EXHIBIT 10.5
 
 
MANAGEMENT AGREEMENT
by and between
FlatWorld Acquisition Corp.
and
Bimini Advisors, LLC
Dated as of [ ], 2012
 

 
 

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MANAGEMENT AGREEMENT, dated as of [ ], 2012, by and between FlatWorld
Acquisition Corp., a British Virgin Islands business company limited by shares
(the “Company”) and Bimini Advisors, LLC, a Maryland limited liability company
(the “Manager”).
 
W I T N E S S E T H:
 
WHEREAS, the Company is a publicly held company which invests in residential
mortgage-backed securities (“RMBS”) the principal and interest payments of which
are guaranteed by the Federal National Mortgage Association, the Federal Home
Loan Mortgage Corporation or the Government National Mortgage Association, and
are backed by primarily single-family residential mortgage loans (collectively,
“Agency RMBS”). The Company’s investment strategy focuses on two categories of
Agency RMBS: (i) traditional pass-through Agency RMBS and (ii) structured Agency
RMBS, such as collateralized mortgage obligations, interest only securities,
inverse interest only securities and principal only securities, among other
types of structured Agency RMBS. On or prior to January 1, 2013, the Company
intends to re-incorporate as a corporation in the State of Maryland, United
States of America and qualify as a real estate investment trust for federal
income tax purposes and will elect to receive the tax benefits accorded by
Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the
“Code”);
 
WHEREAS, the Manager is an indirect subsidiary of Bimini Capital Management,
Inc. (“Bimini”) and FWC Advisors LLC; and
 
WHEREAS, the Company desires to retain the Manager to administer the business
activities and day-to-day operations of the Company and to perform services for
the Company in the manner and on the terms set forth herein and the Manager
wishes to be retained to provide such services.
 
NOW THEREFORE, in consideration of the premises and agreements hereinafter set
forth, the parties hereto hereby agree as follows:
 
Section 1. Definitions.
 
(a)  
The following terms shall have the meanings set forth in this Section 1(a):

 
“Affiliate” means (i) any Person directly or indirectly controlling, controlled
by, or under common control with such other Person, (ii) any executive officer,
general partner or employee of such other Person, (iii) any member of the board
of directors or board of managers (or bodies performing similar functions) of
such Person, and (iv) any legal entity for which such Person acts as an
executive officer or general partner; provided, however, that for purposes
hereof, FWC Advisors LLC and its Affiliates shall not be deemed Affiliates of
the Manager.
 
“Agency RMBS” has the meaning set forth in the Recitals.
 
“Agreement” means this Management Agreement, as amended, supplemented or
otherwise modified from time to time.
 
“Automatic Renewal Term” has the meaning set forth in Section 10(b) hereof.
 

 
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“Bimini” has the meaning set forth in the Recitals.
 
“Board of Directors” means the board of directors of the Company.
 
“Business Day” means any day except a Saturday, a Sunday or a day on which
banking institutions in New York, New York are not required to be open.
 
“Change of Control” means the occurrence of any of the following:
 
(i)  
the sale, lease or transfer, in one or a series of related transactions, of all
or substantially all of the assets (x) of the Manager to any Person other than
any Affiliate of the Manager or (y) of Bimini to any Person other than any
affiliate of Bimini; or

 
(ii)  
the acquisition by any Person or group (within the meaning of Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act, or any successor provision), including
any group acting for the purpose of acquiring, holding or disposing of
securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act),
other than any Affiliate of the Manager (in the case of Manager Voting Power, as
defined below) or Bimini (in the case of Bimini Voting Power, as defined below),
in a single transaction or in a related series of transactions, by way of
merger, consolidation or other business combination or purchase of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any
successor provision) of 50% or more of the total voting power of the voting
capital interests of the Manager (“Manager Voting Power”) or of Bimini (“Bimini
Voting Power”).

 
“Claim” has the meaning set forth in Section 8(c) hereof.
 
“Code” has the meaning set forth in the Recitals.
 
“Shares” means the issued shares of capital stock of the Company.
 
“Company” has the meaning set forth in the Recitals.
 
“Company Indemnified Party” has the meaning set forth in Section 8(b) hereof.
 
“Conduct Policies” has the meaning set forth in Section 2(k) hereof.
 
“Confidential Information” has the meaning set forth in Section 5 hereof.
 
“Effective Termination Date” has the meaning set forth in Section 10(c) hereof.
 
“Equity” means the Company’s month-end stockholders’ equity, adjusted to exclude
the effect of any unrealized gains or losses included in either retained
earnings or other comprehensive income (loss), each computed in accordance with
GAAP.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
“GAAP” means generally accepted accounting principles in effect in the United
States on the date such principles are applied.
 

 
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“Governing Instruments” means, with regard to any entity, the articles of
incorporation or certificate of incorporation and bylaws in the case of a
corporation, the partnership agreement in the case of a general or limited
partnership or the certificate of formation and operating agreement in the case
of a limited liability company, the trust instrument in the case of a trust, or
similar governing documents in each case as amended.
 
“Indemnified Party” has the meaning set forth in Section 8(b) hereof.
 
“Independent Director” means a member of the Board of Directors who is
“independent” in accordance with the Company’s Governing Instruments and the
rules of the OTC Bulletin Board or such other securities exchange on which the
Shares are listed following the date hereof.
 
“Investment Allocation Agreement” means an agreement among the Company, the
Manager and Bimini describing, among other things, the policies to be followed
by the Manager and Bimini in allocating investments among the parties thereto
and any other entities that may be managed by the Manager.
 
“Investment Committee” means the investment committee formed by the Manager, the
members of which shall consist of officers of the Manager and/or other
Affiliates of the Manager, including but not limited to Bimini.
 
“Initial Term” has the meaning set forth in Section 10(a) hereof.
 
“Investment Company Act” means the Investment Company Act of 1940, as amended.
 
“Investment Guidelines” means the investment guidelines proposed by the
Investment Committee and approved by the Board of Directors, a copy of which is
attached hereto as Exhibit A, as the same may be amended, restated, modified,
supplemented or waived by the Investment Committee, subject to the consent of a
majority of the entire Board of Directors (which must include a majority of the
then incumbent Independent Directors).
 
“Losses” has the meaning set forth in Section 8(a) hereof.
 
“Management Fee” means the management fee, calculated and payable monthly in
arrears, in an amount equal to (i) one-twelfth (1/12) multiplied by (ii)(a)
1.50% of the first $250,000,000 of Equity, (b) 1.25% of Equity that is greater
than $250,000,000 and less than or equal to $500,000,000, and (c) 1.00% of
Equity that is greater than $500,000,000.
 
“Manager” has the meaning set forth in the Recitals.
 
“Manager Indemnified Party” has the meaning set forth in Section 8(a) hereof.
 
“Manager Permitted Disclosure Parties” has the meaning set forth in Section 5
hereof.
 
“Notice of Proposal to Negotiate” has the meaning set forth in Section 10(d)
hereof.
 
“Overhead Sharing Agreement” means that certain agreement between Bimini
Advisors, Inc. and Bimini whereby Bimini agrees to provide Bimini Advisors, Inc.
with the personnel,
 

 
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services and resources necessary for the Manager to perform its obligations and
responsibilities under this Agreement.
 
“OTC Bulletin Board” means the Over-the-Counter Bulletin Board.
 
“Person” means any natural person, corporation, partnership, association,
limited liability company, estate, trust, joint venture, any federal, state,
county or municipal government or any bureau, department or agency thereof or
any other legal entity and any fiduciary acting in such capacity on behalf of
the foregoing.
 
“REIT” means a “real estate investment trust” as defined under the Code.
 
“RMBS” has the same meaning set forth in the Recitals.
 
“SEC” means the United States Securities and Exchange Commission.
 
“Securities Act” means the Securities Act of 1933, as amended.
 
“Subsidiary” means any subsidiary of the Company and any partnership, the
general partner of which is the Company or any subsidiary of the Company, and
any limited liability company, the managing member of which is the Company or
any subsidiary of the Company, including, without limitation, Orchid Island
Capital, LLC.
 
“Termination Fee” means a termination fee equal to three (3) times the average
annual Management Fee earned by the Manager during the shorter of (i) the
24-month period immediately preceding the most recently completed calendar
quarter prior to the Effective Termination Date, or (ii) the period beginning on
the date of this Agreement and ending on the most recently completed calendar
quarter prior to the Effective Termination Date.
 
“Termination Notice” has the meaning set forth in Section 10(c) hereof.
 
“Termination Without Cause” has the meaning set forth in Section 10(c) hereof.
 
(b)           As used herein, accounting terms relating to the Company and its
Subsidiaries, if any, not defined in Section 1(a) and accounting terms partly
defined in Section 1(a), to the extent not defined, shall have the respective
meanings given to them under GAAP. As used herein, “calendar quarters” shall
mean the period from January 1 to March 31, April 1 to June 30, July 1 to
September 30 and October 1 to December 31 of the applicable year.

(c)           The words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section references are to
this Agreement unless otherwise specified.

(d)           The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. The words
include, includes and including shall be deemed to be followed by the phrase
“without limitation.”
 
 
 
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Section 2. Appointment and Duties of the Manager.
 
(a)
The Company hereby appoints the Manager to manage the investments and day-to-day
operations of the Company and its Subsidiaries, subject at all times to the
further terms and conditions set forth in this Agreement and to the supervision
of, and such further limitations or parameters as may be imposed from time to
time by, the Board of Directors. The Manager hereby agrees to use its
commercially reasonable efforts to perform each of the duties set forth herein,
provided that funds are made available by the Company for such purposes as set
forth in Section 7 hereof. The appointment of the Manager shall be exclusive to
the Manager, except to the extent that the Manager elects, in its sole and
absolute discretion, in accordance with the terms of this Agreement, to cause
the duties of the Manager as set forth herein to be provided by third parties,
including Affiliates of the Manager.

 
(b)           The Manager, in its capacity as manager of the investments and the
operations of the Company, at all times will be subject to the supervision and
direction of the Board of Directors and will have only such functions and
authority as the Board of Directors may delegate to it, including, without
limitation, the functions and authority identified herein and delegated to the
Manager hereby. The Manager will be responsible for the day-to-day operations of
the Company and will perform (or cause to be performed) such services and
activities relating to the investments and operations of the Company as may be
appropriate, which may include, without limitation:

(i)  
forming and maintaining the Investment Committee, which will have the following
responsibilities: (A) proposing the Investment Guidelines to the Board of
Directors, (B) reviewing the Company’s investment portfolio for compliance with
the Investment Guidelines on a monthly basis, (C) reviewing the Investment
Guidelines adopted by the Board of Directors on a periodic basis, (D) reviewing
the diversification of the Company’s investment portfolio and the Company’s
hedging and financing strategies on a monthly basis, and (E) generally be
responsible for conducting or overseeing the provision of the services set forth
in this Section 2.

 
(ii)  
serving as the Company’s consultant with respect to the periodic review of the
investments, borrowings and operations of the Company and other policies and
recommendations with respect thereto, including, without limitation, the
Investment Guidelines, in each case subject to the approval of the Board of
Directors;

 
(iii)  
serving as the Company’s consultant with respect to the selection, purchase,
monitoring and disposition of the Company’s investments;

 
(iv)  
serving as the Company’s consultant with respect to decisions regarding any
financings, hedging activities or borrowings undertaken by the Company or its
Subsidiaries, including (1) assisting the Company in developing criteria for
debt and equity financing that is specifically tailored to the Company’s
investment objectives, and (2) advising the Company with respect to obtaining
appropriate financing for its investments;

(v)  
purchasing and financing investments on behalf of the Company;

 
(vi)  
providing the Company with portfolio management;

 

 
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(vii)  
engaging and supervising, on behalf of the Company and at the Company’s expense,
independent contractors that provide real estate, investment banking, securities
brokerage, insurance, legal, accounting, transfer agent, registrar and such
other services as may be required relating to the Company’s operations or
investments (or potential investments);

 
(viii)  
providing executive and administrative personnel, office space and office
services required in rendering services to the Company;

 
(ix)  
performing and supervising the performance of administrative functions necessary
in the management of the Company as may be agreed upon by the Manager and the
Board of Directors, including, without limitation, the collection of revenues
and the payment of the Company’s debts and obligations and maintenance of
appropriate information technology services to perform such administrative
functions;

 
(x)  
communicating on behalf of the Company with the holders of any equity or debt
securities of the Company as required to satisfy the reporting and other
requirements of any governmental bodies or agencies or trading exchanges or
markets and to maintain effective relations with such holders, including website
maintenance, logo design, analyst presentations, investor conferences and annual
meeting arrangements;

 
(xi)  
counseling the Company in connection with policy decisions to be made by the
Board of Directors;

 
(xii)  
evaluating and recommending to the Company hedging strategies and engaging in
hedging activities on behalf of the Company, consistent with the Company’s
qualification and maintenance of the Company’s qualification as a REIT and with
the Investment Guidelines;

 
(xiii)  
counseling the Company regarding its qualification and the maintenance of its
qualification as a REIT and monitoring compliance with the various REIT
qualification tests and other rules set out in the Code and U.S. Treasury
regulations promulgated thereunder;

 
(xiv)  
counseling the Company regarding the maintenance of its exemption from status as
an investment company under the Investment Company Act and monitoring compliance
with the requirements for maintaining such exemption;

 
(xv)  
furnishing reports and statistical and economic research to the Company
regarding the activities and services performed for the Company or its
Subsidiaries, if any, by the Manager;

 
(xvi)  
monitoring the operating performance of the Company’s investments and providing
periodic reports with respect thereto to the Board of Directors, including
comparative information with respect to such operating performance and budgeted
or projected operating results;

 
(xvii)  
investing and re-investing any monies and securities of the Company (including
in short-term investments, payment of fees, costs and expenses, or payments of

 
 
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(xviii)  
dividends or distributions to stockholders of the Company) and advising the
Company as to its capital structure and capital-raising activities;

 
(xix)  
causing the Company to retain qualified accountants and legal counsel, as
applicable, to (i) assist in developing appropriate accounting procedures,
internal controls, compliance procedures and testing systems with respect to
financial reporting obligations and compliance with the provisions of the Code
applicable to REITs and, if applicable, taxable REIT subsidiaries and (ii)
conduct quarterly compliance reviews with respect thereto;

 
(xx)  
causing the Company to qualify to do business in all jurisdictions in which such
qualification is required and to obtain and maintain all appropriate licenses;

 
(xxi)  
assisting the Company in complying with all regulatory requirements applicable
to the Company in respect of its business activities, including preparing or
causing to be prepared all financial statements required under applicable
regulations and contractual undertakings and all reports and documents, if any,
required under the Exchange Act or the Securities Act or by the OTC Bulletin
Board or the requirements of such other stock exchange as the Shares may be
listed on following the date hereof as applicable;

 
(xxii)  
taking all necessary actions to enable the Company and any Subsidiaries to make
required tax filings and reports, including soliciting stockholders for required
information to the extent necessary under the Code and U.S. Treasury regulations
applicable to REITs;

 
(xxiii)  
handling and resolving all claims, disputes or controversies (including all
litigation, arbitration, settlement or other proceedings or negotiations) in
which the Company may be involved or to which the Company may be subject arising
out of the Company’s day-to-day operations;

 
(xxiv)  
arranging marketing materials, advertising, industry group activities (such as
conference participations and industry organization memberships) and other
promotional efforts designed to promote the business of the Company;

 
(xxv)  
using commercially reasonable efforts to cause expenses incurred by or on behalf
of the Company to be commercially reasonable or commercially customary and
within any budgeted parameters or expense guidelines set by the Board of
Directors from time to time;

 
(xxvi)  
performing such other services as may be required from time to time for the
management and other activities relating to the assets, business and operations
of the Company as the Board of Directors shall reasonably request or the Manager
shall deem appropriate under the particular circumstances; and

 
(xxvii)  
using commercially reasonable efforts to cause the Company to comply with all
applicable laws.

 
 
(c)  
The Manager may retain, for and on behalf, and at the sole cost and expense, of
the Company, such services of the persons and firms referred to in Section 7(b)
hereof as the Manager deems necessary or advisable in connection with the
management and operations of the

 

 

 
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Company. In performing its duties under this Section 2, the Manager shall be
entitled to rely reasonably on qualified experts and professionals (including,
without limitation, accountants, legal counsel and other professional service
providers) hired by the Manager at the Company’s sole cost and expense.
 
(d)           The Manager shall refrain from any action that, in its sole
judgment made in good faith, (i) is not in compliance with the Investment
Guidelines, (ii) would adversely affect the qualification of the Company as a
REIT under the Code or the Company’s or any Subsidiary’s status as an entity
excluded from investment company status under the Investment Company Act, or
(iii) would violate any law, rule or regulation of any governmental body or
agency having jurisdiction over the Company or of any exchange on which the
securities of the Company may be listed or that would otherwise not be permitted
by the Company’s Governing Instruments, the Conduct Policies or other Company
compliance or governance policies or procedures. If the Manager is ordered to
take any action by the Board of Directors, the Manager shall promptly notify the
Board of Directors if it is the Manager’s judgment that such action would
adversely affect the qualification of the Company as a REIT or the Company’s or
any Subsidiary’s status as an entity excluded from investment company status
under the Investment Company Act or violate any such law, rule or regulation or
the Company’s Governing Instruments. Notwithstanding the foregoing, neither the
Manager nor any of its Affiliates shall be liable to the Company, the Board of
Directors or the Company’s stockholders for any act or omission by the Manager
or any of its Affiliates, except as provided in Section 8 of this Agreement.

(e)           The Company (including the Board of Directors) agrees to take all
actions reasonably required to permit and enable the Manager to carry out its
duties and obligations under this Agreement, including, without limitation, all
steps reasonably necessary to allow the Manager to file any registration
statement or other filing required to be made under the Securities Act, Exchange
Act, the OTC Bulletin Board, the Code or other applicable law, rule or
regulation, including the regulations or requirements of such other stock
exchange on which the Company’s Shares may be listed following the date hereof,
on behalf of the Company in a timely manner. The Company further agrees to use
commercially reasonable efforts to make available to the Manager all resources,
information and materials reasonably requested by the Manager to enable the
Manager to satisfy its obligations hereunder, including its obligations to
deliver financial statements and any other information or reports with respect
to the Company. If the Manager is not able to provide a service, or in the
reasonable judgment of the Manager it is not prudent to provide a service,
without the approval of the Board of Directors, as applicable, then the Manager
shall be excused from providing such service (and shall not be in breach of this
Agreement) until the applicable approval has been obtained.

(f)           Reporting Requirements. As frequently as the Manager may deem
reasonably necessary or advisable, or at the direction of the Board of
Directors, at the sole cost and expense of the Company, the Manager shall
prepare, or cause to be prepared, with respect to any investment, reports and
other information with respect to such investment as may be reasonably requested
by the Company.

(i)  
At the sole cost and expense of the Company, the Manager shall prepare, or,
cause to be prepared, all reports, financial or otherwise, with respect to the
Company reasonably required by the Board of Directors in order for the Company
to comply with its

 

 
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Governing Instruments, or any other materials required to be filed with any
governmental body or agency, and, at the sole cost and expense of the Company,
shall prepare, or, cause to be prepared, all materials and data necessary to
complete such reports and other materials including, without limitation, an
annual audit of the Company’s books of account by a nationally recognized
independent accounting firm.
 
(ii)  
At the sole cost and expense to the Company, the Manager shall prepare, or,
cause to be prepared, regular reports for the Board of Directors to enable the
Board of Directors to review the Company’s acquisitions, portfolio composition
and characteristics, credit quality, performance and compliance with the
Investment Guidelines and policies approved by the Board of Directors.

(g)           Directors, officers, employees and agents of the Manager, Bimini
or their respective Affiliates may serve as directors, officers, agents,
nominees or signatories for the Company or any of its Subsidiaries, to the
extent permitted by their Governing Instruments and pursuant to the Overhead
Sharing Agreement. When executing documents or otherwise acting in such
capacities for the Company or any of its Subsidiaries, such Persons shall
indicate in what capacity they are executing on behalf of the Company or any of
its Subsidiaries. Without limiting the foregoing, but subject to Section 12
below, the Manager will provide the Company with a management team, including a
Chief Executive Officer, Chief Financial Officer and Chief Investment Officer or
similar positions, along with appropriate support personnel to provide the
management services to be provided by the Manager to the Company hereunder, who
shall devote such of their time to the management of the Company as necessary
and appropriate, commensurate with the level of activity of the Company from
time to time.

(h)           The Manager shall provide personnel for service on the Investment
Committee.

(i)
The Manager shall maintain reasonable and customary “errors and omissions”
insurance coverage and other customary insurance coverage.

 
(j)           The Manager shall provide such internal audit, compliance and
control services as may be required for the Company to comply with applicable
law (including the Securities Act and Exchange Act), regulation (including SEC
regulations) and the rules and requirements of the OTC Bulletin Board or such
other securities exchange on which the Shares may be listed following the date
hereof and as otherwise reasonably requested by the Company or its Board of
Directors from time to time.

Section 3. Additional Activities of the Manager; Non-Solicitation; Restrictions.
 
(a)  
Except as provided in the Conduct Policies, the last sentence of this Section
3(a), the Investment Guidelines and/or the Investment Allocation Agreement,
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 for whom the Manager or any of

 

 
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its Affiliates, officers, directors or employees may be acting. While
information and recommendations supplied to the Company shall, in the Manager’s
reasonable and good faith judgment, be appropriate under the circumstances and
in light of the investment objectives and policies of the Company, they may be
different from the information and recommendations supplied by the Manager or
any Affiliate of the Manager to others. The Company shall be entitled to
equitable treatment under the circumstances in receiving information,
recommendations and any other services, but 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. The Company
shall have the benefit of the Manager’s best judgment and effort in rendering
services hereunder and, in furtherance of the foregoing, the Manager shall not
undertake activities that, in its good faith judgment, will adversely affect the
performance of its obligations under this Agreement.

(b)  
In the event of a Termination Without Cause of this Agreement by the Company
pursuant to Section 10(c) hereof, for two (2) years after such termination of
this Agreement, the Company shall not, without the consent of the Manager,
employ or otherwise retain any employee of the Manager or any of its Affiliates
or any person who has been in the employ of the Manager or any of its Affiliates
at any time within the two (2) year period immediately preceding the date on
which such person commences employment with or is otherwise retained by the
Company. The Company acknowledges and agrees that, in addition to any damages,
the Manager shall be entitled to equitable relief for any violation of this
agreement by the Company, including, without limitation, injunctive relief.

 
Section 4. Bank Accounts.
 
At the direction of the Board of Directors, the Manager may establish and
maintain one or more bank accounts in the name of the Company or any Subsidiary,
and may collect and deposit into any such account or accounts, and disburse
funds from any such account or accounts, under such terms and conditions as the
Board of Directors may approve; and the Manager shall from time to time render
appropriate accountings of such collections and payments to the Board of
Directors and, upon request, to the auditors of the Company or any Subsidiary.
 
Section 5. Records; Confidentiality.
 
The Manager shall maintain appropriate books of accounts and records relating to
services performed hereunder, and such books of account and records shall be
accessible for inspection by representatives of the Company or any Subsidiary at
any time during normal business hours. The Manager shall keep confidential any
and all non-public information, written or oral, about or concerning the
Company, obtained by it in connection with the services rendered hereunder
(“Confidential Information”) and shall not use Confidential Information except
in furtherance of its duties under this Agreement or disclose Confidential
Information, in whole or in part, to any Person other than (i) to its
Affiliates, officers, directors, employees, agents, representatives or advisors
who need to know such Confidential Information for the purpose of rendering
services hereunder, (ii) to appraisers, financing sources and others in the
ordinary course of the Company’s business ((i) and (ii) collectively, “Manager
Permitted Disclosure Parties”), (iii) in connection with any governmental or
regulatory filings of the
 
 
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Company or disclosure or presentations to the Company’s stockholders or to
potential investors in the Company’s securities, (iv) to governmental officials
having jurisdiction over the Company, (v) as required by law or legal process to
which the Manager or any Person to whom disclosure is permitted hereunder is a
party, or (vi) with the consent of the Company. The Manager agrees to inform
each of its Manager Permitted Disclosure Parties of the non-public nature of the
Confidential Information and to direct such Persons to treat such Confidential
Information in accordance with the terms hereof. Nothing herein shall prevent
the Manager from disclosing Confidential Information (i) upon the order of any
court or administrative agency, (ii) upon the request or demand of, or pursuant
to any law or regulation, any regulatory agency or authority, (iii) to the
extent reasonably required in connection with the exercise of any remedy
hereunder, or (iv) to its legal counsel or independent auditors; provided,
however that with respect to clauses (i) and (ii), it is agreed that, so long as
not legally prohibited, the Manager will provide the Company with prompt written
notice of such order, request or demand so that the Company may seek, at its
sole expense, an appropriate protective order and/or waive the Manager’s
compliance with the provisions of this Agreement. If, failing the entry of a
protective order or the receipt of a waiver hereunder, the Manager is required
to disclose Confidential Information, the Manager may disclose only that portion
of such information that is legally required without liability hereunder;
provided, that the Manager agrees to exercise its reasonable best efforts to
obtain reliable assurance that confidential treatment will be accorded such
information. Notwithstanding anything herein to the contrary, each of the
following shall be deemed to be excluded from provisions hereof: any
Confidential Information that (A) is available to the public from a source other
than the Manager (not resulting from the Manager’s violation of this Section 5),
(B) is released in writing by the Company to the public or to persons who are
not under similar obligation of confidentiality to the Company, or (C) is
obtained by the Manager from a third-party which, to the best of the Manager’s
knowledge, does not constitute a breach by such third-party of an obligation of
confidence with respect to the Confidential Information disclosed. The
provisions of this Agreement shall survive the expiration or earlier termination
of this Agreement for a period of one year. For the avoidance of doubt,
information about the Company’s policies, procedures and investment portfolio
(other than investments in which the Company and Manager have co-invested) shall
be deemed to be included within the meaning of “Confidential Information” for
purposes of the Manager’s obligations pursuant to this Section 5.
 
Section 6. Compensation.
 
(a)           For the services rendered under this Agreement, the Company shall
pay the Management Fee to the Manager.
(b)           Subject to Section 7(b) hereof, the parties acknowledge that the
Management Fee is intended to compensate the Manager for providing the Company
investment advisory services and certain general management services as rendered
under this Agreement.
(c)           The Management Fee shall be payable in arrears in cash, in monthly
installments commencing with the month in which this Agreement is executed. If
applicable, the initial and final installments of the Management Fee shall be
pro-rated based on the number of days during the initial and final month,
respectively, that this Agreement is in effect. The Manager shall calculate each
monthly installment of the Management Fee, and deliver such calculation to the

 
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Company, within fifteen (15) days following the last day of each calendar month.
The Company shall pay the Manager each installment of the Management Fee within
five (5) Business Days after the date of delivery to the Company of such
computations.
 
Section 7. Expenses of the Company.
 
(a)           Except as set forth in Section 7(b)(xx), the Manager shall be
responsible for the expenses related to any and all personnel of the Manager and
its Affiliates who provide services to the Company pursuant to this Agreement or
to the Manager pursuant to the Overhead Sharing Agreement (including each of the
officers of the Company and any directors of the Company who are also directors,
officers, employees or agents of the Manager, Bimini or any of their
Affiliates), including, without limitation, salaries, bonus and other wages,
payroll taxes and the cost of employee benefit plans of such personnel, and
costs of insurance with respect to such personnel.
(b)           Subject to Section 7(c) below, the Company shall pay all of its
costs and expenses and shall reimburse the Manager or its Affiliates for
expenses of the Manager and its Affiliates incurred on behalf of the Company,
including its pro rata share of certain overhead expenses incurred by the
Manager or its Affiliates related to the performances of the services pursuant
to this Agreement, excepting only those expenses that are specifically the
responsibility of the Manager pursuant to Section 7(a) of this Agreement.
Subject to Section 7(c) below, without limiting the generality of the foregoing,
it is specifically agreed that the following costs and expenses of the Company
or any Subsidiary shall be paid by the Company and shall not be paid by the
Manager or Affiliates of the Manager:
(i)           all costs and expenses associated with the formation and capital
raising activities of the Company and its Subsidiaries, if any, including,
without limitation, the costs and expenses of (A) the preparation of the
Company’s private placement memoranda and registration statements, (B) all
private and public offerings of the Company, (C) the original incorporation and
initial organization of the Company, (D) any filing fees and costs of being a
public company, including, without limitation, filings with the SEC, the
Financial Industry Regulatory Authority, Inc. and the OTC Bulletin Board (and
any other exchange or over-the-counter market), among other such entities and
(E) any fees and expenses associated with the Company’s initial qualification as
a REIT;
(ii)           all costs and expenses in connection with the acquisition,
disposition, financing, hedging and ownership of the Company’s or any
Subsidiary’s investments, including, without limitation, costs and expenses
incurred in contracting with third parties to provide such services, such as
legal fees, accounting fees, consulting fees, trustee fees, appraisal fees,
insurance premiums, commitment fees, brokerage fees and guaranty fees;
(iii)  
all legal, audit, accounting, consulting, brokerage, listing, filing, custodian,
transfer agent, rating agency, registration and other fees and charges,
printing, engraving and other expenses and taxes incurred in connection with the
issuance, distribution, transfer, registration and stock exchange listing of the
Company’s or any Subsidiary’s equity securities or debt securities;

 
 
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(iv)           all expenses relating to communications to holders of equity
securities or debt securities issued by the Company or any Subsidiary and other
third party services utilized in maintaining relations with holders of such
securities and in complying with the continuous reporting and other requirements
of governmental bodies or agencies (including, without limitation, the SEC),
including any costs of computer services in connection with this function, the
cost of printing and mailing certificates for such securities and proxy
solicitation materials and reports to holders of the Company’s or any
Subsidiary’s securities and the cost of any reports to third parties required
under any indenture to which the Company or any Subsidiary is a party;
(iv)  
all costs and expenses of money borrowed by the Company or its Subsidiaries, if
any, including, without limitation, principal, interest and the costs associated
with the establishment and maintenance of any credit facilities, warehouse
loans, repurchase facilities and other indebtedness of the Company and its
Subsidiaries, if any (including commitment fees, legal fees, closing and other
costs);

(v)  
all taxes and license fees applicable to the Company or any Subsidiary,
including interest and penalties thereon;

(vi)  
all fees paid to and expenses of third-party advisors and independent
contractors, consultants, managers and other agents engaged by the Company or
any Subsidiary or by the Manager for the account of the Company or any
Subsidiary;

(vii)  
all insurance costs incurred by the Company or any Subsidiary, including,
without limitation, the cost of obtaining and maintaining (A) liability or other
insurance to indemnify (1) the Manager, (2) the directors and officers of the
Company, and (3) underwriters of any securities of the Company, (B) “errors and
omissions” insurance coverage, and (C) any other insurance deemed necessary or
advisable by the Board of Directors for the benefit of the Company and its
directors and officers;

(ix)           all compensation and fees paid to directors of the Company or any
Subsidiary (excluding those directors who are also directors, officers,
employees or agents of the Manager or any of its Affiliates), and, subject to
clause (xiii) below, all expenses of all directors of the Company or any
Subsidiary incurred in their capacity as such;
(x)           all third-party legal, accounting and auditing fees and expenses
and other similar services relating to the Company’s or any Subsidiary’s
operations (including, without limitation, all quarterly and annual audit or tax
fees and expenses);
(xi)           all third-party legal, expert and other fees and expenses
relating to any actions, proceedings, lawsuits, demands, causes of action and
claims, whether actual or threatened, made by or against the Company, or which
the Company is authorized or obligated to pay under applicable law or its
Governing Instruments or by the Board of Directors;
(xii)           subject to Section 8 below, any judgment or settlement of
pending or threatened proceedings (whether civil, criminal or otherwise) against
the Company or any Subsidiary, or against any trustee, director or officer of
the Company or any Subsidiary in his capacity as such for which the Company or
any Subsidiary is required to indemnify such trustee,

 

 
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director or officer by any court or governmental agency, or settlement of
pending or threatened proceedings;
(xiii)           all travel and related expenses of directors, officers and
employees of the Company and the Manager, incurred in connection with attending
meetings of the Board of Directors or holders of securities of the Company or
any Subsidiary or performing other business activities that relate to the
Company or any Subsidiary, including, without limitation, travel and related
expenses incurred in connection with the purchase, consideration for purchase,
financing, refinancing, sale or other disposition of any investment or potential
investment of the Company; provided, however, that the Company shall only be
responsible for its pro rata share of such expenses, based on the Company’s
percentage of the aggregate amount of the Manager’s assets under management and
Bimini’s assets (measured as of the first day of each month), where such
expenses were not incurred solely for the benefit of the Company;
(xiv)           all expenses of organizing, modifying or dissolving the Company
or any Subsidiary and costs preparatory to entering into a business or activity,
or of winding up or disposing of a business activity of the Company or its
Subsidiaries, if any;
(xv)           all expenses relating to payments of dividends or interest or
distributions in cash or any other form made or caused to be made by the Board
of Directors to or on account of holders of the securities of the Company or any
Subsidiary, including, without limitation, in connection with any dividend
reinvestment plan;
(xvi)           all costs and expenses related to (A) the design and maintenance
of the Company’s web site or sites and (B) the Company’s pro rata share, based
on the Company’s percentage of the aggregate amount of the Manager’s assets
under management and Bimini’s assets (measured as of the first day of each
month), of any computer software, hardware or information technology services
that is used by the Company;
(xvii)           all costs and expenses incurred with respect to market
information systems and publications, research publications and materials, and
settlement, clearing and custodial fees and expenses; provided, however, that
the Company shall only be responsible for its pro rata share of such expenses,
based on the Company’s percentage of the aggregate amount of the Manager’s
assets under management and Bimini’s assets (measured as of the first day of
each month), where such expenses were not incurred solely for the benefit of the
Company;
(xviii)           all costs and expenses incurred with respect to administering
the Company’s incentive and benefit plans;
(xix)           rent (including disaster recovery facilities costs and
expenses), telephone, utilities, office furniture, equipment, machinery and
other office, internal and overhead expenses of the Manager and its Affiliates
required for the Company’s operations; provided, however, that the Company shall
only be responsible for its pro rata share of such expenses, based on the
Company’s percentage of the aggregate amount of the Manager’s assets under
management and Bimini’s assets (measured as of the first day of each month),
where such expenses were not incurred solely for the benefit of the Company;

 
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(xx)           the Company’s allocable share of the compensation of its Chief
Financial Officer, including, without limitation, annual base salary, bonus, any
related withholding taxes and employee benefits, based on the percentage of time
spent on the Company’s affairs; and
(xxi)           all other expenses (other than those described in Section 7(a)
above) actually incurred by the Manager or its Affiliates or their respective
officers, employees, representatives or agents, or any Affiliates thereof, which
are reasonably necessary for the performance by the Manager of its duties and
functions under this Agreement (including, without limitation, any fees or
expenses relating to the Company’s compliance with all governmental and
regulatory matters).

For the avoidance of doubt, payment for all services provided to the Company by
AVM, L.P. (including repurchase agreement trading, clearing and administrative
services) shall be made by the Company directly to AVM, L.P.
 
(c)
The costs and expenses referred to in Section 7(b)(xvi), Section 7(b)(xvii),
Section 7(b)(xix) and Section 7(b)(xx) to the extent incurred by the Manager or
its Affiliates on behalf of the Company, shall not become reimbursable costs and
expenses until the date on which the Company’s aggregate stockholders’ equity,
determined on a monthly basis and adjusted to exclude the effect of any
unrealized gains or losses included in either retained earnings or other
comprehensive income (loss), each computed in accordance with GAAP, is equal to
or in excess of $100 million.

 
(d)           Costs and expenses incurred by the Manager on behalf of the
Company shall be reimbursed monthly to the Manager. The Manager shall prepare a
written statement in reasonable detail documenting the costs and expenses of the
Company and those incurred by the Manager on behalf of the Company during each
month, and shall deliver such written statement to the Company within thirty
(30) days after the end of each month. The Company shall pay all amounts payable
to the Manager pursuant to this Section 7(d) within five (5) Business Days after
the receipt of the written statement without demand, deduction, offset or delay.
Cost and expense reimbursement to the Manager shall be subject to adjustment at
the end of each calendar year in connection with the annual audit of the
Company. The provisions of this Section 7 shall survive the expiration or
earlier termination of this Agreement to the extent such expenses have
previously been incurred or are incurred in connection with such expiration or
termination.

 
Section 8. Limits of the Manager’s Responsibility.
 
(a)  
The Manager assumes no responsibility under this Agreement other than to render
the services called for hereunder in good faith and shall not be responsible for
any action of the Board of Directors in following or declining to follow any
advice or recommendations of the Manager. The Manager and its Affiliates, and
the directors, officers, employees and stockholders of the Manager and its
Affiliates, will not be liable to the Company, any Subsidiary of the Company,
the Board of Directors, or the Company’s stockholders for any acts or omissions
by the Manager, its officers, employees or its Affiliates, performed in
accordance with and pursuant to this Agreement, except by reason of acts
constituting bad faith, willful misconduct, gross negligence or reckless
disregard of their respective duties under this Agreement. The Company shall, to
the full extent lawful, reimburse, indemnify and hold harmless the Manager, its

 

 
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Affiliates, and the directors, officers, employees and stockholders of the
Manager and its Affiliates (each, a “Manager Indemnified Party”) of and from any
and all expenses, losses, damages, liabilities, demands, charges and claims of
any nature whatsoever (including reasonable attorneys’ fees) (collectively
“Losses”) in respect of or arising from any acts or omissions of such Manager
Indemnified Party performed in good faith under this Agreement and, in respect
of any such Manager Indemnified Party, not constituting bad faith, willful
misconduct, gross negligence or reckless disregard of duties of such Manager
Indemnified Party under this Agreement.
 
(b)
The Manager shall, to the full extent lawful, reimburse, indemnify and hold
harmless the Company, and the directors, officers and stockholders of the
Company and each Person, if any, controlling the Company (each, a “Company
Indemnified Party”; a Manager Indemnified Party and a Company Indemnified Party
are each sometimes hereinafter referred to as an “Indemnified Party”) of and
from any and all Losses in respect of or arising from (i) any acts or omissions
of the Manager constituting bad faith, willful misconduct, gross negligence or
reckless disregard of duties of the Manager under this Agreement or (ii) any
claims by the Manager’s or any of its Affiliates’ employees relating to the
terms and conditions of their employment by the Manager or its Affiliates.

 
(c)           In case any such claim, suit, action or proceeding (a “Claim”) is
brought against any Indemnified Party in respect of which indemnification may be
sought by such Indemnified Party pursuant hereto, the Indemnified Party shall
give prompt written notice thereof to the indemnifying party, which notice shall
include all documents and information in the possession of or under the control
of such Indemnified Party reasonably necessary for the evaluation and/or defense
of such Claim and shall specifically state that indemnification for such Claim
is being sought under this Section 8; provided, however, that the failure of the
Indemnified Party to so notify the indemnifying party shall not limit or affect
such Indemnified Party’s rights to be indemnified pursuant to this Section 8.
Upon receipt of such notice of Claim (together with such documents and
information from such Indemnified Party), the indemnifying party shall, at its
sole cost and expense, in good faith defend any such Claim with counsel
reasonably satisfactory to such Indemnified Party, which counsel may, without
limiting the rights of such Indemnified Party pursuant to the next succeeding
sentence of this Section 8, also represent the indemnifying party in such
investigation, action or proceeding. In the alternative, such Indemnified Party
may elect to conduct the defense of the Claim, if (i) such Indemnified Party
reasonably determines that the conduct of its defense by the indemnifying party
could be materially prejudicial to its interests, (ii) the indemnifying party
refuses to defend (or fails to give written notice to the Indemnified Party
within ten (10) days of receipt of a notice of Claim that the indemnifying party
assumes such defense), or (iii) the indemnifying party shall have failed, in
such Indemnified Party’s reasonable judgment, to defend the Claim in good faith.
If the Indemnified Party elects to conduct the defense of the Claim due to the
reasons set forth in the preceding sentence, the fees and expenses of counsel to
the Indemnified Party shall be borne by the indemnifying party. The indemnifying
party may settle any Claim against such Indemnified Party without such
Indemnified Party’s consent, provided (i) such settlement is without any Losses
whatsoever to such Indemnified Party, (ii) the settlement does not include or
require any admission of liability or culpability by such Indemnified Party and
(iii) the indemnifying party obtains an effective written release of liability
for such Indemnified Party from the party to the Claim with whom such settlement
is being made, which release must be reasonably acceptable to such Indemnified

 
 
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Party, and a dismissal with prejudice with respect to all claims made by the
party against such Indemnified Party in connection with such Claim. The
applicable Indemnified Party shall reasonably cooperate with the indemnifying
party, at the indemnifying party’s sole cost and expense, in connection with the
defense or settlement of any Claim in accordance with the terms hereof. If such
Indemnified Party is entitled pursuant to this Section to elect to defend such
Claim by counsel of its own choosing and so elects, then the indemnifying party
shall be responsible for any good faith settlement of such Claim entered into by
such Indemnified Party. Except as provided in the immediately preceding
sentence, no Indemnified Party may pay or settle any Claim and seek
reimbursement therefor under this Section.
 
(d)  
Manager’s total liability pursuant to Section 8.1(a) of this Agreement or
otherwise to the Company Indemnified Parties with respect to Losses incurred by
the Company Indemnified Parties will not exceed the cumulative total Management
Fee paid to Manager by the Company through the date of the act or occurrence
causing such Losses.

(e)           IN NO EVENT SHALL MANAGER BE LIABLE FOR SPECIAL, CONSEQUENTIAL,
INCIDENTAL, PUNITIVE OR INDIRECT LOSSES OR DAMAGES, INCLUDING BUT NOT LIMITED TO
LOST PROFITS AND LOSS OF USE.
(f)           The provisions of this Section 8 shall survive the expiration or
earlier termination of this Agreement.

 
Section 9. No Joint Venture.
 
The Company and the Manager are not partners or joint venturers with each other
and nothing herein shall be construed to make them such partners or joint
venturers or impose any liability as such on either of them.
 
Section 10. Term; Renewal.
 
(a)           Initial Term. This Agreement shall become effective on the date
hereof and shall continue in operation, unless terminated in accordance with the
terms hereof, until the date that is 3 years from the date hereof (the “Initial
Term”).
(b)           Automatic Renewal Terms. After the Initial Term, this Agreement
shall be deemed renewed automatically each year for an additional one-year
period (an “Automatic Renewal Term”) unless the Company or the Manager elects
not to renew this Agreement in accordance with Section 10(c) of this Agreement.
(c)           Nonrenewal of this Agreement Without Cause. Notwithstanding any
other provision of this Agreement to the contrary, upon the expiration of the
Initial Term any Automatic Renewal Term, in each case upon 180 days’ prior
written notice to the Manager or the Company, as applicable (the “Termination
Notice”), either the Company (but only with the approval of a majority of the
Independent Directors) or the Manager may, without cause, in connection with the
expiration of the Initial Term or any Automatic Renewal Term, decline to renew
this Agreement (any such nonrenewal, a “Termination Without Cause”). If the
Company issues the Termination Notice, the Company shall be obligated to (i)
specify the reason for nonrenewal in the Termination Notice and (ii) pay the
Manager the Termination Fee before or on

 

 
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the last day of the Initial Term or Automatic Renewal Term (the “Effective
Termination Date”). In the event of a Termination Without Cause, nonrenewal of
this Agreement shall be without any further liability or obligation of either
party to the other, except as provided in this Section 10(c) or Section 3(b),
Section 8 or Section 14 of this Agreement. The Manager shall cooperate with the
Company in executing an orderly transition of the management of the Company’s
assets to a new manager. The Company may terminate this Agreement for cause
pursuant to Section 12 hereof even after a Termination Without Cause and, in
such case, no Termination Fee shall be payable.
 
(d)  
Unfair Manager Compensation. Notwithstanding the provisions of Section 10(c)
above, if the reason for nonrenewal specified in the Company’s Termination
Notice is that a majority of the Independent Directors have determined that the
Management Fee payable to the Manager is unfair, the Company shall not have the
foregoing nonrenewal right in the event the Manager agrees that it will continue
to perform its duties hereunder during the Automatic Renewal Term that would
commence upon the expiration of the Initial Term or then current Automatic
Renewal Term at a fee that the majority of the Independent Directors determine
to be fair; provided, however, the Manager shall have the right to renegotiate
the Management Fee by delivering to the Company, not less than 120 days prior to
the pending Effective Termination Date, written notice (a “Notice of Proposal to
Negotiate”) of its intention to renegotiate the Management Fee. Thereupon, the
Company and the Manager shall endeavor to negotiate the Management Fee in good
faith. Provided that the Company and the Manager agree to a revised Management
Fee or other compensation structure within sixty (60) days following the
Company’s receipt of the Notice of Proposal to Negotiate, the Termination Notice
from the Company shall be deemed of no force and effect, and this Agreement
shall continue in full force and effect on the terms stated herein, except that
the Management Fee or other compensation structure shall be the revised
Management Fee or other compensation structure then agreed upon by the Company
and the Manager. The Company and the Manager agree to execute and deliver an
amendment to this Agreement setting forth such revised Management Fee or other
compensation structure promptly upon reaching an agreement regarding same. In
the event that the Company and the Manager are unable to agree to a revised
Management Fee or other compensation structure during such sixty (60) day
period, this Agreement shall terminate on the Effective Termination Date and the
Company shall be obligated to pay the Manager the Termination Fee upon the
Effective Termination Date.

 
Section 11. Assignments.
 
(a)  
Assignments by the Manager. This Agreement shall terminate automatically without
payment of the Termination Fee in the event of its assignment, in whole or in
part, by the Manager, unless such assignment is consented to in writing by the
Company with the consent of a majority of the Independent Directors. Any such
permitted assignment shall bind the assignee under this Agreement in the same
manner as the Manager is bound, and the Manager shall be liable to the Company
for all errors or omissions of the assignee under any such assignment. In
addition, the assignee shall execute and deliver to the Company a counterpart of
this Agreement naming such assignee as the Manager. Notwithstanding the
foregoing, the Manager may (i) assign this Agreement to an Affiliate of the
Manager that is a successor to the Manager by reason of a restructuring or other
internal reorganization among the Manager and any one or more of its Affiliates
without the consent of the majority of the Independent Directors if such
approval is not required under the Investment Advisors Act of 1940, as amended,
and

 

 
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(ii) delegate to one or more of its Affiliates the performance of any of its
responsibilities hereunder so long as it remains liable for any such Affiliate’s
performance. Nothing contained in this Agreement shall preclude any pledge,
hypothecation or other transfer of any amounts payable to the Manager under this
Agreement.
 
(b)  
Assignments by the Company. This Agreement shall terminate automatically in the
event of its assignment, in whole or in part, by the Company, unless such
assignment is consented to in writing by the Manager. Any such permitted
assignment shall bind the assignee under this Agreement in the same manner as
the Company is bound. In addition, the assignee shall execute and deliver to the
Manager a counterpart of this Agreement. If the assignment is not consented to
by the Manager, the Company shall be obligated to pay the Manager the
Termination Fee within 60 days of such assignment.

 
Section 12. Termination of the Manager for Cause.
 
At the option of the Company and at any time during the term of this Agreement,
this Agreement shall be and become terminated upon 30 days’ written notice of
termination from the Board of Directors to the Manager, without payment of the
Termination Fee, if any of the following events shall occur, which shall be
determined by a majority of the Independent Directors:
 
(a)           the Manager shall commit any act of fraud, misappropriation of
funds, or embezzlement against the Company or shall be grossly negligent in the
performance of its duties under this Agreement (including such action or
inaction by the Manager which materially impairs the Company’s ability to
conduct its business)
(b)           the Manager shall fail to provide adequate or appropriate
personnel necessary for the Manager to originate investment opportunities for
the Company and to manage and develop the Company’s portfolio; provided, that
such default has continued uncured for a period of sixty (60) days after written
notice thereof, which notice shall contain a request that the same be remedied;
(c)           the Manager shall commit a material breach of any provision of
this Agreement (including the failure of the Manager to use reasonable efforts
to comply with the Investment Guidelines);provided, that such default has
continued uncured for a period of thirty (30) days after written notice thereof,
which notice shall contain a request that the same be remedied;
(d)           (A) the Manager or Bimini shall commence any case, proceeding or
other action (1) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (2) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or the Manager or Bimini shall
make a general assignment for the benefit of its creditors; or (B) there shall
be commenced against the Manager or Bimini any case, proceeding or other action
of a nature referred to in clause (A) above;

 

 
 
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(e)           the Manager is convicted (including a plea of nolo contendre) of a
felony;
(f)           a Change of Control;
(g)           the departure of both Robert Cauley and Hunter Haas from the
senior management of the Manager during the Initial Term; or
(h)           upon the dissolution of the Manager.

 
If any of the events specified above shall occur, the Manager shall give prompt
written notice thereof to the Board of Directors.
 
Section 13. Action Upon Termination.
 
From and after the effective date of termination of this Agreement pursuant to
Sections 10, 11 or 12 of this Agreement, the Manager shall not be entitled to
compensation for further services hereunder, but shall be paid all compensation
accruing, and reimbursable expenses incurred prior, to the date of termination
and, if terminated or not renewed pursuant to Section 10 or assigned by the
Company without the Manager’s consent pursuant to Section 11, the Termination
Fee. Upon any such termination, the Manager shall forthwith:
 
(a)           after deducting any accrued compensation and reimbursement for its
expenses to which it is then entitled, pay over to the Company or a Subsidiary
all money collected and held for the account of the Company or a Subsidiary
pursuant to this Agreement;
(b)           deliver to the Board of Directors a full accounting, including a
statement showing all payments collected by it and a statement of all money held
by it, covering the period following the date of the last accounting furnished
to the Board of Directors with respect to the Company and any Subsidiaries; and
(c)           deliver to the Board of Directors all property and documents of
the Company and any Subsidiaries then in the custody of the Manager.

 
Section 14. Release of Money or Other Property Upon Written Request.
 
The Manager agrees that any money or other property of the Company (which such
term, for the purposes of this Section, shall be deemed to include any and all
of its Subsidiaries, if any) held by the Manager shall be held by the Manager as
custodian for the Company, and the Manager’s records shall be appropriately and
clearly marked to reflect the ownership of such money or other property by the
Company. Upon the receipt by the Manager of a written request signed by a duly
authorized officer of the Company requesting the Manager to release to the
Company any money or other property then held by the Manager for the account of
the Company under this Agreement, the Manager shall release such money or other
property to the Company within a reasonable period of time, but in no event
later than 60 days following such request. Upon delivery of such money or other
property to the Company, the Manager shall not be liable to the Company, the
Board of Directors or the Company’s stockholders or partners for any acts or
omissions by the Company in connection with the money or other property released
to the Company in accordance with this Section. The Company shall indemnify the
Manager and its
 

 

 
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Affiliates’ directors, officers, stockholders, employees and agents against any
and all expenses, losses, damages, liabilities, demands, charges and claims of
any nature whatsoever, which arise in connection with the Manager’s release of
such money or other property to the Company in accordance with the terms of this
Section 14. Indemnification pursuant to this provision shall be in addition to
any right of the Manager to indemnification under Section 8 of this Agreement.
 
Section 15. Representations and Warranties.
 
(a)           The Company hereby represents and warrants to the Manager as
follows:
(i)           The Company is duly organized, validly existing and in good
standing under the laws of the British Virgin Islands, has the limited liability
company power and authority and the legal right to own and operate its assets,
to lease any property it may operate as lessee and to conduct the business in
which it is now engaged and is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction where its ownership or lease
of property or the conduct of its business requires such qualification, except
for failures to be so qualified, authorized or licensed that could not in the
aggregate have a material adverse effect on the business operations, assets or
financial condition of the Company.
(ii)           The Company has the limited liability company power and authority
and the legal right to make, deliver and perform this Agreement and all
obligations required hereunder and has taken all necessary corporate action to
authorize this Agreement on the terms and conditions hereof and the execution,
delivery and performance of this Agreement and all obligations required
hereunder. No consent of any other Person, including stockholders and creditors
of the Company, and no license, permit, approval or authorization of, exemption
by, notice or report to, or registration, filing or declaration with, any
governmental authority is required by the Company in connection with this
Agreement or the execution, delivery, performance, validity or enforceability of
this Agreement and all obligations required hereunder. This Agreement has been,
and each instrument or document required hereunder will be, executed and
delivered by a duly authorized officer of the Company, and this Agreement
constitutes, and each instrument or document required hereunder when executed
and delivered hereunder will constitute, the legally valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms.
(iii)           The execution, delivery and performance of this Agreement and
the documents or instruments required hereunder will not violate any provision
of any existing law or regulation binding on the Company, or any order,
judgment, award or decree of any court, arbitrator or governmental authority
binding on the Company, or the Governing Instruments of, or any securities
issued by, the Company or of any mortgage, indenture, lease, contract or other
agreement, instrument or undertaking to which the Company is a party or by which
the Company or any of its assets may be bound, the violation of which would have
a material adverse effect on the business operations, assets or financial
condition of the Company and its Subsidiaries, if any, taken as a whole, and
will not result in, or require, the creation or imposition of any lien on any of
its property, assets or revenues pursuant to the provisions of any such
mortgage, indenture, lease, contract or other agreement, instrument or
undertaking.
(b)  
The Manager hereby represents and warrants to the Company as follows:

 

 
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(i)  
The Manager is duly organized, validly existing and in good standing under the
laws of the State of Maryland, has the corporate power and authority and the
legal right to own and operate its assets, to lease any property it operates as
lessee and to conduct the business in which it is now engaged and is duly
qualified as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification, except for failures to be so qualified,
authorized or licensed that could not in the aggregate have a material adverse
effect on the business operations, assets or financial condition of the Manager.

(ii)  
The Manager has the corporate power and authority and the legal right to make,
deliver and perform this Agreement and all obligations required hereunder and
has taken all necessary corporate action to authorize this Agreement on the
terms and conditions hereof and the execution, delivery and performance of this
Agreement and all obligations required hereunder. No consent of any other
Person, including members and creditors of the Manager, and no license, permit,
approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental authority is required
by the Manager in connection with this Agreement or the execution, delivery,
performance, validity or enforceability of this Agreement and all obligations
required hereunder. This Agreement has been, and each instrument or document
required hereunder will be, executed and delivered by a duly authorized officer
of the Manager, and this Agreement constitutes, and each instrument or document
required hereunder when executed and delivered hereunder will constitute, the
legally valid and binding obligation of the Manager enforceable against the
Manager in accordance with its terms.

(iii)  
The execution, delivery and performance of this Agreement and the documents or
instruments required hereunder will not violate any provision of any existing
law or regulation binding on the Manager, or any order, judgment, award or
decree of any court, arbitrator or governmental authority binding on the
Manager, or the Governing Instruments of, or any securities issued by, the
Manager or of any mortgage, indenture, lease, contract or other agreement,
instrument or undertaking to which the Manager is a party or by which the
Manager or any of its assets may be bound, the violation of which would have a
material adverse effect on the business operations, assets or financial
condition of the Manager, and will not result in, or require, the creation or
imposition of any lien on any of its property, assets or revenues pursuant to
the provisions of any such mortgage, indenture, lease, contract or other
agreement, instrument or undertaking.

 
Section 16. Miscellaneous.
 
(a)  
Notices. All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy), and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered against receipt or upon actual receipt of (i) personal
delivery, (ii) delivery by reputable overnight courier, (iii) delivery by
facsimile transmission with telephonic confirmation or (iv) delivery by
registered or certified mail, postage prepaid, return receipt requested,
addressed as set forth below (or to such other address as may be hereafter
notified by the respective parties hereto in accordance with this Section 16):

 

 
 
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The Company:
FlatWorld Acquisition Corp.

3305 Flamingo Drive
Vero Beach, FL 32963
Attention: Chief Executive Officer
Fax: 772-231-2896

with a copy to:
Hunton & Williams LLP

Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
Attention: S. Gregory Cope, Esq.
Fax: (804) 343-4833

The Manager:
Bimini Advisors, LLC

3305 Flamingo Drive
Vero Beach, FL 32963
Attention: Chief Executive Officer
Fax: 772-231-2896

with a copy to:
Moye White LLP

16 Market Square 6th Floor
1400 16th Street
Denver, CO 80202-1486
Attention: David C. Roos, Esq
Fax: 303 292 4510

(b)           Binding Nature of Agreement; Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors and assigns as
provided herein.
(c)           Integration. This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof.
(d)           Amendments. This Agreement, nor any terms hereof, may not be
amended, supplemented or modified except in an instrument in writing executed by
the parties hereto.
(e)           GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF MARYLAND, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF MARYLAND AND
THE UNITED STATES DISTRICT COURT FOR ANY DISTRICT WITHIN SUCH STATE

 
 
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FOR THE PURPOSE OF ANY ACTION OR JUDGMENT RELATING TO OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND TO THE LAYING OF
VENUE IN SUCH COURT.
(f)           WAIVER OF JURY TRIAL. EACH PARTY HERETO ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
(g)           Survival of Representations and Warranties. All representations
and warranties made hereunder, and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement.
(h)           No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of a party hereto, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
(i)           Costs and Expenses. Each party hereto shall bear its own costs and
expenses (including the fees and disbursements of counsel and accountants)
incurred in connection with the negotiations and preparation of and the closing
under this Agreement, and all matters incident thereto.
(j)           Section Headings. The section and subsection headings in this
Agreement are for convenience in reference only and shall not be deemed to alter
or affect the interpretation of any provisions hereof.
(k)           Counterparts. This Agreement may be executed by the parties to
this Agreement on any number of separate counterparts (including by telecopy),
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument.
(l)           Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(signatures on following page)

 

 
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IN WITNESS WHEREOF, each of the parties hereto have executed this Management
Agreement as of the date first written above.
FLATWORLD ACQUISITION CORP.

By:______________________
Name:
Title:

BIMINI ADVISORS, LLC

By:______________________
Name:
Title:

Signature Page to the Management Agreement

 
Exhibit A

 
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Investment Guidelines
 
Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in that certain Management Agreement, dated as of [ ], 2012, as may be
amended from time to time (the “Management Agreement”), by and between FlatWorld
Acquisition Corp. (the “Company”) and Bimini Advisors, LLC (the “Manager”).
 
1.
The Company shall not make any investments other than investments in Agency
RMBS.

 
2.
The Company’s leverage may not exceed 12 times its stockholders’ equity (as
computed in accordance with GAAP) (the “Leverage Threshold”). In the event that
the Company’s leverage inadvertently exceeds the Leverage Threshold, the Company
may not utilize additional leverage without prior approval from the Board of
Directors until the Company is once again in compliance with the Leverage
Threshold.

 
3.
No investment shall be made that would cause the Company to fail to qualify as a
REIT under the Code.

 
4.
No investment shall be made that would cause the Company to be regulated as an
investment company under the Investment Company Act.

 
These Investment Guidelines may be amended, restated, modified, supplemented or
waived by the Board of Directors (which must include a majority of the
Independent Directors) without the approval of the Company’s stockholders.
 
 
 
A - 1

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