EXHIBIT 10.5


 


AVM, L.P.


 


	
  AVM
  ASSOCIATES LLC, GENERAL PARTNER

  	
   

  	
  250 SOUTH AUSTRALIAN AVENUE, SUITE 600

  
	
   

  	
   

  	
  WEST PALM BEACH, FLORIDA 33401

  
	
   

  	
   

  	
  TELEPHONE: 561-655-6267

  
	
   

  	
   

  	
  FACSIMILE: 561-655-9843

  
	
   

  	
   

  	
  E-MAIL: bill.mccauley@avmltd.com

  



 


November 4, 2003


 


Jeffrey
J. Zimmer


Chief Executive Officer and
President


Bimini Mortgage Management,
Inc.


3305 Flamingo Drive, Suite 100


Vero Beach, Florida 32963


 


Dear Mr. Zimmer:


 


The purpose of this Letter
Agreement (the “Agreement”) is to document the terms pursuant to which AVM,
L.P. (“AVM”) has agreed to provide consulting and related introducing broker
services to Bimini REIT (“BIMINI”).


 


Consulting Services to be Provided.  Beginning as soon
as practicable after the execution of this Agreement by the parties, AVM will
consult with BIMINI regarding financing – through the use of the repo markets
and possibly other techniques – as well as collateral management and other
services that are reasonably calculated to assist BIMINI in its REIT-related
securities financing activities. BIMINI acknowledges that AVM will not be
acting as an investment adviser to BIMINI and that any trading, investment or
risk management-related advice provided by AVM will be incidental to and in
connection with AVM’s role as an introducing broker for BIMINI, as described
below. In consideration for these services, BIMINI will pay to AVM an annual
Consulting Fee. The annual Consulting Fee will be the greater of $200,000 and 1
running basis point (i.e., .01% per annum times the average
daily aggregate market value of BIMINI’s Mortgage-Related Securities which are
subject to Financing Transactions executed by AVM, L.P. (defined below). The
initial Consulting Fee (covering the period until February 15, 2004) shall be
$50,000, payable within 5 business days after the date on which BIMINI closes
on its first private placement of Class A Common Stock (the “Effective
Date”). Thereafter, the Consulting Fee shall be payable quarterly in arrears
within five business days of each February 15, May 15, August 15 and November
15 (each such date a “Calculation Date”), beginning with May 15, 2004 and
continuing until this Agreement is terminated by either party.


 


In consideration of these fees
and the IB Fees detailed below, AVM will provide the following specific
services in addition to the general consulting services and IB services
described herein: (1) dealer introductions and related assistance with the
arrangement of repo credit lines and associated documentation with no fewer
than eight (8) leading counterparties (note: AVM will not provide any legal
advice; all legal advice and analysis, and the associated expense, shall be the
exclusive responsibility of BIMINI and its counsel); (2) daily reporting
of mark-to-market/credit exposure; (3) daily financing schedules and cashflow
reports; (4) copies of all trade tickets, confirmations and related trade
documentation; (5) periodic P+I reports; (6) other reports as needed
regarding financing activities transacted by AVM on behalf of BIMINI;
(7) at BIMINI’s direction, cooperate in settling outstanding balances due
to or from counterparties under repurchase agreements secured by AVM; and
(8) cooperate in trade settlement or clearing activities by or through
third parties engaged by BIMINI.


 

















 


Introducing Broker Services to be Provided.  AVM will act as
exclusive introducing broker on behalf of BIMINI in Financing Transactions for
all of BIMINI’s Mortgage-Related Securities. A “Financing Transaction” for
purposes of this Agreement includes repurchase agreements, securities lending agreements,
Sell/Buy Backs used for financing purposes, total return swaps, or any other
transaction where securities, swaps and/or cash are used as collateral to
secure financing. As introducing broker, AVM will execute financing trades as
directed by BIMINI with respect to the Mortgage-Related Securities.
Mortgage-Related Securities are those mortgage securities owned by BIMINI that
meet the criteria listed in BIMINI’S Private Placement Memorandum (under
“Investment Strategies and Asset Acquisition Strategy”) in the
“mortgage-related securities component” – i.e., “obligations issued directly by or
under the auspices of various U.S. federal agencies or federally chartered
entities, such as, but not limited to, the Federal National Mortgage
Association (more commonly known as Fannie Mae, or FNMA), the Federal Home Loan
Mortgage Corporation (more commonly know as Freddie Mac, or FHLMC), or the
Government National Mortgage Administration (more commonly known as Ginnie Mae,
or GNMA).” For these introducing broker services, AVM will be paid an
introducing broker fee (the “IB Fee”) based on the following formula: for each
Financing Transaction secured by AVM, AVM will receive 45% of the amount by
which the financing costs under that repurchase agreement calculated at an
assumed rate of LIBOR + 2 basis points (the “Hurdle Rate”) would exceed the
actual financing costs under that repurchase agreement. For that portion of
BIMINI’s Mortgage-Related Securities above $3 billion but less than $5 billion,
the Hurdle Rate used to calculate the IB Fee shall decrease to LIBOR +
1 basis point, and for that portion above $5 billion, the Hurdle Rate
shall decrease to LIBOR flat. For computation of the IB Fee, the relevant LIBOR
rate will be the interpolated LIBOR rate to the same maturity date as the
relevant Financing Transaction relating to each Mortgage-Related Security. The
IB Fee will be computed daily on an Actual/360 basis and accrued until each
Calculation Date. If the term of any Financing Transaction should extend past a
quarterly Calculation Date, then the portion of any IB Fee accruing through the
Calculation Date shall be paid as set forth in the next sentence, with the
balance of any IB Fee accruing in the subsequent calculation period or periods.
All fees are based on an Actual/360 basis, payable quarterly in arrears within
5 business days of each Calculation Date.


 


Where appropriate, BIMINI will
provide the relevant dealer/counterparty with whatever documentation those
dealers reasonably require to evidence AVM’s trading authority to act on
BIMINI’s behalf in executing such transactions.


 


Term and Termination.  This Agreement
shall be effective as of the date on which BIMINI closes on its first private
placement of Class A Common Stock (the “Effective Date”). This agreement is
terminable at will by either party upon 120 days’ written notice to the other
party. In the event that BIMINI terminates the agreement, AVM will not be
required to refund or return any portion of the Consulting Fees previously
paid. In addition, unless extended by agreement of the parties, this Agreement
will expire by its terms on October 1, 2006.


 


Confidentiality.  In connection with the services to be
provided by AVM, BIMINI may receive information that describes, explains or
otherwise relates to certain AVM trade ideas and other confidential and
proprietary information (the “AVM Information”). AVM Information includes, but
is not limited to, information contained in AVM research reports and other
written materials. BIMINI hereby acknowledges that AVM Information is being
provided on a strictly confidential basis. In consideration for AVM
Information, BIMINI agrees that AVM Information will be kept confidential by
BIMINI and will not be disclosed to or discussed with any third parties, except
as allowed by the terms of the succeeding paragraph. Further, BIMINI agrees not
to allow third parties to review, photocopy or otherwise duplicate any
documents provided by AVM. Additionally, BIMINI agrees that it will not use AVM
Information to design, recommend or execute trades for itself, its clients or 


 


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others without the consent of
AVM. Similarly, AVM acknowledges that information concerning BIMINI, its
trading activities, financial status and results, etc. (the “BIMINI
Information”) may be confidential, and AVM will likewise keep BIMINI
Information confidential on the same basis.


 


The obligations of BIMINI and
AVM to maintain confidentiality extend to all of the AVM Information and BIMINI
Information (collectively, the “Information”) received except for information
(1) that is already in the public domain; (2) that subsequently
becomes available to third parties via publication or otherwise through no
breach of the terms of the Agreement; (3) that was already in their
possession prior to its disclosure by the other party; (4) the disclosure
of which is required by law or by a competent regulatory authority or is
necessitated by a legal proceeding or audit requirement; or (5) that is
disclosed only to legal or other professional advisors who have previously
entered into a comparable confidentiality agreement with the other party, and
only where such advisors are advising upon matters related to the Agreement
and/or the Information.


 


The parties further agree to
take all reasonable precautions to prevent the theft or unauthorized use of any
of these materials, to notify the other party of any unauthorized use or
disclosure of Information of which a party becomes aware and to make all
reasonable efforts to prevent and stop such unauthorized use. The parties
further acknowledge that any unauthorized use or disclosure of Information will
cause irreparable damage to the other party and that, consequently, the parties
shall have the right to injunctive or other equitable relief to prevent or stop
such use or disclosure and to other legal and equitable relief for the damages
occasioned thereby.


 


Miscellaneous.  The Agreement, and all matters
pertaining to its validity, construction, enforcement, interpretation or effect,
shall be governed by and construed in accordance with the laws of the State of
Florida, without regard to choice of law principles.


 


The Agreement contains the
entire agreement between the parties relating to the subject matter hereof and
supersedes all prior understandings, representations or negotiations, written
or oral, express or implied.


 


The Agreement shall not be
modified, amended, supplemented, altered or varied, and no provision hereof may
be waived, except by a written instrument signed by all of the parties after
the date hereof.


 


Very truly yours,


 


	
  AVM, L.P.

  
	
   

  
	
   

  
	
  /s/ Bill
  McCAuley

  	
   

  
	
  By:

  	
  Bill
  McCauley

  
	
  Its:

  	
  CEO

  
			



 


AGREED AND ACCEPTED THIS 31st
DAY OF OCTOBER 2003:


 


	
  BIMINI MORTGAGE MANAGEMENT, INC.

  
	
   

  
	
   

  
	
  /s/ Jeffrey
  J. Zimmer

  	
   

  
	
  By:

  	
  Jeffrey J.
  Zimmer

  
	
  Its:

  	
  CEO

  
			



 


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AVM, L.P.


 


	
  AVM
  ASSOCIATES LLC, GENERAL PARTNER

  	
   

  	
  250 SOUTH AUSTRALIAN AVENUE, SUITE 600

  
	
   

  	
   

  	
  WEST PALM BEACH, FLORIDA 33401

  
	
   

  	
   

  	
  TELEPHONE: 561-655-6267

  
	
   

  	
   

  	
  FACSIMILE: 561-655-9843

  
	
   

  	
   

  	
  E-MAIL: bill.mccauley@avmltd.com

  



 


February 10, 2004


 


Jeffrey
J. Zimmer


Chief Executive Officer and
President


Bimini Mortgage Management,
Inc.


3305 Flamingo Drive, Suite 100


Vero Beach, Florida 32963


 


Dear Mr. Zimmer:


 


The purpose of this Letter
Agreement is to assign all of the rights, interests and responsibilities of
AVM, L.P. (“AVM”) under the terms of the Agreement dated November 4, 2003 (the
“2003 Agreement”) between AVM and Bimini Mortgage Management, Inc. (“Bimini”)
from AVM to its affiliate III Associates (“III”), and to evidence Bimini’s
consent to such assignment.


 


Accordingly, Bimini, AVM and
III hereby agree that all of the services AVM is obligated to provide under the
2003 Agreement, including all services described under “Consulting Services to
be Provided” and “Introducing Broker Services to be Provided” shall from the
date of this Letter Agreement forward be provided by III.  Similarly, Bimini’s obligations to AVM under
the 2003 Agreement, including its obligations to pay those fees provided for in
the 2003 Agreement, shall become obligations to III.  All other provisions, terms and conditions of the 2003 Agreement
shall remain in full force and effect. 
Finally, this agreement shall in no way alter or affect the agreement
and arrangements between AVM and Bimini regarding clearing-related services,
and AVM and Bimini shall remain the sole parties to the Agency Agreement dated
November 20, 2003.


 


Very truly yours,


 


	
  AVM, L.P.

  
	
   

  
	
   

  
	
  /s/ Bill
  McCAuley

  	
   

  
	
  By:

  	
  Bill
  McCauley

  
	
  Its:

  	
  CEO

  
			



 


AGREED AND ACCEPTED THIS 10TH
DAY OF FEBRUARY 2004:


 


	
  BIMINI MORTGAGE MANAGEMENT, INC.

  
	
   

  
	
   

  
	
  /s/ Jeffrey
  J. Zimmer

  	
   

  
	
  By:

  	
  Jeffrey J.
  Zimmer

  
	
  Its:

  	
  CEO

  
			



 

















 


 


AGREED AND ACCEPTED THIS 10TH
DAY OF FEBRUARY 2004:


 


III ASSOCIATES


 


 


	
  /s/ Scott
  Wyler

  	
   

  
	
  By:

  	
  Scott Wyler

  
	
  Its:

  	
  Authorized Signatory

  
			



 


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