Exhibit 10.2
 
INVESTMENT ALLOCATION AGREEMENT

     This INVESTMENT ALLOCATION AGREEMENT (this “Agreement”) is dated as of
February 20, 2013, by and among Orchid Island Capital, Inc., a Maryland
corporation (the “Company”), Bimini Advisors, LLC, a Maryland limited liability
company (the “Manager”), and Bimini Capital Management, Inc., a Maryland
corporation (“Bimini”).

     WHEREAS, the Company invests in residential mortgage-backed securities 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 (the “Target Assets”);

     WHEREAS, pursuant to a Management Agreement, dated as of the date hereof
(the “Management Agreement”), by and between the Company and the Manager, the
Company will be externally managed and advised by the Manager, which is a
wholly-owned subsidiary an affiliate of Bimini;

     WHEREAS, Bimini invests in certain of the Target Assets;

     WHEREAS, the Manager may in the future manage other accounts that invest in
the Target Assets (a “Manager Account”);

     WHEREAS, the Manager and Bimini wish to provide the Company with certain
rights to invest in Target Assets identified by Bimini or the Manager; and

     WHEREAS, the Manager and Bimini have agreed to the additional sponsorship
and management restrictions as set forth herein.
 
 
     NOW, THEREFORE, in consideration of the mutual agreements herein made and
intending to be legally bound, the parties hereto hereby agree as follows:

ARTICLE I
 
INVESTMENT OPPORTUNITIES

Section 1.01 Other Investment Vehicles.
 
(a)  
Each of the Manager and Bimini represent and warrant to the Company that neither
the Manager nor Bimini currently sponsor or manage any real estate investment
trust that has substantially the same investment strategy as Bimini or the
Company (a “Competing Investment Vehicle”).

 
(b)  
Each of the Manager and Bimini agree that during the Term (as defined below) of
this Agreement, neither the Manager nor Bimini nor any Affiliate thereof shall
form, fund, sponsor or manage any Competing Investment Vehicle.

 
 
 
 

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Section 1.02 Allocation Agreement.
 
(a)  
The Manager and Bimini hereby agree that they will make available to the Company
pursuant to this Section 1.02 all investment opportunities in Target Assets made
available to the Manager or Bimini, as the case may be.

 
(b)  
Notwithstanding the provisions of Section 1.02(a) hereof, if the amount of
available Target Assets is less than the amount requested or desired by the
Company, Bimini or any other Manager Account, either the Manager or Bimini, as
the case may be, shall allocate such Target Assets to each such Manager Account,
Bimini and the Company in good faith based on the following factors (the
“Allocation Procedures”):

 
(i)  
the primary investment strategy of Bimini, the relevant Manager Accounts and the
Company;

 
(ii)  
the effect of the Target Assets on the diversification of each of Bimini’s, the
relevant Manager Accounts’ and the Company’s portfolio by coupon, purchase
price, size, payment characteristics and leverage;

 
(iii)  
the cash requirements of each of Bimini, the relevant Manager Accounts and the
Company;

 
(iv)  
the anticipated cash flow of each of Bimini’s, the relevant Manager Accounts’
and the Company’s portfolio; and

 
(v)  
the amount of funds available to each of Bimini, the relevant Manager Accounts
and the Company and the length of time such funds have been available for
investment.

 
(c)  
Notwithstanding anything to the contrary in this Agreement, the Allocation
Procedures shall not be required to be followed by Bimini or the Manager (i)
with respect to the allocation of purchases of whole-pool residential
mortgage-backed securities and (ii) if such allocation procedures would result
in an inefficiently small amount of Target Assets being purchased for either
Bimini, a Manager Account or the Company, as the case may be.

 
(d)  
If Target Assets are not allocated among Bimini, a Manager Account and/or the
Company pursuant to the Allocation Procedures due to the provisions of Section
1.2(c) hereof, either Bimini or the Manager, as the case may be, shall allocate
any future purchases of Target Assets that are not subject to the Allocation
Procedures in a manner such that, on an overall basis, each of Bimini, the
relevant Manager Accounts and the Company are treated equitably.

 
Section 1.03 Cross Transactions
 
(a)  
The Manager shall not cause the Company or any of its subsidiaries to purchase
assets, including Target Assets, from, or sell assets, including Target Assets,
to, any Manager Account (a “Cross Transaction”); provided, however, that the
Manager may cause the Company or any of its subsidiaries to enter into a Cross
Transaction if (i) such Cross Transaction is in the best interests of, and is
consistent with the investment objectives and policies of, the Company and (ii)
unless otherwise approved by a majority of the independent (as defined in the
Company’s Corporate Governance Guidelines) members (the “Independent Members”)
of the Board of Directors of the Company (the “Board”) or conducted in
accordance with a policy that has been approved by a majority of the Independent
Members, such Cross Transaction is effected at the then-current market price for
the assets subject to such Cross Transaction.

 
 
 
 

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(b)  
If assets subject to a Cross Transaction do not have a readily observable market
price, then such Cross Transaction may be effected (i) at prices based upon
third party bids received through auction, (ii) at the average of the highest
bid and lowest offer quoted by third-party dealers or (iii) according to another
pricing methodology approved by the Manager’s Chief Compliance Officer.

 
Section 1.04 Principal Transactions.  The Manager shall not cause the Company or
any of its subsidiaries to purchase assets, including Target Assets, from, or
sell assets, including Target Assets, to, the Manager or Bimini (or any related
party of the Manager or Bimini, including their respective employees and their
employees’ families) (a “Principal Transaction”); provided, however, that the
Manager may cause the Company or any of its subsidiaries to enter into a
Principal Transaction if such Principal Transaction has been previously approved
by a majority of the Independent Members.  Such approval shall include the
approval of the pricing methodology (including for assets with no readily
observable market price) to be used in the Principal Transaction and shall be
evidenced by a signed written consent of a majority of the Independent
Members.  Notwithstanding the foregoing, a Principal Transaction shall include
any Cross Transaction in which the Manager, Bimini or any of their respective
related parties (including their respective employees and their employees’
families) has a substantial (as determined by the Independent Members) ownership
interest.
 
Section 1.05 Split-Price Executions.  If our Manager combines the purchase or
sale of Target Assets for the Company with the purchase or sale of Target Assets
for Bimini or a Manager Account or both,  the purchase price assigned to such
Target Assets allocated to the Company shall be either (i) the average price of
all such Target Assets or (ii) based on another methodology that treats each
recipient of such Target Assets in a fair and consistent manner.
 
ARTICLE II
 
MISCELLANEOUS

Section 2.01 Term; Termination. The “Term” of this Agreement shall begin on the
date hereof and end on the Termination Date (as defined below).  This Agreement
shall terminate on the earlier of the date (i) on which the Management Agreement
terminates or expires in accordance with its terms, and (ii) the Manager is no
longer a subsidiary or an affiliate of Bimini (the “Termination Date”).
 
 
 

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Section 2.02 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 2.02):
 
 
 
    The
Company:                                                           Orchid Island
Capital, Inc.
3305 Flamingo Drive
Vero Beach, Florida 32963
Fax:  (772) 231-8896
 
 
    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 or Bimini:                                           Bimini
Capital Management, Inc.
3305 Flamingo Drive
Vero Beach, Florida 32963
Fax:  (772) 231-8896
 
 
    with a copy
to:                                                           Moye White LLP
16 Market Square, 6th Floor
1400 16th Street
Denver, Colorado 80202-1486
Attention:  David Roos
Fax:  (303) 292-4510

Section 2.03 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.
 
Section 2.04 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.
 
Section 2.05 Amendments; Waivers. Neither this Agreement nor any terms hereof
may be amended, supplemented or modified except in an instrument in writing
executed by the parties hereto. No waiver of any term or condition hereof or
obligation hereunder shall be valid unless made in writing and signed by the
party to which performance is due.
 
 
 

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Section 2.06 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 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.
 
Section 2.07 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.
 
Section 2.08 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.
 
Section 2.09 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.
 
Section 2.10 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.
 
Section 2.11 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.
 
[Signature Page Follows]

 
 

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      IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
 
                             Orchid Island Capital, Inc.
 

  By: /s/ Robert E. Cauley     Name: Robert E. Cauley     Title: Chief Executive
Officer  

                            Bimini Advisors, LLC
 

  By: /s/ G. Hunter Haas, IV     Name: G. Hunter Haas, IV     Title: Chief
Finanial Officer, Chief Investment Officer and Secretary  

 
 
 
  BIMINI CAPITAL MANAGEMENT, INC.

  By: /s/ G. Hunter Haas, IV     Name: G. Hunter Haas, IV     Title: Chief
Finanial Officer, Chief Investment Officer and Secretary  

 
 
 

 
 

Signature Page to the Investment Allocation Agreement

 
 

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