DYNEX CAPITAL INC (Form: 8-K, Received: 09/04/2018 17:04:28)

DYNEX CAPITAL, INC.

Date: September 4, 2018

/s/ Stephen J. Benedetti

Stephen J. Benedetti

Executive Vice President, Chief Financial Officer and Chief Operating Officer

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 4, 2018

DYNEX CAPITAL, INC.

(Exact name of registrant as specified in its charter)

Virginia

1-9819

52-1549373

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

4991 Lake Brook Drive, Suite 100

Glen Allen, Virginia

(Address of principal executive offices)

23060-9245

(Zip Code)

Registrant’s telephone number, including area code: (804) 217-5800

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01.

Entry into a Material Definitive Agreement.

On September 4, 2018, Dynex Capital, Inc., a Virginia corporation (the “ Company ”), entered into an amendment no. 1 (the “ Amendment ”) to the equity distribution agreement, dated November 21, 2016 (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 reflect the effectiveness of a new registration statement on Form S-3 (file no. 333-222354) of the Company, (ii) to amend the term “Maximum Amount” to refer to $83,099,644, which includes an aggregate of $33,099,644 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 statement on Form S-3 (file no. 333-200859); and (iii) to provide that in no event will the Company sell pursuant to the Amended Agreement more than 5,700,000 shares of the Company’s 8.50% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share, or 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 A and Series B Preferred Stock together, the “ Preferred Stock ”), which 4,750,000 shares includes an aggregate of 1,358,999 Series B Shares sold prior to the date hereof under the Company’s registration statement on Form S-3 (333-200859).

Pursuant to the Amended Agreement, on or after September 4, 2018, the Company may offer and sell up to $50,000,000 of aggregate value of shares of the Company’s Preferred Stock from time to time through the Agents, each as the Company’s sales agents under the Amended Agreement. Sales of shares of the Preferred 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 Preferred 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 Preferred 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 Preferred 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 Preferred 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, Ladenburg and its affiliates have provided, and in the future both Agents and their respective affiliates 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 and Exhibit 10.29.1 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 Sanders LLP with respect to the legality of the shares of Preferred 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 Sanders LLP with respect to certain tax matters.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.


Exhibit No.		Description

5.1		Opinion of Troutman Sanders LLP with respect to the legality of the shares.

8.1		Opinion of Troutman Sanders LLP with respect to certain tax matters.

10.29		Equity Distribution Agreement by and among Dynex Capital, Inc., Ladenburg Thalmann & Co. Inc., and JonesTrading Institutional Services LLC, dated November 21, 2016 (incorporated herein by reference to Exhibit 10.29 to Dynex Capital, Inc.’s Current Report on Form 8-K filed November 22, 2016).

10.29.1		Amendment No. 1, dated September 4, 2018, to Equity Distribution Agreement by and among Dynex Capital, Inc., Ladenburg Thalmann & Co. Inc., and JonesTrading Institutional Services LLC.

23.1		Consent of Troutman Sanders LLP (included in exhibit 5.1).

23.2		Consent of Troutman Sanders LLP (included in exhibit 8.1).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Troutman Sanders LLP

Troutman Sanders Building, 1001 Haxall Point

Richmond, Virginia 23219

troutman.com

Exhibit 5.1

September 4, 2018

Dynex Capital, Inc.

4991 Lake Brook Drive, Suite 100

Glen Allen, Virginia 23060

Registration Statement on Form S-3 (File No. 333-222354)

Ladies and Gentlemen:

We have acted as counsel to Dynex Capital, Inc., a Virginia corporation (the “ Company ”), in connection with the preparation of a prospectus supplement and prospectus (together, the “ Prospectus ”) included in a registration statement on Form S-3, file number 333-222354 (the “ Registration Statement ”) originally filed with the Securities and Exchange Commission (the “ Commission ”) under the Securities Act of 1933, as amended (the “ Securities Act ”), on December 29, 2017 and declared effective under the Securities Act on June 28, 2018. The Prospectus relates to the issuance and sale by the Company from time to time on or after September 4, 2018, pursuant to Rule 415 of the General Rules and Regulations promulgated under the Securities Act of up to $50,000,000 in shares (the “ Shares ”) of the Company’s 8.50% Series A Cumulative Redeemable Preferred Stock (the “ Series A Preferred Stock ”) and the Company’s 7.625% Series B Cumulative Redeemable Preferred Stock (the “ Series B Preferred Stock ”).

This opinion is being furnished in accordance with the requirements of Item 601(b)(5)(i) of Regulation S-K.

We have examined originals or copies, certified or otherwise identified to our satisfaction, of such corporate records, agreements, and other instruments, certificates, orders, opinions, correspondence with public officials, certificates provided by the Company’s officers and representatives, and other documents as we have deemed necessary or advisable for the purposes of rendering the opinion set forth herein, including (i) the corporate and organizational documents of the Company, including the Restated Articles of Incorporation, as amended to date (the “ Restated Articles ”), and the Amended and Restated Bylaws of the Company, as amended to date (ii) the resolutions (the “ Resolutions ”) of the Board of Directors of the Company with respect to the offering and sale of the Shares, (iii) the Registration Statement and exhibits thereto, including the Prospectus comprising a part thereof, and (iv) an executed copy of the Equity Distribution Agreement, dated as of November 21, 2016, as amended by an Amendment No. 1, dated September 4, 2018 (as amended, the “ Agreement ”), by and among the Company, Ladenburg Thalmann & Co. Inc., and JonesTrading Institutional Services LLC, as agents.

Dynex Capital, Inc.

September 4, 2018

Page 2

LOGO

For purposes of the opinions expressed below, we have assumed (i) the authenticity of all documents submitted to us as originals, (ii) the conformity to the originals of all documents submitted as certified, photostatic or electronic copies and the authenticity of the originals thereof, (iii) the legal capacity of natural persons, (iv) the genuineness of signatures not witnessed by us, (v) the due authorization, execution and delivery of all documents by all parties, other than the Company, and the validity, binding effect and enforceability thereof and (vi) the truth, accuracy and completeness of the information, representations and warranties contained in the records, documents, instruments and certificates we have reviewed.

In expressing the opinion set forth below, we have assumed that the Shares will not be issued or transferred in violation of the restrictions on ownership and transfer set forth in Articles IIIA, IIIB, VI and VII of the Restated Articles.

We note that both the Series A Preferred Stock and the Series B Preferred Stock are convertible into shares of the Company’s common stock, par value $0.01 per share (“ Common Stock ”), only if certain future events specified in Article IIIA and Article IIIB, respectively, of the Restated Articles relating to the Series A Preferred Stock and the Series B Preferred Stock, respectively, occur. Because we do not know whether those events will ever occur or the circumstances that may exist if and when they occur, we do not express any opinion with respect to the shares of Common Stock issuable upon conversion of either the Series A Preferred Stock or the Series B Preferred Stock.

Based on the foregoing and in reliance thereon, and subject to the limitations, qualifications, assumptions, exceptions and other matters set forth herein, we are of the opinion that the Shares have been duly authorized and, when and if issued and delivered against payment therefor in accordance with the Restated Articles, the Registration Statement, the Resolutions and the Agreement (assuming that, upon any issuance of the Shares, the total number of shares of Series A Preferred Stock and Series B Preferred Stock, as applicable, issued and outstanding, together with the total number of shares of Series A Preferred Stock and Series B Preferred Stock, as applicable, reserved for issuance will not exceed the total number of shares of Series A Preferred Stock or Series B Preferred Stock, as applicable, that the Company is then authorized to issue under the Restated Articles), the Shares will be validly issued, fully paid and nonassessable.

We are members of the bar of the Commonwealth of Virginia and are not purporting to be experts on, or generally familiar with, or qualified to express legal conclusions based upon, laws of any state or jurisdiction other than the federal laws of the United States of America and the Commonwealth of Virginia and we express no opinion as to the effect of the laws of any other jurisdiction or as to the securities or blue sky laws of any state (including, without limitation, Virginia), municipal law or the laws of any local agencies within any state (including, without limitation, Virginia). This opinion is limited to the matters stated herein, and no opinion is implied or may be inferred beyond the matters expressly stated herein.

Our opinion is as of the date hereof and we have no responsibility to update this opinion for events and circumstances occurring after the date hereof or as to facts relating to prior events that are subsequently brought to our attention and we disavow any undertaking to advise you of any changes in law.

Dynex Capital, Inc.

September 4, 2018

Page 3

LOGO

We hereby consent to the filing of this opinion as an exhibit to the Company’s Current Report on Form 8-K, the incorporation of this opinion by reference in the Registration Statement and to the use of our name under the caption “Legal Matters” in the Prospectus and Registration Statement. In giving this consent, we do not hereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act, or the rules or regulations of the Commission promulgated thereunder.

Very truly yours,

/s/ TROUTMAN SANDERS LLP


Troutman Sanders LLP 875 Third Avenue New York, NY 10022

troutman.com

Exhibit 8.1

September 4, 2018

Dynex Capital, Inc.

4991 Lake Brook Drive

Suite 100

Glen Allen, Virginia 23060

Ladies and Gentlemen:

We have acted as counsel to Dynex Capital, Inc., a Virginia corporation (“ Dynex ”), in connection with the preparation of a prospectus supplement and prospectus (together, the “ Prospectus ”) included in a registration statement on Form S-3, file number 333-222354 (the “ Registration Statement ”) originally filed with the Securities and Exchange Commission (the “ Commission ”) under the Securities Act of 1933, as amended (the “ Securities Act ”), on December 29, 2017 and declared effective under the Securities Act on June 28, 2018. The Prospectus relates to the issuance and sale by Dynex from time to time on or after September 4, 2018, pursuant to Rule 415 of the General Rules and Regulations promulgated under the Securities Act of up to $50,000,000 in shares of Dynex’s 8.50% Series A Cumulative Redeemable Preferred Stock and Dynex’s 7.625% Series B Cumulative Redeemable Preferred Stock, pursuant to the Equity Distribution Agreement, dated as of November 21, 2016, as amended by an Amendment No. 1, dated September 4, 2018 (the “ Agreement ”), by and among Dynex, Ladenburg Thalmann & Co. Inc., and JonesTrading Institutional Services LLC, as agents.

You have requested our opinion regarding Dynex’s qualification as a real estate investment trust (“ REIT ”) pursuant to sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “ Code ”), for its 2015 and 2016 taxable years. In addition, you have requested our opinion with respect to whether Dynex’s organization and contemplated method of operations are such as to enable it to continue to qualify as a REIT for its 2017 taxable year and subsequent taxable years.

Dynex has a number of wholly-owned subsidiaries (“ qualified REIT subsidiaries ”), the income, liabilities, and assets of which are consolidated with those of Dynex for U.S. federal income tax purposes. This letter refers to Dynex, together with such subsidiaries, as “ Consolidated Dynex .” In connection with the opinions rendered below, we have examined such records, certificates, documents and other materials as we considered necessary or appropriate as a basis for such opinion, including, without limitation, the following:

The Restated Articles of Incorporation of Dynex, as amended, effective June 2, 2014;

Dynex Capital, Inc.

September 4, 2018

Page 2

The Amended and Restated Bylaws of Dynex, effective as of March 12, 2018;

Consolidated Dynex’s federal income tax return for its taxable years 2015 and 2016;

The Form 10-K of Consolidated Dynex for the fiscal year ended December 31, 2017;

The Registration Statement and the Prospectus;

The representation letter dated the date hereof delivered to us by an officer of Dynex as to relevant factual matters and covenants as to future operations (the “ Representation Letter ”);

The Agreement; and

such other documents as we have deemed necessary or appropriate for purposes of the opinions provided herein.

In connection with the opinions rendered below, we have assumed that each of the documents referred to above has been duly authorized, executed, and delivered, is authentic, if an original, or accurate, if a copy, and has not been amended, and is accurate, correct and complete in all material respects. We have further assumed that during Consolidated Dynex’s 2017 taxable year and subsequent taxable years, it has conducted, and will continue to conduct, its affairs in a manner that will make the representations set forth in the Representation Letter true for such years; and that neither Dynex nor any subsidiary of Dynex will make any amendments to its organizational documents after the date of this opinion that would affect Consolidated Dynex’s qualification as a REIT for any taxable year.

Further, the opinion is based on the assumption that (i) Consolidated Dynex met certain asset, income and distribution requirements applicable to REITs, (ii) if Consolidated Dynex were ultimately found not to have met the REIT distribution requirements for any taxable year, such failure was due to reasonable cause and not due to willful neglect; (iii) each of Dynex and its subsidiaries has been operated and will continue to operate in accordance with the laws of the jurisdiction in which it was formed, and in the manner described in the relevant articles of incorporation, bylaws, partnership agreement, LLC operating agreement or other organizational documents, (iv) there will be no changes in the applicable law of Virginia or of any other jurisdiction under the laws of which any of the entities comprising Dynex and its subsidiaries have been formed, and (v) each of the written agreements to which Dynex or its subsidiaries is a party has been and will be implemented, construed and enforced in accordance with its terms, without regard to any parole evidence. In addition, for the purposes of rendering this opinion, we have not made an independent investigation or reached independent conclusions as to the assumptions that we have made or of the facts set forth in any of the aforementioned documents, including, without limitation, the Registration Statement, the Prospectus, the Prospectus Supplement, and the Representation Letter.

Based solely on the documents, assumptions, and representations set forth above, and without further investigation, we are of the opinion that Consolidated Dynex

Dynex Capital, Inc.

September 4, 2018

Page 3

qualified as a REIT in its 2015 and 2016 taxable years and that its organization and contemplated method of operation are such that it will continue to so qualify for its 2017 taxable year and subsequent taxable years. Except as described herein we have performed no further due diligence and have made no efforts to verify the accuracy or genuineness of the documents, assumptions, and representations set forth above.

The ability of Consolidated Dynex to qualify as a REIT for subsequent taxable years will depend on future events, some of which are not within the control of Consolidated Dynex. Additionally, it is not possible to predict whether the statements, representations, warranties, or assumptions on which we have relied to issue this opinion will continue to be accurate in the future. We will not review Consolidated Dynex’s compliance with the documents or assumptions, or the representations set forth above. Accordingly, no assurance can be given that the actual results of Consolidated Dynex’s operations for any given taxable year will satisfy the requirements for qualification and taxation as a REIT.

The foregoing opinion is based on the Code and Treasury Regulations promulgated thereunder, each as amended from time to time and as in existence as of the date hereof, and on existing administrative and judicial interpretations thereof. Legislation enacted, administrative action taken, administrative interpretations or rulings, or judicial decisions promulgated or issued subsequent to the date hereof may result in tax consequences different from those anticipated by our opinion herein. Additionally, our opinion is not binding on the Internal Revenue Service or any court, and there can be no assurance that contrary positions may not be taken by the Internal Revenue Service.

The foregoing opinion is limited to the U.S. federal income tax matters addressed herein, and no other opinions are rendered with respect to other U.S. federal tax matters or to any issues arising under the tax laws of any other country, or any state or locality. We undertake no obligation to update the opinions expressed herein after the date of this letter. This opinion letter is solely for the information and use of the addressee, and it speaks only as of the date hereof. Except as provided in the next paragraph, this opinion letter may not be distributed, relied upon for any purpose by any other person, quoted in whole or in part or otherwise reproduced in any document, or filed with any governmental agency without our express written consent.

We consent to the references to this firm in the Prospectus filed with the Registration Statement and to the filing of this opinion as an exhibit to a Current Report on Form 8-K incorporated by reference into the Registration Statement in which the Prospectus is included. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act, or the rules and regulations of the Commission thereunder.

Very truly yours,

/s/ TROUTMAN SANDERS LLP

Exhibit 10.29.1

DYNEX CAPITAL, INC.

(a Virginia corporation)

AMENDMENT NO. 1 TO

EQUITY DISTRIBUTION AGREEMENT

September 4, 2018

Ladenburg Thalmann & Co. Inc.

277 Park Avenue, 26 ^th Floor

New York, New York 10172

JonesTrading Institutional Services LLC

757 Third Avenue, 23rd Floor

New York, NY 10017

Ladies and Gentlemen:

This Amendment No. 1, dated September 4, 2018 (the “ Amendment ”), is to the Equity Distribution Agreement, dated November 21, 2016 (the “ Equity Distribution Agreement ”), by and among Dynex Capital, Inc., a Virginia corporation (the “ Company ”), Ladenburg Thalmann & Co. Inc. (“ Ladenburg ”), and JonesTrading Institutional Services LLC (“ JonesTrading ”, together with Ladenburg, the “ Agents ”).

WHEREAS, the Company has sold an aggregate of $33,099,644 of Preferred Stock pursuant to the Equity Distribution Agreement prior to the date hereof under the Company’s registration statement on Form S-3 (333-200859); and

WHEREAS, the Company, Ladenburg and JonesTrading desire to amend the Equity Distribution Agreement to reflect the effectiveness of a new registration statement on Form S-3 of the Company and to increase the Maximum Amount (as defined in the Equity Distribution Agreement) from $50,000,000 to $83,099,644.

NOW THEREFORE, in consideration of the mutual promises contained in this Amendment and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Amendment, intending to be legally bound, hereby amend the Equity Distribution Agreement and agree as follows:

1. Amendments . Commencing as of the date hereof:

(A) all references in the Equity Distribution Agreement to the “Registration Statement” shall refer to the registration statement on Form S-3 (No. 333-222354) filed with the Commission on December 29, 2017;

(B) the “Maximum Amount” shall refer to $83,099,644, which includes an aggregate of $33,099,644 of Preferred Stock the Company has sold pursuant to the Equity Distribution Agreement prior to the date hereof under the Company’s registration statement on Form S-3 (333-200859); and

“Notwithstanding anything to the contrary in this Agreement, in no event shall the Company sell more than 5,700,000 Series A Shares or 4,750,000 Series B Shares pursuant to this Agreement, which includes an aggregate of 1,358,999 Series B Shares sold prior to the date hereof under the Company’s registration statement on Form S-3 (333-200859).”

2. No Other Amendments; Consent . Except as set forth above, no other amendments to the Equity Distribution Agreement are intended by the parties hereto, are made, or shall be deemed to be made, pursuant to this Amendment, and all provisions of the Equity Distribution Agreement, including all Exhibits thereto, unaffected by this Amendment shall remain in full force and effect.

3. Capitalized Terms . Each capitalized term used but not defined herein shall have the meaning ascribed to such term in the Equity Distribution Agreement.

4. Execution of Counterparts . This Amendment may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.

[ Signature Page Follows. ]

If the foregoing is in accordance with your understanding of our agreement, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement among the Company, the Adviser and the Agents.


Very truly yours,

DYNEX CAPITAL, INC.



By:		/s/ Stephen J. Benedetti


Name:		Stephen J. Benedetti
Title: Executive Vice President, Chief Financial Officer and Chief Operating Officer


CONFIRMED AND ACCEPTED, as of the date first above written:

LADENBURG THALMANN & CO. INC.



By:		/s/ Steve Kaplan


Name:		Steve Kaplan
Title:		Head of Capital Markets

JONESTRADING INSTITUTIONAL SERVICES LLC


By:		/s/ Trent McNair


Name:		Trent McNair
Title:		Chief Financial Officer

[ Signature page to Amendment No. 1 to Equity Distribution Agreement ]