Document:

Form of Amended and Restated Nonstatutory Stock Option Notice

 Exhibit 10.7 
 FORM OF AMENDED AND RESTATED NONSTATUTORY STOCK OPTION NOTICE 

HATTERAS FINANCIAL CORP. 
 2007 EQUITY INCENTIVE PLAN 
 This
Amended and Restated Notice evidences the award of nonstatutory stock options (each, an “Option” or collectively, the “Options”) that have been granted to
you,                 , subject         to         and conditioned upon your agreement to
the terms of the attached Nonstatutory Stock Option Agreement (the “Agreement”). The Options entitle you to purchase shares of common stock, par value $0.001 per share (“Common Stock”), of Hatteras
Financial Corp. a Maryland corporation (the “Company”), under the Hatteras Financial Corp. 2007 Equity Incentive Plan (the “Plan”). The number of shares you may purchase and the exercise price at which
you may purchase them are specified below. This Amended and Restated Notice constitutes part of and is subject to the terms and provisions of the Agreement and the Plan, which are incorporated by reference herein. You must return an executed
copy of this Amended and Restated Notice to the Company within 30 days of the date hereof. If you fail to do so, the Options will be null and void. 
 Grant Date: November 5, 2007 
 Number of
Shares:                     subject to forfeiture as described below 
 Exercise Price: $20.00 per share 
 Expiration Date: The
Options expire at 5:00 p.m. Eastern Time on the last business day coincident with or prior to the 10th anniversary of the Grant Date (the
“Expiration Date”), unless fully exercised or terminated earlier. 
 Exercisability Schedule: Subject to the terms and
conditions described in the Agreement, the Options become exercisable in accordance with the following schedule: 1/3 of the Options become exercisable on each anniversary of the Grant Date. 
 Acceleration Events: The extent to which you may purchase shares under the Options may be accelerated in the following circumstances: If a Change in Control (as
defined in the Plan) of the Company occurs or the Management Agreement (as defined in the Plan) is terminated by the Company without cause (as determined in accordance with the Management Agreement), the Options that had not yet become exercisable
as of the date of termination will immediately become 100% exercisable. 
 Forfeiture of Options: If the Company shall not have filed a shelf
registration statement with the Securities and Exchange Commission on or before June 30, 2008 pursuant to those certain registration rights agreements among the Company, Atlantic Capital Advisors LLC and Keefe, Bruyette & Woods, Inc.,
dated November 5, 2007 and February 5, 2008, the number of Options and Shares issued in respect of exercised Options (including any additional Options or Shares issued in respect thereof whether by stock dividend, stock split or otherwise)
as of June 30, 2008 shall be reduced by 2% for each week thereafter until and including the week that such shelf registration statement shall have been so filed. 
 The extent to which the Options are exercisable as of a particular date is rounded down to the nearest whole share. However, exercisability is rounded up to 100% on the third anniversary of the Grant Date. 

 

			
	Hatteras Financial Corp.
		
	By:	 	 
	Date:	 	 

  

									
	I acknowledge that I have carefully read the attached Agreement and the Plan and agree to be bound by all of the provisions set forth in these documents.	 		 	OPTIONEE
	 		 	 
	Enclosures:	 		 		 	Date:	 	 
		 	 Nonstatutory Stock Option Agreement
 2007 Equity
Incentive Plan
 Exercise Form
	 		 		 	

 Grant No.:______ 
 NONSTATUTORY STOCK OPTION AGREEMENT 
 UNDER THE 
 HATTERAS FINANCIAL CORP. 2007
EQUITY INCENTIVE PLAN 
 1. Terminology. Capitalized terms used in this Agreement are
defined in the correlating Stock Option Notice and/or the Glossary at the end of the Agreement. 
 2. Exercise of Options. 

(a) Exercisability. The Options will become exercisable in accordance with the Exercisability Schedule set forth in the Stock
Option Notice, so long as you are in the Service of the Company from the Grant Date through the applicable exercisability dates. None of the Options will become exercisable after your Service with the Company ceases, unless the Stock Option Notice
provides otherwise with respect to exercisability that arises as a result of your cessation of Service. 
 (b) Right to
Exercise. You may exercise the Options, to the extent exercisable, at any time on or before 5:00 p.m. Eastern Time on the Expiration Date or the earlier termination of the Options, unless otherwise provided under applicable law. Section 3
below describes certain limitations on exercise of the Options that apply in the event of your death, Total and Permanent Disability, or termination of Service. The Options may be exercised only in multiples of whole Shares and may not be exercised
at any one time as to fewer than one hundred Shares (or such lesser number of Shares as to which the Options are then exercisable). No fractional Shares will be issued under the Options. 
 (c) Exercise Procedure. In order to exercise the Options, you must provide the following items to the Secretary of the Company or
his or her delegate before the expiration or termination of the Options: 
  

	 	(i)	notice, in such manner and form as the Administrator may require from time to time, specifying the number of Shares to be purchased under the Options; and 

 

	 	(ii)	full payment of the Exercise Price for the Shares or properly executed, irrevocable instructions, in such manner and form as the Administrator may require from time to time, to
effectuate a broker-assisted cashless exercise, each in accordance with Section 2(d) of this Agreement; and 

  

	 	(iii)	an executed copy of any other agreements requested by the Administrator pursuant to Section 2(e) of this Agreement. 

 An exercise will not be effective until the Secretary of the Company or his or her delegate receives all of the foregoing items, and such exercise otherwise is permitted
under and complies with all applicable federal, state and foreign securities laws. 
 (d) Method of Payment. You may
pay the Exercise Price by: 
  

	 	(i)	delivery of cash, certified or cashier’s check, money order or other cash equivalent acceptable to the Administrator in its discretion; 

  

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	 	(ii)	a broker-assisted cashless exercise in accordance with Regulation T of the Board of Governors of the Federal Reserve System through a brokerage firm approved by the
Administrator; 

  

	 	(iii)	subject to such limits as the Administrator may impose from time to time, tender (via actual delivery or attestation) to the Company of other shares of Common Stock of the Company
which have a Fair Market Value on the date of tender equal to the Exercise Price, provided that tender of such shares will not result in the Company having to record a charge to earnings under United States generally accepted
accounting principles then applicable to the Company; 

  

	 	(iv)	any other method approved by the Administrator; or 

  

	 	(v)	any combination of the foregoing. 

 (e)
Issuance of Shares upon Exercise. As soon as practicable after exercise of the Options, the Company will deliver a share certificate to you, or deliver Shares electronically or in certificate form to your designated broker on your behalf, for
the Shares issued upon exercise. Any share certificates delivered will, unless the Shares are registered or an exemption from registration is available under applicable federal and state law, bear a legend restricting transferability of such Shares
and referencing any applicable Stock Restriction Agreement. 
 3. Termination of Service. 
 (a) Termination of Unexercisable Options. If your Service with the Company ceases for any reason, the Options that are then
unexercisable after giving effect to any exercise acceleration provisions set forth on the Stock Option Notice, will terminate immediately upon such cessation. 
 (b) Exercise Period Following Termination of Service. If your Service with the Company ceases for any reason other than discharge
for Cause, the Options that are then exercisable after giving effect to any exercise acceleration provisions set forth on the Stock Option Notice, will terminate upon the earliest of: 
  

	 	(i)	the expiration of 30 days following such cessation, if your Service ceases on account of (1) your termination by the Company other than a discharge for Cause, or (2) your
voluntary termination other than for Total and Permanent Disability or death; 

  

	 	(ii)	the expiration of 12 months following such cessation, if your Service ceases on account of your Total and Permanent Disability or death; 

  

	 	(iii)	the expiration of 12 months following your death, if your death occurs during the periods described in clauses (i) or (ii) of this Section 3(b), as applicable; or

  

	 	(iv)	the Expiration Date. 

 In the event of your death, the exercisable Options
may be exercised by your executor, personal representative, or the person(s) to whom the Options are transferred by will or the laws of descent and distribution. 
 (c) Misconduct. The Options will terminate in their entirety, regardless of whether the Options are then exercisable, immediately
upon your discharge from Service for Cause, or upon your commission of any of the following acts during the exercise period following your termination of Service: (i) fraud on or misappropriation of any funds or property of the 

  

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Company, or (ii) your breach of any provision of any employment, non-disclosure, non-competition, non-solicitation, assignment of inventions, or other
similar agreement executed by you for the benefit of the Company, as determined by the Administrator, which determination will be conclusive. 
 (d) Change in Status. In the event that your Service is with a business, trade or entity that, after the Grant Date, ceases for any reason to be part or an Affiliate of the Company, your Service will be deemed
to have terminated for purposes of this Section 3 upon such cessation if your Service does not continue uninterrupted immediately thereafter with the Company or an Affiliate of the Company. 
 4. Market Stand-Off Agreement. You agree that following the effective date of a registration statement of the Company filed under
the Securities Act of 1933, you, for the duration specified by and to the extent requested by the Company and an underwriter of Common Stock or other securities of the Company, shall not offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, any equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, enter into a transaction which would have the same effect, or enter into any swap, hedge or other
arrangement that transfers, in whole or in part, any of the economic consequences of ownership of such securities, whether any such aforementioned transaction is to be settled by delivery of such securities or other securities, in cash or otherwise,
or publicly disclose the intention to make any such offer, sale, pledge or disposition, or to enter into any such transaction, swap, hedge or other arrangement, in each case during the seven days prior to and the 180 days after the effectiveness of
any underwritten offering of the Company’s equity securities (or such longer or shorter period as may be requested in writing by the managing underwriter and agreed to in writing by the Company) (the “Market Stand-Off
Period”), except as part of such underwritten registration if otherwise permitted. In addition, you agree to execute any further letters, agreements and/or other documents requested by the Company or its underwriters that are consistent
with the terms of this Section 4. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Stand-Off Period. 
 5. Nontransferability of Options. These Options are nontransferable otherwise than by will or the laws of descent and distribution and during your
lifetime, the Options may be exercised only by you or, during the period you are under a legal disability, by your guardian or legal representative. Except as provided above, the Options may not be assigned, transferred, pledged, hypothecated or
disposed of in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. 
 6.
Nonqualified Nature of the Options. The Options are not intended to qualify as incentive stock options within the meaning of Code section 422, and this Agreement shall be so construed. You hereby acknowledge that, upon exercise of
the Options, you will recognize compensation income in an amount equal to the excess of the then Fair Market Value of the Shares over the Exercise Price and must comply with the provisions of Section 7 of this Agreement with respect to any tax
withholding obligations that arise as a result of such exercise. 
 7. Withholding of Taxes. At the time the Options are exercised, in
whole or in part, or at any time thereafter as requested by the Company, you hereby authorize withholding from payroll or any other payment of any kind due to you and otherwise agree to make adequate provision for foreign, federal, state and local
taxes required by law to be withheld, if any, which arise in connection with the Options. The Company may require you to make a cash payment to cover any withholding tax obligation as a condition of exercise of the Options or issuance of share
certificates representing Shares. 
 The Administrator may, in its sole discretion, permit you to satisfy, in whole or in part, any
withholding tax obligation which may arise in connection with the Options either by electing to have the Company withhold from the Shares to be issued upon exercise that number of Shares, 

  

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or by electing to deliver to the Company already-owned shares, in either case having a Fair Market Value not in excess of the amount necessary to satisfy the
statutory minimum withholding amount due. 
 8. Adjustments. The Administrator may make various adjustments to your Options, including
adjustments to the number and type of securities subject to the Options and the Exercise Price, in accordance with the terms of the Plan. In the event of any transaction resulting in a Change in Control (as defined in the Plan) of the Company, the
outstanding Options will terminate upon the effective time of such Change in Control unless provision is made in connection with the transaction for the continuation or assumption of such Options by, or for the substitution of the equivalent awards
of, the surviving or successor entity or a parent thereof. In the event of such termination, you will be permitted, immediately before the Change in Control, to exercise or convert all portions of such Options that are then exercisable or which
become exercisable upon or prior to the effective time of the Change in Control. 
 9. Non-Guarantee of Employment or Service
Relationship. Nothing in the Plan or this Agreement will alter your at-will or other employment status or other service relationship with the Company, nor be construed as a contract of employment or service relationship between you and the
Company, or as a contractual right for you to continue in the employ of, or in a service relationship with, the Company for any period of time, or as a limitation of the right of the Company to discharge you at any time with or without Cause or
notice and whether or not such discharge results in the failure of any of the Options to become exercisable or any other adverse effect on your interests under the Plan. 
 10. No Rights as a Stockholder. You shall not have any of the rights of a stockholder with respect to the Shares until such Shares have been issued to you upon the due exercise of the Options. No adjustment
will be made for dividends or distributions or other rights for which the record date is prior to the date such Shares are issued. 
 11.
The Company’s Rights. The existence of the Options shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the
Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or other stocks with preference ahead of or convertible into, or otherwise affecting the Common Stock or
the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of the Company’s assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

 12. Entire Agreement. This Agreement, together with the correlating Stock Option Notice and the Plan, contain the entire agreement
between you and the Company with respect to the Option. Any oral or written agreements, representations, warranties, written inducements, or other communications made prior to the execution of this Agreement with respect to the Options shall be void
and ineffective for all purposes. 
 13. Amendment. This Agreement may be amended from time to time by the Administrator in its
discretion; provided, however, that this Agreement may not be modified in a manner that would have a materially adverse effect on the Options or Shares as determined in the discretion of the Administrator, except as provided in the
Plan or in a written document signed by you and the Company. 
 14. Conformity with Plan. This Agreement is intended to conform in all
respects with, and is subject to all applicable provisions of, the Plan. Any conflict between the terms of this Agreement and the Plan shall be resolved in accordance with the terms of the Plan. In the event of any ambiguity in this Agreement or any
matters as to which this Agreement is silent, the Plan shall govern. A copy of the Plan is provided to you with this Agreement. 
 {Glossary begins on next page} 
  

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 GLOSSARY 
 (a) “Affiliate” means any entity, whether now or hereafter existing, which controls, is controlled by, or is under common control with or that has entered into a service agreement with Hatteras
Financial Corp. For this purpose, “control” means ownership of 50% or more of the total combined voting power or value of all classes of stock or interests of the entity. 
 (b) “Cause” has the meaning ascribed to such term or words of similar import in your written employment or service
contract with the Company as in effect at the time at issue and, in the absence of such agreement or definition, means your (i) conviction of, or plea of nolo contendere to, a felony or crime involving moral turpitude; (ii) fraud on or
misappropriation of any funds or property of the Company, any affiliate, customer or vendor; (iii) personal dishonesty, incompetence, willful misconduct, willful violation of any law, rule or regulation (other than minor traffic violations or
similar offenses) or breach of fiduciary duty which involves personal profit; (iv) willful misconduct in connection with your duties or willful failure to perform your responsibilities in the best interests of the Company; (v) illegal use
or distribution of drugs; (vi) violation of any Company rule, regulation, procedure or policy; or (vii) breach of any provision of any employment, non-disclosure, non-competition, non-solicitation or other similar agreement executed by you
for the benefit of the Company, all as determined by the Administrator, which determination will be conclusive.  
 (d)
“Company” includes Hatteras Financial Corp., Inc. and its Affiliates, except where the context otherwise requires. For purposes of determining whether a Change in Control has occurred, Company shall mean only Hatteras
Financial Corp. 
 (e) “Fair Market Value” of a share of Common Stock generally means either the closing price or the
average of the high and low sale price per share of Common Stock on the relevant date, as determined in the Administrator’s discretion, as reported by the principal market or exchange upon which the Common Stock is listed or admitted for trade.
Refer to the Plan for a detailed definition of Fair Market Value, including how Fair Market Value is determined in the event that no sale of Common Stock is reported on the relevant date. 
 (f) “Service” means your employment or other service relationship with the Company or an Affiliate. 
 (g) “Shares” mean the shares of Common Stock underlying the Options. 
 (h) “Stock Option Notice” means the written notice evidencing the award of the Options that correlates with and makes up a part
of this Agreement. 
 (i) “Total and Permanent Disability” means the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months. The Administrator may
require such proof of Total and Permanent Disability as the Administrator in its sole discretion deems appropriate and the Administrator’s good faith determination as to whether you are totally and permanently disabled will be final and binding
on all parties concerned. 
 (j) “You”; “Your”. “You” or “your” means the
recipient of the award of Options as reflected on the Stock Option Notice. Whenever the Agreement refers to “you” under circumstances where the provision should logically be construed, as determined by the Administrator, to apply to your
estate, personal representative, or beneficiary to whom the Options may be transferred by will or by the laws of descent and distribution, the word “you” shall be deemed to include such person. 
  

 - 5 -Indemnification Agreement

 Exhibit 10.8 
 HATTERAS FINANCIAL CORP. 
 INDEMNIFICATION AGREEMENT 
 THIS INDEMNIFICATION AGREEMENT is made and entered into this 5th day of November, 2007 (“Agreement”), by and between Hatteras Financial Corp.,
a Maryland corporation (the “Company”), and (“Indemnitee”). 
 WHEREAS, at the request of the Company, Indemnitee will
serve or currently serves as a director or officer of the Company or one of its subsidiaries and may, therefore, be subjected to claims, suits or proceedings arising as a result of the Indemnitee’s service; and 
 WHEREAS, as an inducement to Indemnitee to serve or to continue to serve as such director or officer, the Company has agreed to indemnify Indemnitee
against expenses and costs incurred by Indemnitee in connection with any such claims, suits or proceedings, to the maximum extent permitted by law; and 
 WHEREAS, the parties by this Agreement desire to set forth their agreement regarding indemnification and hereby supersede any previous indemnification agreement between the Indemnitee and the Company. 
 NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

 Section 1. Definitions. 
 For purposes of this Agreement: 
 (a) “Change in Control” means the occurrence after the date hereof of
any of the following events: 
 (i) the consummation by the Company, directly or indirectly, of (x) a merger or
consolidation or (y) a sale or other disposition of all or substantially all of the assets of the Company, in each case other than a transaction upon the completion of which 50% or more of the beneficial ownership of the voting power of the
Company, the surviving entity or entity directly or indirectly controlling the Company or the surviving entity or owning all or substantially all of the assets of the Company, as the case may be, is held by the same persons, in substantially the
same proportion, as held the “beneficial ownership” (as defined in Rule 13(d)(3) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of the voting power of the Company immediately prior to the
transaction (except that upon the completion thereof, employees or employee benefit plans of the Company may be a new holder of such beneficial ownership); 
 (ii) the beneficial ownership of securities representing 25% or more of the combined voting power of the Company is acquired, other than from the Company, by any “person” or “group” as defined in
Sections 13(d) and 14(d) of the Exchange Act (other than by any trustee or other fiduciary holding securities under an employee benefit plan or other similar stock plan of the Company); 
 (iii) at any time during any period of two consecutive years, individuals who at the beginning of such period were members of the Board of
Directors of the Company cease for any reason to constitute at least a majority thereof (unless the election, or 

 
the nomination for election by the Company’s stockholders, of each new director was approved by a vote of at least a majority of the directors still in
office at the time of such election or nomination who were directors at the beginning of such period); or 
 (iv) the adoption
of a plan of liquidation by the Company. 
 (b) “Corporate Status” means the status of a person who is or was a
director, trustee, officer, employee or agent of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Company. 
 (c) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of
which indemnification is sought by Indemnitee. 
 (d) “Effective Date” means the date set forth in the first
paragraph of this Agreement. 
 (e) “Expenses” shall include all reasonable attorneys’ fees, retainers, court
costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred, in
the geographic region in which the expenses are incurred or the services are provided, in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding. 
 (f) “Independent Counsel” means a law firm, or a member of a law firm that is experienced in matters of corporation law and
neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party, or (ii) any other party or witness to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. If a Change of Control has not occurred, Independent Counsel shall be selected by the Board of Directors, with the approval of
Indemnitee, which approval will not be unreasonably withheld. If a Change of Control has occurred, Independent Counsel shall be selected by Indemnitee, with the approval of the Board of Directors, which approval will not be unreasonably withheld.

 (g) “Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute
resolution mechanism, investigation, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative (including on appeal), except one (i) initiated by an Indemnitee pursuant to Section 11 of this
Agreement to enforce his rights under this Agreement or (ii) pending or completed on or before the Effective Date, unless otherwise specifically agreed in writing by the Company and Indemnitee. 
 (h) “MGCL” means the Maryland General Corporation Law, as amended. 
  

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 Section 2. Services by Indemnitee. 
 Indemnitee will serve as a director or officer of the Company. However, this Agreement shall not impose any obligation on Indemnitee or the Company to
continue Indemnitee’s service to the Company beyond any period otherwise required by law or by other agreements or commitments of the parties, if any. 
 Section 3. Indemnification — General. 
 The Company shall indemnify, and advance Expenses
to, Indemnitee (a) as provided in this Agreement and (b) otherwise to the fullest extent permitted by Maryland law in effect on the date hereof and as amended from time to time; provided, however, that no change in Maryland law shall have
the effect of reducing the benefits available to Indemnitee hereunder based on Maryland law as in effect on the date hereof. The rights of Indemnitee provided in this Section 3 shall include, without limitation, the rights set forth in the
other sections of this Agreement, including any additional indemnification permitted by Section 2-418(g) of the MGCL. 
 Section 4. Proceedings Other Than Proceedings by or in the Right of the Company. 
 Indemnitee shall be entitled to the
rights of indemnification provided in this Section 4 if, by reason of his Corporate Status, he is, or is threatened to be, made a party to or a witness in any threatened, pending, or completed Proceeding, other than a Proceeding by or in the
right of the Company. Pursuant to this Section 4, Indemnitee shall be indemnified against all judgments, penalties, fines, amounts paid in settlement and all Expenses actually and reasonably incurred by him or on his behalf in connection with a
Proceeding by reason of his Corporate Status unless it is established that (i) the act or omission of Indemnitee was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of
active and deliberate dishonesty, (ii) Indemnitee actually received an improper personal benefit in money, property or services, or (iii) in the case of any criminal Proceeding, Indemnitee had reasonable cause to believe that his conduct
was unlawful. 
 Section 5. Proceedings by or in the Right of the Company. 
 Indemnitee shall be entitled to the rights of indemnification provided in this Section 5 if, by reason of his Corporate Status, he is, or is
threatened to be, made a party to or a witness in any threatened, pending or completed Proceeding brought by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 5, Indemnitee shall be indemnified against
all amounts paid in settlement and all Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding unless it is established that (i) the act or omission of Indemnitee was material to the matter giving
rise to such a Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty or (ii) Indemnitee actually received an improper personal benefit in money, property or services; provided,
however, that no indemnification against such Expenses shall be made in respect of any Proceeding in which Indemnitee shall have been finally adjudged to be liable to the Company. 
 Section 6. Court-Ordered Indemnification. 
 Notwithstanding any other provision of this Agreement, a court of appropriate jurisdiction, upon application of an Indemnitee and such notice as the court shall require, may order indemnification in the following
circumstances: 
 (a) if it determines an Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL,
the court shall order indemnification, in which case the Indemnitee shall be entitled to recover the expenses of securing such reimbursement; or 
  

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 (b) if it determines that the Indemnitee is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether or not the Indemnitee (i) has met the standards of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper
personal benefit under Section 2-418(c) of the MGCL, the court may order such indemnification as the court shall deem proper. However, indemnification with respect to any Proceeding by or in the right of the Company or in which liability shall
have been adjudged in the circumstances described in Section 2-418(c) of the MGCL shall be limited to Expenses. 
  

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 Section 7. Indemnification for Expenses of a Party Who is Wholly or Partly Successful.

 Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee is, by
reason of his Corporate Status, made a party to and is successful, on the merits or otherwise, in the defense of any Proceeding, he shall be indemnified for all Expenses actually and reasonably incurred by him or on his behalf in connection
therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this
Section 7 for all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section and without limitation, the termination of any claim, issue
or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter. 
 Section 8. Advance of Expenses. 
 The Company shall advance all reasonable Expenses incurred by
or on behalf of Indemnitee in connection with any Proceeding to which Indemnitee is, or is threatened to be, made a party or a witness, within ten days after the receipt by the Company of a statement or statements from Indemnitee requesting such
advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a
written affirmation by Indemnitee of Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Company as authorized by law and by this Agreement has been met and a written undertaking by or on behalf of
Indemnitee, in substantially the form attached hereto as Exhibit A or in such form as may be required under applicable law as in effect at the time of the execution thereof, to reimburse any Expenses advanced to Indemnitee if it shall ultimately be
determined that such standard of conduct has not been met or as required by Section 7 if Indemnitee is wholly or partly unsuccessful. The undertaking required by this Section 8 shall be an unlimited general obligation by or on behalf of
Indemnitee and shall be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses. 
 Section 9. Procedure for Determination of Entitlement to Indemnification. 
 (a) To obtain
indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested
indemnification. 
 (b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of
Section 9(a) hereof, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel
in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; or (ii) if a Change of Control shall not have occurred, (A) by the Board of Directors (or a duly authorized committee thereof) by a majority
vote of a quorum consisting of Disinterested Directors, or (B) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by
Independent Counsel in a written 

  

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opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, or (C) if so directed by a majority of the members of the Board of
Directors, by the stockholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten days after such determination. Indemnitee shall cooperate with the person,
persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or Expenses (including reasonable attorneys’ fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby agrees to
indemnify and hold Indemnitee harmless therefrom. 
 Section 10. Presumptions and Effect of Certain Proceedings. 
 (a) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 9(a) of this Agreement, and the Company shall have the burden
of proof to overcome that presumption in connection with the making of any determination contrary to that presumption. 
 (b)
The termination of any Proceeding by judgment, order, settlement, conviction, a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, does not create a presumption that Indemnitee did not meet the
requisite standard of conduct described herein for indemnification. 
 Section 11. Remedies of Indemnitee. 
 (a) If (i) a determination is made pursuant to Section 9 of this Agreement that Indemnitee is not entitled to indemnification
under this Agreement, (ii) advance of Expenses is not timely made pursuant to Section 8 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 9(b) of this Agreement
within 30 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 7 of this Agreement within ten days after receipt by the Company of a written request therefor,
or (v) payment of indemnification is not made within ten days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Maryland,
or in any other court of competent jurisdiction, of his entitlement to such indemnification or advance of Expenses. Alternatively, Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the
commercial Arbitration Rules of the American Arbitration Association. Indemnitee shall commence such proceeding 

  

 6 

 
seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding
pursuant to this Section 11(a); provided, however, that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce his rights under Section 7 of this Agreement. 
 (b) In any judicial proceeding or arbitration commenced pursuant to this Section 11 the Company shall have the burden of proving that
Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be. 
 (c) If a determination shall have
been made pursuant to Section 9(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 11, absent a
misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification. 
 (d) In the event that Indemnitee, pursuant to this Section 11, seeks a judicial adjudication of or an award in arbitration to enforce
his rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company for, any and all Expenses actually and reasonably incurred by him in such
judicial adjudication or arbitration. If it shall be determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advance of Expenses sought, the Expenses incurred by
Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated. 
 Section 12. Defense of
the Underlying Proceeding. 
 (a) Indemnitee shall notify the Company promptly upon being served with or receiving any
summons, citation, subpoena, complaint, indictment, information, notice, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder; provided, however, that the failure
to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company’s ability to defend in such
Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced. 
 (b) Subject to the provisions of the last sentence of this Section 12(b) and of Section 12(c) below, the Company shall have the
right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within 15 calendar days following receipt of notice of any such
Proceeding under Section 12(a) 

  

 7 

 
above. The Company shall not, without the prior written consent of Indemnitee, which shall not be unreasonably withheld or delayed, consent to the entry of
any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee or (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability
in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee. This Section 12(b) shall not apply to a Proceeding brought by Indemnitee under Section 11 above or Section 18 below.

 (c) Notwithstanding the provisions of Section 12(b) above, if in a Proceeding to which Indemnitee is a party by reason
of Indemnitee’s Corporate Status, (i) Indemnitee reasonably concludes, based upon the advice of counsel approved by the Company, which approval of counsel shall not be unreasonably withheld, that he may have separate defenses or
counterclaims to assert with respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon the advice of counsel approved by the Company, which approval of counsel
shall not be unreasonably withheld, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company (iii) Indemnitee shall have reasonably concluded that there may be a conflict of
interest between Indemnitee and other indemnitees of the Company being represented by counsel retained by the Company in the same proceeding and shall have notified the Company in writing thereof, or (iv) if the Company fails to assume the
defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of the Company, which shall not be unreasonably withheld, at the
expense of the Company. In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes
any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, subject to the prior approval of the Company, which
shall not be unreasonably withheld, at the expense of the Company, to represent Indemnitee in connection with any such matter. In addition to all the requirements above, if the Company has directors and officers liability insurance, or other
insurance, with a panel counsel requirement that may be triggered then or at some future point by the matter for which indemnity is owed to Indemnitee, then Indemnitee shall use such panel counsel, unless there is an actual conflict of interest with
representation by all such panel counsel, or unless and to the extent the Company waives such requirement in writing. 
 Section 13. Non-Exclusivity; Survival of Rights; Insurance; Subrogation. 
 (a) The rights of
indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Charter or Bylaws of the Company, any agreement
(including that 

  

 8 

 
certain management agreement dated November 5, 2007, between the Company and Atlantic Capital Advisors LLC) or a resolution of the stockholders entitled
to vote generally in the election of directors or of the Board of Directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in
respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. 
 (b) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to
secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights. 
 (c) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any
insurance policy, contract, agreement or otherwise. 
 Section 14. Insurance. 
 The Company will use its commercially reasonable efforts to acquire directors and officers liability insurance, on terms and conditions deemed
appropriate by the Board of Directors of the Company, with the advice of counsel, covering Indemnitee or any claim made against Indemnitee for service as a director or officer of the Company and covering the Company for any indemnification or
advance of expenses made by the Company to Indemnitee for any claims made against Indemnitee for service as a director or officer of the Company. Without in any way limiting any other obligation under this Agreement, the Company shall indemnify
Indemnitee for any payment by Indemnitee arising out of the amount of any deductible or retention and the amount of any excess of the aggregate of all judgments, penalties, fines, settlements and reasonable expenses incurred by Indemnitee in
connection with a Proceeding over the coverage of any insurance referred to in the previous sentence. 
 Section 15. Indemnification
for Expenses of a Witness. 
 Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his
Corporate Status, a witness in any Proceeding, whether instituted by the Company or any other party, and to which Indemnitee is not a party, he shall be advanced all reasonable Expenses and indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith. 
 Section 16. Duration of Agreement; Binding Effect. 
 (a) This Agreement shall continue until and terminate upon the expiration of the applicable statute of limitations for claims against
Indemnitee which are subject to indemnification pursuant to this Agreement; provided, that the rights of Indemnitee hereunder shall continue until the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights
of indemnification or advance of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 11 of this Agreement relating thereto, and of any Proceeding commenced after the expiration of the applicable statute of
limitations and subsequently dismissed as a result thereof. 
  

 9 

 (b) The indemnification and advance of Expenses provided by, or granted pursuant to, this
Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the
business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, trustee, officer, employee or agent of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which such person is or was serving at the request of the Company, and shall inure to the benefit of Indemnitee and his or her spouse, assigns, heirs, devisees, executors and administrators and other legal representatives. 
 (c) The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all,
substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had taken place. 
 Section 17. Severability.

 If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable
that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of
this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby. 
 Section 18. Exception to Right of Indemnification or Advance of Expenses. 
 Notwithstanding any other provision of this Agreement, Indemnitee shall not be entitled to indemnification or advance of Expenses under this Agreement
with respect to any Proceeding brought by Indemnitee, unless (a) the Proceeding is brought to enforce indemnification under this Agreement or otherwise or (b) the Company’s Bylaws, as amended, the Charter, a resolution of the
stockholders entitled to vote generally in the election of directors or of the Board of Directors or an agreement approved by the Board of Directors to which the Company is a party expressly provide otherwise. 
 Section 19. Identical Counterparts. 
 This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. One such counterpart signed by the party
against whom enforceability is sought shall be sufficient to evidence the existence of this Agreement. 
 Section 20. Headings. 

 The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof. 
  

 10 

 Section 21. Modification and Waiver. 
 No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 
 Section 22. Notice by Indemnitee. 
 Indemnitee shall promptly notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to
indemnification or advance of Expenses covered hereunder. 
 Section 23. Notices. 
 All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered
by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

 (a) If to Indemnitee, to: The address set forth on the signature page hereto. 
 (b) If to the Company to: 
 3288 Robinhood Road, Suite 100 
 Winston Salem, North Carolina 27106 
 Attention: Chief Executive Officer 
 or to such other address
as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be. 
 Section 24. Governing
Law. 
 The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State
of Maryland, without regard to its conflicts of laws rules. 
 Section 25. Miscellaneous. 
 Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. 
  

 11 

 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above stated.

  

			
	HATTERAS FINANCIAL CORP.
		
	By:	 	 
		 	 Name:
 Title:

  

			
	INDEMNITEE
		
	By:	 	 
		 	 Name:
 Title:

  

 12

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