8-K

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) March 1, 2016

JAVELIN Mortgage Investment Corp.

 (Exact Name of Registrant as Specified in Its Charter)

Maryland	001-35673	45-5517523
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

3001 Ocean Drive, Suite 201 Vero Beach, Florida	32963
(Address of Principal Executive Offices)	(Zip Code)

(772) 617-4340

 (Registrant’s Telephone Number, Including Area Code)

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 (see General Instruction A.2. below):

[_]

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 (17CFR 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))

Item 1.01.       Entry into a Material Definitive Agreement.

On March 1, 2016, JAVELIN Mortgage Investment Corp., a Maryland corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), among the Company, ARMOUR Residential REIT, Inc., a Maryland corporation (“Parent”), and JMI Acquisition Corporation, a Maryland corporation and wholly-owned subsidiary of Parent (“Acquisition”), pursuant to which, among other things, Acquisition will commence a tender offer (the “Offer”) to purchase all of the outstanding shares of the Company’s common stock, par value $0.001 per share (the “Shares”), for an amount in cash per share equal to 87% of the book value per share of the Company’s common stock, as calculated in accordance with the Merger Agreement including a reduction of $1.0 million in respect of the Company’s transaction expenses.  Book value per share will be set 10 business days prior to the expiration of the Offer based on the book value per share of the Company’s common stock at that time. If at least a majority of the Shares which are not owned immediately prior to the expiration of the Offer by Parent or any of its subsidiaries, or any officers or directors of Parent or the Company, are tendered and purchased by Acquisition in the Offer, and subject to the satisfaction or waiver of certain limited conditions set forth in the Merger Agreement, Acquisition will merge with and into the Company, with the Company surviving as a wholly-owned subsidiary of Parent (the “Merger”).  In the Merger, each outstanding Share, other than Shares owned by Acquisition and Parent, will be converted into the right to receive the same cash consideration per Share paid in the Offer.

Under the terms of the Merger Agreement, the Company must terminate any ongoing discussions with respect to alternative proposals from third parties and may not solicit, initiate or facilitate any alternative proposals from third parties.  The Company may engage in discussions and negotiations with parties who make unsolicited acquisition proposals to the Company that the Company determines, in good faith, would result in, or is reasonably likely to result in, a superior proposal. If the Company receives a superior proposal, Parent and Acquisition have the right to increase their offer price to an amount per Share equal to the value per Share stockholders would receive as a result of the superior proposal and thereafter the Company may terminate after providing three business days’ notice. If the Merger Agreement is terminated in connection with a superior proposal or if Parent terminates the Merger Agreement because the Board of Directors of the Company, acting on the recommendation of the Special Committee, withdraws or materials modifies the terms of the Merger Agreement, the Company will be required to reimburse Parent’s documented out-of-pocket expenses, up to $2.0 million.

The Merger Agreement includes customary representations, warranties and covenants of the Company, Parent and Acquisition. The Company has agreed to operate its business in the ordinary course consistent with past practice until the effective time of the Merger.  The Company is managed by Armour Capital Management LP, a Delaware limited partnership (the “Manager”), an affiliate of Parent, pursuant to that certain Management Agreement between Manager and the Company dated as of October 5, 2012 and amended as of March 5, 2014 and February 23, 2015.

Consummation of the Offer is subject to various conditions, including (1) the valid tender of the number of Shares that would represent at least a majority of the Shares not owned by Parent or any of its subsidiaries, officers or directors, (2) the consummation of the Offer or the Merger not being unlawful under any applicable statute, rule or regulation, (3) the consummation of the Offer or the Merger not being enjoined by order of any court or other governmental authority, (4) the absence of a Company Material Adverse Effect (as defined in the Merger Agreement), (5) neither the Company’s board of directors nor its special committee of independent directors having withdrawn its recommendation of the Offer or Merger to the Company’s stockholders, and (6) the satisfaction of certain other customary closing conditions. Neither the Offer nor the Merger is subject to a financing condition. Parent plans to finance the transaction with cash on hand.

If, after completion of the Offer, Parent and Acquisition hold at least a majority of the outstanding Shares, the Merger will be consummated in accordance with the short-form merger provisions under Maryland law without the approval of the Merger by the Company’s stockholders.  Following completion of the tender offer, the parties will promptly effect a second-step merger without the approval of the Company stockholders under Maryland law pursuant to which all remaining shares of the Company’s common stock not tendered in the tender offer will be converted into the right to receive the same cash price per share as in the tender offer and the Company will become a wholly-owned subsidiary of Parent.

The board of directorsof the Company, upon the recommendation and approval of a special committee consisting of the Company’s independent director, adopted resolutions (i) determining and declaring advisable the Merger Agreement and the Offer, the Merger and the other transactions contemplated by the Merger Agreement, (ii) determining that the terms of the Offer, the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are in the best interests of, and fair to, the Company’s stockholders, and (iii) recommending that the Company’s stockholders accept the Offer and tender their Shares into the Offer.

The foregoing summary of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, which is attached as Exhibit 2.1 hereto and incorporated herein by reference.

The Merger Agreement has been attached as an exhibit to this Current Report solely to provide investors and holders of Shares with information regarding its terms and is not intended to modify or supplement any factual disclosures about the Company, Parent or Acquisition in the Company’s public reports filed with the U.S. Securities and Exchange Commission (the “SEC”). The representations, warranties and covenants contained in the Merger Agreement were made only for the purposes of the Merger Agreement, were made as of specific dates, were made solely for the benefit of the parties to the Merger Agreement and may not have been intended to be statements of fact but, rather, as a method of allocating risk and governing the contractual rights and relationships among the parties to the Merger Agreement. In addition, such representations, warranties and covenants may have been qualified by certain disclosures not reflected in the text of the Merger Agreement and may apply standards of materiality and other qualifications and limitations in a way that is different from what may be viewed as material by the Company’s stockholders. None of the Company’s stockholders or any other third parties should rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or conditions of the Company, Parent or Acquisition or any of their respective subsidiaries or affiliates. The Merger Agreement and this summary are not intended to modify or supplement any factual disclosures about the Company, and should not be relied upon as disclosure about the Company without consideration of the periodic and current reports and statements that the Company files with the SEC. Factual disclosures about the Company contained in public reports filed with the SEC may supplement, update or modify the factual disclosures contained in the Merger Agreement.

Item 5.03

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On March 1, 2016, the Board of Directors of the Company, having determined that it was in the best interests of the Company and its stockholders to amend the bylaws of the Company, by resolution authorized, approved and adopted an amendment to the Company’s bylaws (the “Bylaw Amendment”) that became effective on March 1, 2016, the date of the Merger Agreement.

The Bylaw Amendment provides that, unless the Company consents in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland (or, if the Circuit Court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division) will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of any duty owed by any director, officer or other employee of the Company to the Company or its stockholders, (iii) any action asserting a claim against the Company or any of its directors, officers or other employees arising pursuant to any provision of the Maryland General Corporation Law, the charter or the bylaws (in each case, as may be amended from time to time), or (iv) any action asserting a claim against the Company or any of its directors, officers or other employees of the Corporation that is governed by the internal affairs doctrine.

The foregoing description is qualified in its entirety by reference to the text of Article XIV of the Amended and Restated Bylaws, which are included as Exhibit 3.1 to this Current Report on Form 8-K and incorporated into this Item 5.03 by reference.

Item 7.01

Regulation FD Disclosure.

On March 2, 2016, the Company issued a press release relating to the Merger Agreement. A copy of the press release is being furnished as Exhibit 99.1 to this Report.

Additional Information

The tender offer described in this Current Report on Form 8-K has not yet commenced, and this Current Report is neither an offer to purchase nor a solicitation of an offer to sell securities. At the time the tender offer is commenced, Acquisition will file a Tender Offer Statement on Schedule TO with the SEC and the Company will thereafter file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 related to the tender offer.  The Tender Offer Statement (including an Offer to Purchase, a related Letter of Transmittal and other tender offer documents) and the Solicitation/Recommendation Statement will contain important information that should be read carefully before any decision is made with respect to the tender offer. These materials will be sent free of charge to all stockholders of the Company when available. These documents (and all other offer documents filed with the SEC) will be available at no charge on the SEC’s website at www.sec.gov. Investors and security holders may also obtain free copies of the documents filed with the SEC by the Company on the Company’s website www.javelinreit.com or by calling (888) 991-1294.

Safe Harbor for Forward-Looking Statements

This Current Report on Form 8-K contains “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations, estimates and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results, including (i) that changes in the market values of the Company’s agency securities and derivatives, appraised values of its non-agency securities, its repurchase agreement balances or other elements of its book value per share, computed in accordance with the

2

terms of the merger agreement, could change in a manner that would reduce the consideration to stockholders in the tender offer or merger, (ii) that the tender offer may not be completed at all or on the terms described, and (iii) that the merger transaction may not be consummated. Additional information concerning these and other risk factors are contained in the most recent filings with the SEC of the Company. All subsequent written and oral forward-looking statements concerning the Company are expressly qualified in their entirety by the cautionary statements above. The Company cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in their expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.

Item 9.01.

Financial Statements and Exhibits.  

(d) Exhibits

Exhibit No.	Description
2.1	Agreement and Plan of Merger, dated as of March 1, 2016, among JAVELIN Mortgage Investment Corp., ARMOUR Residential REIT, Inc. and JMI Acquisition Corporation.
3.1	Amended and Restated Bylaws, dated March 1, 2016.
99.1	Press Release issued by the Company, dated March 2, 2016 (being furnished, not filed).

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.

Dated: March 2, 2016

JAVELIN MORTGAGE INVESTMENT CORP.

By: /s/ James R. Mountain                                      

Name: James R. Mountain

Title: Chief Financial Officer

Exhibit Index

Exhibit No.	Description
2.1	Agreement and Plan of Merger, dated as of March 1, 2016, among JAVELIN Mortgage Investment Corp., ARMOUR Residential REIT, Inc. and JMI Acquisition Corporation.
3.1	Amended and Restated Bylaws, dated March 1, 2016.
99.1	Press Release issued by the Company, dated March 2, 2016 (being furnished, not filed).

EX-2.1

Exhibit 2.1

EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

DATED

MARCH 1, 2016

AMONG

JAVELIN MORTGAGE INVESTMENT CORP.

ARMOUR RESIDENTIAL REIT, INC.

AND

JMI ACQUISITION CORPORATION

{37666475;2}}

Table of Contents

ARTICLE 1   THE TENDER OFFER		1
1.1	Announcement of this Agreement and the Tender Offer	1
1.2	The Offer	2
1.3	Company Action	3
1.4	Special Committee	4
ARTICLE 2   THE MERGER		4
2.1	Agreement to Effect Merger	4
2.2	The Merger	4
2.3	Charter	5
2.4	Bylaws	5
2.5	Directors	5
2.6	Officers	5
2.7	Stock of the Company	5
2.8	Stock of Acquisition	5
2.9	Merger without Stockholder Vote	5
2.10	Payment for Shares
ARTICLE 3   EFFECTIVE TIME OF MERGER		6
3.1	Date of the Merger	6
ARTICLE 4   REPRESENTATIONS AND WARRANTIES		7
4.1	Representations and Warranties of the Company	7
4.2	No Implied Representations and Warranties by the Company	10
4.3	Representations and Warranties of Parent and Acquisition	10
4.4	No Implied Representations and Warranties by Parent or Acquisition	11
4.5	Termination of Representations and Warranties	11
4.6	No Liability of Company regarding Incorrect Representations and Warranties	11
ARTICLE 5   PROPOSALS FROM OTHER PERSONS		11
5.1	No Solicitation of Offers; Notice of Proposals from Others	11
5.2	Waiver of Standstill Provisions	12
5.3	Return of Materials Subject to Confidentiality Agreements	12
ARTICLE 6   ACTIONS PRIOR TO THE MERGER		12
6.1	Company Activities Until Effective Time	12
6.2	All Parties’ Activities Until Effective Time	13
6.3	Communications to Company Employees	14
6.4	No Action to Create Appraisal Rights	14
6.5	ACM Assistance to Company	14
6.6	Reasonable Best Efforts	14
ARTICLE 7   CONDITIONS PRECEDENT TO MERGER		14
7.1	Conditions to the Company’s Obligations	14
7.2	Conditions to Acquisition’s Obligations	14
7.3	Frustration of Closing Conditions	14
ARTICLE 8   TERMINATION		15
8.1	Right to Terminate	15
8.2	Manner of Terminating Agreement	16
8.3	Effect of Termination	17
8.4	Termination Fees; Expenses	17
ARTICLE 9   ABSENCE OF BROKERS		17
9.1	Representations and Warranties Regarding Brokers and Others	17
ARTICLE 10   INDEMNIFICATION OF DIRECTORS AND OFFICERS		17
10.1	Indemnification for Prior Acts	17
10.2	Benefit of Provisions	18

ii

ARTICLE 11   OBLIGATIONS OF PARENT TO FUND ACQUISITION		18
11.1	Funding of Acquisition	18
ARTICLE 12   GENERAL		18
12.1	Expenses	18
12.2	Access to Properties, Books and Records	18
12.3	Press Releases	19
12.4	Entire Agreement	19
12.5	Benefit of Agreement	19
12.6	Effect of Disclosures	19
12.7	Captions	19
12.8	Assignments	19
12.9	Notices and Other Communications	19
12.10	Governing Law	20
12.11	Consent to Jurisdiction	20
12.12	Remedies; Specific Performance	20
12.13	Waiver of Jury Trial	21
12.14	Amendments	21
12.15	Counterparts	21

Defined Terms

ACM	1
ACM Management Agreement	9
Acquisition	1
Acquisition Proposal	11
Acquisition Transaction	11
Action	17
Agreement	1
Articles of Merger	6
Board	1
Business Day	1
BVPS	2
Calculation Date	2
Certificates	5
Charter	7
Closing	6
Closing Date	6
Code	6
Common Stock	1
Company	1
Company 10-K	8
Company Material Adverse Effect	7
Department	6
Effective Time	6
ERISA	9
Exchange Act	1
Excluded Shares	5
Expiration Date	2
Expiration Time	2
GAAP	2
Governmental Authority	12
Indemnified Parties	17
Independent Director	4
JMP	7
Laws	9
Lazard	17
Maryland Short Form Merger Notice	2
Merger	1
Merger Price	5
MGCL	1
Minimum Condition	1
Offer Documents	2
Offer TO	2
Parent	1
Paying Agent	5
Potential Acquiror	11
Price Increase Notice	15

iii

REIT	9
Schedule 14D-9	4
Schedule TO	2
SEC	1
Securities Act	8
September 30 10-Q	8
Special Committee	1
Superior Proposal	15
Superior Proposal Notice	15
Surviving Corporation	1
Takeover Laws	7
Tender Offer	1
Tender Offer Price	2
Tender Outside Date	16
Transactions	1
United States	8

iv

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (the “Agreement”), dated as of March 1, 2016, among JAVELIN Mortgage Investment Corp. (the “Company”), a Maryland corporation, ARMOUR Residential REIT, Inc. (“Parent”), a Maryland corporation, and JMI Acquisition Corporation (“Acquisition” and, together with the Company and Parent, each a “Party” and collectively, the “Parties”), a Maryland corporation and wholly-owned subsidiary of Parent.

WHEREAS, Parent proposes to cause Acquisition to commence a tender offer (as it may be amended from time to time as permitted under this Agreement, the “Tender Offer”) to purchase all of the outstanding shares of common stock of the Company, par value $0.001 per share (“Common Stock”), subject to the condition that greater than fifty percent (50%) of the total number of outstanding shares of Common Stock which are not owned immediately before the Expiration Time (as defined below) by Parent, any of its subsidiaries, or any officers or directors of Parent, or the Company are validly tendered and not withdrawn (the “Minimum Condition”), at a price per share equal to the Tender Offer Price (as defined below), subject to the terms and conditions set forth in this Agreement;

WHEREAS, following the consummation of the Tender Offer, the Parties intend that Acquisition will be merged (the “Merger”) with and into the Company without the approval of the Company's stockholders in accordance with Section 3-106.1 of the Maryland General Corporation Law (the “MGCL”), with the Company surviving the Merger as a wholly-owned subsidiary of Parent (the “Surviving Corporation”), and as a result of the Merger the remaining untendered shares of Common Stock will be converted into the right to receive cash equal to the Tender Offer Price, subject to the terms and conditions set forth in this Agreement and the Merger shall be governed by and effected following the consummation of the Tender Offer pursuant to Section 3-106.1 of the MGCL;

WHEREAS, the Board of Directors of the Company (the “Board”), acting upon the recommendation of the independent special committee of the Board consisting of the director who is not employed by or otherwise affiliated with Parent, ARMOUR Capital Management LP, a Delaware limited partnership (“ACM”), or any of their respective subsidiaries (the “Special Committee”), has unanimously (i) determined that this Agreement, the Transactions (as defined below) and the other transactions contemplated by this Agreement are advisable and in the best interests of the Company and its stockholders, (ii) approved this Agreement and the transactions contemplated by it, consisting of the Tender Offer and the Merger (together with the Tender Offer, the “Transactions”) and (iii) determined to recommend that the Company’s stockholders tender their shares of Common Stock in response to the Tender Offer, in each case subject to the terms and conditions set forth in this Agreement;

WHEREAS, the respective boards of directors of Parent and Acquisition have approved this Agreement and the transactions contemplated hereby, including the Transactions, subject to the terms and conditions provided for in this Agreement;

WHEREAS, no vote of the stockholders of Parent is required in connection with the Transactions;

WHEREAS, the Special Committee has received the opinion of its financial advisor that the consideration to be received by the holders of Common Stock pursuant to the Transactions is fair to such holders from a financial point of view; and

WHEREAS, the Company, Parent and Acquisition are willing to make certain representations, warranties, covenants and agreements in connection with the Transactions and also to prescribe certain conditions to the Transactions, as set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements set forth herein, and intending to be legally bound, the Parties hereto hereby agree as follows:

ARTICLE 1
THE TENDER OFFER

1.1

Announcement of this Agreement and the Tender Offer. Not later than the first business day after the date of this Agreement, Parent and the Company will each make a public announcement of this Agreement and the Transactions.  “Business Day” is any day other than a Saturday, Sunday or a holiday on which banks in New York City generally are closed for business. The announcements shall be filed by Parent with the Securities and Exchange Commission (“SEC”) on such forms, in such manner and at such times as required under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (collectively, the “Exchange Act”). If required to ensure that Parent’s announcements will not constitute the commencement of a tender offer, such filings will be marked to show that they contain pre-commencement communications.

1

1.2

The Offer.  Provided that this Agreement shall not have been terminated pursuant to Article 8 hereof and that no event shall have occurred and be continuing that, had the Tender Offer been commenced, would give rise to a right to terminate the Tender Offer pursuant to any of the conditions set forth in Exhibit 1.2-E, as promptly as reasonably practicable (or by such other date as the Parties may mutually agree in writing), but in no event later than 10 Business Days following the date of this Agreement, Acquisition shall, and Parent shall cause Acquisition to, commence, within the meaning of the Exchange Act, the Tender Offer by offering to purchase all of the outstanding shares of Common Stock, subject to the Minimum Condition, for an amount in cash per share (the “Tender Offer Price”) equal to 87% of the book value per share of Common Stock (“BVPS”), as of 5:00 P.M. New York City time on the date that is ten (10) Business Days prior to the expiration of the Tender Offer (the “Calculation Date”).  BVPS shall be calculated by the Company, subject to the review and approval of the Special Committee, using the following data:  (i) the market value of the Company’s agency securities and derivatives as of the Calculation Date, (ii) the appraised value of the Company’s non-agency securities as of the Calculation Date or the most recent prior date as of which such value can be determined, (iii) cash balances in the Company’s bank accounts as of the Calculation Date, (iv) the Company's repurchase agreement balances and interest payable to repurchase counterparties as of the Calculation Date, and (v) any other tangible assets or liabilities determined in accordance with generally accepted accounting principles, consistently applied ("GAAP"), including accruals, as of the Calculation Date, less $1.0 million to account for the Company's expenses related to the Transactions not included in the above-referenced accruals.  B VPS shall be calculated as set forth on Schedule 1.2 and shall be certified by an authorized representative of the Company as true and accurate in all material respects.  Estimates of BVPS shall be calculated as of 5:00 P.M., New York City time and posted to the Company’s website as soon as reasonably practicable on the date that the Tender Offer is commenced and on every Business Day thereafter until the Calculation Date.  Thereafter, through the Expiration Date (as defined below), the Tender Offer Price shall be posted on the Company’s website. The Tender Offer shall be made by means of an offer to purchase that describes the terms and conditions of the Tender Offer in accordance with this Agreement.

(a)

On the date of the commencement of the Tender Offer, Acquisition will (and Parent will cause Acquisition to), if it has not already done so, file with the SEC a combined Schedule 13E-3/Tender Offer Statement on Schedule TO with respect to the Tender Offer (together with any amendments or supplements that have been made or are made in the future, the “Schedule TO”), including forms of an offer to purchase, a letter of transmittal and a summary advertisement (the Schedule TO and the documents included in it by which the Tender Offer will be made, as they may be supplemented or amended, being the “Offer Documents”) and the notice referred to in Section 3-106.1(e)(1) of the MGCL (the “Maryland Short Form Merger Notice”). Promptly after that, Acquisition will communicate the Tender Offer and deliver the Offer Documents and the Maryland Short Form Merger Notice to the record holders and beneficial owners of Common Stock in accordance with applicable Law. Parent and Acquisition shall cause the Offer Documents to comply as to form in all respects with the requirements of the Exchange Act, the applicable rules and regulations of the New York Stock Exchange and any other applicable Laws. Each of Parent, Acquisition and the Company will promptly correct any information provided by it for use in the Offer Documents if and to the extent that information is or becomes incomplete or inaccurate in any material respect, and Parent and Acquisition will supplement or amend the Offer Documents to the extent required by the Exchange Act, file the amended or supplemented Offer Documents with the SEC and, if required, disseminate the amended Offer Documents or supplements to the Company’s stockholders. The Special Committee and its counsel will be given a reasonable opportunity to review and comment on the Offer Documents and any amendments or supplements to them before they are filed with the SEC or disseminated to the Company's stockholders, and Parent and Acquisition shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Special Committee and its counsel. In addition, Parent and Acquisition shall (i) provide the Special Committee and its counsel with copies of any written comments, (ii) inform them about any oral comments, that Parent or Acquisition or their counsel may receive from time to time from the SEC or its staff with respect to the Offer Documents promptly after the receipt of such comments, (iii) consult with the Special Committee and its counsel prior to responding to any such comments and (iv) provide the Special Committee with copies of all such written responses (or if oral responses, summaries thereof). Subject to the preceding sentence, Parent and Acquisition shall respond promptly to any comments received from the SEC or its staff with respect to the Offer Documents and take all other commercially reasonable actions necessary to resolve the issues raised therein, except to the extent any comments received from the SEC or its staff with respect to the Offer Documents might require a delay or certain actions which might reasonably be viewed as detrimental to the Company or its stockholders, in which case no action may be taken without approval of the Special Committee.

(b)

Unless extended as required or permitted by this Agreement, the day on which the Tender Offer expires (the “Expiration Date”) will be no earlier than the 20th Business Day, nor later than the 75th day, after the day on which the Schedule TO (or any amendment(s) thereto) that includes the Offer Documents (the “Offer TO”) is filed with the SEC, or, if the Tender Offer has been extended as required or permitted by this Agreement, the date to which the Tender Offer has been so extended. The time on the Expiration Date at which the Tender Offer will expire is referred to as the “Expiration Time.” Parent and Acquisition shall not terminate the Tender Offer prior to any scheduled Expiration Time (including any rescheduled Expiration Time) without the prior written consent of the Company, except in the event that this Agreement is terminated pursuant to Article 8.

2

(c)

If at the scheduled Expiration Time any of the conditions set forth on Exhibit 1.2-E shall not have been satisfied or waived by Parent or Acquisition (if permitted hereunder), then Acquisition shall (and Parent shall cause Acquisition to) extend the Tender Offer for one or more successive periods of up to 10 Business Days each in order to permit the satisfaction of such conditions; provided, that Parent and Acquisition will not be required to extend the Tender Offer for more than three successive periods of 10 Business Days each and no extension of the Tender Offer will be required to extend past the earlier of (A) the termination of this Agreement pursuant to Article 8 hereof, and (B) the Tender Outside Date (as defined below).

(d)

Subject to the satisfaction or waiver of the conditions to the Tender Offer set forth on Exhibit 1.2-E, Acquisition will (and Parent shall cause Acquisition to), promptly after the Expiration Time (and in any event in compliance with Rule 14e-1(c) under the Exchange Act), accept for payment and pay for all the shares of Common Stock validly tendered and not properly withdrawn pursuant to the Tender Offer on or before the applicable Expiration Time. Subject to Section 2.10(c), the Tender Offer Price payable in respect of each share of Common Stock validly tendered and not properly withdrawn pursuant to the Tender Offer shall be paid net to the seller in cash, without interest.  Acquisition will not modify or waive the condition in paragraph (a) on Exhibit 1.2-E to reduce the Minimum Condition. In addition, Acquisition will not, without the prior consent of the Company, (i) decrease the Tender Offer Price, (ii) decrease the number of shares of Common Stock being solicited in the Tender Offer, (iii) change the form of consideration payable in the Tender Offer, (iv) modify, amend or add to the conditions set forth on Exhibit 1.2-E, including amending or waiving the Minimum Condition, (v) add any condition to the Tender Offer or (vi) extend the Expiration Date to a day which is more than 75 days after the day on which the Offer TO is filed with the SEC, except that (A) if the Tender Offer is modified to increase the Tender Offer Price or in any other manner permitted by this Agreement, the Expiration Date may be extended until 10 Business Days after the day on which Acquisition makes a public announcement of the modification, (B) if anyone other than Acquisition makes a tender offer for shares of Common Stock before the Tender Offer expires, Acquisition may extend the Expiration Date until not later than 10 Business Days after the other tender offer expires, (C) if the Company delivers a Superior Proposal Notice (as defined below), Parent may extend the Expiration Date until not later than 10 Business Days after the last day on which Parent is permitted under Section 8.1(f) to deliver a Price Increase Notice (as defined below), or the last day of the two Business Day negotiation period under Section 8.1(g), and if Parent delivers a Price Increase Notice by the last day permitted under Section 8.1(f), or if a Superior Proposal Notice given under Section 8.1(g) is withdrawn without this Agreement terminating, Parent may extend the Expiration Date until not later than 10 Business Days (or such longer period as is required by applicable SEC rules or by law) after the day on which Parent delivers the Price Increase Notice or the Superior Proposal Notice under Section 8.1(g) is withdrawn (or until such later date as is agreed upon by the Company, with the approval of the Special Committee, and by Parent), and (D) if Acquisition is prevented by an order of a court or other governmental agency from accepting shares of Common Stock which are tendered in response to the Tender Offer, Acquisition may extend the Expiration Date until not later than 10 Business Days after Acquisition is able to accept shares of Common Stock without violating any order of any court or other governmental agency. Acquisition may extend the Tender Offer for a subsequent offer period after the Expiration Date as permitted by Rule 14d-11 under the Exchange Act.

(e)

If at least two Business Days before the scheduled Expiration Date, the Company delivers a Superior Proposal Notice to Parent and Acquisition as described in clause (iii) of Section 8.1(f), the Expiration Date will automatically be extended to the fourth Business Day after the day on which the Company delivers the Superior Proposal Notice to Parent, subject to compliance with the applicable requirements of the Exchange Act.

(f)

In the event that this Agreement is terminated pursuant to Article 8, Acquisition shall (and Parent shall cause Acquisition to) (i) within one Business Day after such termination, terminate the Tender Offer, (ii) not acquire any shares of Common Stock pursuant to the Tender Offer and (iii) cause any depository acting on behalf of Acquisition to return, in accordance with applicable Law, all tendered shares of Common Stock to the record holders thereof.

1.3

Company Action.

(a)

(i) The Special Committee and the Board each has adopted resolutions in which it has determined that this Agreement, the Transactions, and the other transactions contemplated by this Agreement are advisable and in the best interests of the Company and its stockholders, (ii) the Special Committee recommended that the Board approve this Agreement, the Transactions and the other transactions contemplated by this Agreement, (iii) the Board approved this Agreement, the Transactions and the other transactions contemplated by this Agreement, and (iv) the Board, subject to Sections 8.1(f), 8.1(g) and 8.1(h), determined to recommend that the Company’s stockholders tender their shares of Common Stock in response to the Tender Offer. However, notwithstanding anything contained in this paragraph (a) or elsewhere in this Agreement, if the Special Committee or the Board, after consultation with counsel, determines in good faith to withdraw or modify the recommendation, because the failure to do so could reasonably be expected to be inconsistent with the duties of the members of the Special Committee or of the members of the entire Board under applicable law, then the Special Committee and the Board may withdraw or modify their respective recommendations accordingly.

3

(b)

The Company will file with the SEC, promptly after Acquisition files the Offer TO, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with any amendments or supplements, the “Schedule 14D-9”) containing the recommendations described in subparagraph (a) and will disseminate the Schedule 14D-9 to holders of shares of Common Stock as and to the extent required by Rule 14d-9 under the Exchange Act. Parent and Acquisition shall promptly furnish to the Company in writing any information concerning Parent and Acquisition that may be required by applicable Law for inclusion in the Schedule 14D-9. The Company, on the one hand, and Parent and Acquisition, on the other hand, each will promptly correct any information provided by it for use in the Schedule 14D-9 if and to the extent that such information is or becomes incomplete or inaccurate in any material respect and the Company will file any corrected Schedule 14D-9 with the SEC and disseminate the corrected Schedule 14D-9 to the Company’s stockholders to the extent required by the Exchange Act or the rules under it.

(c)

In connection with the Tender Offer, the Company will promptly furnish Acquisition with mailing labels, security position listings and any other available listing or computer files containing the names and addresses of the record holders or, to the extent known to the Company, beneficial owners of shares of Common Stock as of a recent date and the Company will furnish Acquisition with such additional information and assistance (including, without limitation, updated lists of stockholders, mailing labels and lists of securities positions) as Acquisition or its representatives may reasonably request in order to communicate the Tender Offer to the record holders and beneficial owners of Common Stock. Subject to the requirements of applicable Law, Acquisition will hold in confidence the information contained in any such labels, listings or files, and will use that information only in connection with the Tender Offer and the Merger. If this Agreement is terminated before Acquisition accepts tendered shares, Acquisition will return to the Company the originals and all copies of that information which are in Acquisition’s possession or control.

1.4

Special Committee.

(a)

Parent and the Company will at all times do all things in their power so that at all times prior to the Effective Time, the Special Committee shall be composed of at least one (1) director who is not an officer, stockholder or affiliate of the Company or Parent (other than in such capacity as director of the Company and member of the Special Committee) and who will be independent for purposes of Rule 10A-3 under the Exchange Act (“Independent Director”).

(b)

Until the Effective Time (as defined below), the approval or written consent of the Special Committee shall be required for (i) any consent or action by the Company required or permitted under this Agreement, including any amendment or termination of this Agreement by the Company, (ii) any agreement by the Company to an extension of the time for performance of any obligation or action hereunder by Parent or Acquisition, (iii) any waiver by the Company of compliance with any covenant of Parent or Acquisition or any waiver by the Company of any other agreements or conditions contained herein for the benefit of the Company or (iv) any exercise of the Company’s rights or remedies under this Agreement. Any action by the Company of the type described in any of clauses (i) through (iv) of the preceding sentence will be conclusively presumed to have been approved by the Special Committee if the Company delivers to Parent or Acquisition a document signed by a member of the Special Committee that includes a statement that the action was approved by the Special Committee.

ARTICLE 2
THE MERGER

2.1

Agreement to Effect Merger. If (i) the Minimum Condition is satisfied, (ii) Acquisition purchases the shares of Common Stock that are validly tendered in response to the Tender Offer and not withdrawn, and (iii) the conditions to the Merger set forth in Section 7.2 are satisfied or waived, Acquisition, Parent and the Company each will take all steps in its power (including fulfilling its obligations under Section 2.10) to cause Acquisition to be merged with and into the Company on the terms and with the effects set forth in Sections 2.2 through 2.9 of this Agreement.  Without limiting the foregoing, the Merger shall be governed by Section 3-106.1 of the MGCL and the Merger shall be effected following the consummation of the Tender Offer in accordance therewith.  The Maryland Short Form Merger Notice will be disseminated with the Offer Documents to the holders of record of shares of Common Stock to ensure compliance with Section 3-106.1(e) of the MGCL.

2.2

The Merger. In the Merger, Acquisition will be merged with and into the Company without the approval of the Company’s stockholders in accordance with Section 3-106.1 of the MGCL, and the Company will be the Surviving Corporation of the Merger. Except as specifically provided in this Agreement, when the Merger becomes effective, (i) the real and personal property, other assets, rights, privileges, immunities, powers, purposes and franchises of the Company will continue unaffected and unimpaired by the Merger, (ii) the separate existence of Acquisition will terminate, and Acquisition’s real and personal property, other assets, rights, privileges, immunities, powers, purposes and franchises will transfer to, vest in and devolve on the Surviving Corporation, and (iii) the Merger will have the other effects specified in Section 3-114 of the MGCL.

4

2.3

Charter. Immediately after the Effective Time, the charter of Acquisition shall be the charter of the Surviving Corporation, until thereafter amended in accordance with its terms and as provided by applicable Law.

2.4

Bylaws. Immediately after the Effective Time, the Bylaws of Acquisition shall be the Bylaws of the Surviving Corporation, until thereafter amended in accordance with their terms and as provided by applicable Law.

2.5

Directors. The persons listed on Schedule 2.5 will be the directors of the Surviving Corporation from and after the Effective Time and will hold office in accordance with applicable Law and the Surviving Corporation’s organizational documents.

2.6

Officers. The officers of the Company immediately before the Effective Time will be the officers of the Surviving Corporation after the Effective Time and will hold office at the pleasure of the Board of Directors of the Surviving Corporation and in accordance with the Bylaws of the Surviving Corporation.

2.7

Stock of the Company. At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Acquisition or the Company or any holder of any securities of any of the foregoing:

(a)

Cancellation of Acquisition- or Parent-Owned Company Common Stock. Each outstanding or issued share of Common Stock that is owned by Parent or Acquisition or by any Subsidiary of Parent, Acquisition or the Company, immediately prior to the Effective Time, including each share of Common Stock that has been irrevocably accepted for purchase by Acquisition in the Tender Offer (which shares shall be treated as set forth in Section 2.7(b)) (except to the extent held by any such Person on behalf of a third party) (collectively, the “Excluded Shares”), shall automatically be canceled and shall cease to exist, and no cash, stock or other consideration shall be delivered or deliverable in exchange therefor.

(b)

Conversion of Company Common Stock. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Excluded Shares) shall automatically be converted into the right to receive cash in an amount, without interest, equal to the Tender Offer Price (the “Merger Price”).  

2.8

Stock of Acquisition. At the Effective Time, each share of common stock of Acquisition, par value $0.001 per share, issued and outstanding immediately prior to the Effective Time shall be converted into and become one (1) validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation, par value $0.001 per share.  At the Effective Time, a certificate which represented shares of Acquisition common stock will be a certificate representing the same number of shares of the Surviving Corporation.

2.9

Merger without Stockholder Vote. If the Minimum Condition is met and Acquisition purchases the shares of Common Stock that are validly tendered in response to the Tender Offer and not withdrawn, and Acquisition owns a majority of the total number of the outstanding shares of Common Stock, the Company will cause the Merger to be effected following the consummation of the Tender Offer as promptly as practicable without a vote of the holders of Common Stock, in accordance with Section 3-106.1 of the MGCL.  

2.10

Payment for Shares.

(a)

Prior to the Effective Time, Acquisition will designate, with the Company’s prior consent (not to be unreasonably withheld), a bank or trust company to act as Paying Agent in connection with the Merger (the “Paying Agent”). At, or immediately before, the Effective Time, Acquisition will, and Parent shall cause Acquisition to, provide the Paying Agent with the funds necessary to make the payments under the rights contemplated by Section 2.7. Until used for that purpose, the funds will be invested by the Paying Agent, as directed by the Surviving Corporation, in obligations of or guaranteed by the United States of America or obligations of an agency of the United States of America which are backed by the full faith and credit of the United States of America, in commercial paper obligations rated A-1 or P-1 or better by Moody’s Investors Services Inc. or Standard & Poor’s Corporation, or in deposit accounts, certificates of deposit or banker’s acceptances of, repurchase or reverse repurchase agreements with, or Eurodollar time deposits purchased from, commercial banks, each of which has capital, surplus and undivided profits aggregating more than $10 billion (based on the most recent financial statements of the banks which are then publicly available).

(b)

Promptly (and in any event within five Business Days) after the Effective Time, the Surviving Corporation will cause the Paying Agent to mail to each person who was a record holder of Common Stock at the Effective Time, a form of letter of transmittal for use in effecting the surrender of stock certificates representing Common Stock (“Certificates”) in order to receive payment of the Merger Price. When the Paying Agent receives a Certificate, together with a properly completed and executed letter of transmittal and any other required documents, the Paying Agent will pay to the holder of the shares represented by the Certificate, or as otherwise directed in the letter of transmittal, the Merger Price with regard to those shares, and the Certificate will be cancelled. Book entry transfer of shares to the Paying Agent will have the same effect as delivery of a Certificate with respect to those shares. No interest will be paid or accrued on the cash payable upon the surrender of Certificates. If payment is to be made to a person other than the person in whose name a surrendered Certificate is registered, the surrendered Certificate must be properly endorsed or otherwise

5

be in proper form for transfer, and the person who surrenders the Certificate must provide funds for payment of any transfer or other taxes required by reason of the payment to a person other than the record holder of the surrendered Certificate or establish to the satisfaction of the Surviving Corporation that the tax has been paid. After the Effective Time, a Certificate which has not been surrendered will represent only the right to receive the Merger Price, without any interest.

(c)

The Paying Agent may withhold from the sum payable to any person as a result of the Merger, and pay to the appropriate taxing authorities, any amounts which the Paying Agent or the Surviving Corporation is required, or reasonably believes it is required, to withhold under the Internal Revenue Code of 1986, as amended (the “Code”), or any provision of any state, local or foreign tax law. Any sum which is withheld and paid to a taxing authority as permitted by this paragraph will be deemed to have been paid to the person with regard to whom it is withheld. The Parties shall provide and to make customary requests for information and documentation allowing for the avoidance of withholding.

(d)

If a Certificate has been lost, stolen or destroyed, the Surviving Corporation will accept an affidavit and indemnification reasonably satisfactory to it instead of the Certificate.

(e)

At any time which is more than six months after the Effective Time, the Surviving Corporation may require the Paying Agent to deliver to it any funds which had been made available to the Paying Agent and have not been disbursed to former holders of shares of Common Stock (including, without limitation, interest and other income received by the Paying Agent in respect of the funds made available to it), and after the funds have been delivered to the Surviving Corporation, former stockholders of the Company must look to the Surviving Corporation for payment of the Merger Price upon surrender of the Certificates held by them. Neither the Surviving Corporation nor the Paying Agent will be liable to any former stockholder of the Company for any Merger consideration which is delivered to a public official pursuant to any abandoned property, escheat or similar law.

(f)

After the Effective Time, the Surviving Corporation will not record any transfers of shares of Common Stock on the stock transfer books of the Company or the Surviving Corporation. If, after the Effective Time, Certificates are presented for transfer, they will be cancelled and treated as having been surrendered for the Merger Price (which will be paid upon receipt of a properly completed Letter of Transmittal and any other required documents).

(g)

Notwithstanding anything in this Agreement to the contrary, if, from the date of this Agreement until the Effective Time, the number of outstanding shares of Common Stock shall have been changed into a different number of shares or a different class by reason of any reclassification, stock split (including a reverse stock split), recapitalization, business combination, tender or exchange offer, readjustment or other similar transaction, or a stock dividend or stock distribution thereon shall be declared with a record date within such period, the Tender Offer Price and the Merger Price shall be appropriately adjusted to provide the holders of shares of Common Stock the same economic effect as contemplated by this Agreement prior to such event; provided, however, that (i) in no event shall the aggregate amount payable by Parent or Acquisition pursuant to this Section 2.10 after giving effect to any such event exceed the amount that would have been payable pursuant to this Section 2.10 had such event not occurred and (ii) nothing in this Section 2.10 shall permit the Company to take any action with respect to its securities that is expressly prohibited by the terms of this Agreement.

ARTICLE 3
EFFECTIVE TIME OF MERGER

3.1

Closing of the Merger.  The closing of the Merger (the “Closing”) shall take place at the offices of Akerman LLP, Three Brickell City Center, 98 Southeast Seventh Street, Miami, FL 33131 at 10:00 a.m., Eastern time, as promptly as practicable following the Expiration Time, but in no event later than the third (3^rd) Business Day following the satisfaction or (to the extent permitted by applicable Law) waiver by the Party or Parties entitled to the benefits thereof of the conditions set forth in Article 7 (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or (to the extent permitted by applicable Law) waiver of those conditions), or at such other place, time or date as shall be agreed in writing between Parent and the Company; provided, that the Closing shall in any event not occur earlier than thirty (30) days following the date of dissemination of the Maryland Short Form Merger Notice as set forth in Section 1.2(a). The date on which the Closing occurs is referred to in this Agreement as the “Closing Date.”

3.2

Date of the Merger.  At the Closing, the Parties shall cause the Merger to be consummated by filing with the State Department of Assessments and Taxation of Maryland (the “Department”) articles of merger (the “Articles of Merger”) in connection with the Merger, in such form as is required by, and executed in accordance with, the MGCL, and the Parties shall make all other filings or recordings required under the MGCL in connection with the Merger.  The Merger shall become effective at the time the Articles of Merger are accepted for record by the Department or such later date and time (not to exceed thirty (30) days after the Articles of Merger are accepted for record by the Department) as shall be agreed to by the Company and Parent and specified in the Articles of Merger (the date and time the Merger becomes effective being the “Effective Time”), it being understood and agreed that the Parties shall cause the Effective Time to occur on the Closing Date.

6

3.3

No Dissenters’ or Appraisal Rights. No dissenters’ or appraisal rights or rights of an objecting stockholder (under Section 3-201 et seq. of the MGCL or otherwise) shall be available with respect to the Merger or the other transactions contemplated hereby.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES

4.1

Representations and Warranties of the Company. Except (i) as disclosed in any report, schedule, form or other document filed with, or furnished to, the SEC after January 1, 2013 and publicly available prior to the date of this Agreement, or (ii) as disclosed in the corresponding section of the disclosure schedules attached to this Agreement (it being agreed that disclosure of any item in any section of the disclosure schedules shall also be deemed disclosure with respect to any other section of this Agreement to which the relevance of such item is reasonably apparent on its face), the Company represents and warrants to Parent and Acquisition as follows:

(a)

The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Maryland.

(b)

The Company has all corporate power and authority necessary to enable it to enter into this Agreement and carry out the Transactions. All corporate actions necessary to authorize the Company to enter into this Agreement and carry out the Transactions have been taken and, assuming the conditions of Section 3-106.1 of the MGCL have been satisfied, no other corporate proceedings on the part of the Company are necessary to authorize this Agreement, the Transactions or the other transactions contemplated by this Agreement (subject, with respect to the Merger, to the filing of the Articles of Merger with and acceptance for record of the Articles of Merger by the Department). This Agreement has been duly executed by the Company and, assuming this Agreement has been duly executed by Parent and Acquisition, is a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms (except to the extent that such enforceability (i) may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general application affecting or relating to the enforcement of creditors’ rights generally and (ii) is subject to general principles of equity, whether considered in a proceeding at law or in equity).

(c)

The Special Committee has received and considered in connection with its decision to make the recommendation to the Board described in the next sentence, an opinion, dated as of the date hereof, of JMP Securities LLC (“JMP”) as financial advisor to the Special Committee, to the effect that, subject to the limitations and assumptions set forth therein, as of the date hereof, the Tender Offer Price and Merger Price to be paid to the holders of shares of Common Stock in the Tender Offer and Merger are fair from a financial point of view to the Company’s stockholders.  

(d)

The Board, acting upon the recommendation of the Special Committee, has unanimously (i) determined that this Agreement, the Transactions and the other transactions contemplated by this Agreement are advisable and in the best interests of the Company and its stockholders, (ii) approved this Agreement, the Transactions and the other transactions contemplated by this Agreement and (iii) subject to Sections 8.1(f), 8.1(g) and 8.1(h), determined to recommend that the holders of Common Stock tender their shares in response to the Tender Offer, and include such recommendation in the Schedule 14D-9, which resolutions have not as of the date hereof been subsequently rescinded, modified or withdrawn in any way.

(e)

The Board has taken all action necessary to render inapplicable to this Agreement, the Transactions and the other transactions contemplated by this Agreement (a) the provisions of Subtitle 6 of Title 3 of the MGCL and Subtitle 7 of Title 3 of the MGCL and (b) the limitations on transfer and ownership set forth in Section 7.2.1(a)(i) of the charter of the Company (the “Charter”).  No other “business combination,” “control share acquisition,” “fair price,” “moratorium” or other takeover or anti-takeover statute or similar federal or state Law (collectively, “Takeover Laws”) is applicable to this Agreement, the Transactions or the other transactions contemplated by this Agreement.  The Company does not have a “poison pill” or similar rights plan.

(f)

Neither the execution and delivery of this Agreement or of any document to be delivered in accordance with this Agreement nor the consummation of the Transactions or by any document to be delivered in accordance with this Agreement will violate, result in a breach of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, the Charter or Bylaws of the Company, any agreement or instrument to which the Company or any subsidiary of the Company is a party or by which any of them is bound, any law, or any order, rule or regulation of any court or governmental agency or other regulatory or adjudicatory body having jurisdiction over the Company or any of its subsidiaries, except violations, breaches or defaults that in aggregate would not reasonably be expected to have a Company Material Adverse Effect. As used in this Agreement, the term “Company Material Adverse Effect” means a material adverse effect upon (i) the consolidated financial condition of the Company and its subsidiaries, taken as a whole, (ii) the consolidated results of operations of the Company and its subsidiaries, taken as a whole, during a fiscal year compared with what those consolidated results of operations would have been during that fiscal year but for a particular event or events, or a particular condition or conditions, or (iii) the business of the Company and its subsidiaries, taken as a whole; provided, that, in each case, developments, changes, events, conditions, occurrences or effects shall not be taken into

7

account when determining whether a Company Material Adverse Effect has occurred to the extent arising out of or resulting from (A) changes in the economy of the United States of America (the “United States”) in general, (B) changes in the industry or industries in which the Company or its subsidiaries conduct their businesses, (C) changes in applicable Law, (D) changes in global or national political conditions (including the outbreak of war or acts of terrorism), (E) consummation or public disclosure of this Agreement or the Transactions contemplated by it or the pendency of such Transactions, (F) any litigation arising from allegations of breach of fiduciary duty or violation of Law relating to this Agreement or the Transactions, (G) the performance by the Company or any of its subsidiaries of its obligations under this Agreement or actions otherwise taken by the Company with Parent’s consent or any failure by the Company to take any action as a result of the restrictions in Article 6 of this Agreement, (H) any decline in the market price, or change in trading volume, of Common Stock or any failure of the Company to meet internal projections or forecasts, or projections or forecasts of any other person, of revenues, earnings or cash flow for any period ending on or after the date of this Agreement, or (I) any changes in the market value of the Company’s agency securities and derivatives as of the Calculation Date, the appraised value of the Company’s non-agency securities as of the Calculation Date or the most recent prior date as of which such value can be determined, or the  repurchase agreement balances as of the Calculation Date, except to the extent that the effect of a change described in one or more of clauses (A) through (E) materially disproportionately adversely affects the Company and its subsidiaries, taken as a whole, as compared to other companies engaged in similar businesses.

(g)

Except for (i) the filing with the SEC of the Schedule 14D-9 and, if necessary, any other filings required under, and compliance with other applicable requirements of, the Exchange Act and the rules of the New York Stock Exchange, (ii) the filing of the Articles of Merger with the Department pursuant to the MGCL, (iii) compliance with state securities, takeover and “blue sky” Laws and the filing of documents with various state securities authorities that may be required in connection with the Transactions contemplated hereby, and (iv) filings and notices required as a result of facts and circumstances attributable solely to Parent or Acquisition, no governmental filings, authorizations, approvals, or consents, or other governmental action are required to permit the Company to fulfill all its obligations under this Agreement.

(h)

The only authorized stock of the Company is 250,000,000 shares of Common Stock and 25,000,000 shares of preferred stock, par value $.001 per share. At February 24, 2016, the only outstanding stock of the Company is not more than 11,866,691 shares of Common Stock and there are no outstanding shares of preferred stock. All the outstanding shares of Common Stock have been duly authorized and issued and are fully paid and non-assessable. The Company has not issued any options, warrants or convertible or exchangeable securities which are outstanding, and is not a party to any other agreements, which require, or upon the passage of time, the payment of money or the occurrence of any other event may require, the Company to issue or sell any of its stock at any time or would require the Surviving Corporation to issue or sell any of its stock at any time after the Effective Time.

(i)

Neither the Company nor any of its subsidiaries is a party to any agreements regarding the voting of shares of Common Stock or committing the Company to register shares of Common Stock under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”). No holder of Common Stock or other securities of the Company is entitled under the Charter or under any agreement to which the Company or any of its subsidiaries is a party, to preemptive rights with regard to Common Stock or any other securities issued by the Company or by the Surviving Corporation.

(j)

Since January 1, 2013, the Company has filed with the SEC in a timely manner all forms, statements, reports and documents it has been required to file under the Securities Act or the Exchange Act.

(k)

The Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (the “Company 10-K”) and its Report on Form 10-Q for the period ended September 30, 2015 (the “September 30 10-Q”), which were filed with the SEC, including the documents incorporated by reference in each of them, each contained all the information required to be included in it and, when it was filed, did not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made in it, in light of the circumstances under which they were made, not misleading. Without limiting what is said in the preceding sentence, the financial statements included in the Company 10-K all were prepared, and the financial information included in the September 30 10-Q was derived from financial statements which were prepared, in accordance with GAAP (except that interim financial information included in the September 30 10-Q does not contain all the notes required with regard to financial statements prepared in accordance with GAAP and is subject to normal year-end adjustments) and present fairly the consolidated financial condition and the consolidated results of operations of the Company and its subsidiaries at the dates, and for the periods, to which they relate.

8

(l)

Except as would not in aggregate constitute a Company Material Adverse Change, neither the Company nor any of its subsidiaries has any liabilities, contingent or otherwise, that would be required to be reflected on, or disclosed in notes to, consolidated financial statements of the Company and its subsidiaries prepared in accordance with GAAP, other than (i) liabilities reflected on the balance sheet included in the September 30 10-Q, (ii) liabilities disclosed in the notes to the financial statements in the Company 10-K or to the financial information in the September 30 10-Q, (iii) contingent obligations disclosed in the management’s discussion and analysis of financial condition and results of operations included in the Company 10-K or the September 30 10-Q, (iv) liabilities or obligations incurred or to be incurred in connection with the Transactions contemplated by this Agreement, or (v) trade payables and other current liabilities arising in the ordinary course out of the conduct by the Company and its subsidiaries of their respective businesses since September 30, 2015.

(m)

Since October 1, 2015, (i) the Company and its subsidiaries have conducted their businesses in the ordinary course and in the same manner in which they were being conducted at September 30, 2015, and (ii) nothing has occurred that has had or is likely to have a Company Material Adverse Effect.

(n)

The Company and each of its subsidiaries have since October 1, 2015, complied, and currently is complying, with all applicable United States national, state and local, and all applicable foreign, laws and regulations (collectively, “Laws”), except failures to comply that would not, in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

(o)

The Company and its subsidiaries have all licenses and permits which are required at the date of this Agreement to enable them to conduct their businesses as they currently are being conducted, except licenses or permits the lack of which would not, in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

(p)

At the date of this Agreement, except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, neither the Company nor any of its subsidiaries is a party to any suit or governmental proceeding (in which service or notice of process has been received by the Company) which seeks to prevent the Company from completing the transactions that are the subject of this Agreement, nor, to the best of the knowledge of any member of the Special Committee, has any such legal proceeding or any such suit or governmental proceeding been threatened in writing.

(q)

The Company has elected to be taxed as a real estate investment trust (a “REIT”) as described in Section 856 of the Code, and commencing with its taxable year ended December 31, 2012, the Company (i) has at all times through December 31, 2015 satisfied all requirements to qualify as a REIT under Section 856 of the Code, (ii) has operated since December 31, 2015 in a manner that would allow it to continue to qualify as a REIT under Section 856 of the Code, and (iii) has not received a written notification from the Internal Revenue Service or any other taxing authority indicating that that taxing authority is considering asserting a claim that the Company does not qualify as a REIT. Without limiting what is said in the preceding sentence, neither the Company nor any subsidiary holds any asset the disposition of which would be subject to the built in gains rules of Treasury Reg. Section 1.337(d)-7.

(r)

Since January 1,  2013, except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, the Company and each of its subsidiaries has filed when due (taking account of extensions) all tax returns which it has been required to file and has paid all taxes shown on those returns to be due.

(s)

The Company has no employees. Its activities are managed by ACM under a management agreement between ACM and the Company dated as of October 5, 2012 and amended as of March 5, 2014 and February 23, 2015 (the “ACM Management Agreement”). The Company is not a party to, and has no obligations under or with regard to, any employee benefit plans, whether or not subject to the Employee Retirement Income Security Act of 1974 (“ERISA”).

(t)

Neither the Company nor any of its subsidiaries is required to be registered as an investment company under the Investment Company Act of 1940, as amended.

(u)

Neither the Schedule 14D-9 nor any information supplied by the Company for inclusion in the Offer Documents (or any amendment thereof or supplement thereto) will, at the respective times either the Schedule 14D-9 or the Schedule TO (or amendment to it) that includes the Offer Documents is filed with the SEC or the time when the Schedule 14D-9 or the Offer Documents are first sent to the Company's stockholders or at the Expiration Date, contain an untrue statement with respect to any material fact or omit to state any material fact required to be stated or included in it or necessary in order to make the statements made or included in it, in light of the circumstances under which they are made, not misleading. However, the Company does not make any representation or warranty (i) with respect to information supplied by Parent or Acquisition or any of their affiliates or representatives for inclusion in the Schedule 14D-9, or (ii) with respect to the Offer Documents, except to the extent of information supplied by the Company for inclusion in the Offer Documents. The Schedule 14D-9 Statement each will comply as to form in all material respects with the requirements of the Exchange Act and the rules under it.

9

4.2

No Implied Representations and Warranties by the Company. Except for the representations and warranties contained in Section 4.1, each of Parent and Acquisition acknowledges that neither the Company nor any person on behalf of the Company makes any other express or implied representation or warranty with respect to the Company or any of its subsidiaries or with respect to any other information provided or made available to either Parent or Acquisition in connection with the Transactions. Neither the Company nor any other person will have or be subject to any liability or indemnification obligation to Parent, Acquisition or any other person resulting from the distribution to, or use by, Parent, Acquisition or any other person of any such information, including any documents, projections, forecasts or other material made available to Parent, Acquisition or any other person in “data rooms” or management presentations in expectation of the transactions contemplated by this Agreement, unless and then only to the extent that any such information is expressly included in a representation or warranty contained in Section 4.1 or elsewhere in this Agreement.

4.3

Representations and Warranties of Parent and Acquisition. Except (i) as disclosed in any report, schedule, form or other document filed with, or furnished to, the SEC after January 1, 2013 and publicly available prior to the date of this Agreement, or (ii) as disclosed in the corresponding section of the disclosure schedules attached to this Agreement, (it being agreed that disclosure of any item in any section of the disclosure schedules shall also be deemed disclosure with respect to any other section of this Agreement to which the relevance of such item is reasonably apparent on its face) Parent and Acquisition each represents and warrants to the Company as follows:

(a)

Parent and Acquisition each is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland.

(b)

Parent and Acquisition each has all corporate power and authority necessary to enable it to enter into this Agreement and carry out the transactions contemplated by this Agreement. All corporate actions necessary to authorize each of Parent and Acquisition to enter into this Agreement and carry out the transactions contemplated by it have been taken. This Agreement has been duly executed by each of Parent and Acquisition and (assuming the due authorization, execution and delivery by the Company) is a valid and binding agreement of each of Parent and Acquisition, enforceable against each of them in accordance with its terms (except to the extent that such enforceability (i) may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general application affecting or relating to the enforcement of creditors’ rights generally and (ii) is subject to general principles of equity, whether considered in a proceeding at law or in equity).

(c)

Neither the execution or delivery of this Agreement or of any document to be delivered in accordance with this Agreement nor the consummation of the transactions contemplated by this Agreement or by any document to be delivered in accordance with this Agreement will violate, result in a breach of, or constitute a default (or an event which, with notice or lapse of time or both would constitute a default) under, the Charter or Bylaws of either Parent or Acquisition, any agreement or instrument to which either Parent or Acquisition or any subsidiary of either of them is a party or by which any of them is bound, any law, or any order, rule or regulation of any court or governmental agency or other regulatory organization having jurisdiction over Parent, Acquisition or any of their respective subsidiaries, except violations or breaches of, or defaults under, agreements or instruments which would not, individually or in the aggregate, reasonably be expected to prevent, materially delay or materially impede the ability of Parent and Acquisition to consummate the Tender Offer, the Merger and the other transactions contemplated by this Agreement.

(d)

Except for (i) the filing with the SEC of the Schedule TO, reports on Form 8-K and any related or other filings required under, and compliance with, the applicable requirements of, the Exchange Act, (ii) the filing of Articles of Merger with the Department pursuant to the MGCL and other filings and notices to be made by Company as provided hereunder, (iii) compliance with state securities and Takeover Laws and the filing of documents with various state securities authorities that may be required in connection with the Transactions contemplated hereby, and (iv) filings and notices required as a result of facts and circumstances attributable solely to the Company, no governmental filings, authorizations, approvals or consents, or other governmental action are required to permit Parent and Acquisition to fulfill all their obligations under this Agreement.

(e)

Acquisition was formed solely for the purpose of engaging in the transactions contemplated by this Agreement. Acquisition has not, and on the Effective Date will not have, engaged in any activities or incurred, directly or indirectly, any obligations or liabilities, except the activities relating to or contemplated by this Agreement and obligations or liabilities incurred in connection with those activities and with the transactions contemplated by this Agreement.

(f)

Neither any of the Offer Documents nor any information supplied by Parent or Acquisition for inclusion in the Schedule 14D-9 (or any amendment thereof or supplement thereto) will, at the respective times the Schedule TO (or amendment to it) that contains the Offer Documents or the Schedule 14D-9 is filed with the SEC or the Offer Documents or the Schedule 14D-9 are first sent to the Company's stockholders and at the Expiration Date, contain an untrue statement with respect to any material fact or omit to state any material fact required to be stated or included in it or necessary in order to make the statements made or included in it, in light of the circumstances under which they are made, not misleading. However, Acquisition does not make any representation or warranty with respect to information supplied by the Company or any of its affiliates or representatives for inclusion in the Offer Documents, or with respect to the Schedule 14D-9 (except to the extent of information supplied by Parent or Acquisition for inclusion in the Schedule 14D-9). The Offer Documents will comply as to form in all material respects with the requirements of the Exchange Act and the rules under it.

10

(g)

Acquisition is wholly owned by Parent. Parent has sufficient funds to enable Parent to fulfill its obligations under Section 11.1 and otherwise in this Agreement, and therefore to enable Acquisition to purchase and immediately pay for all shares of Common Stock which are tendered in response to the Tender Offer and enable Acquisition to immediately fulfill all its obligations with regard to the Merger, any and all fees and expenses required to be paid by Parent, Acquisition and the Surviving Corporation in connection with Transactions and all its other obligations under this Agreement.

(h)

Neither Acquisition nor Parent is the subject of any suit or governmental proceeding (in which service or notice of process has been received by either of them) which seeks to prevent Acquisition from completing the transactions which are the subject of this Agreement, nor, to the best of the knowledge of any officer of Parent has any such suit or proceeding been threatened.

(i)

None of Parent, Acquisition or any of their affiliates beneficially owns or owns of record (within the meaning of Section 13 of the Exchange Act), or will prior to the earlier of the Effective Time or the termination of this Agreement (other than as a result of the Transactions contemplated hereby), beneficially own or own of record any shares of Common Stock.

(j)

Neither Parent nor Acquisition nor any of their “affiliates” (as defined in Section 3-601 of the MGCL) is an “interested stockholder” (as defined in Section 3-601 of the MGCL) of the Company.

(k)

Parent has elected to be taxed as a REIT and is operating in a manner that will enable it to qualify as a REIT during 2016.

4.4

No Implied Representations and Warranties by Parent or Acquisition. Except for the representations and warranties contained in Section 4.3, the Company acknowledges that neither Parent nor Acquisition, nor any person on behalf of Parent or Acquisition, makes any other express or implied representation or warranty with respect to Parent or Acquisition, or any of their respective subsidiaries, or with respect to any other information provided or made available to the Company in connection with the Transactions.

4.5

Termination of Representations and Warranties. The representations and warranties in Sections 4.1, 4.3 and 9.1 will terminate at such, if any, time as Acquisition purchases through the Tender Offer any of the shares of Common Stock that are tendered in response to the Tender Offer. No party will have any rights or claims as a result of any representations and warranties after they terminate.

4.6

No Liability of Company regarding Incorrect Representations and Warranties. Even if representations and warranties of the Company in Section 4.1 are not correct and complete in all material respects, neither Acquisition nor Parent will be entitled to any damages from the Company because the representations and warranties are not correct and complete in all material respects. The sole remedy of Acquisition and Parent because one or more representations and warranties are not correct and complete in all material respects will be for Parent to terminate this Agreement as provided in Section 8.1.

ARTICLE 5
PROPOSALS FROM OTHER PERSONS

5.1

No Solicitation of Offers; Notice of Proposals from Others.

(a)

Until such, if any, time as this Agreement terminates without Acquisition’s purchasing the shares of Common Stock that are properly tendered in response to the Tender Offer and not withdrawn, except as provided in Section 5.1(b), the Company will (i) terminate all ongoing discussions regarding merger, reorganization, share exchange, consolidation or similar transaction involving the Company, or a purchase of or tender offer for a majority of the Company’s equity securities or a majority of the assets of the Company and its subsidiaries on a consolidated basis (each of those transactions being an “Acquisition Transaction”, a proposal or offer to enter into an Acquisition Transaction being an “Acquisition Proposal” and a person who makes an Acquisition Proposal being a “Potential Acquiror”), (ii) not authorize or permit its or any of its subsidiaries’ directors, officers, employees, agents or representatives (including any investment banker, attorney or accountant retained by it or by any of its subsidiaries) or any other person directly or indirectly to initiate, solicit, knowingly encourage or otherwise knowingly facilitate (by making available non-public information or otherwise) any Acquisition Proposal or any inquiry or the making of any proposal or offer with respect to a possible Acquisition Transaction, and (iii) not enter into any agreement with anyone other than Parent or Acquisition regarding an Acquisition Transaction (other than a confidentiality agreement permitted by Section 5.1(b)).

11

(b)

Paragraph (a) will not prevent the Company from providing non-public information about the Company and its subsidiaries (subject to a confidentiality agreement that has substantially the same terms as those contained in Section 12.2(b) of this Agreement) to, and engaging in discussions and negotiations regarding a possible Acquisition Transaction with, a prospective acquirer in response to an Acquisition Proposal which the Company receives that did not result in whole or in part from a breach of Section 5.1(a), and which the Special Committee, determines, after consultation with its legal advisors and independent financial advisor, would result (if consummated in accordance with its terms) in, or is reasonably likely to lead to a Superior Proposal (as defined below).

(c)

If the Board, the Special Committee or the Company, directly or through its advisors, receives an Acquisition Proposal or a request for non-public information or an indication that a prospective acquirer intends to make an Acquisition Proposal, as promptly as practicable, and in any event within one Business Day, after the Special Committee receives the Acquisition Proposal or request for non-public information relating to the Company that would reasonably be expected to lead to an Acquisition Proposal, the Company will inform Parent about the Acquisition Proposal or request including the identity of the person who made or intends to make an Acquisition Proposal and a reasonably detailed description of the material proposed terms of the Acquisition Proposal (including the proposed purchase consideration), and the Company will promptly, from time to time, provide Parent with any additional material information the Special Committee or the Company obtains regarding the Acquisition Proposal.

5.2

Waiver of Standstill Provisions. Anything to the contrary herein notwithstanding, Parent and Acquisition hereby acknowledge that in connection with this Agreement, the Company shall waive the applicability of and release any person who entered into a confidentiality agreement with the Company in connection with a possible acquisition of the Company or a significant portion of its assets containing standstill provisions in connection with the Transactions or the solicitation of proposals related to the process undertaken by the Special Committee resulting in such Transactions, from the standstill provisions of such confidentiality agreement.  

5.3

Return of Materials Subject to Confidentiality Agreements. The Company will, or will instruct ACM to, as soon as practicable following the Effective Time, request that any person holding or possessing materials provided during the one-year period prior to the date of this Agreement under a confidentiality agreement entered into in connection with a possible acquisition of the Company or a significant portion of its assets (other than through sales in the ordinary course of business), and any person to which the Company provided materials containing non-public information that does not make a written Acquisition Proposal, promptly return those materials to the Company or to destroy those materials, and the Company will, and will instruct ACM to, endeavor in good faith to obtain compliance with that request.  

ARTICLE 6
ACTIONS PRIOR TO THE MERGER

6.1

Company Activities Until Effective Time. From the date of this Agreement until the earlier of the Effective Time or the time this Agreement is terminated in accordance with Article 8, the Company and each of its subsidiaries will, and the Company will instruct ACM to manage the Company so that the Company and each of its subsidiaries will, except (a) with the written consent of Parent (not to be unreasonably withheld, conditioned or delayed), (b) as required by applicable Law or any supranational, national, foreign, federal, state, provincial or local governmental or regulatory commission, board, bureau, agency, court, arbitral tribunal or regulatory or administrative body (each, a “Governmental Authority”)or (c) as required or expressly contemplated by, or necessary to effect the Transactions and the other transactions contemplated by, this Agreement:

(a)

Conduct its activities in the ordinary course and in a manner consistent with the investment strategies and other strategies of the Company in place as of the date of this Agreement.

(b)

Take all commercially reasonable steps available to it to maintain the goodwill of its businesses.

(c)

Not make any borrowings other than borrowings in the ordinary course of business under repurchase agreements referenced in the notes to the consolidated balance sheet at December 31, 2014 included in the Company 10-K or the consolidated balance sheet at September 30, 2015 included in the September 30, 10-Q, or borrowings to help finance the acquisition of assets in the ordinary course of the Company’s business that do not in any instance exceed the purchase price of the asset that is being acquired.

(d)

Not enter into any contractual commitments involving capital expenditures, loans or advances, and not voluntarily incur any contingent liabilities, except in each case in the ordinary course of business.

(e)

Not redeem or purchase any of its stock and not declare or pay any dividends, or make any other distributions or repayments of debt to its stockholders (other than payments by subsidiaries of the Company to the Company or to wholly owned subsidiaries of the Company), other than regular monthly dividends (payable through the month of March 2016) paid by the Company consistent with its past practice of paying monthly dividends based upon its estimated REIT taxable income for the month (estimated in a manner consistent with past practice) and as otherwise necessary to maintain the Company’s qualification as a REIT.

12

(f)

Not make any loans or advances (other than advances in the ordinary course for travel and other normal business expenses) to stockholders, directors, officers or employees.

(g)

Maintain its books of account and records in the usual manner, in accordance with GAAP applied on a consistent basis, subject to normal year-end adjustments and accruals.

(h)

Comply in all material respects with all applicable Laws and regulations of governmental agencies.

(i)

Not purchase, sell, dispose of or encumber any property or assets, or engage in any activities or transactions, except in each case in the ordinary course of business.

(j)

Not hire any employees.

(k)

Not adopt, become an employer with regard to, or amend any employee compensation, employee benefit or post-employment benefit plan or arrangement.

(l)

Not amend its Charter or Bylaws.

(m)

Not (i) issue or sell, or enter into agreements to issue or sell, any stock of the Company or any options, warrants or convertible or exchangeable securities of the Company or (ii) engage in a reclassification, split or reverse split of Common Stock, declare or make a stock dividend or stock distribution, or engage in a recapitalization, merger (other than the Merger), issuer tender or exchange offer, or other similar transaction.

(n)

Not modify in a material respect the nature or limits (including retention amounts) of insurance coverage that it or its subsidiaries maintain.

(o)

Not make or rescind any material elections under the Code or any state or local tax laws, except to the extent necessary to enable the Company to continue to satisfy all requirements to qualify as a REIT under Section 856 of the Code.

(p)

Not enter into any agreements, including any agreements in connection with the settlement of litigation, that would restrict the ability of the Surviving Corporation to engage after the Effective Time in all the activities in which the Company is engaged as of the date of this Agreement or that would materially restrict the ability of Parent or Acquisition to engage in any activities after Acquisition purchases the shares of Common Stock that are tendered in response to the Tender Offer.

(q)

Subject to the terms of this Agreement, not enter into any agreements that would make it impossible for Acquisition to acquire through the Tender Offer the shares of Common Stock or for the Merger to take place when and as contemplated by this Agreement.

(r)

Not authorize or enter into any agreement to take any of the actions referred to in subparagraphs (a) through (q) above.

6.2

All Parties’ Activities Until Effective Time. Each of Parent, Acquisition and the Company agrees that, from the date of this Agreement to the earlier of the Effective Time and the termination of this Agreement in accordance with Article 8 hereof, unless otherwise contemplated herein (for the avoidance of doubt, this provision is not violated by actions permitted by this agreement including Section 5.1):

(a)

Parent shall not (i) take any action that is intended to or would result in any of the conditions to the Tender Offer or any of the conditions to effecting the Merger becoming incapable of being satisfied; or (ii) take any action or fail to take any action which would, or would be reasonably likely to, individually or in the aggregate, prevent, materially delay or materially impede the ability of Parent and Acquisition to consummate the Tender Offer, the ability of the Company and Acquisition to consummate the Merger or the ability of any of the Company, Parent and Acquisition to complete the other transactions contemplated by this Agreement.

(b)

Parent will take all actions necessary to (i) cause Acquisition to perform its obligations under this Agreement and to consummate the Transactions on the terms and conditions set forth in this Agreement and (ii) ensure that, prior to the Effective Time, Acquisition shall not conduct any business or make any investments other than as specifically contemplated by this Agreement.

(c)

Parent and Company will take all actions necessary to preserve the status of the Company as a REIT under Section 856 of the Code at and immediately subsequent to the Effective Time.

13

6.3

Communications to Employees of ACM. The Company and Parent will endeavor in good faith to agree upon written and oral statements regarding the Transactions to be made to employees of ACM who are engaged in managing the Company and its subsidiaries.

6.4

Takeover Defenses. If any Takeover Law is or may become applicable to the Tender Offer, the Transaction or any other transaction contemplated by this Agreement, each of the Company, Parent and Acquisition and their respective boards of directors shall grant all such approvals and take all such actions as are necessary or appropriate so that such transactions may be consummated as promptly as practicable hereafter on the terms contemplated hereby, and otherwise act to eliminate or minimize the effects of such Law on such transactions.

6.5

ACM Assistance to Company. Parent will, except as otherwise instructed in writing by the Board, acting upon the recommendation of the Special Committee, cause ACM to do all things in its power to cause the Company to fulfill all its obligations in this Article 6 and elsewhere in this Agreement. Without limiting what is said in the preceding sentence, to the extent ACM is reasonably able to do so, Parent will cause ACM to follow all instructions of the Board, acting upon the recommendation of the Special Committee, to cause the Company to take actions or not take actions between the date of this Agreement and the Expiration Time.

6.6

Reasonable Best Efforts. Without limiting the other provisions of this Article 6, upon the terms and conditions set forth in this Agreement, each of the Parties hereto agrees to use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other Parties in doing, all things necessary, proper or advisable under applicable law to fulfill all conditions applicable to such party pursuant to this Agreement (including, as applicable, Section 7.1 or 7.2 of this Agreement) and to consummate the Transactions and the other transactions contemplated by this Agreement. The Parties shall use their respective reasonable best efforts to resolve any objections that may be asserted by any Governmental Authority with respect to the transactions contemplated hereby. Except to the extent that Parent requests otherwise and waives any resulting failure of a condition to Acquisition’s obligation to purchase the shares of Common Stock tendered in response to the Tender Offer, the Company and Parent will cooperate and use their respective reasonable best efforts to obtain as promptly as practicable all consents, approvals and waivers required by third persons so that all permits and contracts of the Company and its subsidiaries will remain in full force and effect after the Effective Time. Subject to the terms and conditions of this Agreement, each party shall use its reasonable best efforts to cause the Expiration Time and the Effective Time to occur as promptly as practicable, including by defending against any lawsuits, actions or proceedings, judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby, and seeking to have any restraint or prohibition entered or imposed by any court or other Governmental Authority that is not yet final and non-appealable vacated or reversed, provided that none of Parent, Acquisition or the Company (unless Parent agrees to reimburse the Company) will be required voluntarily to incur or increase any financial obligation in order to resolve lawsuits, actions or proceedings.

ARTICLE 7
CONDITIONS PRECEDENT TO MERGER

7.1

Conditions to the Company’s Obligations. The obligations of the Company to complete the Merger are subject to satisfaction of the following conditions (any or all of which, other than the condition in Section 7.1(a), may be waived by the Board, acting upon the recommendation of the Special Committee):

(a)

Shares of Common Stock representing at least the Minimum Condition will have been validly tendered in response to the Tender Offer and not withdrawn by the Expiration Time and Acquisition will have purchased all the shares of Common Stock that are validly tendered in response to the Tender Offer and not withdrawn.

(b)

No order will have been entered by any Governmental Authority and be in force that invalidates this Agreement or restrains the Company from completing the Merger.

7.2

Conditions to Acquisition’s Obligations. The obligations of Acquisition to complete the Merger (which may be waived by Parent) are subject to following conditions:

(a)

 No order will have been entered by any Governmental Authority and be in force which invalidates this Agreement or restrains Parent or Acquisition from completing the Merger.

(b)

The Company will have granted a limited waiver to Parent and Acquisition to provide (i) that Parent and Acquisition may each own shares of capital stock of the Company in excess of 9.8% in value or number of shares.

7.3

Frustration of Closing Conditions. No party to this Agreement may rely, either as a basis for not consummating the Merger or terminating this Agreement and abandoning the Merger, on the failure of any condition set forth in Article 7 to be satisfied if such failure was caused in any material respect by such party’s breach of any provision of this Agreement or failure to use the efforts to consummate the Merger and the other transactions contemplated hereby that are required by Article 6.

14

ARTICLE 8
TERMINATION

8.1

Right to Terminate. This Agreement may be terminated at any time prior to the Effective Time:

(a)

By mutual written consent of the Company and Parent.

(b)

By the Company before (but not after) Acquisition accepts for purchase Common Stock that is tendered in response to the Tender Offer if there has been a material breach by Parent or Acquisition, as the case may be, of any representation, warranty, covenant or other agreement contained herein, which breach or failure to perform (i) would give rise to the failure of a condition to the Tender Offer set forth on Exhibit 1.2-E, and (ii) has not been waived by the Company or cured by Parent or Acquisition within fifteen (15) Business Days after Parent’s receipt of written notice thereof from the Company or is incapable of being cured by Parent or Acquisition on or before the Tender Outside Date.

(c)

By the Company after Acquisition accepts for purchase Common Stock that is tendered in response to the Tender Offer but before the Effective Time, as to the Merger but not the Tender Offer (and without affecting any obligation of Acquisition to purchase, or any purchase by Acquisition that has taken place of, Common Stock that is tendered in response to the Tender Offer) if an order is entered by any Governmental Authority which restrains or otherwise prevents the Company or Acquisition from completing the Merger, and despite efforts by the Company to cause that order to be dissolved or modified in a way that would permit the Merger to take place, because of that order the Merger does not take place within 120 days after the Expiration Date.

(d)

By Parent before (but not after) Acquisition accepts for purchase Common Stock that is tendered in response to the Tender Offer if there has been a material breach by the Company of any representation, warranty, covenant or other agreement contained herein, which breach or failure to perform (i) would give rise to the failure of a condition to the Tender Offer set forth on Exhibit 1.2-E, and (ii) has not been waived by Parent or cured by the Company within fifteen (15) Business Days after the Company receives written notice thereof from Parent or is incapable of being cured by the Company on or before the Tender Outside Date (provided, that the breach or inaccuracy of any such representation or warranty was not known, or reasonably should have been known, to Parent or any of its subsidiaries or affiliates on or prior to the date of this Agreement).

(e)

By the Parent after Acquisition accepts for purchase Common Stock that is tendered in response to the Tender Offer but before the Effective Time, as to the Merger but not the Tender Offer (and without affecting any obligation of Acquisition to purchase, or any purchase by Acquisition that has taken place of, Common Stock that is tendered in response to the Tender Offer), if an order is entered by any Governmental Authority which restrains or otherwise prevents the Company or Acquisition from completing the Merger, and despite diligent efforts by the Parent and Acquisition to cause that order to be dissolved or modified in a way that would permit the Merger to take place, because of that order the Merger does not take place within 120 days after the Expiration Date.

(f)

By the Company if before the Expiration Date, (i) the Company receives an Acquisition Proposal to acquire 20% or more of the stock or assets of the Company, or a Potential Acquiror commences a cash tender offer or an exchange offer 20% or more of the Company's outstanding stock (other than any already owned by the Potential Acquiror), (ii) the Board, acting upon the recommendation of the Special Committee, determines that such Acquisition Proposal or the tender offer or exchange offer is or is reasonably likely to lead to a Superior Proposal (as defined below) and resolves to accept the Superior Proposal, or to recommend that stockholders tender their shares in response to the Superior Proposal, unless Acquisition will increase the Tender Offer Price and the Merger Price to an amount per share of Common Stock equal to the value per share of Common Stock of the consideration the Company's stockholders would receive as a result of the Superior Proposal, (iii) the Company has given Parent and Acquisition at least three Business Days’ prior notice (a “Superior Proposal Notice”) (A) of the terms of the Superior Proposal (including the value per share of Common Stock of the consideration the Company's stockholders would receive as a result of the Superior Proposal, valuing non-cash consideration at its fair value as determined by the Board, after consultation with the Special Committee), and (B) that unless Acquisition increases the Tender Offer Price and the Merger Price to an amount per share equal to the value per share of Common Stock of the consideration the Company's stockholders would receive as a result of the Superior Proposal, as set forth in the Superior Proposal Notice, this Agreement will terminate, and (iv) Parent has failed to give the Company an irrevocable notice within the three full Business Day period that Acquisition will increase the Tender Offer Price and the Merger Price to an amount per share equal to the value per share of Common Stock of the consideration the Company's stockholders would receive as a result of the Superior Proposal, as set forth in the Superior Proposal Notice (a “Price Increase Notice”).  A “Superior Proposal” is an Acquisition Proposal, a tender offer or an exchange offer, in each case relating to greater than 50% of the Company’s stock or assets, which the Board, acting upon the recommendation of the Special Committee determines, after consultation with its legal advisors and independent financial advisor, is reasonably likely to be consummated in accordance with its terms and would result in a transaction more favorable to the Company's common stockholders than the Tender Offer and the Merger, taking into account all material legal, financial and regulatory aspects of the proposal (including the consideration per share to be received by the Company’s stockholders). A notice that this Agreement will terminate included in a Superior Proposal Notice will be irrevocable (unless Parent consents in

15

writing to its being withdrawn by the Company) and, unless Parent gives a Price Increase Notice within the three Business Days described in clause (iv) of this Section 8.1(f), will result in this Agreement's terminating on the later of the date specified in the Superior Proposal Notice. If Parent gives the Company a Price Increase Notice, this Agreement will be deemed amended to cause the Tender Offer Price to be the price described in the Price Increase Notice, and the Company will not have the right to terminate this Agreement under this Section 8.1(f) as a result of the Acquisition Proposal described in the Superior Proposal Notice.

(g)

By the Company if, after Parent has given the Company a Price Increase Notice and before the Expiration Date (as it is extended because of the Superior Proposal Notice or the Price Increase Notice), (i) the Company receives a subsequent Acquisition Proposal (whether from the same or a different Potential Acquiror) to acquire 20% or more of the stock or assets of the Company, or a Potential Acquiror commences a cash tender offer or an exchange offer for 20% or more of the Company's outstanding stock (other than any already owned by the Potential Acquiror), and (ii) the Board, acting upon the recommendation of the Special Committee, determines that the subsequent Acquisition Proposal or tender offer or exchange offer is a Superior Proposal even taking into account the amendment to this Agreement as a result of the Price Increase Notice, and resolves to accept the Superior Proposal, or to recommend that stockholders tender their shares in response to the Superior Proposal, provided that the Company will not have the right to terminate this Agreement as a result of a subsequent Acquisition Proposal or tender offer or exchange offer that the Board, acting upon the recommendation of the Special Committee, determines to be a Superior Proposal unless (x) the Company has given Parent and Acquisition at least two Business Days’ prior notice of the terms of the Superior Proposal (including the value per share of Common Stock of the consideration the Company's stockholders would receive as a result of the Superior Proposal, valuing non-cash consideration at its fair value as determined by the Board, acting upon the recommendation of the Special Committee, after consultation with its financial advisers), which two Business Days’ notice will for all purposes of this Agreement be a Superior Proposal Notice (except that it may be revoked at the discretion of the Board, acting upon the recommendation of the Special Committee), and (y) if Parent asks to discuss with the Special Committee during the two Business Day period modifying the Tender Offer Price or other terms of this Agreement to make the Transactions, as modified, as favorable to the Company’s common stockholders as the subsequent Acquisition Proposal or tender offer or exchange offer that the Board, acting upon the recommendation of the Special Committee, has determined to be a Superior Proposal, the Board, acting upon the recommendation of the Special Committee, will have engaged in those discussions and, if Parent has offered to modify the Tender Offer Price or other terms of this Agreement, at the conclusion of those discussions, the Board, acting upon the recommendation of the Special Committee, will have made a determination that the subsequent Acquisition Proposal or tender offer continues to be more favorable to the Company's common stockholders as the Transactions as Parent has offered to modify them. If, because of an offer by Parent to modify the Tender Offer Price or other terms of this Agreement, the Board, acting upon the recommendation of the Special Committee, withdraws its determination that a subsequent Acquisition Proposal or tender offer is a Superior Proposal and then the Company receives one or more additional subsequent Acquisition Proposals or there are one or more subsequent tender offers or exchange offers, the provisions of this Section 8.1(g) will apply to each of those subsequent Acquisition Proposals or tender offers or exchange offers.

(h)

When the Company delivers a Superior Proposal Notice, Acquisition's obligations under Sections 1.2, 2.1 and 6.2(b)(i), will be suspended until such, if any, time as Parent gives a Price Increase Notice (if the Superior Proposal Notice is given under Section 8.1(f)), or the Board, acting upon the recommendation of the Special Committee, withdraws its determination that a subsequent Acquisition Proposal or a tender offer or exchange offer constitutes a Superior Proposal (if the Superior Proposal Notice is given under Section 8.1(g)).

(i)

By Parent, if before Acquisition accepts shares that have been tendered in response to the Tender Offer, (i) the Board, acting upon the recommendation of the Special Committee, withdraws or materially modifies in a manner adverse to the Transactions, or recommends that the Board withdraw or materially modify in a manner adverse to the Transactions, the recommendation that the stockholders of the Company tender their shares in response to the Tender Offer or (ii) there is a public statement, for which neither Parent, any subsidiary of Parent or anyone acting on their behalf is responsible, to the effect that the Board, acting upon the recommendation of the Special Committee, intends to withdraw its recommendation or modify it in a manner adverse to the Transactions and, if requested by Parent, the Company does not within three full Business Days after the date of the request, with the approval of the Board, acting upon the recommendation of the Special Committee, issue and file with the SEC a public statement denying that that is the case.

(j)

By either the Company or Parent if (i) the Expiration Date has not occurred by September 30, 2016 (the “Tender Outside Date”) and (ii) the party seeking to terminate this Agreement pursuant to this Section 8.1(j) has not breached in any material respect its obligations under this Agreement in any manner that shall have proximately caused or resulted in the failure of the Tender Offer to have been consummated by such date.

8.2

Manner of Terminating Agreement. If at any time the Company or Parent has the right under Section 8.1 to terminate this Agreement, except as specifically provided in Section 8.1, it can terminate this Agreement by a notice to the other of them that it is terminating this Agreement.

16

8.3

Effect of Termination. If this Agreement is terminated pursuant to Section 8.1, after this Agreement is terminated, neither party will have any further rights or obligations under this Agreement. Nothing contained in this Section will, however, relieve either party of liability or damages for any fraud or willful misconduct or bad faith resulting in a breach of this Agreement by such party which occurs before this Agreement is terminated.

8.4

Termination Fee; Expenses.

(a)

Notwithstanding anything herein to the contrary, in no event shall the Company be obligated to pay a termination fee.

(b)

If the Company terminates this Agreement as permitted under Section 8.1(f) or 8.1(g), or if Parent terminates this Agreement as permitted under Section 8.1(i) solely in the event that the Tender Offer is commenced and the Minimum Condition is not met prior to the Expiration Date, then, within 10 business days following such termination, the Company will reimburse Parent for all out-of-pocket expenses incurred by it or by Acquisition in connection with this Agreement in connection with this Agreement and the transactions contemplated by it ( including reasonable fees and expenses of professionals and other consultants and out of pocket costs incurred by employees in investigating the business and financial condition of the Company and in connection with the negotiation of this Agreement and efforts to carry out the transactions which are the subject of this Agreement) for which Parent has presented reasonable documentation to the Company (up to a total reimbursement of expenses not exceeding $2.0 million).

(c)

Except as otherwise expressly provided in this Agreement, all fees and expenses incurred in connection with this Agreement, the Tender Offer, the Merger and the other transactions contemplated by this Agreement shall be paid by the party incurring such fees or expenses, whether or not the Merger is consummated, except that expenses incurred in connection with the printing and mailing of any required filings with the SEC and in connection with notices or other filings with any other Governmental Authority shall be shared equally by Parent and the Company.

ARTICLE 9
ABSENCE OF BROKERS

9.1

Representations and Warranties Regarding Brokers and Others. The Company and Acquisition each represents and warrants that nobody acted as a broker, a finder or in any similar capacity in connection with the Transactions or the other transactions contemplated by this Agreement, except that JMP acted as a financial advisor to the Special Committee and Lazard Frères and Co. LLC (“Lazard”) acted as a financial advisor to Parent and Acquisition. The Company will pay all the fees and other charges of JMP, and Parent or Acquisition will pay all the fees and other charges of Lazard.

ARTICLE 10
INDEMNIFICATION OF DIRECTORS AND OFFICERS

10.1

Indemnification for Prior Acts. For a period of no less than six years after the Effective Time, to the fullest extent permitted by applicable Law, Parent shall, and shall cause the Surviving Corporation to, (i) indemnify, defend and hold harmless, all past and present directors, including, but not limited to the member of the Special Committee, and officers of the Company and its subsidiaries (collectively, the “Indemnified Parties”) against any costs, expenses (including attorneys’ fees and expenses and disbursements), judgments, fines, losses, claims damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of or pertaining to the fact that the Indemnified Party is or was a director, officer, employee or fiduciary of the Company or any of its subsidiaries or is or was serving at the request of, or to represent the interest of, the Company or any of its Subsidiaries as a director, officer, partner, member, trustee, fiduciary, employee or agent of any other corporation, partnership, joint venture, limited liability company, trust, employee benefit plan or other enterprise, including any charitable or not-for profit public service organization or trade association whether asserted or claimed prior to, at or after the Effective Time (including with respect to acts or omissions occurring in connection with this Agreement and the consummation of the transactions contemplated hereby), and provide advancement of expenses to the Indemnified Parties, to the fullest extent permitted by applicable Law as it presently exists or may hereafter be amended (but, in the case of any such amendment, only to the extent such amendment permits Parent or the Surviving Corporation to provide broader indemnification rights or rights of advancement of expenses than such Law permitted Parent or the Surviving Corporation to provide prior to such amendment),  (ii) without limitation to clause (i), to the fullest extent permitted by applicable Law, include and cause to be maintained in effect in the Surviving Corporation’s (or any successor’s) organizational documents for a period of not less than six years after the Effective Time, provisions regarding elimination of liability of directors, and indemnification of and advancement of expenses to directors and officers of the Company, no less favorable than those contained in the Company’s organizational documents as of the date hereof and (iii) not settle, compromise or consent to the entry of any judgment in any proceeding or threatened litigation, action, suit, arbitration, investigation or similar proceeding (public or private) (“Action”), in each case, by or before a Governmental Authority (and in which indemnification could be sought by an Indemnified Party hereunder), unless such settlement, compromise or consent includes an unconditional release of such Indemnified Party from all liability arising out of such Action or

17

such Indemnified Party otherwise consents in writing (such consent not to be unreasonably withheld, conditioned or delayed). In the event of any such claim, action, suit, proceeding or investigation, (A) the Surviving Corporation shall have the right to control the defense thereof after the Effective Time, (B) each Indemnified Party shall be entitled to retain his or her own counsel, whether or not the Surviving Corporation shall elect to control the defense of any such claim, action, suit, proceeding or investigation, and (C)  the Surviving Corporation shall pay all reasonable fees and expenses of any counsel retained by an Indemnified Party, promptly after statements therefor are received, whether or not the Surviving Corporation shall elect to control the defense of any such claim, action, suit, proceeding or investigation.

The Surviving Corporation will maintain in effect for not less than six years after Effective Time, with respect to occurrences prior to the Effective Time, the Company's policies of directors’ and officers' liability insurance which are in effect on the date of this Agreement and are listed on Schedule 10.1 (notwithstanding any provisions of those policies that they will terminate as a result of a merger), or provide substantially equivalent coverage and amounts containing terms no less favorable to such directors or officers, and from insurance carriers with at least comparable claims paying ability ratings, to the extent that insurance is available at an annual cost not exceeding 350% of the annual cost of the policies of directors and officers liability insurance that are in effect at the date of this Agreement (and, to the extent that insurance is not available at an annual cost not exceeding 350% of the annual cost of the policies that are in effect at the date of this Agreement, the Surviving Corporation will maintain in effect the maximum coverage that is available for that amount).  Notwithstanding anything in this Agreement to the contrary, prior to the Effective Time, the Company shall purchase a “tail” insurance policy with a fresh, unimpaired aggregate limit of liability (which policy by its express terms shall survive the Merger) of at least the same coverage with a fresh, unimpaired aggregate limit of liability, and containing terms and conditions that are no less favorable to the directors and officers of the Company as the Company’s existing policy or policies, and from insurance carriers with at least comparable claims paying ability ratings, for the benefit of the current and former officers and directors of the Company with a claims period of six years from the Effective Time with respect to directors’ and officers’ liability insurance for claims arising from facts or events that occurred at or prior to the Effective Time. If the Surviving Corporation is acquired during the period of six years after the date of this Agreement, the Surviving Corporation will require in any agreement relating to its being acquired that the acquirer shall maintain in effect the insurance required by this Section.

10.2

Benefit of Provisions. The provisions of Section 10.1 are intended to be for the benefit of, and will be enforceable by, the respective current and former directors and officers of the Company or its subsidiaries to which they relate and their heirs and representatives (all of whom will, for the avoidance of doubt, be express third party beneficiaries of this Article 10).

ARTICLE 11
OBLIGATIONS OF PARENT TO FUND ACQUISITION

11.1

Funding of Acquisition.

(a)

If Acquisition accepts shares of Common Stock tendered in response to the Tender Offer, Parent will provide to Acquisition (whether by contribution, loan or otherwise) or arrange for Acquisition to obtain from other sources, all sums Acquisition needs to pay for the accepted shares of Common Stock. If the Merger takes place, Parent will provide to Acquisition, or arrange for Acquisition to obtain from other sources, all sums it needs to pay the Merger Price and to make any other payments Acquisition is required to make as a result of the Merger.

(b)

If Acquisition is required to make any payments under or with regard to this Agreement, other than payments of the type described in Section 11.1(a), including any payments Acquisition is required to make because it fails to fulfill any of its obligations under this Agreement, Parent will provide to Acquisition, or arrange for Acquisition to obtain from other sources, all funds Acquisition needs to make those payments.

ARTICLE 12
GENERAL

12.1

Expenses.  The Company and Acquisition will each pay its own expenses in connection with the transactions that are the subject of this Agreement, including legal fees and disbursements. The Company will pay the expenses of the Special Committee in connection with the transactions that are the subject of this Agreement, including the fees of, and reimbursement of expenses incurred by, its advisors.

12.2

Access to Properties, Books and Records.

(a)

From the date of this Agreement until the earlier of the Effective Time or the time this Agreement is terminated in accordance with Article 8, the Company will, and will cause each of its subsidiaries to, give representatives of Parent and Acquisition, or of any potential lenders or other sources of financing to Parent, the Company or the Surviving Corporation, reasonable access during normal business hours to all of their respective properties, books and records and to personnel of ACM who are knowledgeable about the various aspects of the business of the Company and its subsidiaries, provided that the Company will not be required by this Section to permit any inspection, or to disclose any information, that in the reasonable judgment of the ACM

18

employees responsible for managing the Company, or of the Special Committee, would result in the disclosure of a trade secret of a third party not related to the Company or ACM, or violate any of the Company’s obligations to a third party not related to the Company or ACM with respect to confidentiality, if the Company (through the ACM employees responsible for managing the Company) has used reasonable efforts to obtain the consent of the third party to the inspection or disclosure.

(b)

Until the Effective Time, Parent and Acquisition each will, and will cause their respective representatives to, hold all information it receives as a result of its access to the properties, books, records and personnel of the Company or its subsidiaries in confidence, except to the extent that information (i) is or becomes available to the public (other than through a breach of this Agreement), (ii) becomes available to Parent or Acquisition from a third party which, insofar as Parent or Acquisition is aware, is not under an obligation to the Company, or to a subsidiary of the Company, to keep the information confidential, (iii) was known to Parent, Acquisition or other of Parent’s affiliates before it was made available to Parent or Acquisition or their representatives by the Company or any of its subsidiary (other than information disclosed to ACM or its employees in the course of ACM’s managing the Company), (iv) otherwise is independently developed by Parent or Acquisition or their affiliates (other than ACM), (v) Parent reasonably believes is required to be included in the Offer Documents, the Schedule TO (including the Offer TO) or (vi) Parent reasonably determines, based on advice of legal counsel, that Parent is required to disclose in response to legal process or any Governmental Authority. If this Agreement is terminated before the Effective Time, Parent and Acquisition each will, at the request of the Company, deliver to the Company all documents and other material obtained by Parent or Acquisition from the Company or a subsidiary in connection with the transactions which are the subject of this Agreement or evidence that that material has been destroyed by Parent or Acquisition.

12.3

Press Releases. The Company and Parent will consult with each other before issuing any press releases or otherwise making any public statements with respect to this Agreement, but nothing in this Section will prevent either party or any affiliate of either party from making any statement or announcement when and as required by Law or by the rules of any securities exchange or securities quotation or trading system on which securities of that party or an affiliate are listed, quoted or traded.

12.4

Entire Agreement. This Agreement and the documents to be delivered in accordance with this Agreement contain the entire agreement among the Company, Parent and Acquisition relating to the transactions which are the subject of this Agreement and those other documents, all prior negotiations, understandings and agreements between the Company and either Parent or Acquisition are superseded by this Agreement and those other documents, and there are no representations, warranties, understandings or agreements concerning the transactions which are the subject of this Agreement or those other documents other than those expressly set forth in this Agreement or those other documents.

12.5

Benefit of Agreement. This Agreement is for the benefit of the Parties to it, their respective successors and any permitted assigns. Except as stated in Section 10.2, this Agreement is not intended to be for the benefit of, or to give any rights to, anybody other than the Parties, their respective successors and any permitted assigns.

12.6

Effect of Disclosures. Any information disclosed by a party in connection with any representation and warranty contained in this Agreement (including any exhibit or schedule to this Agreement) will be treated as having been disclosed in connection with each representation and warranty made by that party in this Agreement.

12.7

Captions. The captions of the articles and sections of this Agreement are for convenience only, and do not affect the meaning or interpretation of this Agreement.

12.8

Assignments. Neither this Agreement nor any right of any party under it may be assigned, except that Acquisition may assign its rights under this Agreement to a corporation or other entity a majority of the equity of which is owned by Parent.

12.9

Notices and Other Communications. Any notice or other communication under this Agreement must be in writing and will be deemed given when it is delivered in person or sent by electronic mail (with proof of receipt at the number or email address to which it is required to be sent), on the Business Day after the day on which it is delivered to a major nationwide overnight delivery service for next Business Day delivery, or on the third Business Day after the day on which it is mailed by first class mail from within the United States, to the following addresses (or such other address as may be specified after the date of this Agreement by the party to which the notice or communication is sent):

19

If to Acquisition or Parent:

ARMOUR Residential REIT, Inc.

3001 Ocean Drive

Suite 201

Vero Beach FL 32963

Attention: Scott J. Ulm and Jeffrey J. Zimmer, Co-CEOs

Email address:sju@armourcap.com and jz@armourcap.com

with a copy to:

Akerman LLP

Three Brickell City Center

98 Southeast Seventh Street

Miami, FL 33131

Attention: Bradley D. Houser

Attn: Bradley D. Houser

Email address: bradley.houser@akerman.com

If to the Company:

JAVELIN Mortgage Investment Corp.

3001 Ocean Drive

Suite 201

Vero Beach, FL 32963

Attention: John C. Chrystal, Chair, Special Committee, Independent Director

Email address:  jchrystal@thebancorp.com

with a copy to:

Duane Morris LLP
30 South 17^th Street

Philadelphia, PA 19103
Attention: Hersh Kozlov, Richard Silfen and Darrick Mix

Email Address:  HKozlov@duanemorris.com, RASilfen@duanemorris.com and DMix@duanemorris.com

Venable LLP

750 E. Pratt Street

Suite 900 Baltimore, MD 21202

Attention:  James J. Hanks, Jr.

Email Address: jhanks@venable.com

12.10

Governing Law. This Agreement will be governed by, and construed under, the laws of the State of Maryland, without regard to conflicts of laws principles that would apply the laws of any other jurisdictions.

12.11

Consent to Jurisdiction. The Company, Parent and Acquisition each agrees that any action or proceeding relating to this Agreement or the transactions that are the subject of this Agreement may be brought in any state or Federal court sitting in the State of Maryland, and each of them (i) consents to the personal jurisdiction of each of those courts in any such action or proceeding, (ii) agrees not to seek to transfer any such action or proceeding to any other court, whether because of inconvenience of the forum or for any other reason (but nothing in this Section will prevent a party from removing any action or proceeding from a state court sitting in the State of Maryland to a Federal court sitting in that state) and (iii) agrees that process in any such action or proceeding may be served by registered mail or in any other manner permitted by the rules of the court in which the action or proceeding is brought.

12.12

Remedies; Specific Performance. The Parties acknowledge that money damages would not be an adequate remedy if the Company, Acquisition or Parent failed to perform in any material respect any of its obligations under this Agreement, and accordingly each of the Company, Acquisition and Parent agrees any party will be entitled to obtain an order compelling specific performance of another party’s obligations under this Agreement, without any requirement that the party obtaining the order post a bond, and the Parties agree that if any proceeding is brought in equity to compel performance of any provision of this Agreement, no party will raise the defense that there is an adequate remedy at law or assert that a remedy of specific enforcement is unenforceable, invalid, contrary to Law or inequitable for any reason. The Parties agree that if specific performance is available and granted with regard to any breach by any party of any obligation under this Agreement, that specific performance shall be the sole and exclusive remedy for that breach unless this Agreement is terminated as permitted under Article 8.

20

12.13

Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, INCLUDING ANY ACTION OR PROCEEDING BROUGHT BY WAY OF COUNTERCLAIM AND ANY ACTION OR PROCEEDING RELATING TO THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT. EACH OF THE PARTIES ACKNOWLEDGES THAT IT IS AWARE THAT THIS WAIVER OF RIGHTS TO JURY TRIAL WAS A FACTOR IN THE OTHER PARTY’S OR PARTIES’ DECISION TO AGREE TO THE TERMS OF THIS AGREEMENT AND THAT NOBODY PROMISED THAT THIS WAIVER OF THE RIGHT TO JURY TRIAL WOULD NOT BE ENFORCED.

12.14

Amendments. This Agreement may be amended by, but only by, a document in writing signed by the Company, Acquisition and Parent.

12.15

Counterparts. This Agreement may be executed in two or more counterparts, some of which may be signed by fewer than all the Parties or may contain facsimile copies of pages signed by some of the Parties. Each of those counterparts will be deemed to be an original copy of this Agreement, but all of them together will constitute one and the same agreement.

(Signatures on following page)

21

IN WITNESS WHEREOF, the Company, Parent and Acquisition have executed this Agreement, intending to be legally bound by it, on the day shown on the first page of this Agreement.

JAVELIN MORTGAGE INVESTMENT CORP.
By:	/s/ Mark R. Gruber
Name:	Mark R. Gruber
Title:	Chief Operating Officer
ARMOUR RESIDENTIAL REIT, INC.
By:	/s/ Jeffrey J. Zimmer
Name:	Jeffrey J. Zimmer
Title:	Co-Chief Executive Officer
JMI ACQUISITION CORPORATION
By:	/s/ James R. Mountain
Name:	James R. Mountain
Title:	Chief Financial Officer

22

Exhibit 1.2-E

Acquisition will not be required to accept for payment or pay for any Common Stock tendered in response to the Tender Offer if:

(a)

The number of shares of Common Stock that are properly tendered in response to the Tender Offer and not withdrawn by the Expiration Time is less than the Minimum Condition.

(b)

Any statute, rule or regulation has been enacted or adopted by any Governmental Authority that would make the acquisition of the tendered Common Stock by Acquisition or the Merger illegal.

(c)

Any order has been entered by any Governmental Authority and be in force which invalidates this Agreement or restrains Acquisition from completing the acquisition of the tendered Common Stock or from completing the Merger.

(d)

Any of the representations and warranties of the Company in this Agreement is not true and correct on the day the Tender Offer expires with the same effect as though they were made on that day, except failures to be true and correct which (i) could not, in the aggregate, reasonably be expected to have a Company Material Adverse Effect or to have a material adverse effect on Acquisition’s legal ability to purchase or own Common Stock that is tendered in response to the Tender Offer or Acquisition’s legal ability to consummate the Merger as contemplated by this Agreement or (ii) were known, or reasonably should have been known, to Parent or any of its subsidiaries or ACM on or prior to the date of this Agreement.

(e)

The Company has not performed in all material respects all the obligations it is required to have performed under this Agreement by the Expiration Date, except failures which (i) do not, and cannot reasonably be expected to, have a Company Material Adverse Effect, (ii) have been caused by or result from a breach of this Agreement by Parent or Acquisition and (iii) (ii) have been caused or result from the action or failure to act by ACM.

(f)

This Agreement has been terminated in accordance with its terms.

(g)

The Board, acting upon the recommendation of the Special Committee, withdraws or modifies in a manner adverse to Acquisition the Board’s recommendation or approval regarding the Tender Offer or the Merger.

(h)

The Board, acting upon the recommendation of the Special Committee, withdraws or modifies in a manner adverse to Acquisition the Board’s recommendation that stockholders accept the Tender Offer.

The conditions set forth above are for the sole benefit of Acquisition and Parent, and any of those conditions, other than the condition in paragraph (a), may be waived by Parent in whole or in part. Any delay by Acquisition in exercising the right to terminate the Tender Offer because any of the conditions is not fulfilled will not be deemed a waiver of its right to do so.

Schedule 1.2

Schedule 1.2 - Calculation of BVPS
Assets		As of   , 2016
MBS
Agency securities (including pledged assets) current face
Agency securities - Premium
Agency securities
Agency principal receivable
Non-agency securities at FV (including pledged assets)
Non-agency Factor Changes
Hedges
Derivatives, at fair value, Principal
Derivatives, accrued interest
Treasuries short sale gain (loss)
Cash and Equivalents
Cash
Restricted Cash
Cash Reconciliation Issues
Cash - Northern Trust
Receivables
Cash Receivable for ATM shares
Cash Receivable for Terminated Swaps
Cash receivable for sold bonds
Agency accrued interest receivable
Non-agency accrued interest receivable
Accrued interest receivable
Prepaid
Amort of prepaid est
Total Assets
Liabilities
Repurchase Agreements
Repo trade principal
Accrued interest payable repo
UBS Long-Term Box Collateral
Hedges
Derivatives, at fair value, Principal
Derivatives, accrued interest
Treasuries short sale gain (loss)
Receivables & Accruals
Cash Payable to AVM
Cash Payable for unsettled shares
Cash payable for Purchased bonds
Cash Payable for Terminated Swaps
Accounts payable
Accrued expenses
Accrued expenses not yet posted/paid
Adjustment for AP paid;
Treasury Stock repurchase; this is removed when settles to match reduction in cash
Dividends - Common
Transaction expenses accrual		(1,000,000)
Management fees
Total Liabilities
Stockholder's Equity
Common shares outstanding		11,866,691
BVPS	$

Schedule 2.5

Scott J. Ulm

Jeffrey J. Zimmer

James R. Mountain

Schedule 10.1

Berkshire Hathaway Specialty Insurance Policy Number: 42-EPF-150287-02

Berkshire Hathaway Specialty Insurance Policy Number:  42-EPF-301792-01

Lance Indemnity Company, LLC Policy: JMI-DO-2015

EX-3.1

Exhibit 3.1

JAVELIN MORTGAGE INVESTMENT CORP.

AMENDED AND RESTATED BYLAWS

As Amended on March 1, 2016

ARTICLE I

OFFICES

Section 1. PRINCIPAL OFFICE. The principal office of JAVELIN Mortgage Investment Corp. (the “Corporation”) in the State of Maryland shall be located at such place as the Board of Directors may designate.

Section 2. ADDITIONAL OFFICES. The Corporation may have additional offices, including a principal executive office, at such places as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 1. PLACE. All meetings of stockholders shall be held at the principal executive office of the Corporation or at such other place as shall be set by the Board of Directors and stated in the notice of the meeting.

Section 2. ANNUAL MEETING. An annual meeting of the stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on the date and at the time set by the Board of Directors.

Section 3. SPECIAL MEETINGS.

a. General. The chairman of the board, president, chief executive officer or Board of Directors may call a special meeting of the stockholders. Subject to Section 3(b), a special meeting of stockholders shall also be called by the secretary of the Corporation to act on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast on such matter at such meeting.

b. Stockholder-Requested Special Meetings.

1. Any stockholder of record seeking to have stockholders request a special meeting shall, by sending written notice to the secretary (the “Record Date Request Notice”) by registered mail, return receipt requested, request the Board of Directors to fix a record date to determine the stockholders entitled to request a special meeting (the “Request Record Date”). The Record Date Request Notice shall set forth the purpose of the meeting and the matters proposed to be acted on at it, shall be signed by one or more stockholders of record as of the date of signature (or their agents duly authorized in a writing accompanying the Record Date Request Notice), shall bear the date of signature of each such stockholder (or such agent) and shall set forth all information relating to each such stockholder and each matter proposed to be acted on at the meeting that would be required to be disclosed in connection with the solicitation of proxies for the election of directors in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such a solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Upon receiving the Record Date Request Notice, the Board of Directors may fix a Request Record Date. The Request Record Date shall not precede and shall not be more than ten days after the close of business on the date on which the resolution fixing the Request Record Date is adopted by the Board of Directors. If the Board of Directors, within ten days after the date on which a valid Record Date Request Notice is received, fails to adopt a resolution fixing the Request Record Date, the Request Record Date shall be the close of business on the tenth day after the first date on which the Record Date Request Notice is received by the secretary.

2. In order for any stockholder to request a special meeting to act on any matter that may properly be considered at a meeting of stockholders, one or more written requests for a special meeting (collectively, the “Special Meeting Request”) signed by stockholders of record (or their agents duly authorized in a writing accompanying the request) as of the Request Record Date entitled to cast not less than a majority of all of the votes entitled to be cast on such matter at such meeting (the “Special Meeting Percentage”) shall be delivered to the secretary. In addition, the Special Meeting Request shall (a) set forth the purpose of the meeting and the matters proposed to be acted on at it (which shall be limited to those lawful matters set forth in the Record Date Request Notice received by the secretary), (b) bear the date of signature of each such stockholder (or such agent) signing the Special Meeting Request, (c) set forth (i) the name and address, as they appear in the Corporation’s books, of each stockholder signing such request (or on whose behalf the Special Meeting Request is signed), (ii) the class, series and number of all shares of stock of the Corporation which are owned (beneficially or of record) by such stockholder and (iii) the nominee holder for, and number of, shares of stock of the Corporation owned beneficially but not of record by such stockholder, (d) be sent to the secretary by registered mail, return receipt requested, and (e) be received by the secretary within 60 days after the Request Record Date. Any requesting stockholder (or agent duly authorized in a writing accompanying the revocation or the Special Meeting Request) may revoke his, her or its request for a special meeting at any time by written revocation delivered to the secretary.

3. The secretary shall inform the requesting stockholders of the reasonably estimated cost of preparing and delivering the notice of the meeting (including the Corporation’s proxy materials). The secretary shall not be required to call a special meeting upon stockholder request and such meeting shall not be held unless, in addition to the documents required by Section 3(b)(2), the secretary receives payment of such reasonably estimated cost prior to the preparation and mailing or delivery of such notice of the meeting.

4. In the case of any special meeting called by the secretary upon the request of stockholders (a “Stockholder-Requested Meeting”), such meeting shall be held at such place, date and time as may be designated by the Board of Directors; provided, however, that the date of any Stockholder-Requested Meeting shall be not more than 90 days after the record date for such meeting (the “Meeting Record Date”); and provided further that if the Board of Directors fails to designate, within ten days after the date that a valid Special Meeting Request is actually received by the secretary (the “Delivery Date”), a date and time for a Stockholder-Requested Meeting, then such meeting shall be held at 2:00 p.m. local time on the 90th day after the Meeting Record Date or, if such 90th day is not a Business Day (as defined below), on the first preceding Business Day; and provided further that in the event that the Board of Directors fails to designate a place for a Stockholder-Requested Meeting within ten days after the Delivery Date, then such meeting shall be held at the principal executive office of the Corporation. In fixing a date for any special meeting, the chairman of the board, chief executive officer, president or Board of Directors may consider such factors as he, she or it deems relevant, including, without limitation, the nature of the matters to be considered, the facts and circumstances surrounding any request for the meeting and any plan of the Board of Directors to call an annual meeting or a special meeting. In the case of any Stockholder-Requested Meeting, if the Board of Directors fails to fix a Meeting Record Date that is a date within 30 days after the Delivery Date, then the close of business on the 30th day after the Delivery Date shall be the Meeting Record Date. The Board of Directors may revoke the notice for any Stockholder-Requested Meeting in the event that the requesting stockholders fail to comply with the provisions of Section 3(b)(3).

5. If written revocations of the Special Meeting Request have been delivered to the secretary and the result is that stockholders of record (or their agents duly authorized in writing), as of the Request Record Date, entitled to cast less than the Special Meeting Percentage have delivered, and not revoked, requests for a special meeting to the secretary: (i) if the notice of meeting has not already been delivered, the secretary shall refrain from delivering the notice of the meeting and send to all requesting stockholders who have not revoked such requests written notice of any revocation of a request for a special meeting on the matter, or (ii) if the notice of meeting has been delivered and if the secretary first sends to all requesting stockholders who have not revoked requests for a special meeting on the matter written notice of any revocation of a request for the special meeting and written notice of the Corporation’s intention to revoke the notice of the meeting or for the chairman of the meeting to adjourn the meeting without action on the matter, (A) the secretary may revoke the notice of the meeting at any time before ten days before the commencement of the meeting or (B) the chairman of the meeting may call the meeting to order and adjourn the meeting without acting on the matter. Any request for a special meeting received after a revocation by the secretary of a notice of a meeting shall be considered a request for a new special meeting.

6. The chairman of the board, chief executive officer, president or Board of Directors may appoint regionally or nationally recognized independent inspectors of elections to act as the agent of the Corporation for the purpose of promptly performing a ministerial review of the validity of any purported Special Meeting Request received by the secretary. For the purpose of permitting the inspectors to perform such review, no such purported Special Meeting Request shall be deemed to have been delivered to the secretary until the earlier of (i) five Business Days after receipt by the secretary of such purported request and (ii) such date as the independent inspectors certify to the Corporation that the valid requests received by the secretary represent, as of the Request Record Date, stockholders of record entitled to cast not less than the Special Meeting Percentage. Nothing contained in this paragraph (6) shall in any way be construed to suggest or imply that the Corporation or any stockholder shall not be entitled to contest the validity of any request, whether during or after such five Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).

7. For purposes of these Bylaws, “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.

Section 4. NOTICE. Not less than ten (10) nor more than 90 days before each meeting of stockholders, the secretary shall give to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting notice in writing or by electronic transmission stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, by mail, by presenting it to such stockholder personally, by leaving it at the stockholder’s residence or usual place of business or by any other means permitted by Maryland law. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at the stockholder’s address as it appears on the records of the Corporation, with postage thereon prepaid. If transmitted electronically, such notice shall be deemed to be given when transmitted to the stockholder by an electronic transmission to any address or number of the stockholder at which the stockholder receives electronic transmissions. The Corporation may give a single

2

notice to all stockholders who share an address, which single notice shall be effective as to any stockholder at such address, unless a stockholder objects to receiving such single notice or revokes a prior consent to receiving such single notice. Failure to give notice of any meeting to one or more stockholders, or any irregularity in such notice, shall not affect the validity of any meeting fixed in accordance with this Article II or the validity of any proceedings at any such meeting.

Subject to Section 11(a) of this Article II, any business of the Corporation may be transacted at an annual meeting of stockholders without being specifically designated in the notice, except such business as is required by any statute to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specifically designated in the notice. The Corporation may postpone or cancel a meeting of stockholders by making a public announcement (as defined in Section 11(c)(3) of this Article II) of such postponement or cancellation prior to the meeting. Notice of the date, time and place to which the meeting is postponed shall be given not less than ten (10) days prior to such date and otherwise in the manner set forth in this section.

Section 5. ORGANIZATION AND CONDUCT. Every meeting of stockholders shall be conducted by an individual appointed by the Board of Directors to be chairman of the meeting or, in the absence of such appointment, by the chairman of the board or, in the case of a vacancy in the office or absence of the chairman of the board, by one of the following officers present at the meeting in the following order: the vice chairman of the board, if there is one, the chief executive officer, the president, the vice presidents in their order of rank and seniority, the secretary, or, in the absence of such officers, a chairman chosen by the stockholders by the vote of a majority of the votes cast by stockholders present in person or by proxy. The secretary, or, in the secretary’s absence, an assistant secretary, or, in the absence of both the secretary and assistant secretaries, a person appointed by the Board of Directors or, in the absence of such appointment, a person appointed by the chairman of the meeting shall act as secretary. In the event that the secretary presides at a meeting of the stockholders, an assistant secretary, or, in the absence of assistant secretaries, an individual appointed by the Board of Directors or the chairman of the meeting, shall record the minutes of the meeting. The order of business and all other matters of procedure at any meeting of stockholders shall be determined by the chairman of the meeting. The chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of the chairman and without any action by the stockholders, are appropriate for the proper conduct of the meeting, including, without limitation,: (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to stockholders of record of the Corporation, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (c) limiting participation at the meeting on any matter to stockholders of record of the Corporation entitled to vote on such matter, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (d) limiting the time allotted to questions or comments; (e) determining when and for how long the polls should be opened and when the polls should be closed; (f) maintaining order and security at the meeting; (g) removing any stockholder or any other individual who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairman of the meeting; (h) concluding a meeting or recessing or adjourning the meeting to a later date and time and at a place announced at the meeting; and (i) complying with any state and local laws and regulations concerning safety and security. Unless otherwise determined by the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

Section 6. QUORUM. At any meeting of stockholders, the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting on any matter shall constitute a quorum; but this section shall not affect any requirement under any statute or the charter of the Corporation (the “Charter”) for the vote necessary for the adoption of any measure. If such quorum is not established at any meeting of the stockholders, the chairman of the meeting may adjourn the meeting sine die or from time to time to a date not more than one hundred 120 days after the original record date without notice other than announcement at the meeting. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.

The stockholders present either in person or by proxy, at a meeting which has been duly called and at which a quorum has been established, may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough stockholders to leave fewer than required to establish a quorum.

Section 7. VOTING. Unless otherwise provided by these Bylaws, the Charter, or by applicable laws or regulations, directors shall be elected by a majority of all votes cast at a meeting of stockholders duly called and at which a quorum is present; provided, however, that directors shall be elected by a plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum is present for which the secretary of the Corporation determines that the number of nominees exceeds the number of directors to be elected as of the record date for such meeting.  If directors are to be elected by a plurality of the votes cast, the stockholders shall not be permitted to vote against a nominee.  Each share may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted. A majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by statute or by the Charter. Unless otherwise provided by statute or by the Charter, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders. Voting on any question or in any election may be viva voce unless the chairman of the meeting shall order that voting be by ballot or otherwise.

3

Section 8. PROXIES. A stockholder may cast the votes entitled to be cast by the holder of the shares of stock owned of record by the stockholder in person or by proxy executed by the stockholder or by the stockholder’s duly authorized agent in any manner permitted by law. Such proxy or evidence of authorization of such proxy shall be filed with the secretary of the Corporation before or at the meeting. No proxy shall be valid more than eleven months after its date unless otherwise provided in the proxy.

Section 9. VOTING OF STOCK BY CERTAIN HOLDERS. Stock of the Corporation registered in the name of a corporation, partnership, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, a general partner, trustee or managing member thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock. Any director or fiduciary may vote stock registered in the name of such person in the capacity of such director or fiduciary, either in person or by proxy.

Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of outstanding shares at any given time.

The Board of Directors may adopt by resolution a procedure by which a stockholder may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date, the time after the record date within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board of Directors considers necessary or desirable. On receipt of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the holder of record of the specified stock in place of the stockholder who makes the certification.

Section 10. INSPECTORS. The Board of Directors or the chairman of the meeting may appoint, before or at the meeting, one or more inspectors for the meeting and any successor to the inspector. The inspectors, if any, shall: (a) determine the number of shares of stock represented at the meeting, in person or by proxy, and the validity and effect of proxies; (b) receive and tabulate all votes, ballots or consents; (c) report such tabulation to the chairman of the meeting; (d) hear and determine all challenges and questions arising in connection with the right to vote; and (e) do such acts as are proper to fairly conduct the election or vote. Each such report shall be in writing and signed by the inspector or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.

Section 11. ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHER STOCKHOLDER PROPOSALS.

a. Annual Meetings of Stockholders.

1. Nominations of individuals for election to the Board of Directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a stockholder of record both at the time of giving of notice by the stockholder as provided for in this Section 11(a) and at the time of the annual meeting, who is entitled to vote at the meeting in the election of each individual so nominated or on any such other business and who has complied with this Section 11(a).

2. For any nomination or other business to be properly brought before an annual meeting by a stockholder pursuant to Section 11(a)(1)(iii), the stockholder must have given timely notice thereof in writing to the secretary of the Corporation and such other business must otherwise be a proper matter for action by the stockholders. To be timely, a stockholder’s notice shall set forth all information required under this Section 11 and shall be delivered to the secretary at the principal executive office of the Corporation not earlier than the 150th day nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting; provided, however, that in connection with the Corporation’ s first annual meeting or in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 p.m., Eastern Time, on the later of the 120th day prior to the date of such annual meeting, as originally convened, or the tenth day following the day on which public announcement of the date of such meeting is first made. The public announcement of a postponement or adjournment of an annual meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.

4

3. Such stockholder’s notice shall set forth:

i. as to each individual whom the stockholder proposes to nominate for election or reelection as a director (each, a “Proposed Nominee”), all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act and the rules thereunder;

ii. as to any business that the stockholder proposes to bring before the meeting, a description of such business, the stockholder’s reasons for proposing such business at the meeting and any material interest in such business of such stockholder or any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom;

iii. as to the stockholder giving the notice, any Proposed Nominee and any Stockholder Associated Person,

A. the class, series and number of all shares of stock or other securities of the Corporation or any affiliate thereof (collectively, the “Company Securities”), if any, which are owned (beneficially or of record) by such stockholder, Proposed Nominee or Stockholder Associated Person, the date on which each such Company Security was acquired and the investment intent of such acquisition, and any short interest (including any opportunity to profit or share in any benefit from any decrease in the price of such stock or other security) in any Company Securities of any such person,

B. the nominee holder for, and number of, any Company Securities owned beneficially but not of record by such stockholder, Proposed Nominee or Stockholder Associated Person,

C. whether and the extent to which such stockholder, Proposed Nominee or Stockholder Associated Person, directly or indirectly (through brokers, nominees or otherwise), is subject to or during the last six months has engaged in any hedging, derivative or other transaction or series of transactions or entered into any other agreement, arrangement or understanding (including any short interest, any borrowing or lending of securities or any proxy or voting agreement), the effect or intent of which is to (I) manage risk or benefit of changes in the price of (x) Company Securities or (y) any security of any entity that was listed in the Peer Group in the Stock Performance Graph in the most recent annual report to security holders of the Corporation (a “Peer Group Company”) for such stockholder, Proposed Nominee or Stockholder Associated Person or (II) increase or decrease the voting power of such stockholder, Proposed Nominee or Stockholder Associated Person in the Corporation or any affiliate thereof (or, as applicable, in any Peer Group Company) disproportionately to such person’s economic interest in the Company Securities (or, as applicable, in any Peer Group Company), and

D. any substantial interest, direct or indirect (including, without limitation, any existing or prospective commercial, business or contractual relationship with the Corporation), by security holdings or otherwise, of such stockholder, Proposed Nominee or Stockholder Associated Person, in the Corporation or any affiliate thereof, other than an interest arising from the ownership of Company Securities where such stockholder, Proposed Nominee or Stockholder Associated Person receives no extra or special benefit not shared on a pro rata basis by all other holders of the same class or series;

iv. as to the stockholder giving the notice, any Stockholder Associated Person with an interest or ownership referred to Section 11(a)(3)(ii) or (iii) and any Proposed Nominee,

A. the name and address of such stockholder, as they appear on the Corporation’s stock ledger, and the current name and business address, if different, of each such Stockholder Associated Person and any Proposed Nominee and

B. the investment strategy or objective, if any, of such stockholder and each such Stockholder Associated Person who is not an individual and a copy of the prospectus, offering memorandum or similar document, if any, provided to investors or potential investors in such stockholder and each such Stockholder Associated Person; and

v. to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee for election or reelection as a director or the proposal of other business on the date of such stockholder’s notice.

4. Such stockholder’s notice shall, with respect to any Proposed Nominee, be accompanied by a certificate executed by the Proposed Nominee (i) certifying that such Proposed Nominee (a) is not, and will not become a party to, any agreement, arrangement or understanding with any person or entity other than the Corporation in connection with service or action as

5

a director that has not been disclosed to the Corporation and (b) will serve as a director of the Corporation if elected; and (ii) attaching a completed Proposed Nominee questionnaire (which questionnaire shall be provided by the Corporation, upon request, to the stockholder providing the notice and shall include all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act and the rules thereunder, or would be required pursuant to the rules of any national securities exchange or over-the-counter market).

5. Notwithstanding anything to the contrary in Section 11(a), in the event that the number of directors to be elected to the Board of Directors is increased, and there is no public announcement of such action at least 130 days prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting, a stockholder’s notice required by this Section 11(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the secretary at the principal executive office of the Corporation not later than 5:00 p.m., Eastern Time, on the tenth day following the day on which such public announcement is first made by the Corporation.

6. For purposes of this Section 11, “Stockholder Associated Person” of any stockholder means (i) any person acting in concert with such stockholder, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder (other than a stockholder that is a depositary) and (iii) any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such stockholder or such Stockholder Associated Person.

b. Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of individuals for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected only (i) by or at the direction of the Board of Directors or (ii) provided that the special meeting has been called in accordance with Section 3 of this Article II for the purpose of electing directors, by any stockholder of the Corporation who is a stockholder of record both at the time of giving of notice provided for in this Section 11 and at the time of the special meeting, who is entitled to vote at the meeting in the election of each individual so nominated and who has complied with the notice procedures set forth in this Section 11. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more individuals to the Board of Directors, any such stockholder may nominate an individual or individuals (as the case may be) for election as a director as specified in the Corporation’s notice of meeting, if the stockholder’s notice, containing the information required by Section 11(a)(3), shall be delivered to the secretary at the principal executive office of the Corporation not earlier than the 120th day prior to such special meeting and not later than 5:00 p.m., Eastern Time, on the later of the 90th day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. The public announcement of a postponement or adjournment of a special meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.

c. General. (1) If information submitted pursuant to this Section 11 by any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders shall be inaccurate in any material respect, such information may be deemed not to have been provided in accordance with this Section 11. Any such stockholder shall notify the Corporation of any inaccuracy or change (within two Business Days of becoming aware of such inaccuracy or change) in any such information. Upon written request by the secretary of the Corporation or the Board of Directors, any such stockholder shall provide, within five Business Days of delivery of such request (or such other period as may be specified in such request), (A) written verification, satisfactory, in the discretion of the Board of Directors or any authorized officer of the Corporation, to demonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 11, and (B) a written update of any information submitted by the stockholder pursuant to this Section 11 as of an earlier date. If a stockholder fails to provide such written verification or written update within such period, the information as to which written verification or a written update was requested may be deemed not to have been provided in accordance with this Section 11.    

(2)    Only such individuals who are nominated in accordance with this Section 11 shall be eligible for election by stockholders as directors, and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with this Section 11. The chairman of the meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with this Section 11.

(3)    “Public announcement” shall mean disclosure (i) in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or other widely circulated news or wire service or (ii) in a document publicly filed by the Corporation with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Exchange Act.

6

(4)    Notwithstanding the foregoing provisions of this Section 11, a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 11. Nothing in this Section 11 shall be deemed to affect any right of a stockholder to request inclusion of a proposal in, or the right of the Corporation to omit a proposal from, the Corporation’s proxy statement pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act. Nothing in this Section 11 shall require disclosure of revocable proxies received by the stockholder or Stockholder Associated Person pursuant to a solicitation of proxies after the filing of an effective Schedule 14A by such stockholder or Stockholder Associated Person under Section 14(a) of the Exchange Act.

Section 12. TELEPHONE MEETINGS. The Board of Directors or chairman of the meeting may permit one or more stockholders to participate in meetings of the stockholders by means of a conference telephone or other communications equipment by which all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means constitutes presence in person at the meeting.

Section 13. CONTROL SHARE ACQUISITION ACT. Notwithstanding any other provision of the Charter or these Bylaws, Title 3, Subtitle 7 of the Maryland General Corporation Law, or any successor statute (the “MGCL”), shall not apply to any acquisition by any person of shares of stock of the Corporation. This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition.

Section 14. STOCKHOLDERS’ CONSENT IN LIEU OF MEETING. Any action required or permitted to be taken at any meeting of stockholders may be taken without a meeting (a) if a unanimous consent setting forth the action is given in writing or by electronic transmission by each stockholder entitled to vote on the matter and filed with the minutes of proceedings of the stockholders or (b) if the action is advised, and submitted to the stockholders for approval, by the Board of Directors and a consent in writing or by electronic transmission of stockholders entitled to cast not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting of stockholders is delivered to the Corporation in accordance with the MGCL. The Corporation shall give notice of any action taken by less than unanimous consent to each stockholder not later than ten days after the effective time of such action.

ARTICLE III

DIRECTORS

Section 1. GENERAL POWERS. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors.

Section 2. NUMBER, TENURE AND QUALIFICATIONS. At any regular meeting or at any special meeting called for that purpose, a majority of the entire Board of Directors may establish, increase or decrease the number of directors, provided that the number thereof shall never be less than the minimum number required by the MGCL, nor more than 15, and further provided that the tenure of office of a director shall not be affected by any decrease in the number of directors. Any director of the Corporation may resign at any time by delivering his or her resignation to the Board of Directors, the chairman of the board or the secretary. Except as provided below in these Bylaws, any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation.  Except as provided below in these Bylaws, the acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation.

Notwithstanding anything to the contrary in these Bylaws, a director nominee who is an incumbent director but who is not elected by the vote required in these Bylaws, and with respect to whom no successor has been elected, shall promptly tender his or her offer to resign to the Board of Directors for its consideration following certification of the stockholder vote.  Within 90 days following certification of the stockholder vote, the Company’s Nominating and Corporate Governance Committee (the “NCG Committee”) shall consider the tendered resignation offer and make a recommendation to the Board of Directors and the Board of Directors shall act on the NCG Committee’s recommendation.  In determining whether to accept the resignation, the NCG Committee and the Board of Directors may consider any factors they deem relevant in deciding whether to accept a director’s resignation, including, among other things, whether accepting the resignation of such director would cause the Company to fail to meet any applicable SEC or stock exchange rules or requirements.  Thereafter, the Board of Directors shall promptly and publicly disclose its decision-making process regarding whether to accept the director’s resignation offer or the reasons for rejecting the resignation offer, if applicable, in a Form 8-K. Any director who tenders his or her resignation shall not participate in the NCG Committee’s recommendation or the Board of Directors’ action regarding whether to accept such resignation offer.  If the director’s resignation is not accepted, the director will continue to serve until the next annual meeting of stockholders and until the director’s successor is duly elected and qualified or until the director’s earlier resignation as provided for in the preceding paragraph of this Section 2 or removal as provided for by the MGCL.

7

Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of Directors shall be held immediately after and at the same place as the annual meeting of stockholders, no notice other than this Bylaw being necessary, or at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. The Board of Directors may provide, by resolution, the time and place for the holding of regular meetings of the Board of Directors without other notice than such resolution.

Section 4. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of the chairman of the board, the chief executive officer, the president or by a majority of the directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix any place as the place for holding any special meeting of the Board of Directors called by them. The Board of Directors may provide, by resolution, the time and place for the holding of special meetings of the Board of Directors without other notice than such resolution.

Section 5. NOTICE. Notice of any special meeting of the Board of Directors shall be delivered personally or by telephone, electronic mail, facsimile transmission, courier or United States mail to each director at his or her business or residence address. Notice by personal delivery, telephone, electronic mail or facsimile transmission shall be given at least 24 hours prior to the meeting. Notice by United States mail shall be given at least three days prior to the meeting. Notice by courier shall be given at least two days prior to the meeting. Telephone notice shall be deemed to be given when the director or his or her agent is personally given such notice in a telephone call to which the director or his or her agent is a party. Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Corporation by the director. Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message to the number given to the Corporation by the director and receipt of a completed answer-back indicating receipt. Notice by United States mail shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid. Notice by courier shall be deemed to be given when deposited with or delivered to a courier properly addressed. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be stated in the notice, unless specifically required by statute or these Bylaws.

Section 6. QUORUM. A majority of the directors shall constitute a quorum for transaction of business at any meeting of the Board of Directors, provided that, if less than a majority of such directors is present at such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to applicable law, the Charter or these Bylaws, the vote of a majority or other percentage of a particular group of directors is required for action, a quorum must also include a majority of such group.

The directors present at a meeting which has been duly called and at which a quorum has been established may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough directors to leave fewer than required to establish a quorum.

Section 7. VOTING. The action of a majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws. If enough directors have withdrawn from a meeting to leave fewer than required to establish a quorum, but the meeting is not adjourned, the action of the majority of that number of directors necessary to constitute a quorum at such meeting shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws.

Section 8. ORGANIZATION. At each meeting of the Board of Directors, the chairman of the board or, in the absence of the chairman, the vice chairman of the board, if any, shall act as chairman of the meeting. In the absence of both the chairman and vice chairman of the board, the chief executive officer or, in the absence of the chief executive officer, the president or, in the absence of the president, a director chosen by a majority of the directors present, shall act as chairman of the meeting. The secretary or, in his or her absence, an assistant secretary of the Corporation, or, in the absence of the secretary and all assistant secretaries, a person appointed by the chairman of the meeting, shall act as secretary of the meeting.

Section 9. TELEPHONE MEETINGS. Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

Section 10. CONSENT BY DIRECTORS WITHOUT A MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each director and is filed with the minutes of proceedings of the Board of Directors.

8

Section 11. VACANCIES. If for any reason any or all the directors cease to be directors, such event shall not terminate the Corporation or affect these Bylaws or the powers of the remaining directors hereunder. Except as may be provided by the Board of Directors in setting the terms of any class or series of preferred stock, any vacancy on the Board of Directors may be filled only by a majority of the remaining directors, even if the remaining directors do not constitute a quorum. Any director elected to fill a vacancy shall serve for the remainder of the full term of the class in which the vacancy occurred and until a successor is elected and qualifies.

Section 12. COMPENSATION. Directors shall not receive any stated salary for their services as directors but, by resolution of the Board of Directors, may receive compensation per year and/or per meeting and/or per visit to real property or other facilities owned or leased by the Corporation and for any service or activity they performed or engaged in as directors. Directors may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Board of Directors or of any committee thereof and for their expenses, if any, in connection with each property visit and any other service or activity they performed or engaged in as directors; but nothing herein contained shall be construed to preclude any directors from serving the Corporation in any other capacity and receiving compensation therefor.

Section 13. RELIANCE. Each director and officer of the Corporation shall, in the performance of his or her duties with respect to the Corporation, be entitled to rely on any information, opinion, report or statement, including any financial statement or other financial data, prepared or presented by an officer or employee of the Corporation whom the director or officer reasonably believes to be reliable and competent in the matters presented, by a lawyer, certified public accountant or other person, as to a matter which the director or officer reasonably believes to be within the person’s professional or expert competence, or, with respect to a director, by a committee of the Board of Directors on which the director does not serve, as to a matter within its designated authority, if the director reasonably believes the committee to merit confidence.

Section 14. RATIFICATION. The Board of Directors or the stockholders may ratify and make binding on the Corporation any action or inaction by the Corporation or its officers to the extent that the Board of Directors or the stockholders could have originally authorized the matter. Moreover, any action or inaction questioned in any stockholders’ derivative proceeding or any other proceeding on the ground of lack of authority, defective or irregular execution, adverse interest of a director, officer or stockholder, non-disclosure, miscomputation, the application of improper principles or practices of accounting, or otherwise, may be ratified, before or after judgment, by the Board of Directors or by the stockholders, and if so ratified, shall have the same force and effect as if the questioned action or inaction had been originally duly authorized, and such ratification shall be binding upon the Corporation and its stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned action or inaction.

Section 15. CERTAIN RIGHTS OF DIRECTORS AND OFFICERS. A director who is not also an officer of the Corporation shall have no responsibility to devote his or her full time to the affairs of the Corporation. Any director or officer, in his or her personal capacity or in a capacity as an affiliate, employee, or agent of any other person, or otherwise, may have business interests and engage in business activities similar to, in addition to or in competition with those of or relating to the Corporation.

Section 16. EMERGENCY PROVISIONS. Notwithstanding any other provision in the Charter or these Bylaws, this Section 16 shall apply during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Directors under Article III of these Bylaws cannot readily be obtained (an “Emergency”). During any Emergency, unless otherwise provided by the Board of Directors, (i) a meeting of the Board of Directors or a committee thereof may be called by any director or officer by any means feasible under the circumstances; (ii) notice of any meeting of the Board of Directors during such an Emergency may be given less than 24 hours prior to the meeting to as many directors and by such means as may be feasible at the time, including publication, television or radio, and (iii) the number of directors necessary to constitute a quorum shall be one-third of the entire Board of Directors.

ARTICLE IV

COMMITTEES

Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors may appoint from among its members an Executive Committee, an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee and one or more other committees, composed of one or more directors, to serve at the pleasure of the Board of Directors.

Section 2. POWERS. The Board of Directors may delegate to committees appointed under Section 1 of this Article any of the powers of the Board of Directors, except as prohibited by law.

Section 3. MEETINGS. Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Directors. A majority of the members of the committee shall constitute a quorum for the transaction of business at any meeting of the committee. The act of a majority of the committee members present at a meeting shall be the act of such committee. The Board of Directors may designate a chairman of any committee, and such chairman or, in the absence of a chairman, any two members of any committee (if there are at least two members of the Committee) may fix the time and place of its meeting unless the Board shall otherwise provide. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint another director to act in the place of such absent member.

9

Section 4. TELEPHONE MEETINGS. Members of a committee of the Board of Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

Section 5. CONSENT BY COMMITTEES WITHOUT A MEETING. Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each member of the committee and is filed with the minutes of proceedings of such committee.

Section 6. VACANCIES. Subject to the provisions hereof, the Board of Directors shall have the power at any time to change the membership of any committee, to fill any vacancy, to designate an alternate member to replace any absent or disqualified member or to dissolve any such committee.

ARTICLE V

OFFICERS

Section 1. GENERAL PROVISIONS. The officers of the Corporation shall include a chief executive officer or co-chief executive officers, a chief financial officer, a president, a secretary and a treasurer and may include a chairman of the board, a vice chairman of the board, one or more vice presidents, a chief operating officer, a chief investment officer, one or more assistant secretaries and one or more assistant treasurers. In addition, the Board of Directors may from time to time elect such other officers with such powers and duties as they shall deem necessary or desirable. The officers of the Corporation shall be elected annually by the Board of Directors, except that the chief executive officer or president may from time to time appoint one or more vice presidents, assistant secretaries and assistant treasurers or other officers. Each officer shall serve until his or her successor is elected and qualifies or until his or her death, or his or her resignation or removal in the manner hereinafter provided. Any two or more offices except president and vice president may be held by the same person. Election of an officer or agent shall not of itself create contract rights between the Corporation and such officer or agent.

Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Corporation may be removed, with or without cause, by the Board of Directors if in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer of the Corporation may resign at any time by delivering his or her resignation to the Board of Directors, the chairman of the board, the chief executive officer, the president or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. Such resignation shall be without prejudice to the contract rights, if any, of the Corporation.

Section 3. VACANCIES. A vacancy in any office may be filled by the Board of Directors for the balance of the term.

Section 4. CHIEF EXECUTIVE OFFICER. The chief executive officer or co-chief executive officers, as applicable, shall be such officer or officers as the Board of Directors may designate from time to time. In the absence of such designation, the chairman of the board shall be the chief executive officer of the Corporation. The chief executive officer shall have general responsibility for implementation of the policies of the Corporation, as determined by the Board of Directors, and for the management of the business and affairs of the Corporation. He or she may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of chief executive officer and such other duties as may be prescribed by the Board of Directors from time to time.

Section 5. CHIEF OPERATING OFFICER. The Board of Directors may designate a chief operating officer. The chief operating officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.

Section 6. CHIEF FINANCIAL OFFICER. The chief financial officer shall have the custody of the funds and securities of the Corporation, shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation, shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors and in general perform such other duties as from time to time may be assigned to him or her by the chief executive officer or the Board of Directors. The chief financial officer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the chief executive officer and Board of Directors, at the regular meetings of the Board of Directors or whenever it may so require, an account of all his or her transactions as chief financial officer and of the financial condition of the Corporation. In the absence of a designation of a treasurer by the Board of Directors, the chief financial officer shall be the treasurer of the Corporation.

10

Section 7. CHIEF INVESTMENT OFFICER. The Board of Directors may designate a chief investment officer. The chief investment officer shall have the responsibilities and duties as determined by the Board of Directors or the chief executive officer.

Section 8. CHAIRMAN OF THE BOARD. The Board of Directors shall designate a chairman of the board. The chairman of the board shall preside over the meetings of the Board of Directors and of the stockholders at which he or she shall be present. The chairman of the board shall perform such other duties as may be assigned to him or her by the Board of Directors.

Section 9.PRESIDENT. In the absence of a chief executive officer, the president shall in general supervise and control all of the business and affairs of the Corporation. In the absence of a designation of a chief operating officer by the Board of Directors, the president shall be the chief operating officer. He or she may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the Board of Directors from time to time.

Section 10. VICE PRESIDENTS. In the absence of the president or in the event of a vacancy in such office, the vice president (or in the event there be more than one vice president, the vice presidents in the order designated at the time of their election or, in the absence of any designation, then in the order of their election) shall perform the duties of the president and when so acting shall have all the powers of and be subject to all the restrictions upon the president; and shall perform such other duties as from time to time may be assigned to such vice president by the president or by the Board of Directors. The Board of Directors may designate one or more vice presidents as executive vice president, senior vice president, or as vice president for particular areas of responsibility.

Section 11. SECRETARY. The secretary shall: (a) keep the minutes of the proceedings of the stockholders, the Board of Directors and committees of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation; (d) keep a register of the post office address of each stockholder which shall be furnished to the secretary by such stockholder; (e) have general charge of the stock transfer books of the Corporation; and (f) in general perform such other duties as from time to time may be assigned to him or her by the chief executive officer, the president or by the Board of Directors.

Section 12. TREASURER. The treasurer shall have the custody of the funds and securities of the Corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. In the absence of a designation of a chief financial officer by the Board of Directors, the treasurer shall be the chief financial officer of the Corporation.

The treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the chief executive officer, the president and Board of Directors, at the regular meetings of the Board of Directors or whenever it may so require, an account of all his or her transactions as treasurer and of the financial condition of the Corporation.

Section 13. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or treasurer, respectively, or by the chief executive officer, the president or the Board of Directors.

Section 14. COMPENSATION. The compensation of the officers shall be fixed from time to time by or under the authority of the Board of Directors and no officer shall be prevented from receiving such compensation by reason of the fact that he or she is also a director.

ARTICLE VI

CONTRACTS, LOANS, CHECKS AND DEPOSITS

Section 1. CONTRACTS. The Board of Directors or any manager of the Corporation approved by the Board of Directors and acting within the scope of its authority pursuant to a management agreement with the Corporation may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances. Any agreement, deed, mortgage, lease or other document shall be valid and binding upon the Corporation when executed by an authorized person and duly authorized or ratified by action of the Board of Directors or a manager acting within the scope of its authority pursuant to a management agreement.

11

Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent of the Corporation in such manner as shall from time to time be determined by the Board of Directors.

Section 3. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited or invested from time to time to the credit of the Corporation as the Board of Directors, the chief executive officer, the chief financial officer, or any other officer designated by the Board of Directors may determine.

ARTICLE VII

STOCK

Section 1. CERTIFICATES. Except as may be otherwise provided by the Board of Directors, stockholders of the Corporation are not entitled to certificates representing the shares of stock held by them. In the event that the Corporation issues shares of stock represented by certificates, such certificates shall be in such form as prescribed by the Board of Directors or a duly authorized officer, shall contain the statements and information required by the MGCL and shall be signed by the officers of the Corporation in the manner permitted by the MGCL. In the event that the Corporation issues shares of stock without certificates, to the extent then required by the MGCL, the Corporation shall provide to the record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates. There shall be no differences in the rights and obligations of stockholders based on whether or not their shares are represented by certificates.

Section 2. TRANSFERS. All transfers of shares of stock shall be made on the books of the Corporation, by the holder of the shares, in person or by his or her attorney, in such manner as the Board of Directors or any officer of the Corporation may prescribe and, if such shares are certificated, upon surrender of certificates duly endorsed. The issuance of a new certificate upon the transfer of certificated shares is subject to the determination of the Board of Directors that such shares shall no longer be represented by certificates. Upon the transfer of uncertificated shares, to the extent then required by the MGCL, the Corporation shall provide to record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates.

The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by the laws of the State of Maryland.

Notwithstanding the foregoing, transfers of shares of any class or series of stock will be subject in all respects to the Charter and all of the terms and conditions contained therein.

Section 3. REPLACEMENT CERTIFICATE. Any officer of the Corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, destroyed, stolen or mutilated, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, destroyed, stolen or mutilated; provided, however, if such shares have ceased to be certificated, no new certificate shall be issued unless requested in writing by such stockholder and the Board of Directors has determined that such certificates may be issued. Unless otherwise determined by an officer of the Corporation, the owner of such lost, destroyed, stolen or mutilated certificate or certificates, or his or her legal representative, shall be required, as a condition precedent to the issuance of a new certificate or certificates, to give the Corporation a bond in such sums as it may direct as indemnity against any claim that may be made against the Corporation.

Section 4. FIXING OF RECORD DATE. The Board of Directors may set, in advance, a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or determining stockholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of stockholders for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days and, in the case of a meeting of stockholders, not less than ten days, before the date on which the meeting or particular action requiring such determination of stockholders of record is to be held or taken.

When a record date for the determination of stockholders entitled to notice of and to vote at any meeting of stockholders has been set as provided in this section, such record date shall continue to apply to the meeting if adjourned or postponed, except if the meeting is adjourned to a date more than 120 days or postponed to a date more than 90 days after the record date originally fixed for the meeting, in which case a new record date for such meeting may be determined as set forth herein.

Section 5. STOCK LEDGER. The Corporation shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate stock ledger containing the name and address of each stockholder and the number of shares of each class held by such stockholder.

12

Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors may issue fractional stock or provide for the issuance of scrip, all on such terms and under such conditions as they may determine. Notwithstanding any other provision of the Charter or these Bylaws, the Board of Directors may issue units consisting of different securities of the Corporation. Any security issued in a unit shall have the same characteristics as any identical securities issued by the Corporation, except that the Board of Directors may provide that for a specified period securities of the Corporation issued in such unit may be transferred on the books of the Corporation only in such unit.

ARTICLE VIII

ACCOUNTING YEAR

The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution.

ARTICLE IX

DISTRIBUTIONS

Section 1. AUTHORIZATION. Dividends and other distributions upon the stock of the Corporation may be authorized by the Board of Directors, subject to the provisions of law and the Charter. Dividends and other distributions may be paid in cash, property or stock of the Corporation, subject to the provisions of law and the Charter.

Section 2. CONTINGENCIES. Before payment of any dividends or other distributions, there may be set aside out of any assets of the Corporation available for dividends or other distributions such sum or sums as the Board of Directors may from time to time, in its absolute discretion, think proper as a reserve fund for contingencies, for equalizing dividends, for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall determine, and the Board of Directors may modify or abolish any such reserve.

ARTICLE X

INVESTMENT POLICY

Subject to the provisions of the Charter, the Board of Directors may from time to time adopt, amend, revise or terminate any policy or policies with respect to investments by the Corporation as it shall deem appropriate in its sole discretion.

ARTICLE XI

SEAL

Section 1. SEAL. The Board of Directors may authorize the adoption of a seal by the Corporation. The seal shall contain the name of the Corporation and the year of its incorporation and the words “Incorporated Maryland.” The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof.

Section 2. AFFIXING SEAL. Whenever the Corporation is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word "(SEAL)" adjacent to the signature of the person authorized to execute the document on behalf of the Corporation.

ARTICLE XII

INDEMNIFICATION AND ADVANCE OF EXPENSES

To the maximum extent permitted by Maryland law in effect from time to time, the Corporation shall indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, shall pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (a) any individual who is a present or former director or officer of the Corporation and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity or (b) any individual who, while a director or officer of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner or trustee of another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity. The rights to indemnification and advance of expenses provided by the Charter and these Bylaws shall vest immediately upon election of a director or officer. The Corporation may, with the approval of its Board of Directors, provide such indemnification and advance for expenses to an individual who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation. The indemnification and payment or reimbursement of expenses provided in these Bylaws shall not be deemed exclusive of or limit in any way other rights to which any person seeking indemnification or payment or reimbursement of expenses may be or may become entitled under any bylaw, regulation, insurance, agreement or otherwise.

13

Neither the amendment nor repeal of this Article, nor the adoption or amendment of any other provision of the Bylaws or the Charter inconsistent with this Article, shall apply to or affect in any respect the applicability of the preceding paragraph with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

ARTICLE XIII

WAIVER OF NOTICE

Whenever any notice of a meeting is required to be given pursuant to the Charter or these Bylaws or pursuant to applicable law, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

ARTICLE XIV

EXCLUSIVE FORUM FOR CERTAIN LITIGATION

Unless the Corporation consents in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that Court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of any duty owed by any director or officer or other employee of the Corporation to the Corporation or to the stockholders of the Corporation, (c) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation arising pursuant to any provision of the MGCL, the charter or these Bylaws, or (d) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation that is governed by the internal affairs doctrine.

ARTICLE XV

AMENDMENT OF BYLAWS

The Board of Directors shall have the exclusive power to adopt, alter or repeal any provision of these Bylaws and to make new Bylaws.

14

EX-99.1

Exhibit 99.1

ARMOUR Residential REIT, Inc. to Acquire
JAVELIN Mortgage Investment Corp.

ARMOUR to Commence $84.7 Million Tender Offer for All Outstanding JAVELIN Shares

VERO BEACH, Fla. – March 2, 2016 – ARMOUR Residential REIT, Inc. (NYSE: ARR, ARR PrA and ARR PrB) (“ARMOUR”) and JAVELIN Mortgage Investment Corp. (NYSE:JMI) (“JAVELIN”) today announced the signing of a definitive merger agreement, under which ARMOUR will acquire JAVELIN for consideration to be paid in cash, which would value JAVELIN at 87 percent of its book value, as calculated in accordance with the merger agreement including a reduction of $1.0 million for JAVELIN’s transaction expenses.

Transaction Highlights:

·

Delivers significant premium to JAVELIN’s common stock price: Using JAVELIN’s latest estimated book value per share as of March 1, 2016, the transaction would value JAVELIN at $7.14 per share, representing a 19 percent premium to JAVELIN’s closing price on March 1, 2016.

·

Provides execution speed and certainty on financing: Tender offer structure promptly delivers JAVELIN stockholders the opportunity to realize cash value for their shares. The tender offer does not have any financing condition, as ARMOUR will fund the acquisition with existing cash on hand.

·

Expands and diversifies ARMOUR’s portfolio: JAVELIN’s complementary assets provide ARMOUR with investment opportunities in non-agency mortgage-backed securities.

·

Drives long-term value: Transaction is accretive to ARMOUR’s book value upon closing and will drive long-term value for stockholders through stable and diversified risk-adjusted returns.

Tender Offer:

Under the terms of the merger agreement, a wholly-owned subsidiary of ARMOUR will commence a tender offer to acquire all of the outstanding shares of JAVELIN common stock for an amount in cash per share equal to 87 percent of the book value per share of JAVELIN common stock, as calculated in accordance with the merger agreement. Book value per share will be set 10 business days prior to the expiration of the tender offer based on the book value per share of JAVELIN’s common stock at that time. Using JAVELIN’s latest estimated book value per share as of March 1, 2016, as calculated in accordance with the merger agreement, the transaction would value JAVELIN at $84.7 million or $7.14 per share, representing a 19 percent premium to JAVELIN’s closing price on March 1, 2016.

The transactions contemplated by the merger agreement, including the tender offer and merger, have been unanimously approved by the Board of Directors of ARMOUR and unanimously approved by the Board of Directors of JAVELIN upon the recommendation of the JAVELIN Board’s Special Committee.

“Today’s announcement is the culmination of a review process conducted by JAVELIN’s Board of Directors that explored value-creation options,” said John C. Chrystal, member of JAVELIN’s Special Committee. “After careful consideration, and with the assistance of independent financial and legal advisors, the Special Committee concluded that this transaction with ARMOUR is in the best interests of JAVELIN and its stockholders.”

- MORE -

ARMOUR Residential REIT, Inc. to Acquire JAVELIN Mortgage Investment Corp.

March 2, 2016

Page 2

“We are pleased to announce this strategically and financially compelling transaction that is aligned with our focused and disciplined approach to evaluating assets for inclusion in the ARMOUR portfolio,” said Daniel C. Staton, ARMOUR’s Non-Executive Chairman. “Today, ARMOUR has a robust portfolio as well as a strong balance sheet. The acquisition of JAVELIN provides complementary assets that increase our flexibility and enable us to drive additional value through the diversification of our investment portfolio into non-agency mortgage-backed securities. This transaction is expected to be immediately accretive to ARMOUR’s book value upon closing and to drive long-term value for our stockholders through stable and diversified risk-adjusted returns.”

The tender offer is subject to customary closing conditions, including the tender of greater than a majority of the total number of JAVELIN’s outstanding shares not owned immediately before the expiration of the tender offer by ARMOUR or JAVELIN, or any of their subsidiaries, officers, or directors. Following completion of the tender offer, the parties will promptly effect a second-step merger without the approval of JAVELIN stockholders under Maryland law pursuant to which all remaining shares of JAVELIN common stock not tendered in the tender offer will be converted into the right to receive the same cash price per share as in the tender offer and JAVELIN will become a wholly-owned subsidiary of ARMOUR. The transaction is expected to close during the second quarter of 2016.  

JAVELIN has declared and will pay its regular monthly dividend for the month of March, but will not declare any regular monthly dividends thereafter during the pendency of the transaction.

Advisors

Lazard Frères and Co. LLC (“Lazard”) served as financial advisor to ARMOUR, and Akerman LLP served as legal counsel to ARMOUR. Lazard provided a fairness opinion to ARMOUR’s Board of Directors. JMP Securities LLC (“JMP”) served as financial advisor to JAVELIN’s Special Committee, and Duane Morris LLP and Venable LLP served as legal counsel to JAVELIN’s Special Committee. JMP provided a fairness opinion to JAVELIN’s Special Committee.  

Conference Call / Webcast Information

In light of the pending transaction with ARMOUR, JAVELIN will not host an earnings conference call and webcast in conjunction with its upcoming release of fourth quarter and full year 2015 results, or provide financial guidance.

About ARMOUR Residential REIT, Inc.

ARMOUR is a Maryland corporation that invests primarily in fixed rate residential, adjustable rate and hybrid adjustable rate mortgage-backed securities issued or guaranteed by U.S. Government-sponsored enterprises, or guaranteed by the Government National Mortgage Association. ARMOUR is externally managed and advised by ARMOUR Capital Management LP (“ACM”), an investment advisor registered with the Securities and Exchange Commission (“SEC”).

About JAVELIN Mortgage Investment Corp.

JAVELIN is a Maryland corporation that invests primarily in fixed rate, adjustable rate and hybrid adjustable rate Agency residential mortgage-backed securities (“RMBS”) and non-Agency RMBS. JAVELIN is externally managed and advised by ACM.

Additional Information and Where to Find It

The tender offer for the outstanding common stock of JAVELIN referred to in this press release has not yet commenced. This press release is neither an offer to purchase nor a solicitation of an offer to sell any securities. The solicitation and the offer to buy shares of JAVELIN common stock will be made pursuant to an offer to purchase and related materials that an affiliate of ARMOUR intends to file with the SEC. At the time the offer is commenced, ARMOUR’s subsidiary will file a tender offer statement on Schedule TO with the SEC, and thereafter JAVELIN will file a solicitation/recommendation statement on Schedule 14D-9 with respect to the offer. The

- MORE -

ARMOUR Residential REIT, Inc. to Acquire JAVELIN Mortgage Investment Corp.

March 2, 2016

Page 3

tender offer statement (including an offer to purchase, a related letter of transmittal and other offer documents) and the solicitation/recommendation statement will contain important information that should be read carefully and considered before any decision is made with respect to the tender offer. These materials will be sent free of charge to all stockholders of JAVELIN when available. In addition, all of these materials (and all other materials filed by JAVELIN with the SEC) will be available at no charge from the SEC through its website at www.sec.gov. Free copies of the offer to purchase, the related letter of transmittal and certain other offering documents will be made available by ARMOUR when available at its website at www.armourreit.com. Investors and security holders may also obtain free copies of the documents filed with the SEC by JAVELIN when available at its website at www.javelinreit.com or by contacting JAVELIN at the phone number set forth at the end of this press release.

Forward-Looking Statements Safe Harbor

This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations, estimates and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results, including (i) that changes in the market values of JAVELIN’s agency securities and derivatives, appraised values of its non-agency securities, its repurchase agreement balances or other elements of its book value per share, computed in accordance with the terms of the merger agreement, could change in a manner that would reduce the consideration to stockholders in the tender offer or merger, (ii) that the tender offer may not be completed at all or on the terms described, and (iii) that the merger transaction may not be consummated. Additional information concerning these and other risk factors are contained in the most recent filings with the SEC of ARMOUR and JAVELIN. All subsequent written and oral forward-looking statements concerning ARMOUR and JAVELIN are expressly qualified in their entirety by the cautionary statements above. ARMOUR and JAVELIN caution readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. ARMOUR and JAVELIN do not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in their expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.

ARMOUR Contact:

James R. Mountain

Chief Financial Officer

JAVELIN Mortgage Investment Corp.

(772) 617-4340

JAVELIN Contact:

Alliance Advisors, LLC

Stockholders call toll free: 

(888) 991-1294

Banks and Brokers: 

(973) 873-7721

-END -