Annaly CapitalManagement Inc. disclosed in a Form 8-K filed April 11 thatHatteras Financial Corp.will pay Annaly Capital a fee of $44.9 million in the event of termination ofthe merger agreement.

The merger agreement contains certain termination rights byAnnaly Capital and Hatteras Financial. The termination fee is applicable underspecified circumstances, including with respect to a change of therecommendation of Hatteras' board.

Annaly Capital also said that in connection with theexecution of the merger agreement, Hatteras Financial and its external manager,Atlantic Capital Advisors LLC, entered into an amendment to the managementagreement, which provides that upon the completion of the merger, themanagement agreement will terminate. As a result of the termination of themanagement agreement, Hatteras Financial will pay a fee of $45.4 million toAtlantic Capital Advisors.