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Item 1.01.
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Entry into a Material Definitive Agreement.
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On August 4, 2020, Dynex Capital, Inc., a Virginia corporation (the “Company”), entered into an amendment no. 2 (the “Amendment”) to the equity distribution agreement, dated November 21, 2016, as previously amended by an amendment no. 1, dated September 4, 2018 (the “Original Agreement” and, as amended by the Amendment, the “Amended Agreement”), by and among the Company, Ladenburg Thalmann & Co. Inc. (“Ladenburg”) and JonesTrading Institutional Services LLC (“Jones,” and with Ladenburg, each an “Agent” and collectively, the “Agents”).
The Amendment amends the Original Agreement (i) to remove from the shares to be issued and sold under the Amended Agreement shares of the Company’s 8.50% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), (ii) to add to the shares to be issued and sold under the Amended Agreement shares of the Company’s 6.900% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series C Preferred Stock”), (iii) to amend the term “Maximum Amount” to refer to $104,586,751, which includes an aggregate of $54,586,751 of Preferred Stock (as defined below) that the Company has sold pursuant to the Original Agreement prior to entry into the Amendment under the Company’s registration statements on Form S-3 (333-200859 and 333-222354); and (iv) to provide that in no event will the Company sell pursuant to the Amended Agreement more than 4,750,000 shares of the Company’s 7.625% Series B Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock”, together with the Series C Preferred Stock, the “Offered Stock”, and, together with the Series A Preferred Stock and the Series C Preferred Stock, the “Preferred Stock”), which 4,750,000 shares includes an aggregate of 2,238,330 shares of Series B Preferred Stock sold prior to the date of the Amended Agreement under the Company’s registration statements on Form S-3 (333-200859 and 333-222354), or more than 2,140,000 shares of the Series C Preferred Stock.
Pursuant to the Amended Agreement, on or after August 4, 2020, the Company may offer and sell up to $50,000,000 of aggregate value of shares of the Offered Stock from time to time through the Agents, each as the Company’s sales agents under the Amended Agreement. Sales of shares of the Offered Stock, if any, under the Amended Agreement may be made in sales deemed to be “at the market offerings” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended, including sales made directly on or through the New York Stock Exchange or on any other existing trading market for the Offered Stock, or sales made to or through a market maker other than on an exchange, or, subject to a written notice from the Company, by any other method permitted by law.
Under the terms of the Amended Agreement, the Company may also sell shares of the Offered Stock to either Agent as principal for such Agent’s own account at a price agreed upon at the time of sale. If the Company sells shares of the Offered Stock to an Agent as principal, the Company and the applicable Agent will enter into a separate terms agreement.
Each Agent is entitled to compensation of up to two percent (2.0%) of the gross sales price per share for any shares of the Offered Stock sold by such Agent under the Amended Agreement. The Amended Agreement contains various representations, warranties and agreements by the Company and the Agents, conditions to closing, indemnification rights and obligations of the parties and termination provisions.
From time to time, in the ordinary course of business, the Agents and their respective affiliates have provided, and in the future may provide, investment banking services to the Company and have received or may receive fees from the Company for the rendering of such services.
The foregoing description of the Amended Agreement is not complete and is qualified in its entirety by reference to the full text of the Original Agreement and the Amendment, copies of which are filed or incorporated by reference herewith as Exhibit 10.29, Exhibit 10.29.1 and Exhibit 10.29.2 to this Current Report on Form 8-K, respectively, and are incorporated herein by reference. In connection with the filing of the Amendment, the Company is filing as (i) Exhibit 5.1 to this Current Report on Form 8-K an opinion of Troutman Pepper Hamilton Sanders LLP with respect to the legality of the shares of Offered Stock to be sold under the Amended Agreement and (ii) Exhibit 8.1 to this Current Report on Form 8-K an opinion of Troutman Pepper Hamilton Sanders LLP with respect to certain tax matters.