American Capital Mortgage Investment

The Manager and its affiliates may allocate investments to other entities they manage (including American Capital Agency Corp.) rather than to the Company, and such allocation need not be pro rata. The Investment Committee consists of officers of American Capital and its affiliates, creating a structural conflict between the Company and competing affiliated vehicles.

“When a particular investment would be appropriate for the Company as well as for American Capital Agency Corp., a Delaware corporation, or another entity that the Manager or an Affiliate of the Manager manages at such time, the Manager and its Affiliates may, in good faith, allocate the investment to one such entity and allocate a different investment to the other such entity, provided that the Manager and its Affiliates determine, in their sole discretion, that the two investments are similar. ... Such apportionment may not be strictly pro rata depending on the good faith determination of the Manager and its Affiliates in light of all relevant factors”

The Manager and its affiliates, officers, directors, and employees are expressly permitted to engage in other businesses, render services to other persons (including competitors), and buy or sell securities for their own accounts or others, without restriction. The Company is explicitly not entitled to preferential treatment relative to other clients of the Manager.

“nothing in this Agreement shall (i) prevent the Manager or any of its Affiliates, officers, directors or employees, from engaging in other businesses or from rendering services of any kind to any other Person or entity, whether or not the investment objectives or policies of any such other Person or entity are similar to those of the Company or (ii) in any way bind or restrict the Manager or any of its Affiliates, officers, directors or employees from buying, selling or trading any securities or commodities for their own accounts or for the account of others ... The Company recognizes that it is not entitled to receive preferential treatment as compared with the treatment given by the Manager or any Affiliate of the Manager to others.”