity to answer such grounds for termination in person, at a hearing or in writing, in the Executive’s discretion; and (2) if such breach is susceptible to cure or remedy, a period of 60 days from and after the giving of the notice described in (1) shall have elapsed without the Executive having effectively cured or remedied such breach during such 60-day period, unless such breach cannot be cured or remedied within 60 days, in which case the period for remedy or cure shall be extended for a reasonable time (not to exceed an additional 30 days), provided the Executive has made and continues to make a diligent effort to effect such remedy or cure.  In the case of clause (iii) above, the Executive’s employment may be terminated immediately without any advance written notice.  Upon a determination that grounds exist for a termination for Cause by the Company and that the breach cannot be cured, or immediately in the case of clause (iii) above, the Executive’s 
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employment shall terminate for Cause and the Company shall only be obligated to pay or provide the Accrued Obligations.  
(d)Termination by the Company other than for Cause or by the Executive for Good Reason. During the Term, the Company may terminate the Executive’s employment without Cause by giving the Executive notice in writing not less 90 days in advance of such termination (or pay in lieu thereof), or the Executive may terminate her employment for Good Reason (the amount of compensation received during the notice period as pay in lieu of work or as paid administrative leave, is referred to as “Notice Pay”).  In such event, the Company shall pay or provide the Executive with: (1) the Accrued Obligations, and (2) if such termination occurs after payment of the Bonus for 2020 (whether or not during the Term), all amounts provided under the Annaly Capital Management Inc. Executive Severance Plan as in effect at the time of termination (the “Executive Severance Plan”), subject to the terms and conditions of the Executive Severance Plan.  During any notice period provided to the Executive by the Company, the Company may in its sole discretion place the Executive on paid administrative leave. The Executive shall not be entitled to any other compensation or benefits, except as may be separately negotiated by the parties in writing in conjunction with the termination of Executive’s employment.  If the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason before the date of payment of the Bonus for 2020, the Company will pay the Executive the payments set forth in Section 6 below in lieu of amounts pursuant to the Executive Severance Plan.  For purposes of this Agreement, “Good Reason” shall mean the occurrence of one or more of the following without the Executive’s written consent:  (i) a material breach of this Agreement by the Company, or (ii) a materially significant change in the Executive’s duties, reporting lines, authorities or responsibilities, or (iii) the relocation of the Executive’s principal place of employment more than 20 miles from New York, New York, or (iv) the failure of the Company to obtain the assumption in writing of its obligations to perform this Agreement by any successor to all or substantially all of the assets or business of the Company within 15 days upon a merger, consolidation, sale or similar transaction, provided, however, that none of the events specified in (i), (ii), or (iii) shall constitute Good Reason unless the Executive shall have notified the Company in writing describing the events which constitute Good Reason and the Company shall have failed to cure such event within a reasonable period, not to exceed 30 days, after the Company’s actual receipt of such written notice. 
(e)Termination by the Executive other than for Good Reason.  The Executive may at any time during the Term of this Agreement terminate her employment hereunder for any reason or no reason (other than for Good Reason) by giving the Company notice in writing not less 90 days in advance of such termination.  The Executive shall have no further obligations to the Company after the effective date of her termination, as set forth in the notice.  In the event of a termination by the Executive other than for Good Reason, the Company shall pay or provide the Accrued Obligations.  
6.    Compensation upon Termination by the Company other than for Cause or upon Termination by the Executive for Good Reason Before the Date of Payment of the Bonus for 2020, or upon Termination on account of Death or Disability on or Before December 
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31, 2021.  If the Executive’s employment shall be terminated (i) by the Company other than for Cause or by the Executive for Good Reason, in either case before the date of payment of the Bonus for 2020, or (ii) on account of the Executive’s death or Disability, in either case on or before December 31, 2021, the Executive (or, in the event of death, Executive’s executor, legal representative, administrator or designated beneficiary, as applicable) shall be entitled to a lump sum cash payment in the gross amount of $6,750,000. Such payment is subject to the Executive (or, in the event of death, Executive’s executor, legal representative, administrator or designated beneficiary, as applicable) signing and not revoking, within 60 days following such termination of employment, a general release in a form attached hereto as Exhibit B, subject to such legally required changes as the Company may require (the “Release”).  Such payment shall be made as soon as administratively practicable after the Release becomes effective, but not later than 60 days following the Executive’s termination of employment, subject to any required delay under Section 12. 
7.    Section 280G.  In the event of a change in ownership or control under section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), if it shall be determined that any payment or distribution in the nature of compensation (within the meaning of section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a “Payment”), would constitute an “excess parachute payment” within the meaning of section 280G of the Code, the aggregate present value of the Payments under the Agreement shall be reduced (but not below zero) to the Reduced Amount (defined below) if and only if the Accounting Firm (described below) determines that the reduction will provide the Executive with a greater net after-tax benefit than would no reduction.  No reduction shall be made unless the reduction would provide Executive with a greater net after-tax benefit.  The determinations under this Section shall be made as follows:
(a)The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Payments under this Agreement without causing any Payment under this Agreement to be subject to the Excise Tax (defined below), determined in accordance with section 280G(d)(4) of the Code.  The term “Excise Tax” means the excise tax imposed under section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.
(b)Payments under this Agreement shall be reduced on a nondiscretionary basis in such a way as to minimize the reduction in the economic value deliverable to the Executive. Where more than one payment has the same value for this purpose and they are payable at different times, they will be reduced on a pro rata basis.  Only amounts payable under this Agreement shall be reduced pursuant to this Section. 
(c)All determinations to be made under this Section shall be made by an independent certified public accounting firm selected by the Company and agreed to by the Executive immediately prior to the change-in-ownership or -control transaction (the “Accounting Firm”).  The Accounting Firm shall provide its determinations and any supporting calculations both to the Company and the Executive within 10 days of the transaction.  Any such 
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determination by the Accounting Firm shall be binding upon the Company and the Executive.  All of the fees and expenses of the Accounting Firm in performing the determinations referred to in this Section shall be borne solely by the Company.
8.    Noncompetition Provisions.
(a)Noncompetition.  The Executive agrees that during the Term of employment under this Agreement prior to any termination of her employment hereunder and, in the event of termination of the Executive’s employment by the Company for Cause or voluntary termination of employment by the Executive (other than for Good Reason), for a period of one year following such termination, the Executive will not, directly or indirectly, without the prior written consent of the Company, manage, operate, join, control, participate in, or be connected as a stockholder (other than as a holder of shares publicly traded on a stock exchange or the NASDAQ National Market System), partner, or other equity holder with, or as an officer, director or employee of, any private or public investment firm, broker dealer or real estate investment trust whose principal business strategy is based on or who engages in the trading, sales or management of mortgage-backed securities (the “Business”) in any geographical region in which the Company engages in the Business (a “Competitor”).  It is further expressly agreed that the Company will or would suffer irreparable injury of the Company in violation of the preceding sentence of this Agreement and that the Company would by reason of such competition be entitled to injunctive relief in a court of appropriate jurisdiction, and the Executive further consents and stipulates to the entry of such injunctive relief in such a court prohibiting the Executive from competing with the Company or any subsidiary or affiliate of the Company, in the areas of Business set forth above, in violation of this Agreement.  
(b)Right to Company Materials.  The Executive agrees that all styles, designs, lists, materials, books, files, reports, correspondence, records, and other documents (“Company Materials”) used, prepared, or made available to the Executive in connection with her employment by the Company shall be and shall remain the property of the Company.  Upon the termination of employment or the expiration of the Term of employment under this Agreement, all Company Materials shall be returned immediately to the Company, and the Executive shall not make or retain any copies thereof.  To the extent that the Executive made use of the Executive’s personal electronics (e.g., laptop, iPad, telephone, thumb drives, etc.) during employment with the Company, the Executive will delete all Company property and information from such personal devices on or before the Executive’s termination of employment.  The Company shall upon termination of Executive’s employment, provide Executive in electronic, and if requested hard-copy form, her Microsoft Outlook contacts, or the equivalent if she used some other contacts system. 
(c)Soliciting Executives.  The Executive promises and agrees that she will not directly or indirectly solicit any of the executives of the Company to work for any Competitor during the one-year period following her termination of employment unless such termination is by the Company for reasons other than Cause or by the Executive for Good Reason.
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(d)Corporate Opportunities.  The Executive agrees, in accordance with Delaware law, to first offer to the Company corporate opportunities learned of solely as a result of her service as an officer of the Company.
9.    Confidentiality.  Executive recognizes that the services to be performed by her hereunder are special, unique and extraordinary and that, by reason of her employment hereunder, she will acquire and have access to, Confidential Information (defined below) concerning the operations of the Company and its affiliates, the use or disclosure of which could cause the Company substantial loss and damages which could not be readily calculated and for which no remedy at law would be adequate.  Accordingly, Executive agrees that at all times during the Term and at all times thereafter, Executive will hold in strictest confidence and safeguard, and will not use or disclose to any person or entity except as necessary to perform her job duties hereunder, any confidential, proprietary or trade secret information of or belonging to the Company or any Company affiliate.  “Confidential Information” shall include, but is not limited to:  (i) confidential and proprietary matters relating to the initiatives, strategies, partnerships, investors, clients, advisors, business relations, vendors, suppliers, contractors, personnel and programs of the Company or any affiliate; (ii) confidential and proprietary matters relating to the business and financial operations of the Company or any affiliate, including but not limited to, financial data, budgets, financial statements, profits, business plans, product or service plans, contract terms, and training and program materials of the Company or any affiliate; (iii) confidential and proprietary matters relating to the intellectual property of the Company or any affiliate; and (iv) any trade secret of the Company or any affiliate (as that term is defined by law).  This Section 9 is intended to provide rights to the Company that are in addition to, not in lieu of, those rights the Company has under the common law or applicable statutes for the protection of trade secrets.  Executive understands and agrees that the rights and obligations set forth in this Section 9 are perpetual and shall extend beyond Executive’s employment.  
        Notwithstanding the foregoing, the restrictions of this Agreement on the use and disclosure of Confidential Information shall not apply (w) to information that is or becomes publicly known through no fault of Executive; (x) if the information is rightfully obtained by Executive from a third party authorized to make such disclosure to Executive without legal restriction; (y) if the information is identified by the Board in writing as no longer proprietary or confidential; or (z) if the information is required in response to a legal summons, subpoena or other lawful court order; provided that, Executive shall promptly notify the Company in writing of any such legal requirement and assist the Company or its designee upon request in seeking a protective order or in objecting to such request; provided further, that any such assistance will be at the sole cost and expense of the Company.  If Executive produces any Confidential Information pursuant to clause (z), Executive shall disclose only that portion of the Confidential Information that she is legally compelled to disclose and, if legally permitted to do so (unless requested by law enforcement or a regulator not to do so) provide a copy of same to the Company.
10.    Notices.  All notices and other communications under this Agreement shall be in writing and shall be given by fax or first class mail, certified or registered 
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with return receipt requested, and shall be deemed to have been duly given three days after mailing or 24 hours after transmission of a fax to the respective persons named below:
						
	If to the Company:	Annaly Capital Management, Inc.
1211 Avenue of the Americas
41st Floor
New York, NY 10036
Attention:  Chief Executive Officer
Phone: (212) 696-0100

	If to the Executive:	At such address as is on file with the Company

Either party may change such party’s address for notices by notice duly given pursuant hereto.

11.    Attorney’s Fees.  In the event judicial determination or arbitration (as provided in Section 24) is necessary for any dispute arising as to the parties’ rights and obligations hereunder, each party shall bear their own respective costs (including attorney’s fees), unless otherwise required by statute.
12.    Section 409A.
(a)This Agreement is intended to comply with section 409A of the Code, and its corresponding regulations, or an exemption thereto, and payments may only be made under this Agreement upon an event and in a manner permitted by section 409A of the Code, to the extent applicable.  Severance benefits under this Agreement are intended to be exempt from section 409A of the Code under the “short-term deferral” exception, to the maximum extent applicable, and then under the “separation pay” exception, to the maximum extent applicable.  Notwithstanding anything in this Agreement to the contrary, if required by section 409A of the Code, if the Executive is considered a “specified employee” for purposes of section 409A of the Code and if payment of any amounts under this Agreement is required to be delayed for a period of six months after separation from service pursuant to section 409A of the Code, payment of such amounts shall be delayed as required by section 409A of the Code, and the accumulated amounts shall be paid in a lump-sum payment within 10 days after the end of the six-month period.  If the Executive dies during the postponement period prior to the payment of benefits, the amounts withheld on account of section 409A of the Code shall be paid to the personal representative of the Executive’s estate within 60 days after the date of the Executive’s death.  
(b)All payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” under section 409A of the Code.  For purposes of section 409A of the Code, each payment hereunder shall be treated as a separate payment, and the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.  In no event may the Executive, directly or indirectly, designate the fiscal year of a payment.  Notwithstanding any provision of this Agreement to the contrary, in no event shall the timing of the Executive’s execution of the 
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Release, directly or indirectly, result in the Executive’s designating the fiscal year of payment of any amounts of deferred compensation subject to section 409A of the Code, and if a payment that is subject to execution of the Release could be made in more than one taxable year, payment shall be made in the later taxable year.
(c)All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement be for expenses incurred during the period specified in this Agreement, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a fiscal year not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other fiscal year, (iii) the reimbursement of an eligible expense be made no later than the last day of the fiscal year following the year in which the expense is incurred, and (iv) the right to reimbursement or in-kind benefits not be subject to liquidation or exchange for another benefit.
13.    No Mitigation or Offset.  The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise.  The Company shall not be entitled to set off against the amounts payable to the Executive under this Agreement any amounts earned by the Executive in other employment after termination of employment with the Company, or any amounts which might have been earned by the Executive in other employment had such other employment been sought.
14.    Termination of Prior Agreements.  Upon commencement of the Term, this Agreement terminates and supersedes any and all prior agreements and understandings between the parties with respect to employment or with respect to the compensation of the Executive by the Company.
15.    Resignation of Positions.  Effective as of the date of any termination of employment, the Executive will resign from all Company-related positions, including as an officer and director of the Company and its parents, subsidiaries and affiliates.
16.    Assignment; Successors.  This Agreement is personal in its nature and neither of the parties hereto shall, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder; provided that, in the event of the merger, consolidation, transfer, or sale of all or substantially all of the assets of the Company with or to any other individual or entity, this Agreement shall, subject to the provisions hereof, be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all the promises, covenants, duties, and obligations of the Company hereunder.
17.    Governing Law.  This Agreement and the legal relations thus created between the parties hereto shall be governed by and construed under and in accordance with the laws of the State of New York.
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18.    Entire Agreement; Headings.  This Agreement embodies the entire agreement of the parties respecting the matters within its scope and may be modified only in writing.  Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.
19.    Waiver; Modification.  Failure to insist upon strict compliance with any of the terms, covenants, or conditions hereof shall not be deemed a waiver of such term, covenant, or condition, nor shall any waiver or relinquishment of, or failure to insist upon strict compliance with, any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such right or power at any other time or times.  This Agreement shall not be modified in any respect except by a writing executed by each party hereto.
20.    Severability.  In the event that a court of competent jurisdiction determines that any portion of this Agreement is in violation of any statute or public policy, only the portions of this Agreement that violate such statute or public policy shall be stricken.  All portions of this Agreement that do not violate any statute or public policy shall continue in full force and effect.  Further, any court order striking any portion of this Agreement shall modify the stricken terms as narrowly as possible to give as much effect as possible to the intentions of the parties under this Agreement.
21.     Indemnification; Directors and Officers Insurance.  In the Executive’s capacity as an employee of the Company or any subsidiary or affiliated entity, or serving or having served as an employee at the Company’s request, the Executive shall be indemnified and held harmless by the Company to the fullest extent allowed by law, the Company’s Articles of Incorporation and Bylaws or any indemnification agreement between the Company and the Executive, from and against any and all losses, claims, damages, liabilities, expenses (including reasonable legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, in which the Executive may be involved, or threatened to be involved, as a party or otherwise by reason of the Executive’s status as an employee of the Company, or which relate to or arise out of the Company, its assets, business or affairs. At the Executive’s request, the Company shall advance all reasonable expenses incurred by the Executive in connection with the investigation, defense, settlement or appeal of any civil or criminal action or proceeding referenced in this Section, including but not necessarily limited to, reasonable fees of legal counsel, expert witnesses or other litigation-related expenses. The obligations of this paragraph shall survive the expiration or termination of the Executive’s employment with the Company.  During the Term and for six years following the date of the Executive’s termination as an officer of the Company, the Company (or any successor thereto) shall provide comprehensive coverage under the Company’s officers and directors insurance policy (or policies) on substantially the same terms and levels that it provides to its senior executive officers, at the Company’s sole cost. 
22.    Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
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23.    Successor Sections.  References herein to sections, rules or regulations of the Code or other applicable law shall be deemed to include any successor sections, rules or regulations.
24.    Arbitration.  Any dispute, claim or controversy arising out of or in relation to this Agreement, which the Executive and the Company are unable to resolve shall be determined by the decision of a board of arbitration consisting of a single arbitrator selected in accordance with the Employment Rules of the American Arbitration Association upon application made to it for such purpose by either the Company or the Executive.  The arbitration proceedings shall take place in New York, New York or such other place as shall be agreed to by the parties.  The Arbitrator shall reach and render a decision in writing.    Any award shall be rendered on the basis of the substantive law governing this Agreement.  
Any decision made by the Arbitrator shall be final, binding and conclusive on the Executive and the Company and entitled to be enforced to the fullest extent permitted by law and entered in any court of competent jurisdiction.  The Company shall bear all of the costs of arbitration, except for the attorneys’ fees incurred by the Executive, which fees shall be subject to Section 11 hereof.
25.    Third Party Beneficiary.  The Company and the Executive each hereby designate Annaly as a third-party beneficiary of this Agreement having the right to enforce the Agreement.
26.    Withholding.  All payments under this Agreement shall be made subject to applicable tax withholding, and the Company shall withhold from any payments under this Agreement all federal, state and local taxes as the Company is required to withhold pursuant to any law or governmental rule or regulation.  The Executive shall bear all expense of, and be solely responsible for, all federal, state and local taxes due with respect to any payment received under this Agreement.
27.    Company Policies.  This Agreement and the compensation payable hereunder, other than the Guaranteed Bonuses, shall be subject to any applicable clawback or recoupment policies, share trading policies, and other policies that may be implemented by the Board from time to time with respect to officers of the Company.  
28.    Acknowledgment of Full Understanding.  THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT EXECUTIVE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS INTO THIS AGREEMENT. THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT EXECUTIVE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS AND CONSULT WITH AN ATTORNEY OF EXECUTIVE’S CHOICE BEFORE SIGNING THIS AGREEMENT.

[REMAINDER OF THE PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Executive has hereunto signed this Agreement, as of the date first above written. 
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                ANNALY CAPITAL MANAGEMENT, INC.

                /s/ Donnell A. Segalas        
                Name: Donnell A. Segalas
                Title:  Chair of the Management Development and Compensation Committee
                Date:   November 9, 2020
                

                EXECUTIVE
                /s/ Serena Wolfe        
                Name:  Serena Wolfe
                Date:    November 9, 2020

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Exhibit A

•Treasurer, Finance Committee and Board of Directors for Non-traditional Employment for Women (NEW), a New York based not for profit. 
•Trustee, Urban Land Institute, Chair for Global WLI and Chair of ULI’s National Audit Committee.

15
 

Exhibit B

Form of Release

(see attached)

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CONFIDENTIAL SEPARATION AND RELEASE AGREEMENT
This Confidential Separation and Release Agreement (the “Agreement”), entered into as of  XXX, is by and between Annaly Capital Management, Inc., a Maryland corporation (the “Company”) and Serena Wolfe (the “Employee”) (collectively, the “parties”).
WHEREAS, Employee is an at-will employee of the Company and holds and has held various titles and responsibilities with respect to the Company;
WHEREAS, Employee and the Company are parties to an Employment Agreement dated _______, 2020 (the “Employment Agreement”);
WHEREAS, pursuant to Section 6 of the Employment Agreement, upon Employee’s termination from employment by the Company other than for Cause (as defined in the Employment Agreement); upon termination by Employee for Good Reason (as defined in the Employment Agreement), or upon termination on account of death or Disability (as defined in the Employment Agreement) on or before December 31, 2021, Employee is entitled to certain termination compensation;  
WHEREAS, effective as of the date of the Separation Date (as defined below), Employee ceases to hold any positions with the Company or any of its subsidiaries or affiliates, any delegation of authority to Employee will be revoked, and Employee will not represent or take any action on behalf of the Company; and
WHEREAS, Employee and the Company wish to enter into this Agreement to provide the Company together with its subsidiaries, affiliates and related parties, with a release of claims;
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth in this Agreement, the Employee and the Company have agreed and do hereby agree as follows: 
1.    Termination of Employment.  The Employee acknowledges and agrees that the Employee’s employment with the Company, including all offices and positions the Employee holds with any member of the Company and its subsidiaries and affiliates, shall terminate effective XXX  (the “Separation Date”).  The Company agrees to continue to pay the Employee the Employee’s normal accrued and unpaid base salary (on a pro rata basis) through XXX (the “Last Day Paid Date”) pursuant to the Company’s normal payroll practices. Upon execution and return of this Agreement, and the Employee’s return of all Company property as provided for in Section 9 of this Agreement, the Company agrees to provide the Employee with the payments and benefits set forth below:
(a)    Separation Payment.  The Company will provide the Employee the payments due in Section 6 of the Employment Agreement, and to the extent applicable, as limited in Section 7 of the Employment Agreement (the “Separation Payment”). The Company agrees to also 
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provide the Employee with the cash equivalent of the Employee’s accrued but unused vacation time earned through the Separation Date pursuant to the Company’s normal payroll practices.  
(b)    Outplacement Services.  The Company agrees to provide the Employee outplacement services for six months following the Separation Date.  
(c)    No Additional Benefits or Payments.  The Employee acknowledges that the termination of employment does not entitle the Employee to the acceleration of any benefits or termination payments except as set forth in this Agreement.
2.    Employee Acknowledgement.  Employee acknowledges and agrees that the Company has provided Employee with all monies and benefits to which the Employee is owed relating to the Employee’s employment with the Company, including, but not limited to, all wages earned, bonuses, vacation pay, and that no other amounts are due to the Employee other than as set forth in this Agreement.  The Employee further acknowledges that Employee has received all leave (paid or unpaid) for which the Employee was eligible during the Employee’s employment.  The Employee further acknowledges and agrees that the Company’s agreement to provide the payments and benefits contained in Section 1 of this Agreement is solely in exchange for the promises, releases and agreements of Employee set forth in this Agreement.  Employee acknowledges and agrees that Employee is required to execute and continue to comply with the terms of this Agreement as a condition to receiving the payments and benefits contained in Section 1 of this Agreement, and would not be entitled to the payments and benefits contained in Section 1 of this Agreement if Employee did not do so.
3.    General Release of Claims.  
3.1  In exchange for the consideration provided under this Agreement, which Employee acknowledges is acceptable and satisfactory to Employee, Employee, for and on behalf of Employee and each of Employee’s heirs, administrators, executors, personal representatives, beneficiaries, successors and assigns, fully and completely releases the Company together with its affiliates, and each of their respective current and former officers, directors, managers, members, partners, shareholders, agents, employees, employee benefit plans and fiduciaries, trustees, insurers, representatives, attorneys, transferees, recordkeepers, service providers, successors and assigns (collectively, the “Releasees”), collectively, separately, and severally, of and from any and all claims, grievances, injuries, agreements, covenants, promises, demands, damages, causes of action, debts, liabilities, controversies, judgments, arbitrations, sums of money, wages, attorneys’ fees, costs, and suits of every kind and nature whatsoever, foreseen, unforeseen, known or unknown, which Employee has had, now has, or may have against the Releasees from the beginning of time up until the time Employee signs this Agreement, which arise out of or relate in any way to Employee’s employment relationship with the Company or the Releasees or other associations with the Company or the Releasees or any termination thereof, with the exception of (i) any claims which cannot be waived by private agreement; (ii) any claims which may arise after the date Employee signs this Agreement; (iii) any claims for breach of this Agreement or Section 6 of the Employment Agreement; (iv) any claims by Employee for indemnification, advancement or insurance coverage for Employee’s acts or omissions while employed with the Company or any of its affiliates under the Employment Agreement, any articles of incorporation, bylaws, operating agreement, directors and officers insurance policy, or other applicable plan, document, agreement, or insurance policy; (v) any claim or right Employee may have under COBRA; (vi) any claim or right Employee may have for unemployment insurance or workers’ compensation benefits; or (vii) any vested benefits under the written terms of a qualified employee pension benefit plan. 
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3.2  Without limiting the generality of the foregoing, this waiver, release, and discharge includes any claim or right, to the extent legally capable of being waived, based upon or arising under any federal, state or local fair employment practices and equal opportunity laws, including, but not limited to, all claims arising under any federal, state or local statute or ordinance, constitutional provision, public policy or common law, including all claims under the Age Discrimination in Employment Act of 1967 (“ADEA”), as amended by the Older Workers’ Benefits Protection Act of 1990 (“OWBPA”), Title VII of the Civil Rights Act of 1964, the Equal Pay Act, the Civil Rights Act of 1866, the Civil Rights Act of 1871, Employee Order 11246, the Employee Retirement Income Security Act of 1974 (“ERISA”) (including, but not limited to, claims for unvested benefits and claims for breach of fiduciary duty under ERISA), the Americans with Disabilities Act, the Rehabilitation Act of 1973, the Family and Medical Leave Act of 1993, the Worker Adjustment and Retraining Notification Act, the New York Executive Law, including its Human Rights Law, the New York Retaliatory Action By Employers Law, the New York Civil Rights Law, the New York Labor Law, the New York City Administrative Code, including its Human Rights Law, the New York State Constitution, including any amendments thereto, and all claims for breach of any express or implied contract, all claims for breach of any covenant of good faith and fair dealing, all claims for promissory estoppel or detrimental reliance, all claims for wages, bonuses, incentive compensation, fringe benefits and severance allowances or entitlements, all tort claims, all claims for compensatory or punitive damages, or any other claim for damages or injury of any kind whatsoever, and all claims for monetary recovery, including, without limitation, attorneys’ fees and related expenses, experts’ fees and related expenses, medical fees and related expenses, and all other costs and disbursements.  Employee hereby irrevocably and unconditionally waives and relinquishes any right to obtain or receive reinstatement or any monetary, injunctive, or other relief through any suit, complaint, action or proceeding commenced or maintained in any court, agency, or other forum by Employee or on Employee’s behalf for or on account of any of the claims released in this Agreement.    
4.    Nothing herein shall prevent Employee from filing a charge or complaint with the Equal Employment Opportunity Commission (“EEOC”) or similar federal or state agency or Employee’s ability to participate in any investigation or proceeding conducted by such agency; provided, however, that, to the fullest extent permitted by law, Employee is waiving any right to recover monetary damages or any other form of personal relief in connection with any such charge, complaint, investigation or proceeding.  To the extent Employee receives any personal or monetary relief in connection with any such charge, complaint, investigation or proceeding, the Company will be entitled to an offset for the payments made pursuant to Section 1 of this Agreement to the extent determined by a court of competent jurisdiction.      
5.    Confidentiality.  Unless, until, and to the extent publicly disclosed by the Company, the parties agree to maintain the confidentiality of this Agreement, and to refrain from disclosing or making reference to its terms, except (a) as may be required by law; or (b) with Employee’s accountant or attorney for the sole purposes of obtaining, respectively, financial or legal advice;  (c) with Employee’s immediate family members; (d) with employees, agents, attorneys, accountants, directors and/or officers of the Company as reasonably required to implement this Agreement (the parties in clauses (b), (c) and (d), “Permissible Parties”); provided that the Permissible Parties agree to keep the terms of this Agreement confidential.  Employee agrees to keep confidential any non-public information relating to the Company, and/or its subsidiaries and affiliates.  The parties acknowledge and agree that any disclosure of any information by Employee or the Permissible Parties contrary to the provisions of this Agreement shall be a breach of this Agreement.  Employee likewise acknowledges and agrees to abide by the provisions of any and all confidentiality agreements Employee executed with the Company or any affiliate thereof, the terms of which shall remain in full force and effect.
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6.    Permitted Conduct.  Nothing in this Agreement shall prohibit or restrict Employee, the Company, or their respective attorneys from:  (i) making any disclosure of relevant and necessary information or documents in any action, investigation, or proceeding relating to this Agreement, or as required by law or legal process; or (ii) participating, cooperating, or testifying in any action, investigation, or proceeding with, or providing information to, any self-regulatory organization, governmental agency or legislative body, including but not limited to, the EEOC or similar state or local agency, or the Company’s Legal Department, provided that, to the extent permitted by law, upon receipt of any subpoena, court order or other legal process compelling the disclosure of any Company or Employee confidential information or documents, the disclosing party gives prompt written notice to the other party so as to permit such other party to protect such party’s interests in confidentiality to the fullest extent possible.
7.    Non-Disparagement.  Except as expressly permitted in Section 6 of this Agreement, Employee agrees that Employee shall not at any time make any written or verbal comments or statements of a defamatory or disparaging nature, in any manner, including, but not limited to, via the Internet on any website, blog, forum, or other electronic or social media, whether anonymous or not, regarding the Company and/or the Releasees or their personnel or business and Employee shall not take any action that would cause the Company and/or the Releasees or their personnel or business any embarrassment or humiliation or otherwise cause or contribute to their being held in disrepute.  Except as expressly permitted in Section 6 of this Agreement, the Company’s officers and directors shall not at any time make any written or verbal comments or statements of a defamatory or disparaging nature, in any manner, including, but not limited to, via the Internet on any website, blog, forum, or other electronic or social media, whether anonymous or not, regarding the Employee, and the Company’s directors and officers shall not take any action that would cause Employee any embarrassment or humiliation or otherwise cause or contribute to her being held in disrepute.  The Company agrees that it will not issue, authorize or condone any action that would disparage Employee.
8.    Cooperation.  Employee agrees that upon the Company’s reasonable notice to Employee, Employee shall cooperate with the Company and its counsel (including, if necessary, preparation for and appearance at depositions, hearings, trials or other proceedings) with regard to any past, present or future legal or regulatory matters that relate to or arise out of matters Employee has knowledge about or have been involved with during Employee’s employment with the Company.  In the event that such cooperation is required, Employee will be reimbursed for reasonable expenses incurred in connection therewith.  
9.    Return of Property.  Employee represents that Employee has returned to the Company all material Company property, including, without limitation, all mailing lists, reports, files, memoranda, records, computer hardware, software, credit cards, door and file keys, computer access codes or disks and instructional manuals, and other physical or personal property, any documents or other materials which are necessary for the Company to comply with its obligations under the Code of Ethics, regardless of who created the foregoing materials, and that, other than as set forth in Section 8(b) of the Employment Agreement, Employee will not retain any copies, duplicates, reproductions or excerpts thereof. Furthermore, should the Employee or the Company discover that the Employee inadvertently possesses any of the documents or materials described in this Section for which Employee is not otherwise authorized to maintain, Employee agrees to return any such documents or materials to the Company immediately, and to permanently delete any electronic copies of such records from any personal computing device in Employee’s possession.
10.    Acknowledgments.  Employee hereby acknowledges that:
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10.1  The Company advises Employee to consult with an attorney before signing this Agreement; 
10.2  Employee has obtained independent legal advice from an attorney of Employee’s own choice with respect to this Agreement, or has knowingly and voluntarily chosen not to do so;  
10.3  Employee has freely, voluntarily and knowingly entered into this Agreement after due consideration;
10.4  In exchange for Employee’s waivers, releases and commitments set forth in this Agreement, the payments, benefits and other considerations that Employee is receiving pursuant to this Agreement exceed any payment, benefit or other thing of value to which Employee would otherwise be entitled, and are just and sufficient consideration for the waivers, releases and commitments set forth herein; 
10.5  Employee acknowledges that, if Employee elects to sign this Agreement, the executed Agreement must be returned to the Company’s General Counsel (or if none, an appropriate executive of the Company) by email, overnight mail, or U.S. mail.  
10.6  No promise or inducement has been offered to Employee, except as expressly set forth herein, and Employee is not relying upon any such promise or inducement in entering into this Agreement.  Employee’s employment remains at-will and this Agreement does not confer upon Employee any right or obligation to continue in the employ of the Company for any period of time; and
10.7 Employee acknowledges that the date on which Employee signs the Agreement shall be considered the “Effective Date” of the Agreement.
11.    Non-Admission.  It is understood and agreed that neither the execution of this Agreement, nor the terms of the Agreement, constitute an admission of liability to Employee by the Company or the Releasees, and such liability is expressly denied.  It is further understood and agreed that no person shall use the Agreement, or the consideration paid pursuant thereto, as evidence of an admission of liability, inasmuch as such liability is expressly denied.    
12.    Assignment; Successors.  This Agreement is personal in its nature and none of the parties hereto shall, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder; provided that, in the event of the merger, consolidation, transfer, or sale of all or substantially all of the assets of the Company with or to any other individual or entity, this Agreement shall, subject to the provisions hereof, be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all the promises, covenants, duties, and obligations of the Company hereunder.
13.    Governing Law.  This Agreement shall be construed, performed, enforced and in all respects governed in accordance with the laws of the State of New York, without giving effect to the principles of conflicts of law thereof.  This Agreement does not supersede Section 24 of the Employment Agreement, which is incorporated herein. 
14.    Entire Agreement; Headings.  This Agreement embodies the entire agreement of the parties and replaces any other oral or written agreement between Employee and the Company relating to the subject matter of this Agreement.  Section headings in this Agreement are 
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included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.
15.    Waiver; Modification.  Failure to insist upon strict compliance with any of the terms, covenants, or conditions hereof shall not be deemed a waiver of such term, covenant, or condition, nor shall any waiver or relinquishment of, or failure to insist upon strict compliance with, any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such right or power at any other time or times.  This Agreement shall not be modified or amended in any respect except by a writing executed by each party hereto.
16.    Severability.  In the event that a court of competent jurisdiction determines that any portion of this Agreement is in violation of any statute or public policy, only the portions of this Agreement that violate such statute or public policy shall be stricken.  All portions of this Agreement that not violate any statute or public policy shall continue in full force and effect, to be read and construed as if such provisions were originally deleted.  Further, any court order striking any portion of this Agreement shall modify the stricken terms as narrowly as possible to give as much effect as possible to the intentions of the parties in entering this Agreement.
17.    Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original and all of which together will constitute one and the same agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Employee has hereunto signed this Agreement, as of the date written.
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ANNALY CAPITAL MANAGEMENT, INC.

By:________________________

                        Name: __________________________
                        
                        Title: ___________________________

                        Date: ___________________________ 

I HAVE READ THIS AGREEMENT.   I UNDERSTAND THAT I AM GIVING UP IMPORTANT RIGHTS.   I AM AWARE OF MY RIGHT TO CONSULT WITH AN ATTORNEY OF MY OWN CHOOSING.  I  SIGN THIS AGREEMENT FREELY AND VOLUNTARILY, WITHOUT DURESS OR COERCION.

UNDERSTOOD, AGREED AND ACCEPTED
WITH THE INTENTION TO BE LEGALLY
BOUND:

EMPLOYEE

By:  ________________________
                        
                        Name: _________________________

                        Date:  _________________________

23Document

Exhibit 10.3

EMPLOYMENT AGREEMENT 
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into by and between Annaly Capital Management, Inc. (the “Company”) and Timothy P. Coffey (the “Executive”) as of November 9, 2020.
WHEREAS, the Company and Executive entered into an Employment Agreement dated February 12, 2020 (the “Original Agreement”) which became effective on June 30, 2020 upon the closing of the Company’s internalization transaction (the “Internalization”).
WHEREAS, the Company and Executive desire to amend and restate the Original Agreement to revise the provisions related to the 2020 bonus to remove any minimum guaranteed amount for that bonus.
WHEREAS, upon execution of this Agreement by the parties, this Agreement will amend, restate, replace, and supersede in its entirety the Original Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the Company and the Executive hereby agree as follows:
1.Employment.
(a)Term.  The term of this Agreement shall begin upon the closing of the Internalization (the “Effective Date”), and shall continue until the date the Company has paid the 2020 Bonus (as defined in Section 2(b) below), which shall be no later than March 15, 2021 (the “Term End Date”), or until the termination of the Executive’s employment, if earlier.  The period commencing on the Effective Date and ending on the date on which the term of this Agreement terminates is referred to herein as the “Term.”  
(b)Duties.  During the Term, the Executive shall serve as the Chief Credit Officer of the Company, with duties consistent with such position, and shall report to the Chief Executive Officer of the Company (the “CEO”).  The Executive shall perform all duties and accept all responsibilities incident to such position as may be reasonably and lawfully assigned to the Executive by the CEO.  The Executive represents to the Company that the Executive is not subject to or a party to any employment agreement, noncompetition covenant, or other agreement that would be breached by, or prohibit the Executive from, executing this Agreement and performing fully the Executive’s duties and responsibilities hereunder.
(c)Best Efforts.  During the Term, the Executive shall devote the Executive’s best efforts and full time and attention to promote the business and affairs of the Company and its Affiliates, and shall not be engaged in other business activities.  The foregoing shall not be construed as preventing the Executive from (1) serving on civic, educational, philanthropic or charitable boards or committees, or, with the prior written consent of the CEO, in its sole discretion, on corporate boards, and (2) managing personal investments; so long as such activities are permitted under the Company’s code of conduct and employment policies, do not violate the provisions of Section 8 below, and do not interfere or conflict with the Executive’s 

obligations to the Company hereunder. The Executive shall provide notice of any activity under Section 1(c)(1) to the Company.
(d)Principal Place of Employment.  The Executive understands and agrees that the Executive’s principal place of employment will be in the Company’s offices located in the New York City metropolitan area and that the Executive will be required to travel for business in the course of performing the Executive’s duties for the Company.   
(e)Resignation of Positions.  Effective as of the date of any termination of employment, the Executive shall resign from all Company-related positions, including as an officer and director of the Company and its parents, subsidiaries and Affiliates.
2.Compensation.  
(a)Base Salary.  During the Term, the Company shall pay the Executive a base salary (“Base Salary”), at the annual rate of $750,000, which shall be paid in installments in accordance with the Company’s normal payroll practices.  The Executive’s Base Salary shall be reviewed annually by the Board of Directors of the Company (the “Board”) pursuant to the normal performance review policies and may be increased but not decreased from time to time as the Board deems appropriate.  The Management Development and Compensation Committee of the Board (the “Compensation Committee”) may take any actions of the Board pursuant to this Agreement.  Notwithstanding anything to the contrary, any amounts payable by the Company under this Agreement may be paid through the Company’s direct or indirect wholly owned subsidiaries, as determined by the Company.  
(b)Incentive Compensation.
(1)For the 2020 calendar year, the Executive shall be eligible to receive an annual bonus, in the target amount of $3,800,000, which shall be paid to the Executive at such time as the Company pays its annual 2020 bonuses, but no later than March 15, 2021 (the “2020 Bonus”). The 2020 Bonus actually earned shall be in such amount as determined by the Compensation Committee based upon performance and other factors in accordance with the Company’s compensation policies and procedures.  The Compensation Committee may determine to have the 2020 Bonus, to the extent earned, paid in cash, an award of restricted stock units (“RSUs”) under the Company’s 2020 Equity Incentive Plan (or any successor equity compensation plan, the “Equity Plan”), an award of performance stock units (“PSUs”) under the Equity Plan, or any combination of cash, RSUs, and PSUs.  
(2)If any portion of the 2020 Bonus is awarded as RSUs or PSUs, the number of RSUs and/or target number of PSUs shall be determined by dividing the applicable dollar amount by the Share Price (as defined below) as of the date of grant, rounded to the nearest whole number.  The RSUs and/or PSUs shall be granted under the Equity Plan and the Company’s standard form of RSU and/or PSU award agreement, reflecting such terms and conditions as approved by the Compensation Committee for such awards.  Any RSUs or PSUs granted as part of the 2020 Bonus shall be granted at the same time that the Company grants its annual equity 2020 awards, which shall be no later than March 15, 2021. To receive the grant of 
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RSUs or PSUs as part of the 2020 Bonus, the Executive must be employed on the date the RSUs and/or PSUs are granted. “Share Price” shall mean the closing price per Share at the close of regular hours trading on the New York Stock Exchange on the relevant date.
(3)At the closing of the Internalization, the Executive shall be entitled to receive long-term incentive compensation consisting of an award of RSUs with a value equal to $1,250,000 (the “Internalization RSUs”), covering a number of Shares determined by dividing $1,250,000 by the Share Price as of the date of grant, rounded to the nearest whole number.  The Internalization RSUs shall be granted under the Equity Plan and the Company’s standard form of RSU Agreement, in each case consistent with the text of this Agreement and Exhibit A.  The Internalization RSUs shall be granted promptly upon the closing of the Internalization. To receive the grant of Internalization RSUs, the Executive must be employed on the date the Internalization RSUs are granted. The Compensation Committee will make all determinations with respect to the Internalization RSUs in good faith, in consultation with the CEO, and in compliance with the text of this Agreement and Exhibit A. 
3.Retirement and Welfare Benefits.  During the Term, the Executive shall be eligible to participate in the health, life insurance, long-term disability, retirement and welfare benefit plans and programs available to employees of the Company, pursuant to their respective terms and conditions.  Nothing in this Agreement shall preclude the Company or any Affiliate of the Company from terminating or amending any employee benefit plan or program from time to time after the Effective Date. 
4.Vacation.  During the Term, the Executive shall be entitled to vacation each year and holiday and sick leave at levels commensurate with those provided to other executives of the Company, in accordance with the Company’s vacation, holiday and other pay-for-time-not-worked policies. 
5.Business Expenses.  The Company shall reimburse the Executive for all necessary and reasonable travel (which does not include commuting) and other business expenses incurred by the Executive in the performance of the Executive’s duties hereunder in accordance with such policies and procedures as the Company may adopt generally from time to time for executives. 
6.Definitions.  For purposes of this Agreement, the following terms shall have the following meanings:
(a)“Affiliate” shall mean any subsidiary of the Company or other entity under common control with the Company.
(b)“Release” shall mean a separation agreement and general release of any and all claims against the Company, its Affiliates, and all related parties including with respect to all matters arising out of the Executive’s employment by the Company, and the termination thereof.  The Release will be in the form provided by the Company.  
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7.Section 409A.
(a)This Agreement is intended to comply with section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and its corresponding regulations, or an exemption thereto, and payments may only be made under this Agreement upon an event and in a manner permitted by section 409A of the Code, to the extent applicable.  Severance benefits under this Agreement are intended to be exempt from section 409A of the Code under the “short-term deferral” exception, to the maximum extent applicable, and then under the “separation pay” exception, to the maximum extent applicable.  Notwithstanding anything in this Agreement to the contrary, if required by section 409A of the Code, if the Executive is considered a “specified employee” for purposes of section 409A of the Code and if payment of any amounts under this Agreement is required to be delayed for a period of six months after separation from service pursuant to section 409A of the Code, payment of such amounts shall be delayed as required by section 409A of the Code, and the accumulated amounts shall be paid in a lump-sum payment within 10 days after the end of the six-month period.  If the Executive dies during the postponement period prior to the payment of benefits, the amounts withheld on account of section 409A of the Code shall be paid to the personal representative of the Executive’s estate within 60 days after the date of the Executive’s death.  
(b)All payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” under section 409A of the Code.  For purposes of section 409A of the Code, each payment hereunder shall be treated as a separate payment, and the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.  In no event may the Executive, directly or indirectly, designate the calendar year of a payment.  Notwithstanding any provision of this Agreement to the contrary, in no event shall the timing of the Executive’s execution of the Release, directly or indirectly, result in the Executive’s designating the calendar year of payment of any amounts of deferred compensation subject to section 409A of the Code, and if a payment that is subject to execution of the Release could be made in more than one taxable year, payment shall be made in the later taxable year.
(c)All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement be for expenses incurred during the period specified in this Agreement, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense be made no later than the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement or in-kind benefits not be subject to liquidation or exchange for another benefit.
8.Restrictive Covenants.
(a)Performance Track Record.  Notwithstanding any other provisions of this Agreement or other employment arrangement between the Executive and the Company and its subsidiaries, if, prior to the Term End Date, the Executive’s employment with the Company 
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terminates for any reason, then the Executive shall be permitted to use at any time after Executive’s employment by the Company the track record of the performance, while employed by the Company, of the middle market business of the portfolio and individual assets, including, records and material pertaining to the track record of the performance of the middle market business of the portfolio and individual assets, for marketing or other use.  Such marketing or other use will be either confidential in nature or in accordance with applicable securities laws, rules and regulations.
(b)Proprietary Information.  Subject to the provisions of Section 8(a), at all times, the Executive will hold in strictest confidence and will not disclose, use, lecture upon or publish any of the Proprietary Information (defined below) of the Company or an Affiliate, except as such disclosure, use or publication may be required in connection with the Executive’s work for the Company or as described in Section 8(a) above or Section 8(d) below, or unless the Company expressly authorizes such disclosure in writing.  “Proprietary Information” shall mean any and all confidential and/or proprietary knowledge, data or information of the Company and its Affiliates and shareholders, including but not limited to information relating to financial matters, investments, budgets, business plans, marketing plans, personnel matters, business contacts, products, processes, know-how, designs, methods, improvements, discoveries, inventions, ideas, data, programs, and other works of authorship.
(c)Reports to Government Entities.  Nothing in this Agreement shall prohibit or restrict the Executive from initiating communications directly with, responding to any inquiry from, providing testimony before, providing confidential information to, reporting possible violations of law or regulation to, or filing a claim or assisting with an investigation directly with a self-regulatory authority or a government agency or entity, including the Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Department of Justice, the Securities and Exchange Commission, Congress, any agency Inspector General or any other federal, state or local regulatory authority (collectively, the “Regulators”), or from making other disclosures that are protected under the whistleblower provisions of state or federal law or regulation.  The Executive does not need the prior authorization of the Company to engage in conduct protected by this subsection, and the Executive does not need to notify the Company that the Executive has engaged in such conduct.  Please take notice that federal law provides criminal and civil immunity to federal and state claims for trade secret misappropriation to individuals who disclose trade secrets to their attorneys, courts, or government officials in certain, confidential circumstances that are set forth at 18 U.S.C. §§ 1833(b)(1) and 1833(b)(2), related to the reporting or investigation of a suspected violation of the law, or in connection with a lawsuit for retaliation for reporting a suspected violation of the law.
(d)Inventions Assignment.  The Executive agrees that all inventions, innovations, improvements, developments, methods, designs, analyses, reports, and all similar or related information which relates to the Company’s or its Affiliates’ actual or anticipated business, research and development or existing or future products or services and which are conceived, developed or made by the Executive while employed by the Company (“Work Product”) belong to the Company.  The Executive will promptly disclose such Work Product to the Board and 
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perform all actions reasonably requested by the Board (whether during or after the Term) to establish and confirm such ownership (including, without limitation, assignments, consents, powers of attorney and other instruments).  If requested by the Company, the Executive agrees to execute any inventions assignment and confidentiality agreement that is required to be signed by Company employees generally.  
(e)Return of Company Property.  Upon termination of the Executive’s employment with the Company for any reason, and at any earlier time the Company requests, the Executive will deliver to the person designated by the Company all originals and copies of all documents and property of the Company or an Affiliate that is in the Executive’s possession or under the Executive’s control or to which the Executive may have access.  The Executive will not reproduce or appropriate for the Executive’s own use, or for the use of others, any property, Proprietary Information or Work Product.
(f)Future Cooperation.  The Executive agrees that upon the Company’s reasonable request following the Executive’s termination of employment and provided such cooperation is not adverse to the Executive’s legal interests, the Executive shall use reasonable efforts to assist and cooperate with the Company in connection with the transition of the Executive’s responsibilities, with the defense or prosecution of any claim with respect to which the Executive may have knowledge that is made against or by the Company or its Affiliates (other than by or against the Executive), or in connection with any ongoing or future investigation by, or any proceeding before, any arbitral, administrative, regulatory, self-regulatory, judicial, legislative, or other body or agency involving the Company or any Affiliate.  The Company shall pay reasonable out-of-pocket expenses (including travel expenses) incurred in connection with providing such assistance.  The Company and the Executive agree that, following the Executive’s termination of employment, the Executive’s cooperation pursuant to this Section 8(f) shall be at mutually agreed upon times in light of the Executive’s other professional responsibilities and pursuant to a reasonable schedule.
9.Legal and Equitable Remedies.  
(a)Because the Executive’s services are personal and unique and the Executive has had and will continue to have access to and has become and will continue to become acquainted with the Proprietary Information of the Company and its Affiliates, and because any breach by the Executive of any of the restrictive covenants contained in Section 8 would result in irreparable injury and damage for which money damages would not provide an adequate remedy, the Company shall have the right to enforce Section 8 and any of its provisions by injunction, specific performance or other equitable relief, without prejudice to any other rights and remedies that the Company may have for a breach, or threatened breach, of the restrictive covenants set forth in Section 8.  
(b)The Executive irrevocably and unconditionally agrees that any dispute arising as to the parties’ rights and obligations hereunder shall be resolved by confidential binding arbitration in accordance with the rules of the Judicial Arbitration & Mediation Services, Inc. (JAMS).  Such arbitration will take place in the City of New York.  The arbitrator shall be empowered to decide the arbitrability of all disputes, and shall apply the substantive federal, 
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state, or local law and statute of limitations governing any dispute submitted to arbitration and any arbitration demand must be filed within the applicable limitations period for the claim or claims asserted.  In ruling on any dispute submitted to arbitration, the arbitrator shall have the authority to award only such remedies or forms of relief as are provided for under the substantive law governing such dispute.  The arbitrator shall issue a written decision that shall include the essential findings and conclusions on which the decision is based (a standard award).  Each party consents to the jurisdiction of the state of New York for injunctive, specific enforcement or other relief in aid of the arbitration proceedings or to enforce judgment of the award in such arbitration proceeding, but not otherwise.  The award entered by the arbitrator shall be final and binding on all parties to arbitration, and may be entered in any court of competent jurisdiction.  The parties shall equally bear all fees and costs unique to the arbitration forum (e.g., filing fees, transcript costs and arbitrator’s fees), except as provided otherwise in statutory claims.  The parties shall be responsible for their own attorneys’ fees and costs, except as provided otherwise in statutory claims. The parties agree that any dispute between the parties that is determined to be not subject to arbitration shall be subject to exclusive jurisdiction and venue in the courts of the City of New York.
10.Acknowledgement of Satisfaction of All Pre-Employment Conditions.
(a)Right to Work.  For purposes of federal immigration law, the Executive will be required to provide to the Company documentary evidence of the Executive’s identity and eligibility for employment in the United States.  Such documentation must be provided to the Company within three days following the Effective Date, or the Company’s employment relationship with the Executive may be terminated and this Agreement will be void.
(b)Verification of Information.  By entering into this Agreement, the Executive warrants that all information provided by the Executive is true and correct to the best of the Executive’s knowledge, and the Executive expressly releases all parties from any and all liability for damages that may result from obtaining, furnishing, collecting or verifying such information, as well as from the use of or disclosure of such information by the Company or its agents.  
11.Survival.  The respective rights and obligations of the parties under this Agreement (including, but not limited to, under Sections 8 and 9) shall survive any termination of the Executive’s employment or termination or expiration of this Agreement to the extent necessary to the intended preservation of such rights and obligations.
12.No Mitigation or Set-Off.  In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced regardless of whether the Executive obtains other employment.  The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or others.
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13.Section 280G.  In the event of a change in ownership or control under section 280G of the Code, if it shall be determined that any payment or distribution in the nature of compensation (within the meaning of section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a “Payment”), would constitute an “excess parachute payment” within the meaning of section 280G of the Code, the aggregate present value of the Payments under the Agreement shall be reduced (but not below zero) to the Reduced Amount (defined below) if and only if the Accounting Firm (described below) determines that the reduction will provide the Executive with a greater net after-tax benefit than would no reduction.  No reduction shall be made unless the reduction would provide the Executive with a greater net after-tax benefit.  The determinations under this Section shall be made as follows:
(a)The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Payments under this Agreement without causing any Payment under this Agreement to be subject to the Excise Tax (defined below), determined in accordance with section 280G(d)(4) of the Code.  The term “Excise Tax” means the excise tax imposed under section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.
(b)Payments under this Agreement shall be reduced on a nondiscretionary basis in such a way as to minimize the reduction in the economic value deliverable to the Executive. Where more than one payment has the same value for this purpose and they are payable at different times, they will be reduced on a pro rata basis.  Only amounts payable under this Agreement shall be reduced pursuant to this Section. 
(c)All determinations to be made under this Section shall be made by an independent certified public accounting firm selected by the Company and agreed to by the Executive immediately prior to the change-in-ownership or -control transaction (the “Accounting Firm”).  The Accounting Firm shall provide its determinations and any supporting calculations both to the Company and the Executive within 10 days of the transaction.  Any such determination by the Accounting Firm shall be binding upon the Company and the Executive.  All of the fees and expenses of the Accounting Firm in performing the determinations referred to in this Section shall be borne solely by the Company.
14.Notices.  All notices and other communications required or permitted under this Agreement or necessary or convenient in connection herewith shall be in writing and shall be deemed to have been given when hand delivered or mailed by registered or certified mail, as follows (provided that notice of change of address shall be deemed given only when received):
    If to the Company, to:

1211 Avenue of the Americas
New York, New York 10036
Attn:  Chief Executive Officer

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    If to the Executive, to the most recent address on file with the Company or to such other names or addresses as the Company or the Executive, as the case may be, shall designate by notice to each other person entitled to receive notices in the manner specified in this Section.

15.Withholding.  All payments under this Agreement shall be made subject to applicable tax withholding, and the Company shall withhold from any payments under this Agreement all federal, state and local taxes as the Company is required to withhold pursuant to any law or governmental rule or regulation.  The Executive shall bear all expense of, and be solely responsible for, all federal, state and local taxes due from the Executive with respect to any payment received under this Agreement.  The Company will use commercially reasonable efforts to establish a relationship with a broker-dealer to facilitate the sale of Shares acquired on the vesting or exercise of any equity or equity-based compensation granted to the Executive by the Company to enable the Executive to satisfy all applicable withholding taxes due in connection with such vesting or exercise; provided that if the Company does not establish any such relationship, the Executive may satisfy such withholding obligations through an automatic Share withholding procedure pursuant to which the Company will withhold, at the time of such vesting or exercise, a portion of the Shares otherwise deliverable to the Executive upon such vesting or exercise with a fair market value not exceeding the minimum amount required to be withheld by applicable law.
16.Remedies Cumulative; No Waiver.  No remedy conferred upon a party by this Agreement is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to any other remedy given under this Agreement or now or hereafter existing at law or in equity.  No delay or omission by a party in exercising any right, remedy or power under this Agreement or existing at law or in equity shall be construed as a waiver thereof, and any such right, remedy or power may be exercised by such party from time to time and as often as may be deemed expedient or necessary by such party in its sole discretion.
17.Assignment.  All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, executors, administrators, legal representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of the Executive under this Agreement are of a personal nature and shall not be assignable or delegable in whole or in part by the Executive.  The Company may assign its rights, together with its obligations hereunder, in connection with any sale, transfer or other disposition of all or substantially all of its business and assets, and such rights and obligations shall inure to, and be binding upon, any successor to the business or any successor to substantially all of the assets of the Company, whether by merger, purchase of stock or assets or otherwise, which successor shall expressly assume such obligations, and the Executive acknowledges that in such event the obligations of the Executive hereunder, including but not limited to those under Section 8, will continue to apply in favor of the successor. 
18.Company Policies.  This Agreement and the compensation payable hereunder shall be subject to any applicable share trading policies, and other policies that may be implemented by the Board from time to time with respect to officers or executives of the Company that do not conflict with this Agreement.  
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19.Entire Agreement.  For the avoidance of doubt, this Agreement sets forth the entire agreement of the parties hereto and supersedes any and all prior agreements and understandings concerning the Executive’s employment by the Company and its subsidiaries, other than (a) any severance rights agreement entered into or that may be entered into between the Executive and the Company, (b) all employee retention and severance policies applicable for all employees of Company, (c) RSU and (if applicable) PSU award agreements with respect to the 2020 Bonus and Internalization RSUs, and (d) any separate indemnification agreement entered into between the Company and the Executive and any indemnification obligations set forth in the Company’s bylaws.  This Agreement may be changed only by a written document signed by the Executive and the Company. 
20.Severability.  If any provision of this Agreement or application thereof to anyone or under any circumstances is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement, which can be given effect without the invalid or unenforceable provision or application, and shall not invalidate or render unenforceable such provision or application in any other jurisdiction.  If any provision is held void, invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances.
21.Governing Law.  This Agreement shall be governed by, and construed and enforced in accordance with, the substantive and procedural laws of New York without regard to rules governing conflicts of law.    
22.Counterparts.  This Agreement may be executed in any number of counterparts (including facsimile counterparts), each of which shall be an original, but all of which together shall constitute one instrument.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
                ANNALY CAPITAL MANAGEMENT, INC.

                /s/ Donnell A. Segalas                    
                Name: Donnell A. Segalas
                Title:   Chair of the Management Development and Compensation Committee
                Date:    November 9, 2020
                

                EXECUTIVE
                /s/ Timothy P. Coffey                    
                Name:  Timothy P. Coffey
                Date:    November 9, 2020

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EXHIBIT A

Internalization RSUs

Vesting Date:

•One-third on the first anniversary of closing of Internalization
•One-third on the second anniversary of closing of Internalization
•One-third on the third anniversary of closing of Internalization

Accelerated vesting if (1) Company terminates Executive’s employment during the Term other than for Cause, (2) Executive’s employment ends during the Term as a result of death or disability, or (3) Executive resigns for Good Reason during the Term. Accelerated vesting is subject to Executive signing and not revoking a Release.

“Cause” and “Good Reason” for purposes of this Exhibit A shall each have the meanings set forth in the Severance Rights Agreement dated February 12, 2020 between the parties hereto.

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